TaxTMI Updates e-Newsletter
May 28,2022

GST liability on royalty payable for mining - nature of royalty - tax or consideration - interim stay of demand-cum-show cause notices - exercise of power under Section 74(1) of the GST Act - precedential effect of interim orders of the Supreme Court

Interim stay of demand-cum-show cause notices - exercise of power under Section 74(1) of the GST Act - precedential effect of interim orders of the Supreme Court - Grant of interim relief by staying the demand notices dated 07.01.2022 and 18.01.2022 for the months July 2017 to March 2018. - HELD THAT: - The Court, placing reliance on interim orders passed by the Supreme Court in related matters and on interim orders of a coordinate Bench of this Court in similar writ petitions, held that the petitioner was entitled to interim relief. Having considered the prior interim orders which stayed payment of service tax/GST in cases involving royalty for mining leases, the Court granted an interlocutory stay of the specified demand-cum-show cause notices until further orders. The respondents were directed to file counter-affidavits within three weeks and the petitioner to file rejoinder within one week, and the petition was to be connected with other similar writ petitions before the appropriate Bench.

Demand notices dated 07.01.2022 and 18.01.2022 for July 2017 to March 2018 are stayed until further orders; counter-affidavit and rejoinder timelines fixed; matter to be connected with related proceedings.

GST liability on royalty payable for mining - nature of royalty - tax or consideration - Merits as to whether GST/service tax is chargeable on royalty for mining were not finally adjudicated and remain subject to adjudication in connected proceedings. - HELD THAT: - The Court recorded that the petitioner denied liability to pay GST on royalty and noted that the substantial question-whether royalty constitutes a tax or consideration for purposes of GST-has been the subject of interim orders of the Supreme Court and is pending adjudication, including a reference to a larger Bench on the nature of royalty. In view of the pendency of those proceedings and interlocutory orders in related matters, the Court refrained from deciding the substantive question on merits in this petition and directed it to be connected with other similar writ petitions for consideration by the appropriate Bench.

Substantive question on GST liability on royalty is not finally decided and is to be considered in connected proceedings; no adjudication on merits in this order.

Final Conclusion: Interim stay granted of the specified demand-cum-show cause notices for July 2017 to March 2018 in light of existing interim orders of the Supreme Court and this Court; the substantive question whether GST is leviable on royalty for mining remains pending and will be considered in connected proceedings.

Confiscation of vehicle - release of seized vehicle on payment of fine under Section 130 of the CGST - authority empowered to impose fine and release property - right to challenge order of confiscation

Release of seized vehicle on payment of fine under Section 130 of the CGST - authority empowered to impose fine and release property - Whether the vehicle seized and allegedly confiscated may be released upon payment of an appropriate fine under Section 130 of the CGST and whether the authority which imposed the fine is competent to consider such release application. - HELD THAT: - The Court recorded that the vehicle was seized on 5.3.2019 and that while an order of confiscation was said to have been passed, it had not been specifically served on the petitioner. The petitioner sought release of the vehicle and offered to pay any fine as permissible under Section 130 of the CGST. The Court expressed no opposition to the petitioner pursuing release by payment of a fine, provided the statutory provisions permit such release. The Court directed that if the petitioner files an application for release on payment of fine, the authority which has the power to impose the fine and to release the vehicle must consider the application strictly in accordance with Section 130 of the CGST. The Court mandated that such consideration be completed within a period of two weeks from the date of the order. The Court further made clear that this direction is without prejudice to the petitioner's statutory right to challenge any order of confiscation before the competent forum.

Application for release on payment of fine to be considered by the competent authority under Section 130 of the CGST within two weeks; petitioner's right to challenge confiscation preserved.

Final Conclusion: Petitioner permitted to apply for release of the seized/declared-confiscated vehicle on payment of an appropriate fine; the competent authority shall consider such application strictly under Section 130 of the CGST within two weeks, without prejudice to the petitioner's right to challenge the confiscation order.

Violation of principles of natural justice - ex parte order - non-speaking order - quashing and remand for fresh adjudication - deposit as condition for continuing proceedings/appeal - prohibition of coercive steps during pendency - direction to pass a speaking order

Violation of principles of natural justice - ex parte order - non-speaking order - quashing and remand for fresh adjudication - Impugned notice, assessment orders and consequential recovery/attachment orders were quashed on grounds of procedural infirmity. - HELD THAT: - The Court found that the proceedings were vitiated by violation of principles of natural justice because the petitioner was not afforded sufficient time to represent his case. The order passed was ex parte and devoid of discernible reasons as to how the liability was determined. The authorities had also failed to adjudicate the matter on attending facts and circumstances. For these reasons the High Court held the impugned notice dated 19.02.2020, the order dated 21.03.2020, the Form GST DRC 07 summary, the appellate order dated 26.03.2022 and the recovery orders in Form GST DRC 13 (Annexures-3, 6 and 7 series) unsustainable and set them aside.

Impugned proceedings and orders quashed for breach of natural justice and being non speaking; consequential recovery/attachment orders set aside.

Quashing and remand for fresh adjudication - direction to pass a speaking order - deposit as condition for continuing proceedings/appeal - prohibition of coercive steps during pendency - Matter remanded to the Assessing Authority for fresh decision on merits after affording adequate hearing and subject to specified interim conditions. - HELD THAT: - The Court directed that the Assessing Authority decide the case afresh on merits after complying with principles of natural justice and passing a speaking order. The petitioner undertook to deposit an additional ten per cent of the demand within four weeks (subject to verification whether the initial ten per cent stood deposited), and the deposit was to be without prejudice to the parties' rights; any excess ultimately found would be refunded. The Court ordered immediate de freezing/de attachment of bank accounts related to the impugned proceedings, prohibited coercive steps during the pendency, and required the petitioner to appear before the Assessing Authority on the fixed date. The Assessing Authority was directed to decide the matter expeditiously, preferably within two months of appearance. Liberty was reserved to the parties to pursue other remedies.

Proceedings remitted for fresh adjudication on merits after providing adequate opportunity of hearing; interim directions issued regarding deposits, de freezing of accounts and prohibition of coercive steps.

Final Conclusion: Impugned show cause, assessment and recovery orders were quashed for breach of natural justice and being non speaking; the matter is remitted to the Assessing Authority to decide afresh on merits after affording adequate hearing and passing a speaking order, subject to interim deposits and directions (including de freezing of accounts and stay of coercive action).

Interest on delayed payment of tax - self-assessment - payment in instalments under Section 80 - automatic/compensatory nature of interest - Rule 158 procedure for instalment facility - electronic cash ledger and order of utilisation

Interest on delayed payment of tax - self-assessment - payment in instalments under Section 80 - Rule 158 procedure for instalment facility - Whether the Commissioner of CT&GST was justified in rejecting the petitioner's application to pay the interest levied for belated deposit of admitted self-assessed tax for April, 2019 to December, 2019 in instalments under Section 80 read with Rule 158. - HELD THAT: - The Court held that interest under Section 50(1) is compensatory and arises automatically where a taxpayer fails to pay admitted tax within the period prescribed for self-assessed returns; the obligation to pay such interest is to be discharged "on his own" and does not depend upon assessment proceedings. Section 80 authorises the Commissioner to allow payment of "any amount due" in monthly instalments not exceeding twenty-four months but expressly excludes amounts "due as per the liability self-assessed in any return." Rule 158 prescribes the Form GST DRC-20 application and the procedure (report from jurisdictional officer and order in Form GST DRC-21) and limits the instalment facility. A plain reading of Section 80 admits no power to permit instalments for liabilities that are self-assessed; therefore the Commissioner correctly concluded that the instalment facility could not be extended to interest arising from belated payment of self-assessed tax for the periods in question. The Court applied settled principles of statutory interpretation that taxing provisions must be given their natural and ordinary meaning and the statutory exclusion must be respected. [Paras 7, 9, 10, 11, 12]

The Commissioner was justified in rejecting the petitioner's request to pay the interest on belatedly deposited self-assessed tax by instalments under Section 80 read with Rule 158.

Final Conclusion: The writ petition is dismissed. The impugned order dated 8.2.2022 rejecting the application for instalment payment of interest on belatedly deposited self-assessed tax for April, 2019 to December, 2019 is upheld.

Services by an educational institution to its students, faculty and staff - Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 (Heading 9992) - education institution includes an institution providing pre-school education - composite supply governed by principal supply test - supply without consideration not taxable under Section 7(1)(a) of CGST Act

Education institution includes an institution providing pre-school education - services by an educational institution to its students, faculty and staff - "Nashik Cambridge Pre-School" falls within the definition of an educational institution for the purposes of Notification No. 12/2017-CT (Rate) SI No. 66. - HELD THAT: - The notification defines "Education Institution" to include institutions providing pre-school education. The Authority found, on the facts placed before it, that the applicant provides pre-school education and therefore qualifies as an "Educational Institution" for the purposes of the notification. This conclusion is based on the definition in the notification and the applicant's stated activities. [Paras 5]

Answered in the affirmative.

Services by an educational institution to its students, faculty and staff - Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 (Heading 9992) - Pre-school education services supplied by Nashik Cambridge Pre-School to its students against fee are exempt at Nil rate under SI No. 66 of Notification No. 12/2017-CT (Rate). - HELD THAT: - Since the applicant qualifies as an "Educational Institution" and the notification exempts services provided by such institutions to their students, the supply of pre-school education against fee falls within the Nil rate exemption under SI No. 66. The Authority applied the notification's coverage to the applicant's declared educational services and held them exempt. [Paras 5]

Answered in the affirmative.

Composite supply governed by principal supply test - Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - Supply of goods (books, stationery, drawing material, sports goods, food items, milk, beverages) to students without separate consideration but whose cost is included in the fee is covered by the Nil rate exemption as part of a composite supply where the principal supply is the exempt educational service. - HELD THAT: - The applicant stated that certain goods will be supplied with their cost included in the education fee. The Authority treated such supplies as part of a composite supply in which the principal supply is the educational service. Applying the principal-supply test, where the principal supply is an exempt service under SI No. 66, the ancillary goods supplied without separate consideration qualify for Nil rate treatment as part of that composite supply. [Paras 5]

Answered in the affirmative.

Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - composite supply governed by principal supply test - Sale of the same goods to students for separate consideration (standalone sale) does not attract Nil rate exemption under SI No. 66. - HELD THAT: - The Authority noted that where goods are sold for separate consideration they are not part of a composite supply whose principal element is the exempt educational service. As Serial No. 66 applies only to supply of services by an educational institution (and ancillary goods only when part of a composite supply), standalone taxable sale of goods to students is not covered by the Nil rate entry. [Paras 5]

Answered in the negative.

Supply without consideration not taxable under Section 7(1)(a) of CGST Act - Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - Transportation services supplied to pre-school students without separate consideration (cost covered in fee) are not taxable and are treated under the exemption framework applicable to the institution's services. - HELD THAT: - The Authority observed that supplies without consideration fall outside taxable supplies as per the concept in the statute and, where transportation is provided as part of the educational service (cost embedded in fee), it is covered by the notification's exemption for services by an educational institution to its students. Consequently, transportation supplied without separate consideration qualifies for Nil rate treatment in the circumstances declared by the applicant. [Paras 5]

Answered in the affirmative.

Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - services to students by way of transportation - Transportation services to pre-school students for consideration are exempt at Nil rate under SI No. 66 when provided to the institution's students. - HELD THAT: - The notification explicitly covers transportation of students by or to an educational institution under entry (b)(i). The Authority held that transportation services supplied to the applicant's students for consideration fall within the scope of the Nil rate exemption, on the facts presented. [Paras 5]

Answered in the affirmative.

Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - services by an educational institution to its faculty and staff - Transportation services supplied to faculty and staff for consideration are covered by the Nil rate exemption under SI No. 66. - HELD THAT: - Entry (a) of SI No. 66 exempts services provided by an educational institution to its faculty and staff. The Authority applied this provision to hold that transportation provided to faculty and staff for consideration, as declared by the applicant, attracts Nil rate treatment under the notification. [Paras 5]

Answered in the affirmative.

Nil rate exemption under Notification No. 12/2017-CT (Rate) - entry at SI No. 66 - services by an educational institution to its faculty and staff - catering services - Canteen (catering) services supplied to faculty and staff for consideration are exempt at Nil rate under SI No. 66. - HELD THAT: - The notification includes catering services to an educational institution in entry (b)(ii) and expressly exempts services provided by an educational institution to its faculty and staff under entry (a). The Authority therefore concluded that canteen/catering services supplied to faculty and staff for consideration are covered by the Nil rate exemption on the facts before it. [Paras 5]

Answered in the affirmative.

Final Conclusion: The Authority ruled that Nashik Cambridge Pre-School qualifies as an "Education Institution" and that its pre-school education services to students, transportation services to students and to faculty/staff, canteen services to faculty/staff, and goods supplied to students without separate consideration (where cost is embedded in fees as part of a composite supply whose principal element is the exempt educational service) attract Nil rate under SI No. 66 of Notification No. 12/2017-CT (Rate); standalone sale of goods to students for separate consideration does not attract the Nil rate.

Admissibility of advance ruling application - Definition of "supplier" for GST purposes - Issuance of tax invoice as indicium of supply - Rejection of application under Section 98(2) of the CGST Act, 2017

Advance ruling - Supplier - Tax Invoice - Section 98(2) of the CGST Act, 2017 - Whether the application for advance ruling filed by M/s. Auriga Research Private Limited is admissible and maintainable before the Authority. - HELD THAT: - The Authority examined whether the applicant falls within the class of persons entitled to seek an advance ruling, namely a person registered or desirous of obtaining registration in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant. The Authority noted the contractual and invoicing arrangements and observed that BIAL issues tax invoices in respect of the revenue share and rent and therefore qualifies as the person supplying the service for which invoices are issued. Applying the statutory definition of 'supplier' and the tax invoice provisions, the Authority concluded that the applicant is not the supplier of the services covered by the tax invoices issued by BIAL. Because an advance ruling can be sought only in respect of supplies being undertaken or proposed to be undertaken by the applicant, the application filed by Auriga Research Private Limited was held to be outside the ambit of matters on which an advance ruling can be given and thus not maintainable. The Authority therefore rejected the application as inadmissible under the statutory provision invoked. [Paras 16, 17]

Application rejected as inadmissible and dismissed under Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority held that the applicant is not the supplier of the services in question and, accordingly, the advance ruling application is inadmissible and is rejected under Section 98(2) of the CGST Act, 2017.

Grant of bail in economic offences - offence under the CGST Act involving forged certificates and fraudulent GST refund claims - shared UDIN credentials and OTP as complicity in fraud - gravity of offence and nascent stage of investigation as bail considerations - risk of prejudice to public exchequer and necessity for firmness in economic crime cases

Grant of bail in economic offences - shared UDIN credentials and OTP as complicity in fraud - gravity of offence and nascent stage of investigation as bail considerations - Bail application of the accused Sunil Mehlawat dismissed. - HELD THAT: - The Court found on the material before it that the accused had given his UDIN login ID, password and had shared OTP with the co-accused, and that the co-accused thereafter generated UDINs used to prepare forged CA certificates for filing refund claims in respect of firms later found to be fictitious. The Court recorded that the accused was involved in conduct that caused a substantial loss to the public exchequer and held that offences alleged fall within the class of economic offences requiring a stricter approach to bail. The Court also noted that the investigation was at a nascent stage and applied the established considerations relevant to bail in economic crime cases - nature of accusation, gravity of offence, risk to public interest and the need to prevent prejudice to the investigation - as explained in the precedents cited. On these grounds the Court was not inclined to grant bail. [Paras 5, 6, 8]

Bail refused and the bail application dismissed.

Final Conclusion: The bail plea of Sunil Mehlawat is dismissed by the Court in view of the accused's alleged sharing of UDIN credentials and OTP facilitating forged certificates and substantial loss to the public exchequer, the nascent stage of investigation and the gravity of the economic offence.

Adjustment of tax refund against outstanding demand without prior intimation under Section 245 - Treatment of assessee as not in default on filing appeal under Section 220(6) - Recovery of demand only through Tax Recovery Officer under Sections 222 and 223 - Requirement of statutory notice and principles of natural justice - Excess adjustment beyond 20% contrary to departmental circulars

Treatment of assessee as not in default on filing appeal under Section 220(6) - Adjustment of tax refund against outstanding demand without prior intimation under Section 245 - Requirement of statutory notice and principles of natural justice - Validity of departmental adjustments of the assessee's refunds against the disputed demand for AY 2017-18 when an appeal had been filed and whether such adjustments complied with the statutory scheme and principles of natural justice - HELD THAT: - The Court found that the assessee had filed an appeal in the prescribed format on 26/12/2019 and therefore, by operation of the statutory principle in Section 220(6), was not to be treated as an assessee in default in respect of the amount in dispute while the appeal remained undecided. The respondents issued an intimation deemed under Section 245 only on 13/01/2020, and nonetheless effected two suo-motu adjustments of refunds determined for other years against the outstanding demand for AY 2017-18. The Court held that Section 245 mandates that, before setting off a refund, an intimation in writing of the proposed action must be given and opportunity afforded in accordance with principles of natural justice. The respondents' unilateral adjustment of the entire refundable amounts, bypassing the stay principle under Section 220(6) and the intimation/hearing requirement of Section 245, was held to be without authority, contrary to the statutory scheme and to established precedents that recovery pending disposal of an appeal where the delay is not due to the assessee is an act in terrorem. The Court concluded that recovery initiated in those circumstances was de hors the statutory provisions and constituted high-handed action by the Revenue. [Paras 6, 9, 10]

The impugned adjustments/recovery were unlawful and in violation of Sections 220(6) and 245 and the recovery provisions; the respondents acted without jurisdiction and contrary to principles of natural justice.

Excess adjustment beyond 20% contrary to departmental circulars - Requirement of statutory notice and principles of natural justice - Judicial discipline and remedies for illegal recovery - Relief to be granted for the unlawful adjustment: refund of amounts adjusted in excess of the permitted 20% of the disputed demand and imposition of costs/strictures - HELD THAT: - Relying on the factual finding that refunds were adjusted beyond what departmental circulars permit and without complying with the statutory safeguards, and having regard to the Apex Court's admonitions against oppressive recovery practices, the Court directed that the respondents must refund to the assessee, with interest as prescribed by law, the amounts adjusted in excess of 20% of the disputed demand for AY 2017-18 within thirty days. The Court further recorded that the respondents' conduct offended Article 265 and principles of judicial discipline, and therefore issued directions for departmental action against the officers concerned and imposed a cost to be paid to the Rajasthan State Legal Services Authority, Jaipur, quantifying it and specifying the mode of payment. [Paras 6, 7, 8, 11, 12]

Respondents directed to refund amounts adjusted in excess of 20% of the disputed demand for AY 2017-18 with interest within thirty days; departmental action and costs ordered.

Final Conclusion: Writ petition allowed: the Court held the departmental adjustments of refunds against the AY 2017-18 demand to be unlawful for non-compliance with Section 220(6) and Section 245 and principles of natural justice; respondents directed to refund amounts adjusted in excess of 20% of the disputed demand with interest within thirty days, strictures issued, departmental action recommended and costs imposed.

Validity of notice under Section 148 - Requirement of Section 148A procedure - Reassessment jurisdiction and statutory machinery - Maintainability of writ under Article 226 in tax matters - Exceptional grounds for interim writ relief in tax cases

Requirement of Section 148A procedure - Validity of notice under Section 148 - Whether the impugned notice and consequential proceedings were governed by the amended procedure under Section 148A and whether the petitioner established non-compliance with that procedure. - HELD THAT: - The Court found that the petitioner did not place on record any material to demonstrate that the impugned notice was governed by the amended procedure under Section 148A. In the absence of such proof, the contention that the notice was issued in violation of procedural requirements under Section 148A could not be sustained. The Court therefore did not uphold the challenge to the notice on the ground of non-compliance with the amended procedure.

Petitioner failed to prove that the impugned notice required compliance with Section 148A; challenge on that ground not accepted.

Reassessment jurisdiction and statutory machinery - Maintainability of writ under Article 226 in tax matters - Exceptional grounds for interim writ relief in tax cases - Whether the writ petition is maintainable under Article 226 to challenge the reassessment/order on merits instead of availing the statutory remedies of appeal and rectification. - HELD THAT: - Relying on the principle that the Income Tax Act provides a complete machinery for assessment and reassessment, the Court reiterated that an assessee cannot abandon the statutory remedy and seek relief under Article 226 to challenge assessment orders on merits. The Court observed that the present petition was essentially a merits challenge to the reassessment and did not fall within any exceptional category permitting interlocutory writ relief in tax matters. Consequently, the Court declined to entertain the writ petition and directed the petitioner to pursue its contentions in the appellate and rectification fora.

Writ petition not maintainable as a substitute for statutory remedies; dismissed as not raising exceptional grounds for interim relief.

Final Conclusion: Writ petition and applications dismissed; petitioner granted liberty to press all contentions and submissions before the appellate authority and in the pending rectification proceedings.

Power of compounding of offences - quasi-judicial power - discretion in compounding not unfettered - extension of limitation during COVID-19 - compounding of offences under Section 279 of the Act - Guidelines for Compounding of Offences dated 14th June, 2019

Power of compounding of offences - quasi-judicial power - discretion in compounding not unfettered - compounding of offences under Section 279 of the Act - Validity of rejection of the compounding application on limitation grounds and entitlement to extension of limitation - HELD THAT: - The Court held that the power to compound offences carries a judicial element and is therefore quasi-judicial; the discretion to compound is not unfettered. In view of the Supreme Court's directions in the suo motu proceedings extending limitation during the COVID-19 pandemic, the petitioner was entitled to the benefit of extension of limitation. The respondent's mechanical rejection of the compounding application as belated - relying on Clause 7(ii) of the Guidelines for Compounding of Offences dated 14th June, 2019 - could not stand without considering the impact of the extension of limitation. Consequently, the order dated 22nd April, 2022 rejecting the compounding application was set aside and the matter was directed to be reconsidered on merits.

The rejection on limitation grounds was set aside and the compounding application was remanded for fresh consideration on merits.

Extension of limitation during COVID-19 - Guidelines for Compounding of Offences dated 14th June, 2019 - Direction to reconsider the compounding application and requirement of a reasoned decision within a time-bound period - HELD THAT: - Having set aside the impugned order, the Court directed the CCIT (TDS), Delhi-2 to consider afresh the petitioner's application for compounding under Section 279 of the Act on merits, taking into account the extension of limitation granted by the Supreme Court during the pandemic. The authority was required to communicate a reasoned decision to the petitioner within eight weeks, ensuring exercise of discretion with judicial temper and not by mechanical application of the Guidelines.

CCIT (TDS), Delhi-2 to reconsider the compounding application on merits and issue a reasoned decision within eight weeks.

Final Conclusion: The order rejecting the compounding application as time-barred was set aside; the matter was remitted to the CCIT (TDS), Delhi-2 to reconsider the application on merits, applying the extension of limitation granted during the COVID-19 pandemic, and to pass a reasoned order within eight weeks.

Reopening of assessment under Section 148 - reasons to believe - income escaping assessment - change of opinion - requirement of a speaking order in GKN Drivershafts - alternative remedy of statutory appeal

Reopening of assessment under Section 148 - reasons to believe - income escaping assessment - change of opinion - requirement of a speaking order in GKN Drivershafts - Validity of reopening assessment for Assessment Year 2013 to 2014 by issuance of notice under Section 148 and the effect of alleged failure to issue a speaking order. - HELD THAT: - The Court found that the petitioner was furnished with the reasons for reopening (communication dated 15.11.2021), participated in proceedings under the Section 148 notice and filed detailed replies tracing the transaction history and explanations for the source and ownership of the land. The respondents relied on information suggesting a substantial sale consideration and concluded that there existed reasons to believe that income had escaped assessment. The Court observed that the petitioner did not seek a speaking order at the time of objections and, having participated in the proceedings without asking for a speaking order, could not later contend that the impugned order was invalid for want of a speaking order. On the allegation that the reopening amounted to a mere change of opinion, the Court held that the merits (i.e., whether income had in fact escaped assessment) are matters for appellate consideration and not for the writ forum at this stage. Consequently, there was no ground to interfere with the assessment order in the writ petition. [Paras 14, 15, 19, 20, 21]

Reopening of assessment was not interfered with; writ petition to challenge reopening dismissed on merits and procedure.

Alternative remedy of statutory appeal - Availability of alternative remedy and relief by way of statutory appeal against the impugned assessment order. - HELD THAT: - The Court noted that the petitioner has an alternative statutory remedy by filing an appeal under the income-tax appellate provisions. The Court granted liberty to the petitioner to prefer a statutory appeal before the Appellate Commissioner under Section 246A within three months from receipt of the order and directed that such appeal, if filed within the stipulated period, shall be entertained and disposed of on merits and in accordance with law. [Paras 10, 22]

Liberty granted to file statutory appeal within three months; appeal to be heard on merits.

Final Conclusion: Writ petition dismissed for lack of merit; impugned assessment order under Section 148 for Assessment Year 2013 to 2014 upheld in the writ proceedings, with liberty to the petitioner to file a statutory appeal before the Appellate Commissioner under Section 246A within three months for adjudication on merits.

Revision under Section 263 - Explanation 1(c) to Section 263 - limitation where assessment is subject matter of appeal - scope of show cause notice in revision proceedings - regularisation of manual orders and Document Identification Number (DIN) under CBDT Circular No.19/2019 - assessment subject to appellate proceedings - matters not considered and decided in appeal

Revision under Section 263 - Explanation 1(c) to Section 263 - limitation where assessment is subject matter of appeal - assessment subject to appellate proceedings - matters not considered and decided in appeal - The validity of initiation and exercise of jurisdiction under Section 263 where the assessment order is the subject matter of an appeal. - HELD THAT: - The Court examined Explanation 1(c) to Section 263 and construed it to mean that the Commissioner's powers extend only to those matters which have not been considered and decided in the pending appeal. The appellate challenge by the assessee was confined to taxability of the receipts as fees for technical services; the Commissioner's notice under Section 263 sought revision limited to examination of applicability of Section 115JB which, according to the Commissioner, had not been considered by the Assessing Officer. On that basis the Court held that there was no embargo to initiate revision under Section 263 insofar as it related to matters not considered and decided in the appeal. The Court did not enter into the merits of whether Section 115JB in fact applies, observing that the question of merits would fall to be determined in the revision/assessment process and by the appellate fora thereafter. [Paras 45, 46, 47, 50]

The Section 263 proceedings were not without jurisdiction because Explanation 1(c) allows revision in respect of matters not considered and decided in the pending appeal; the notice seeking examination of applicability of Section 115JB did not fall within the embargo.

Scope of show cause notice in revision proceedings - scope of revision cannot be constrained by narrower grounds if matters not considered in appeal - Whether the impugned revision order travelled beyond the scope of the show cause notice or was otherwise impermissible for introducing fresh reasons. - HELD THAT: - The petitioner contended that the Commissioner relied on a different or additional rationale (failure to make enquiry regarding estimation of profits) which was not contained in the show cause notice and therefore the order exceeded its scope. The Court noted the grievance but declined to invalidate the revision on that ground, observing that the ultimate question of merits was not being determined in the writ proceeding and that the initiation of revision could not be characterised as without jurisdiction merely because certain aspects of reasoning were expanded. The Court emphasised that it would refrain from adjudicating the merits of the factual and taxability disputes in exercise of writ jurisdiction and left quantification and merits for the reassessment and appellate process. [Paras 28, 29, 50, 51]

The impugned order was not quashed on the ground that it travelled beyond the show cause notice; the Court did not decide the substantive merits and allowed revision proceedings to continue.

Regularisation of manual orders and Document Identification Number (DIN) under CBDT Circular No.19/2019 - Whether issuance of the impugned order without a Document Identification Number (DIN) rendered the order invalid. - HELD THAT: - The petitioner relied on Circular No.19/2019 to contend that issuance of order without DIN renders it invalid. The Court examined the Circular and noted its proviso for regularisation: communications issued manually in specified exceptional situations can be regularised by uploading and generating DIN within 15 days. The Court found that an after the fact communication showing a DIN had been issued and that the defect of initial non generation of DIN was capable of being regularised in terms of the Circular. Consequently, the mere fact of initial absence of DIN did not render the Section 263 order without jurisdiction. [Paras 31, 32, 48, 49]

The order issued without DIN was not invalid on that ground because the Circular permits regularisation and the defect had been addressed in communication thereafter.

Final Conclusion: Writ petition dismissed. The High Court held that the Commissioner validly initiated revision under Section 263 in respect of matters not considered and decided in the pending appeal, that the impugned order was not invalid for having expanded on reasons in the course of revision or for initial absence of DIN (which could be regularised); the Court declined to adjudicate on the merits of the taxability or applicability of Section 115JB and left those questions to the revision/assessment process and appellate remedies, granting liberty to the petitioner to pursue appeal to the Appellate Tribunal within 30 days.

Reassessment under Section 147/148 - Proviso to Section 147 - failure to disclose fully and truly all material facts - Transfer Pricing reference to TPO under Section 92CA - Auditor's Certificate in Form No.3CEB - disclosure requirement - Unexplained investment treated as income under Section 69 - Prima facie case for reopening assessment - Scope of reassessment at initiation stage - Rajesh Jhaveri principle

Reassessment under Section 147/148 - Proviso to Section 147 - failure to disclose fully and truly all material facts - Prima facie case for reopening assessment - Scope of reassessment at initiation stage - Rajesh Jhaveri principle - Validity of reopening assessment for AY 2012-13 under the proviso to Section 147 read with Section 148 in light of alleged failure to disclose material facts. - HELD THAT: - The Court examined whether the twin conditions in the proviso to Section 147 were established - (i) reason to believe that income chargeable to tax has escaped assessment and (ii) such escapement is attributable to omission or failure by the assessee to disclose fully and truly all material facts. The material on record showed that the loan/advance to the Associated Enterprise (MMG) and related particulars were part of the assessee's return and were specifically placed before the Assessing Officer during scrutiny under Section 143(2). The AO had examined the advance and, relying on the value of the transaction, made disallowance of interest in the assessment order. The Court therefore concluded that the revenue failed to establish that there was an omission or failure to disclose material facts which is a necessary pre-condition under the proviso to Section 147. Applying the Rajesh Jhaveri principle, the Court nevertheless assessed the facts on a prima facie scale and found that the AO had sufficient knowledge of the transaction and had considered it; consequently there was no jurisdictional foundation to reopen the assessment under the proviso. The initiation notice was held to be without jurisdiction and liable to be quashed. [Paras 25, 26, 27, 29, 33]

Reopening of assessment under the proviso to Section 147/148 for AY 2012-13 quashed for lack of jurisdiction since the Revenue failed to establish omission or failure to disclose fully and truly material facts.

Transfer Pricing reference to TPO under Section 92CA - Auditor's Certificate in Form No.3CEB - disclosure requirement - Prima facie case for reopening assessment - Validity of the reference of the assessee's international transaction (loan to MMG) to the Transfer Pricing Officer under Section 92CA. - HELD THAT: - The Revenue justified reference to the TPO on the ground that the Auditor's Certificate in Form No.3CEB disclosed only the interest component and not the principal loan amount, and that therefore the AO did not form a prima facie belief to refer the transaction. The Court found it undisputed that the assessee furnished Form No.3CEB in the prescribed format with required details (nature of transaction, rate of interest, interest computed and method for ALP) and that the AO had examined the advance in scrutiny proceedings and recorded disallowance with reference to the transaction value. Given that the AO had knowledge of and had considered the loan/advance, the Court held that the Revenue did not establish that the assessee omitted or failed to disclose material facts which prevented a TPO reference. Consequently the reference to the TPO, being dependent on valid initiation of reassessment jurisdiction, could not stand. [Paras 8, 24, 25, 29, 33]

Order directing reference to the TPO under Section 92CA quashed as the reassessment jurisdiction to make such reference was not validly assumed.

Unexplained investment treated as income under Section 69 - Auditor's Certificate in Form No.3CEB - disclosure requirement - Sufficiency of the Revenue's case to treat the assessee's investment in MMG as unexplained investment under Section 69. - HELD THAT: - The Revenue relied on an apparent mismatch between the amount shown as the assessee's investment in MMG and figures in MMG's financials to invoke Section 69. The Court noted that for Section 69 to apply the Revenue must establish that the investment was not recorded in the assessee's books or that the source of investment was not reflected and that any explanation furnished was unsatisfactory. Here it was undisputed that the assessee's books recorded the investment, that the assessee had adequate resources, and that payment of premium to third-party shareholders need not be reflected in the company's financials. The Revenue did not dispute these aspects and merely reserved the matter for reassessment; the Court held that the threshold requirements for treating the investment as unexplained were not demonstrated. [Paras 30, 31, 32, 33]

Revenue failed to establish at the initiation stage that the investment in MMG was an unexplained investment liable to be deemed income under Section 69; the contention could not sustain reopening.

Final Conclusion: The writ petition is allowed; the notice dated 29.01.2018 initiating reassessment proceedings, and the orders dated 02.11.2018 rejecting objections and directing reference to the TPO, are quashed because the Revenue failed to establish omission or failure to disclose material facts and hence had no jurisdiction under the proviso to Section 147 to reopen assessment for AY 2012-13.

Condonation of delay - survey under Section 133A - assessment under Section 143(3) - reliance on statements recorded during survey - use of papers found and impounded during survey - appreciation and re appreciation of factual findings - no substantial question of law - scope of appellate review on questions of fact - inadmissibility of disclosure during survey as sole basis for assessment

Reliance on statements recorded during survey - inadmissibility of disclosure during survey as sole basis for assessment - use of papers found and impounded during survey - Deletion of addition made on account of alleged under-valuation of stock where assessment relied on statements recorded during survey - HELD THAT: - A survey was conducted under Section 133A and assessment completed under Section 143(3) raising an addition for alleged under-valuation of saree stock. The CIT(A) examined elaborate submissions, documents, affidavits and sale bills produced by the assessee and considered whether a statement recorded from the director during survey could form the sole basis for the assessment. The CIT(A) applied the principle that disclosures made during survey ought not to be the sole foundation for an assessment and that the Department should rely on papers found and impounded during survey. The tribunal re-examined and re-appreciated the factual findings and the materials on record, endorsed the conclusions reached by the CIT(A) and dismissed the revenue's appeal. The High Court held that the controversy was essentially factual and that the authorities below had applied the cited principle in examining evidence; accordingly no substantial question of law arose for consideration.

The deletion of the addition was upheld on facts; no substantial question of law arises from the factual re-appreciation and the revenue's appeal is dismissed.

Appreciation and re appreciation of factual findings - scope of appellate review on questions of fact - no substantial question of law - Whether the findings of the CIT(A) and the Tribunal gave rise to substantial questions of law warranting interference by the High Court - HELD THAT: - The High Court reviewed the sequence: assessment, first appeal to the CIT(A) who examined evidence and remand report, and further hearing before the Tribunal which re-appreciated the facts and affirmed the CIT(A)'s approach. The Court emphasised that the matter turned on factual appreciation - valuation, documentary evidence and reconciliation of stock - and that the lower authorities had considered the legal principle limiting reliance on survey disclosures. Because the determinations were factual and involved re-appreciation by both appellate fora, the High Court found no substantial question of law to entertain the revenue's appeal.

The appeal does not raise any substantial question of law and is dismissed; consequential interim application for stay is closed.

Final Conclusion: Delay in filing the appeal was condoned. On the merits the High Court held the dispute to be factual-the CIT(A) and the Tribunal re examined evidence and applied the principle that survey disclosures alone cannot sustain an assessment-therefore no substantial question of law arises; the revenue's appeal is dismissed and the stay application closed.

Assessment under section 153C - deemed date of search - block period - invalid assessment framed under section 143(3) - prospective amendment

Assessment under section 153C - deemed date of search - block period - invalid assessment framed under section 143(3) - Whether the assessment for Assessment Year 2015-16 was required to be framed under section 153C and whether the assessment framed under section 143(3) is valid. - HELD THAT: - The Tribunal held that for a person other than the searched person the provisions of section 153C apply and the date of search (for computing the six-year block) is to be treated as the date of handing over of seized documents by the assessing officer of the searched person to the assessing officer of the other person (the deemed date of search). The satisfaction note was recorded on 02.12.2016, which falls in the previous year relevant to AY 2017-18, and thus the six-year block comprises Assessment Years 2011-12 to 2016-17. Since AY 2015-16 falls within that block, the assessment for that year could only be lawfully framed under section 153C after compliance with that section. The impugned order, however, was framed under section 143(3) on 31.12.2016. Having regard to the statutory scheme and the contemporaneous satisfaction note, the Tribunal concluded that framing an assessment under section 143(3) for a year within the section 153C block was invalid. The Tribunal noted the Finance Act, 2017 amendments had only prospective effect from AY 2018-19 and did not cure the defect. As the assessment was quashed on this ground, the Tribunal did not adjudicate the merits of additions made. [Paras 8, 9, 11, 13]

Assessment for AY 2015-16 framed under section 143(3) was invalid because AY 2015-16 fell within the six-year block for which proceedings ought to have been initiated under section 153C; the assessment is quashed.

Final Conclusion: The assessment order for Assessment Year 2015-16 framed under section 143(3) is quashed as the year fell within the six-year block (2011-12 to 2016-17) covered by section 153C and therefore could only have been validly framed under section 153C; appeal allowed.

Revisional jurisdiction under section 263 of the Income tax Act - agricultural land excluded from the definition of capital asset - application of mind and verification in assessment proceedings

Revisional jurisdiction under section 263 of the Income tax Act - agricultural land excluded from the definition of capital asset - application of mind and verification in assessment proceedings - Validity of the Principal Commissioner of Income Tax's revision under section 263 that set aside the assessment framed under scrutiny/reassessment proceedings. - HELD THAT: - The Tribunal examined the assessment record, including chitta and adangal entries and revenue certificates placed before the Assessing Officer during the original assessment, which recorded cultivation of paddy in the relevant Fasli years up to 2004. The AO had considered those records, formed the view that the lands sold in 2005 were agricultural lands and accordingly did not treat them as capital assets attracting long term capital gains. The Principal Commissioner reopened the matter under his revisional jurisdiction on the ground that the AO had not made proper enquiry and that records did not contain certain harvest details. The Tribunal held that the AO had in fact applied his mind to the documents on record and taken a permissible view on the nature of the land. Revisional action under section 263 is not sustainable where the Assessing Officer has considered and accepted relevant official revenue records and formed a view reasonably open on the materials; a revision cannot be sustained merely because another view is possible or because the revisional authority would have preferred further enquiry. Applying these principles to the material on record, the Tribunal found no error or prejudice to Revenue in the assessment order and concluded that the PCIT's order setting aside the assessment was not justified. [Paras 7, 8]

Revision order passed by the Principal Commissioner under section 263 is reversed and the assessment order upheld.

Final Conclusion: The assessee's appeal is allowed: the Tribunal reverses the revisional order of the Principal Commissioner and upholds the assessment on the ground that the AO had legitimately accepted the land as agricultural on the basis of revenue records and had applied his mind.

Reopening of assessment - reason to believe - assumption of jurisdiction under Section 147/148 - first proviso to Section 147 - nondisclosure of material facts - statement of a third party obtained in survey proceedings as basis for reopening - bogus/accommodation entries - assessment void ab initio - onus on Revenue to afford opportunity of cross examination before using third party statement

Reopening of assessment - reason to believe - first proviso to Section 147 - nondisclosure of material facts - statement of a third party obtained in survey proceedings as basis for reopening - bogus/accommodation entries - assessment void ab initio - Validity of the notice under Section 148 and consequent reassessment for AY 2010-11 - HELD THAT: - The Tribunal found that the sole foundation for reopening the AY 2010-11 assessment was a general statement recorded in survey proceedings by one Shri Ram Prakash Bhatia alleging provision of accommodation entries through various concerns. That statement was generic, related principally to food grain billing operations and did not identify the assessee as a beneficiary; moreover the assessee is not engaged in the food grain business. The reasons recorded by the Assessing Officer therefore did not furnish the requisite "reason to believe" that income had escaped assessment in respect of the assessee, nor did they demonstrate any failure by the assessee to disclose material facts within the meaning of the first proviso to Section 147. The Assessing Officer acted on the information from the Investigation Wing without adequate application of mind to the material on record. For these reasons the assumption of jurisdiction under Section 147/148 was held to be without jurisdiction and void ab initio, and the reassessment order consequent thereto was quashed. The Tribunal accordingly did not examine merits of the additions as that exercise was rendered infructuous by the jurisdictional defect. [Paras 10, 12, 13, 14, 15]

Notice under Section 148 and reassessment for AY 2010-11 quashed; appeal allowed.

Reopening of assessment - reason to believe - assumption of jurisdiction under Section 147/148 - statement of a third party obtained in survey proceedings as basis for reopening - bogus/accommodation entries - assessment void ab initio - Validity of the notice under Section 148 and consequent reassessment for AY 2011-12 - HELD THAT: - The reasons recorded for AY 2011-12 were materially identical to those in AY 2010-11 and likewise rested on the generalized statement of the same third party and information from the Investigation Wing. In the absence of any changed circumstances or pinpointed material implicating the assessee, the Tribunal applied the same legal analysis and held that the Assessing Officer lacked the requisite "reason to believe" and did not satisfy the jurisdictional conditions of Section 147; consequently the reassessment was void. The appeal was allowed on the same grounds without adjudicating the merits of the additions. [Paras 17, 18]

Notice under Section 148 and reassessment for AY 2011-12 quashed; appeal allowed.

Reopening of assessment - reason to believe - assumption of jurisdiction under Section 147/148 - first proviso to Section 147 - limitation not in issue where notice issued within four years - statement of a third party obtained in survey proceedings as basis for reopening - assessment void ab initio - Validity of the notice under Section 148 and consequent reassessment for AY 2012-13 - HELD THAT: - Although the notice for AY 2012-13 was issued within four years (making the first proviso inapplicable), the Assessing Officer's reasons again derived from the generalized statement of the third party and information from the Investigation Wing and failed to demonstrate a specific "reason to believe" that the assessee's income had escaped assessment. The Tribunal found the prerequisites of Section 147 unmet for the same reasons as in the earlier years and concluded that the reassessment was without jurisdiction and therefore liable to be quashed. The Tribunal did not examine the merits of the additions as they were rendered moot by the jurisdictional finding. [Paras 21, 23, 24]

Notice under Section 148 and reassessment for AY 2012-13 quashed; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeals for AY 2010-11, 2011-12 and 2012-13, holding that notices issued under Section 148 and the consequent reassessment orders were without jurisdiction because the reasons recorded did not furnish the required "reason to believe" nor, where applicable, demonstrate nondisclosure of material facts; all reassessments were quashed and merits of additions were not adjudicated.

Penalty under section 271G for failure to furnish information - substantial compliance with transfer pricing documentation requirements - transfer pricing documentation and segmental profit allocation - transactional net margin method (TNMM) - reasonable cause for non-furnishing of segmental details - prohibition on levy of penalty where reasonable cause exists under section 273B

Penalty under section 271G for failure to furnish information - substantial compliance with transfer pricing documentation requirements - transfer pricing documentation and segmental profit allocation - reasonable cause for non-furnishing of segmental details - prohibition on levy of penalty where reasonable cause exists under section 273B - Whether the penalty levied under section 271G for non-furnishing of segmental profit & loss details was correctly deleted on the ground of substantial compliance and reasonable cause. - HELD THAT: - The Tribunal held that the assessee had furnished the necessary information called for by the TPO for determination of the arm's length price, but could not provide segment-wise profit and loss accounts for AE and non-AE transactions because separate books of account for those segments were not maintained. The CIT(A) found, and the Tribunal agreed, that this amounted to substantial compliance with the TPO's requirements. The Tribunal further relied on a co-ordinate bench decision which, having been approved by the High Court, recognised the practical difficulties in the diamond industry in furnishing segmental AE and non-AE details and treated such inability as a reasonable cause preventing imposition of penalty. Applying that precedent, and noting that the TPO accepted the information furnished for determining ALP, the Tribunal found no justification to sustain the penalty. Consequently the CIT(A)'s deletion of the penalty under section 271G was affirmed. [Paras 7, 8, 9]

The deletion of the penalty under section 271G was upheld on the grounds of substantial compliance and reasonable cause; Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and confirmed the CIT(A)'s order deleting the penalty under section 271G for Assessment Year 2012-13, finding substantial compliance with transfer pricing documentation requirements and reasonable cause for non-furnishing of segmental details in the diamond trade.

Penalty under section 271(1)(c) for concealment of income - Explanation to section 271(1)(c) and presumption of concealment - agreed addition / surrender of alleged bogus credits and its evidentiary effect - addition by way of estimate and applicability of penalty - disallowance of late payment of EPF/ESIC as a legal disallowance - deemed dividend treated as taxable income under relevant provisions

Penalty under section 271(1)(c) for concealment of income - Explanation to section 271(1)(c) and presumption of concealment - agreed addition / surrender of alleged bogus credits and its evidentiary effect - Validity of levy of penalty under section 271(1)(c) in respect of additions accepted/ surrendered by the assessee during assessment proceedings - HELD THAT: - The Tribunal considered the findings of the Commissioner (Appeals) that the assessee had not furnished cogent, reliable evidence to rebut the presumption of concealment raised by the Explanation to section 271(1)(c). The lower authorities recorded that on enquiry the assessee surrendered certain creditor balances and agreed to additions (including alleged bogus credits and a large conditional surrender of creditors), which the Commissioner found amounted to admission of falsity rather than an inability to produce confirmations. Reliance was placed on precedent that where an assessee admits amounts as income or surrenders suspected items on enquiry, such conduct can support a finding of conscious concealment and attract penalty; mere subsequent admission does not absolve liability. The Tribunal noted that the assessee failed before it to place any new material to contradict those findings. In that factual matrix, the Tribunal found no reason to overturn the conclusion that the presumption of concealment remained unrebutted and that imposition of penalty by the Assessing Officer, as upheld by the Commissioner, was justified. [Paras 5, 7, 8]

Penalty under section 271(1)(c) upheld; appeal dismissed for assessment year 2009-10.

Addition by way of estimate and applicability of penalty - disallowance of late payment of EPF/ESIC as a legal disallowance - Whether the adjudicated estimated disallowance and the disallowance for late payment of EPF/ESIC attract penalty under section 271(1)(c) - HELD THAT: - The Commissioner (Appeals) distinguished items: the adhoc estimated disallowance of selling expenses was characterised as a purely estimated disallowance for lack of petty vouchers and was held not to attract penalty; similarly the disallowance arising from late payment of EPF/ESIC was treated as a legal disallowance emerging from facts disclosed by the assessee and therefore not attracting concealment penalty. The Tribunal recorded these findings of the Commissioner and observed that while these particular additions were not considered to evidence concealment, other additions and the assessee's conduct (surrenders/agreement to additions) supported imposition of penalty overall. The assessee did not advance material before the Tribunal to counter these conclusions. [Paras 5, 7]

Estimated selling expense and late EPF/ESIC disallowance do not attract penalty; nevertheless, penalty sustained on other grounds.

Final Conclusion: The Tribunal, having found no cogent material placed by the assessee to rebut the findings of the lower authorities, upheld the penalty imposed under section 271(1)(c) for AY 2009-10 while recognising that the adhoc estimated disallowance and the late EPF/ESIC disallowance were not, by themselves, grounds for penalty; the assessee's appeal is dismissed.

Deduction under section 80IC - eligibility as manufacturing unit - classification of articles under state schedule (13th vs 14th Schedule) - precedential effect of earlier Tribunal order in assessee's own case

Deduction under section 80IC - eligibility as manufacturing unit - classification of articles under state schedule (13th vs 14th Schedule) - Allowability of deduction claimed under section 80IC for assessment year 2013-14 - HELD THAT: - The Assessing Officer disallowed the deduction on two principal grounds: (i) the articles produced were said to fall under the 13th Schedule (plastic articles) and therefore not covered by the 14th Schedule, and (ii) the activity was characterised as mere assembling rather than manufacturing. The Commissioner (Appeals) accepted the assessee's claim, relying on material showing commencement of operations before the sunset date, possession of premises (rent agreements), corroborative sales tax and excise records, details and bills of machinery used for manufacture, and minimal related-party purchases. The Commissioner also followed the Tribunal's earlier decision in the assessee's own case for AY 2012-13 (order dated 22.11.2018) which held that the assessee had set up a manufacturing unit and satisfied conditions for exemption. Applying that precedent to the identical facts of AY 2013-14, the Tribunal found no perversity or illegality in the Commissioner's conclusions and declined to interfere. [Paras 5, 6]

Deduction under section 80IC for AY 2013-14 allowed; order of Commissioner (Appeals) upheld and Revenue's appeal dismissed.

Final Conclusion: The Tribunal, following its earlier bench decision in the assessee's own case for AY 2012-13 and on the facts and records before it, upheld the CIT(A)'s allowance of deduction under section 80IC for AY 2013-14 and dismissed the Revenue's appeal.

Deemed dividend under section 2(22)(e) - disallowance under section 14A read with Rule 8D(2)(iii) - precedent in assessee's own case - consistency in adjudication

Deemed dividend under section 2(22)(e) - precedent in assessee's own case - consistency in adjudication - Whether the loan/credit from Rajshree Automotive Pvt. Ltd. to the assessee is taxable as deemed dividend under section 2(22)(e) in assessment year 2014-15. - HELD THAT: - The Tribunal found the facts and commercial relationship between the assessee and the related concern in AY 2014-15 to be materially identical to those considered in the Tribunal's decision in the assessee's immediately preceding year (AY 2013-14) and to authorities relied upon (including the Madras High Court decision cited). On the material that the transactions were in the course of closely related business dealings, current accounts reflected business inter-dependence and closed to nil balance at year-end, the Tribunal accepted the earlier finding that no beneficial accrual to the shareholder occurred and that credits arose from business transactions rather than loans or deposits. Applying the settled view in the assessee's own preceding-year decision and for reasons of consistency in adjudication, the Tribunal confirmed the CIT(A)'s deletion of the addition made by the AO under section 2(22)(e). [Paras 6]

Order of CIT(A) deleting the addition under section 2(22)(e) is confirmed and the Revenue's ground on this point is dismissed.

Disallowance under section 14A read with Rule 8D(2)(iii) - precedent in assessee's own case - Whether the disallowance computed under Rule 8D(2)(iii) in respect of expenses relatable to exempt income for AY 2014-15 should be sustained. - HELD THAT: - The AO made a disallowance under Rule 8D(2)(iii) based on the average value of investments. The CIT(A) deleted the disallowance relying on the Tribunal's order for AY 2013-14. On examination, the Tribunal noted that in the immediately preceding year the Tribunal had deleted certain components but had sustained the disallowance under Rule 8D(2)(iii) in respect of the same investment. The assessee conceded that the earlier finding on that component could be applied. In view of the binding effect of the Tribunal's prior conclusion on the same factual matrix, the Tribunal reversed the CIT(A)'s deletion to the extent covered by Rule 8D(2)(iii). [Paras 8]

The CIT(A)'s deletion of the disallowance under section 14A read with Rule 8D(2)(iii) is reversed to the extent covered by the Tribunal's earlier finding; the Revenue's ground on this point is allowed.

Final Conclusion: The Revenue's appeal is partly allowed: the deletion of the addition as deemed dividend under section 2(22)(e) is confirmed in favour of the assessee, while the CIT(A)'s deletion of the disallowance under section 14A read with Rule 8D(2)(iii) is reversed in accordance with the Tribunal's earlier decision on the same factual matrix.

Computation of book profit under Section 115JB - notional loss on reduction of share capital of a wholly owned subsidiary - add-back under Explanation (1)(d) to Section 115JB - transactions of capital nature recorded on pooling of interest - treatment of capital reduction vis-a -vis income/loss for tax purposes

Computation of book profit under Section 115JB - notional loss on reduction of share capital of a wholly owned subsidiary - add-back under Explanation (1)(d) to Section 115JB - Whether the write-off of investment consequent to reduction of paid-up share capital of the wholly owned subsidiary is to be excluded from book profit or is required to be added back in computing book profit under Section 115JB. - HELD THAT: - The Tribunal held that the reduction of capital by the wholly owned subsidiary which cancelled shares to wipe off accumulated losses was a capital, book-entry transaction effected after amalgamation accounted for under pooling of interests. The assessee's percentage holding in the subsidiary remained unchanged and no consideration moved from the subsidiary's coffers; therefore the diminution claimed in the assessee's books is a notional loss. Reliance on precedent treating reduction of paid-up capital as at best a notional loss was applied. The Tribunal further applied the principle that items which do not amount to income (or which are not within the charging provisions) cannot be treated as includible/excludible in a manner contrary to the scheme of Section 115JB; by parity, losses that are not genuine/realised losses of the assessee and which are not taken through profit and loss in a manner that alters taxable income cannot be allowed to reduce book profit. Consequently, the notional loss arising from capital reduction of a wholly owned subsidiary falls within the scope of Explanation (1)(d) to Section 115JB and must be added back when computing book profit under that provision. The Tribunal distinguished decisions where there was actual sale or realised profit/adjustment directly affecting balance sheet items without being routed through profit and loss account, observing those facts were not present here. On these bases the addition made by the AO was sustained and the CIT(A)'s order upholding the add-back was affirmed. [Paras 4, 5, 6, 7, 8]

The write-off on account of reduction of capital of the wholly owned subsidiary is a notional loss and is required to be added back in computing book profit under Section 115JB.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Commissioner (Appeals) and Assessing Officer in directing add-back of the write-off of investment arising from reduction of share capital of the wholly owned subsidiary for computation of book profit under Section 115JB for AY 2010-11.

Quashing of criminal complaint - Summoning order and prima facie satisfaction - Limitation under Section 468 Cr.P.C. (time-bar) - Validity of sanction for prosecution - Applicability of Section 135(1)(a) - market price threshold of Rs.1 Crore - Liability under Section 132 - false declaration requirement - Dispensing with recording of preliminary evidence of a public servant

Applicability of Section 135(1)(a) - market price threshold of Rs.1 Crore - Prosecution under Section 135(1)(a) could not be initiated as market value of goods was less than Rs.1 Crore. - HELD THAT: - The Court observed that Section 135(1)(a) prescribes enhanced punishment where the market price of the goods exceeds Rs.1 Crore. The Commissioner of Customs (Preventive) had earlier taken the collective value of the goods as Rs.77,16,288/-, and that order attained finality as no appeal was preferred. On that admitted valuation, the statutory threshold for initiating prosecution under Section 135(1)(a) was not met and therefore prosecution under that clause could not properly be sustained. [Paras 19]

Prosecution under Section 135(1)(a) not maintainable as valuation is below Rs.1 Crore.

Liability under Section 132 - false declaration requirement - No material showed that the petitioners made, signed or used any false declaration or document as required for prosecution under Section 132. - HELD THAT: - Section 132 requires that a person makes, signs or uses a declaration or document knowing or having reason to believe it false. The Court found no evidence on record to indicate that the petitioners had made any false declaration or prepared false documents. Absent such material, liability under Section 132 could not be established at the summons stage. [Paras 21]

Petitioners not liable to be prosecuted under Section 132 on the material before the Court.

Limitation under Section 468 Cr.P.C. (time-bar) - The complaint was time-barred insofar as prosecution under Section 132 was concerned. - HELD THAT: - The Court noted that, with respect to offences triable under Section 132 as they stood at the relevant time, the punishable term attracted the limitation period prescribed by Section 468 Cr.P.C. (one year). The incident dated in 2009 whereas the complaint was filed in 2013, rendering the complaint barred by limitation in respect of offences attracting that limitation. The Court therefore held that the complaint was time-barred on that ground. [Paras 21]

Complaint barred by limitation for offences under Section 132.

Validity of sanction for prosecution - The sanction granted by the Additional Director was held to be invalid and void-ab-initio for non-application of mind. - HELD THAT: - The petition challenged the prosecution sanction on the ground that it was mechanical and did not reflect application of mind or awareness of material facts (including the prior Commissioner's valuation order). The Court found that the sanction suffered from grave lacunae of being mechanical and without proper consideration of relevant facts, rendering the sanction invalid and consequently vitiating the prosecution founded thereon. [Paras 22]

Sanction for prosecution invalid and void-ab-initio for non-application of mind.

Summoning order and prima facie satisfaction - Dispensing with recording of preliminary evidence of a public servant - The summoning order was unlawful because the Trial Court issued summons without requisite material or reasons and after dispensing with requisite preliminary evidence. - HELD THAT: - The Court examined the procedure followed at the presummoning stage and found that the complainant, a public servant, was allowed to be represented and the recording of preliminary evidence was dispensed with. The department had not even examined panch/seizure witnesses to establish its case. The learned CMM issued summons without sufficient material to reach a prima facie satisfaction and without assigning adequate reasons in the summoning order. For these procedural infirmities, the summoning order was held to be bad in law. [Paras 16, 22]

Summoning order quashed for lack of material, reasons and improper dispensing with preliminary evidence.

Final Conclusion: The impugned summoning order dated 5th March 2014 and the revisional order dated 29th July 2016 are set aside; CC No.75/1/2013 under Sections 132 and 135(1)(a) of the Customs Act and all proceedings emanating therefrom are quashed.

Summons under Section 108 of the Customs Act, 1962 - issuance of summons to Managing Director - authority to summon an authorised representative - administrative circular of the Central Board of Excise and Customs dated 13.10.1989 - last-resort principle for summoning top management

Summons under Section 108 of the Customs Act, 1962 - issuance of summons to Managing Director - administrative circular of the Central Board of Excise and Customs dated 13.10.1989 - authority to summon an authorised representative - Validity of issuing a summons directly to the Managing Director of the petitioner company without first issuing it to an authorised representative and in the absence of material justifying personal summons to top management. - HELD THAT: - The Court observed that the CBEC circular dated 13.10.1989 directs departmental authorities not to summon Managing Directors or other directors except as a last resort where the assessee is uncooperative or where expedient completion of investigations requires the presence of top management. The record contains no material showing a reasoned departmental view that the petitioner company was not cooperating or that the Managing Director's personal presence was specifically required. In these circumstances the departmental practice embodied in the circular must be followed and summonses should ordinarily be issued to an authorised representative nominated by the board of directors rather than directly to the Managing Director. The Court therefore directed that the impugned summon dated 27.04.2022 not be acted upon and that any fresh or modified summons under Section 108 be issued to a competent authorised person after the Board of Directors of the petitioner authorises such person, consistent with the circular. [Paras 5, 6, 7]

Summons issued directly to the Managing Director set aside; authorities directed to issue summons to an authorised representative in accordance with the CBEC circular dated 13.10.1989 and to modify the summon dated 27.04.2022 accordingly.

Final Conclusion: Writ petition disposed of by directing departmental authorities not to summon the Managing Director directly in the absence of justification and to issue summons to an authorised representative nominated by the company's board, with the existing summon of 27.04.2022 to be replaced by a modified summon in that manner.

Scheme of Amalgamation - sanction under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - appointed date - vesting of assets and liabilities - dissolution of transferor companies - dispensing with meetings of shareholders and creditors - regulatory compliance and approvals including Reserve Bank of India no-objection - payment of stamp duty on transfer of immovable property - continuation of pending proceedings and recovery of statutory demands against transferee

Scheme of Amalgamation - sanction under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - appointed date - Sanction of the Scheme of Amalgamation and its operative date. - HELD THAT: - The Tribunal considered the petition under the Companies Act, the statutory compliances, notices, affidavits of consent in lieu of meetings, statutory auditor certificates, the reports filed by the Official Liquidator and the Regional Director and the responses of the petitioners. The Tribunal found that statutory formalities requisite for sanction had been complied with, that requisite notices and advertisements were made and that the Official Liquidator reported no complaints and no prejudicial conduct. The Tribunal took note of the dispensation of meetings where consents by shareholders and creditors were on record. Regulatory observations by the RD were addressed by the petitioners, including production of the Reserve Bank of India no-objection and undertakings regarding adjustment of fees and payment of stamp duty. The Tribunal therefore sanctioned the Scheme to be binding with effect from the appointed date of 1st April, 2021.

The Scheme of Amalgamation is sanctioned and shall be effective from 1st April, 2021.

Vesting of assets and liabilities - dissolution of transferor companies - continuation of pending proceedings and recovery of statutory demands against transferee - Consequences of sanction: vesting of assets and liabilities, continuation of proceedings and dissolution of transferor companies. - HELD THAT: - Upon sanction, all properties, rights and interests of the two transferor companies were ordered to vest in the transferee company without further act or deed, subject to existing charges. Likewise, all liabilities and duties of the transferor companies were declared to stand transferred to and become liabilities of the transferee company. The Tribunal directed that pending suits, appeals or proceedings by or against the transferor companies shall be continued by or against the transferee company. The Tribunal noted the Income Tax Department's communication of outstanding demands against the transferee company and observed that such demands pertain to the transferee company which will continue to exist post-sanction and against which recovery may proceed; sanction did not extinguish statutory demands against the transferee.

Assets, rights and liabilities of the transferor companies vest in the transferee company; pending proceedings continue against or by the transferee; transferor companies stand dissolved from the appointed date.

Dispensing with meetings of shareholders and creditors - statutory auditor certificates confirming accounting treatment - Validity of dispensing with convening of meetings of shareholders and creditors and conformity of accounting treatment. - HELD THAT: - The Tribunal recorded that meetings were dispensed with where all equity shareholders or requisite creditors had given consent by affidavit and where auditors' certificates and auditors' verification of creditor lists supported the position. The statutory auditors of the companies furnished certificates confirming that the accounting treatment in the Scheme conforms with the accounting standards under the Companies Act. On the basis of these filings and recorded consents, the Tribunal accepted the dispensation of meetings and the accounting conformity certificates.

Dispensation of meetings is upheld and auditors' certificates on accounting treatment are accepted.

Regulatory compliance and approvals including Reserve Bank of India no-objection - payment of stamp duty on transfer of immovable property - undertakings regarding post-amalgamation filings - Satisfaction of regulatory concerns and imposition of undertakings by the transferee. - HELD THAT: - The RD's observations were met by the petitioners: a Reserve Bank of India letter conveying no objection to the Scheme was produced; the transferee gave an undertaking to comply with adjustment of fees and to file a detailed statement with the Registrar at the time of INC-28; and the transferee undertook to pay applicable stamp duty on transfer of immovable properties. The Tribunal accepted these submissions and recorded the undertakings as conditions to sanction. The Tribunal also directed filing of the schedule of assets within 60 days and delivery of certified copies of the order for registration with the Registrar of Companies within 30 days of receipt of certified copy.

Regulatory concerns are satisfied by the produced RBI no-objection and the recorded undertakings; directions issued for payment of stamp duty, filing of schedule of assets and post-order filings.

Final Conclusion: The Tribunal allowed the petition, sanctioned the Scheme of Amalgamation to operate from 1st April, 2021, ordered vesting of assets and liabilities in the transferee company subject to existing charges, directed continuity of pending proceedings in the name of the transferee, recorded dissolution of the transferor companies from the appointed date, accepted regulatory undertakings (including RBI no-objection and payment of stamp duty), upheld dispensation of meetings where consents were on record, and made ancillary directions for filing the schedule of assets and registration formalities.

Liability of successful auction purchaser for pre CIRP and CIRP electricity dues - treatment of operational creditors' claims in liquidation under Section 53 of the IBC - conflict between contractual/regulatory conditions of sale and the statutory priority in the IBC - effect of sale as a going concern in liquidation - non application of precedent from SARFAESI auction to IBC liquidation sale

Liability of successful auction purchaser for pre CIRP and CIRP electricity dues - treatment of operational creditors' claims in liquidation under Section 53 of the IBC - Whether the Successful Auction Purchaser is liable to pay the Corporate Debtor's pre CIRP and CIRP electricity dues directly to the electricity supplier outside the IBC distribution mechanism. - HELD THAT: - The Tribunal held that claims for pre CIRP electricity dues and electricity consumed during CIRP fall to be dealt with under the insolvency code and distribution under Section 53. The electricity supplier had lodged its claim with the Liquidator and is entitled to payment in accordance with the Code; it cannot bypass the statutory scheme and recover those dues directly from the Successful Auction Purchaser. Treating pre CIRP and CIRP electricity dues as recoverable directly from the purchaser would be contrary to the IBC's scheme for verification and distribution of claims in liquidation. The Tribunal rejected the Appellant's contention that it could realize such dues from the purchaser and upheld the Adjudicating Authority's direction subject to the Appellant's right to pursue its claim before the Adjudicating Authority under Section 53. [Paras 13, 14, 21, 22]

Successful Auction Purchaser is not liable to pay the Corporate Debtor's pre CIRP and CIRP electricity dues outside the IBC process; the electricity supplier must pursue its claim under Section 53 in the liquidation.

Conflict between contractual/regulatory conditions of sale and the statutory priority in the IBC - non application of precedent from SARFAESI auction to IBC liquidation sale - effect of sale as a going concern in liquidation - Whether Regulation 8.4 (or similar terms in sale/connection conditions) can impose liability on the purchaser of a going concern in liquidation to pay the Corporate Debtor's outstanding electricity dues, notwithstanding the IBC. - HELD THAT: - The Tribunal observed that Regulation 8.4 and comparable contractual clauses cannot override the IBC's provisions. IBC, having overriding effect under Section 238, governs priority and payment of claims in liquidation. The Supreme Court decision relied upon by the Appellant arose in the context of a SARFAESI auction with explicit contractual terms making the purchaser liable; that reasoning does not apply to a liquidation sale under the IBC. A regulatory provision or sale term attempting to fasten the Corporate Debtor's pre and post CIRP liabilities on the purchaser would conflict with the Code and is inapplicable in liquidation proceedings where claims are to be paid as per Section 53. The Tribunal therefore held that the Adjudicating Authority did not err in refusing to treat Regulation 8.4 as permitting direct recovery from the purchaser. [Paras 15, 17, 18]

Regulation 8.4 or similar sale conditions cannot displace the IBC's scheme; the purchaser of a going concern in liquidation is not to be burdened with the Corporate Debtor's past electricity dues contrary to Section 53.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order restoring supply and directing refund/retention as per its directions is upheld. The electricity supplier must claim its pre CIRP and CIRP dues through the liquidation process in accordance with Section 53 of the IBC and is granted liberty to file appropriate applications before the Adjudicating Authority if not already filed.

Existence of pre-notice dispute - undisputed amount threshold for admission under Section 9 of Insolvency & Bankruptcy Code, 2016 - acknowledgement of liability by email - admission of application under Section 9 of IBC, 2016 - appointment of Interim Resolution Professional - moratorium under Section 14 of IBC, 2016

Existence of pre-notice dispute - undisputed amount threshold for admission under Section 9 of Insolvency & Bankruptcy Code, 2016 - acknowledgement of liability by email - Whether there was a pre-existing dispute and whether an undisputed liability exceeding the statutory threshold existed so as to admit the Section 9 application. - HELD THAT: - The Tribunal examined the communications between the parties to determine if a dispute existed prior to the notice and, if so, whether any undisputed amount exceeded the threshold for admission. While there were a number of exchanges showing differences between the parties, two emails were found to contain clear acknowledgements of liability by the corporate debtor: an email acknowledging GBP 23,544.13 and an email of 18.09.2017 agreeing GBP 10,000 as full and final settlement (the use of the words "without prejudice" did not negate the acknowledgement). The subsequent and earlier emails which raised general claims or alleged breaches did not, in the view of the Tribunal, negate these specific acknowledgements. Having regard to NCLAT precedent that an application may be admitted if the undisputed portion exceeds the threshold, the Tribunal held that definite liability was acknowledged at two stages and that the undisputed liability exceeded the statutory limit, removing the bar posed by the existence of other disputes. [Paras 22, 23, 24, 25, 26]

Application under Section 9 admitted as the corporate debtor had acknowledged undisputed liability exceeding the threshold despite other asserted disputes.

Admission of application under Section 9 of IBC, 2016 - appointment of Interim Resolution Professional - moratorium under Section 14 of IBC, 2016 - Reliefs and directions consequent to admission of the Section 9 application. - HELD THAT: - On admitting the application, the Tribunal exercised its powers to appoint an Interim Resolution Professional from the IBBI list to take charge of the corporate debtor's management and to cause the public announcement and invite claims as mandated by the Code. The Tribunal declared the moratorium with the statutory prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property, and directed that supply of essential goods or services shall not be terminated. Directions were also given for cooperation with the IRP and for the operational creditor to deposit a specified amount to enable IRP compliance with statutory duties; registry and Registrar of Companies were directed to take administrative steps for public information. [Paras 27, 28, 29, 30, 31]

IRP appointed; moratorium declared; incidental directions issued for compliance and public notice.

Final Conclusion: The Section 9 application was admitted because the corporate debtor had, by specific emails, acknowledged undisputed liability exceeding the statutory threshold; the Tribunal appointed an Interim Resolution Professional, declared the moratorium and issued consequential directions for conduct of the CIRP.

Applicability of amended procedural regulation to pending liquidation process - time for deposit of balance sale consideration under Schedule I, Clause 12 - legal effect of regulatory circular vis-a -vis statutory amendment - priority of subordinate legislation over administrative circulars - mode of sale under Regulation 33 of IBBI (Liquidation Process) Regulations

Time for deposit of balance sale consideration under Schedule I, Clause 12 - applicability of amended procedural regulation to pending liquidation process - mode of sale under Regulation 33 of IBBI (Liquidation Process) Regulations - Whether the amended Schedule I, Clause 12 (introducing 90 days for deposit of balance sale consideration) applied to the e auctions held on 26th February, 2021 although the liquidation order was passed on 30th July, 2018. - HELD THAT: - Schedule I, Clause 12 governs the time within which the highest bidder must pay the balance consideration and is triggered "on the close of the auction." The auctions in question were held after the amendment of Clause 12 (amendment notified on 25th July, 2019 and e auction notice issued on 23rd January, 2021; auction closed on 26th February, 2021). Clause 12 relates to the procedural step that follows an auction and does not derive its applicability from the date of the liquidation order under Regulation 33. The amended Clause 12 came into force on its notification date and is prospective in respect of auctions held before the amendment; however, where an auction occurs after the amendment, the amended timeline (90 days) applies irrespective of when the liquidation order was passed. The Letter of Intent issued to the successful bidders incorporated the 90 day period; both appellants complied by depositing the balance within 90 days. Applying the amended Clause 12 to auctions held after 25th July, 2019 accords with the statutory scheme and the purposive intent of the amendment. [Paras 12, 14, 15, 16, 19]

Amended Schedule I, Clause 12 (90 days) applied to the e auctions held on 26th February, 2021 and the successful bidders who paid within 90 days were entitled to have the sales confirmed.

Legal effect of regulatory circular vis-a -vis statutory amendment - priority of subordinate legislation over administrative circulars - Whether the IBBI Circular dated 26th August, 2019, which stated that the Amendment Regulations of 25th July, 2019 were not applicable to liquidation processes commenced before that date, could override or displace the amended Schedule I, Clause 12 in respect of auctions held after the amendment. - HELD THAT: - The Circular (26.08.2019) asserted limited application of the 2019 Amendment Regulations to liquidation processes commencing on or after 25th July, 2019. The Circular did not refer to Schedule I, Clause 12 and its operative text begins "on the close of the auction," hence the Clause's applicability is tied to the timing of an auction rather than the date of the liquidation order. Further, a circular issued under the Board's powers cannot override or curtail a clear statutory regulation; guidelines or circulars inconsistent with statutory provisions are not legally enforceable. The subsequent withdrawal of the Circular by the Board (06.05.2022) and the 2022 Amendment Regulations clarified the limited prospective operation of certain regulations but did not alter the effect of the amendment to Clause 12. Accordingly, the Circular could not be read as whittling down or displacing the statutory amendment to Schedule I, Clause 12 where auctions occurred after the amendment's notification. [Paras 17, 18, 19, 20, 21]

The IBBI Circular dated 26th August, 2019 could not displace the statutory amendment to Schedule I, Clause 12; the Circular did not affect the operation of Clause 12 for auctions held after 25th July, 2019.

Final Conclusion: The Tribunal allowed the appeals, set aside the Adjudicating Authority's order refusing confirmation, confirmed the e auction sales of 26th February, 2021, and directed the liquidator to take consequential actions; parties to bear their own costs.

Exclusion under Section 14 of the Limitation Act - Condonation of delay under Section 5 of the Limitation Act - Bona fide proceedings in a court without jurisdiction - Application under Section 9 of the Insolvency and Bankruptcy Code - Dismissal for non-compliance with statutory notice as a defect of procedure - Power to condone delay without a formal Section 5 application

Exclusion under Section 14 of the Limitation Act - Bona fide proceedings in a court without jurisdiction - Dismissal for non-compliance with statutory notice as a defect of procedure - Application under Section 9 of the Insolvency and Bankruptcy Code - Period during which the winding up petition remained pending before the High Court is excluded under Section 14(2) of the Limitation Act. - HELD THAT: - The Court found that the winding up petition was dismissed because the statutory notice required by Section 434(1)(a) had not been served on the transferee company (Times Internet Ltd.) and therefore the petition could not be entertained on merits. Relying on precedents interpreting Section 14 broadly, the Court held that a proceeding which cannot be decided on merits due to a defect of jurisdiction or a cause of like nature attracts exclusion. The pending period of the winding up petition therefore falls within the ambit of Section 14(2) and must be excluded when computing limitation for the subsequent Section 9 application. The Court observed that full particulars of the winding up proceedings and the High Court order were placed on record in the Section 9 petition, furnishing an ample foundation for exclusion under Section 14(2). [Paras 20]

The period during which the winding up petition was pending before the High Court is excluded under Section 14(2) of the Limitation Act.

Condonation of delay under Section 5 of the Limitation Act - Power to condone delay without a formal Section 5 application - Application under Section 9 of the Insolvency and Bankruptcy Code - Short delay in filing the Section 9 application after excluding the pendency of the winding up petition is capable of condonation under Section 5 and should be condoned. - HELD THAT: - Applying the exclusion for the winding up petition period, the Court accepted the appellant's calculation that only a short delay (79 days) remained. Having regard to the High Court's liberty to pursue remedy against the actual entity and to the principle in Sesh Nath Singh that Section 5 does not mandate a formal written application for condonation, the Court found sufficient cause to exercise its discretion to condone the delay. The combination of exclusion under Section 14 and the discretionary power under Section 5 justified admitting the Section 9 petition despite the short residual delay. [Paras 21, 22]

The residual delay after excluding the winding up petition period is condoned in the exercise of discretion under Section 5 of the Limitation Act.

Final Conclusion: Appeal allowed; the Adjudicating Authority's order rejecting the Section 9 application as time barred is set aside. The matter is remitted to the Adjudicating Authority to pass orders on admission of the Section 9 application after affording the parties opportunity to settle.

Default - operational creditor - demand notice - initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - interim funding to IRP - moratorium

Default - operational creditor - demand notice - initiation of Corporate Insolvency Resolution Process - There was a default by the corporate debtor and the Section 9 application by the operational creditor is maintainable, warranting admission under Section 9(5) of the Code and initiation of CIRP. - HELD THAT: - The Tribunal accepted the applicant's ledger and invoices showing an outstanding principal amount and accumulated interest, and noted that the demand notice dated 03.12.2019 was issued. The corporate debtor did not file a substantive reply and effectively admitted the existence of the debt and non-payment. Applying the statutory scheme that a default-i.e., a due debt not paid-triggers the insolvency resolution process, the Tribunal found that the applicant proved the existence of an operational debt and default and, accordingly, admitted the application under Section 9(5) of the Code and ordered initiation of the CIRP. [Paras 5, 6]

Application under Section 9 admitted and CIRP ordered to be initiated against the corporate debtor.

Appointment of Interim Resolution Professional - consent and disclosures required - An Interim Resolution Professional is to be appointed to manage the CIRP, subject to required consent and disclosures. - HELD THAT: - Because the applicant did not nominate an IRP, the Tribunal appointed Ms. Ashu Gupta as the Interim Resolution Professional and recorded the condition that her appointment is subject to there being no pending disciplinary proceedings. The Tribunal directed that specific consent be filed in the prescribed Form 2 and that disclosures required under the IBBI regulations be made prior to acting as IRP. [Paras 7]

Ms. Ashu Gupta appointed as IRP, subject to filing of consent in Form 2 and prescribed disclosures.

Interim funding to IRP - moratorium - The applicant must deposit interim funds for the IRP and the statutory moratorium under Section 14(1) applies upon admission of the petition. - HELD THAT: - The Tribunal directed the operational creditor to deposit a sum of Rs. 2 lacs with the IRP within one week to meet expenses of the IRP, with the amount to be subject to later adjustment by the Committee of Creditors as accounted for by the IRP. Consequential to admission of the application, the moratorium under Section 14(1) was declared to follow in relation to the corporate debtor, with corresponding operation of Sections 14(2) to 14(4) during the moratorium period. The Registry was directed to communicate the order to parties, the IRP and IBBI, and to forward a copy to the ROC for updating master data. [Paras 8, 9, 10]

Operational creditor to deposit interim funding with IRP; moratorium under Section 14 imposed and consequential communications directed.

Final Conclusion: The Tribunal admitted the Section 9 application on proof of an operational debt and default, ordered initiation of the CIRP, appointed an IRP subject to prescribed consent and disclosures, directed interim funding to the IRP, and declared the statutory moratorium with directions for communication to relevant authorities.

Dissolution under section 59(7) of the Insolvency and Bankruptcy Code, 2016 - members' voluntary liquidation - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - declaration of solvency and board/EGM approval - public announcement and claims process - preservation of records under Regulations 9 and 10 - filing with Registrar of Companies under section 59(9)

Dissolution under section 59(7) of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency and board/EGM approval - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - public announcement and claims process - preservation of records under Regulations 9 and 10 - filing with Registrar of Companies under section 59(9) - Whether the company may be dissolved under the Code following a members' voluntary liquidation after satisfaction of statutory and regulatory compliance - HELD THAT: - The Tribunal examined the liquidator's averments and documentary steps demonstrating compliance with the statutory scheme for members' voluntary liquidation. The record shows that the board passed a resolution recommending voluntary liquidation and directors executed a declaration of solvency; the special resolution in the members' meeting approved voluntary liquidation and appointed a registered insolvency professional as liquidator; audited financial statements for the preceding two years were placed on record; the liquidator published the statutory public announcements and invited claims within the prescribed period and served the requisite notice for publication on the IBBI website; the liquidator intimated income-tax authorities and obtained a no-objection response; no claims from creditors were received; a liquidation bank account was opened; a preliminary report was submitted and the liquidation process was completed with the final report dispatched to the IBBI and filed with the Registrar of Companies. In view of these compliant steps, the Tribunal found no legal impediment to dissolution and applied section 59(7) of the Code. The Tribunal further applied the regulatory requirement to preserve specified records and to file the order with the Registrar of Companies under the statutory provision dealing with post-dissolution filings. [Paras 4, 5]

The prayer to dissolve the company under section 59(7) of the Code is allowed; the company is dissolved with effect from the date of the order, the liquidator must preserve the reports, registers and books as required by Regulations 9 and 10 for eight years, and a copy of the order must be filed with the Registrar of Companies within fourteen days.

Final Conclusion: The Tribunal allowed the liquidator's application and ordered voluntary dissolution of the company after recording compliance with the statutory and regulatory requirements for members' voluntary liquidation, directed preservation of records for the prescribed period, and directed filing of the copy of this order with the Registrar of Companies.

Service of demand notice - Existence of operational debt and default - Pre-existing dispute in terms of Section 9(3)(b) of the IBC - Limitation for filing Section 9 petition - Admission of petition under Section 9(5)(i) of the IBC - Moratorium under Section 14 of the IBC - Appointment and powers of Interim Resolution Professional and suspension of Board under Section 17 - Public announcement and constitution of Committee of Creditors

Service of demand notice - The demand notice in Form 3 dated 09.01.2020 was duly served on the corporate debtor. - HELD THAT: - The Tribunal examined the tracking report placed at Annexure P-2 and found that the demand notice had been delivered to the corporate debtor. On that basis the notice was held to be properly served and the statutory pre condition for proceeding under Section 9 was satisfied. [Paras 10]

Demand notice duly served.

Pre-existing dispute in terms of Section 9(3)(b) of the IBC - Existence of operational debt and default - There was no pre-existing dispute pleaded or proved by the corporate debtor and the operational debt and default stood established. - HELD THAT: - The petitioner filed the affidavit in terms of Section 9(3)(b) averring absence of any pre-existing dispute and produced ledger, invoices and bank statements (Annexures P-4 to P-6) to substantiate the claim. The corporate debtor denied averments in reply but, on the record and by counsel's statement that the corporate debtor was unable to pay due to financial crunch, the Tribunal treated the liability as undisputed. On the materials before it the Tribunal concluded that the petitioner had proven the operational debt and the default which exceeded the statutory threshold. [Paras 11, 13, 14]

No pre-existing dispute; operational debt and default established.

Limitation for filing Section 9 petition - The petition was filed within the period of limitation computed from the date of default stated in Form 5. - HELD THAT: - The Tribunal noted the date of default recorded in Part IV of Form 5 as 12.10.2019. The petition was initially filed on 22.12.2020 and re filed on 05.01.2021. Having regard to the date of default and the filing dates, the Tribunal held that the application was within limitation. [Paras 12]

Section 9 petition filed within limitation.

Admission of petition under Section 9(5)(i) of the IBC - Moratorium under Section 14 of the IBC - Appointment and powers of Interim Resolution Professional and suspension of Board under Section 17 - Public announcement and constitution of Committee of Creditors - The petition was admitted under Section 9(5)(i); moratorium declared; Interim Resolution Professional appointed with directions including public announcement, vesting of management, constitution of Committee of Creditors and reporting obligations. - HELD THAT: - Having found service, absence of a pre existing dispute, limitation compliance and proof of debt and default above the threshold, the Tribunal held that the conditions of Section 9(5)(i) were satisfied and admitted the petition to initiate CIRP. Consequential reliefs were granted: declaration of moratorium in the terms of Section 14; directions that supply of essential goods not be interrupted; appointment of the proposed IRP whose credentials were vetted; suspension of the board and vesting of management in the IRP under Section 17; requirement for public announcement and call for claims under the Regulations; constitution of the Committee of Creditors within the prescribed timeline; and directions for regular progress reports to the Tribunal. The Tribunal also directed the petitioner to deposit an amount to meet immediate CIRP expenses to be accountable to the IRP and to be reimbursed as CIRP cost. [Paras 16, 17, 18, 19, 20]

Petition admitted; moratorium declared; IRP appointed and directed to take requisite steps; petitioner directed to deposit immediate CIRP expenses.

Final Conclusion: The Section 9 petition filed by the operational creditor was admitted after the Tribunal found service of notice, absence of a pre existing dispute, limitation compliance and proved operational debt and default. Consequential orders included declaration of moratorium, appointment of the Interim Resolution Professional with specified powers and duties, directions for public announcement and constitution of the Committee of Creditors, and an order for the petitioner to deposit funds to meet immediate CIRP expenses.

Abatement of settlement proceedings under Section 32F(6) - revival of proceedings before the adjudicating authority - jurisdiction of the Settlement Commission to decide abated matters - adjudication under Section 11-A - transfer of settlement proceedings - right of appeal and second appeal under the statute

Abatement of settlement proceedings under Section 32F(6) - revival of proceedings before the adjudicating authority - Effect of abatement under Section 32F(6) on the continuance of settlement proceedings and the forum that must decide the dispute thereafter. - HELD THAT: - The Court held that where an application to the Settlement Commission could not be disposed of within the period prescribed by Sub-section (6) of Section 32F, the settlement proceedings abate by operation of law and the dispute revives before the adjudicating authority in the same state as it was at the time of making the application. The statutory language of Section 32F(6) contemplates automatic abatement and expressly provides that the adjudicating authority shall dispose of the case as if no application under Section 32E had been made. Consequently, once abatement occurs, the Court will not judicially revive the abated settlement proceedings before the Settlement Commission. [Paras 3, 5, 6]

Abatement under Section 32F(6) results in revival of proceedings before the adjudicating authority; the Settlement Commission cannot be re-engaged by judicial intervention after such abatement.

Adjudication under Section 11-A - jurisdiction of the Settlement Commission to decide abated matters - transfer of settlement proceedings - right of appeal and second appeal under the statute - Validity of the order dated 2nd March, 2022 relegating the petitioner to the adjudicating authority and the availability of alternative remedies to the petitioner. - HELD THAT: - The Court found the impugned order of 2nd March, 2022 validly reflected the legal effect of abatement under Section 32F(6), thereby directing adjudication by the adjudicating authority under Section 11-A. The petitioner's contention that the matter ought to be sent back to the Settlement Commission was rejected because the Act itself provided mechanisms (including an application for transfer to another competent Settlement Commission) which the petitioner had not availed while proceedings before the Settlement Commission were pending. The Court also noted that any consequential or punitive actions by the adjudicating authority do not leave the petitioner remediless because statutory rights of appeal and second appeal remain available. [Paras 4, 7, 8, 9]

The order of 2nd March, 2022 relegating the matter to the adjudicating authority is within the scope of Section 32F(6) and Section 11-A; the petitioner has statutory appellate remedies and cannot claim revival of abated settlement proceedings.

Final Conclusion: Writ Petition dismissed. The Court upheld that abatement under Section 32F(6) operates by law to revive proceedings before the adjudicating authority to be decided under Section 11-A; the petitioner's request to relegate the matter to the Settlement Commission was refused, and statutory appellate remedies remain available.

Exemption for construction services to Government or local authority where structure is predominantly for use other than commerce or industry - Scope of Entries 12 and 13 of Mega Exemption Notification - use by general public / non-commercial use - Exclusion where construction is for commerce and industry - Burden of proof on revenue to show commercial use (auction/rental) to bring construction within taxable ambit - Clause 14(d) of Mega Exemption Notification - infrastructure for agricultural produce

Exemption for construction services to Government or local authority where structure is predominantly for use other than commerce or industry - Scope of Entries 12 and 13 of Mega Exemption Notification - use by general public / non-commercial use - Burden of proof on revenue to show commercial use (auction/rental) to bring construction within taxable ambit - Clause 14(d) of Mega Exemption Notification - infrastructure for agricultural produce - Construction of the 'Hut Bazaar' for Nagar Palika Parishad, Dhamtari was not for commerce and industry and therefore the construction services are exempt under the exemption notification. - HELD THAT: - The Tribunal examined Entries 12 and 13 of the Mega Exemption Notification and held that construction services provided to a governmental or local authority are exempt when the structure is meant predominantly for use by the general public or for non-commercial purposes. The determinative question was whether the 'Hut Bazaar' was intended to be used for commercial gains by the local authority. The appellant's case - construction of small stalls to be given to farmers against a nominal fee for sale of agricultural produce - falls within non-commercial facilitation of farmers and is consistent with earlier decisions cited by the Tribunal. The revenue produced no document showing that stalls were auctioned or otherwise used for commercial exploitation by the authority; the adjudicating authorities themselves recorded collection only of a nominal 'bazaar shulk' from 01.04.2018. In absence of evidence of commercial use, the construction cannot be treated as a commercial/industrial building attracting service tax. Clause 14(d) further supports exemption for infrastructure provided for agricultural produce. The Commissioner (Appeals) was therefore in error in upholding demand in respect of the 'Hut Bazaar'. [Paras 7, 9, 10]

Findings holding the construction of the 'Hut Bazaar' to be taxable were set aside and the demand confirmed on that account is quashed.

Final Conclusion: The appeal is allowed insofar as the demand relating to construction of the 'Hut Bazaar' is concerned; the confirmed demand on that account is set aside.

Refund of amounts paid under Voluntary Compliance Encouragement Scheme (VCES) - Non refundability clause in Section 109 of the Finance Act, 2013 - Refund provision under Section 11B of the Central Excise Act, 1944 as applied to Service Tax - Inapplicability of precedent in Shabina Abraham to VCES payments

Refund of amounts paid under Voluntary Compliance Encouragement Scheme (VCES) - Refund provision under Section 11B of the Central Excise Act, 1944 as applied to Service Tax - Refund claim under Section 11B in respect of amounts paid pursuant to a VCES declaration. - HELD THAT: - The Tribunal examined the appellant's claim for refund of amounts paid under the Service Tax VCES and the invocation of Section 11B (Central Excise Act, 1944) as made applicable to Service Tax. The court noted that the declared liability arose under the VCES scheme and the payment was made pursuant to that scheme. Having considered the statutory scheme and the submissions, the Tribunal held that a refund claim under Section 11B cannot be sustained in respect of amounts paid under the VCES because those payments fall within the special regime created by the VCES and are governed by its statutory limitations. [Paras 4]

Refund cannot be claimed under Section 11B for amounts paid under the VCES.

Non refundability clause in Section 109 of the Finance Act, 2013 - Refund of amounts paid under Voluntary Compliance Encouragement Scheme (VCES) - Effect of Section 109 of the Finance Act, 2013 on refundability of amounts paid pursuant to a VCES declaration. - HELD THAT: - The Tribunal relied on the explicit statutory provision in Section 109 which states that any amount paid pursuant to a declaration under the VCES shall not be refundable under any circumstances. Given this clear and specific bar, the Tribunal declined to entertain the appellant's contention that the deposited amounts were refundable. The presence of an express non refundability clause in the VCES was decisive and prevailed over a general refund provision when applied to payments made under the scheme. [Paras 4]

Section 109 bars refund of amounts paid under the VCES and is determinative against the refund claim.

Inapplicability of precedent in Shabina Abraham to VCES payments - Refund provision under Section 11B of the Central Excise Act, 1944 as applied to Service Tax - Whether the decision in Shabina Abraham applies to entitle legal heirs to refund of VCES payments made after the proprietor's death. - HELD THAT: - The Tribunal considered the appellant's reliance on Shabina Abraham and analysed that decision in light of the present facts. It observed that Shabina Abraham dealt with different considerations, particularly machinery provisions enabling continuance of assessment or refund proceedings after death, and does not address or override an express statutory bar like Section 109 of the VCES. The Tribunal therefore found Shabina Abraham inapplicable to a case where payments were made under the VCES and expressly declared non refundable. [Paras 4]

Shabina Abraham does not apply to bar the effect of Section 109; it is inapplicable to refund claims of VCES payments made after the proprietor's death.

Final Conclusion: The appeal is dismissed and the impugned orders upholding rejection of the refund claim are affirmed on the ground that amounts paid pursuant to the VCES are expressly non refundable under Section 109 of the Finance Act, 2013; the relied upon precedent does not authorise refund in the face of this statutory bar.

Mandamus for inclusion of land in statutory notification - administrative discretion in area-based exemption - encroachment on policy matters by judicial review - res judicata - review jurisdiction under Article 226 of the Constitution

Mandamus for inclusion of land in statutory notification - administrative discretion in area-based exemption - encroachment on policy matters by judicial review - res judicata - review jurisdiction under Article 226 of the Constitution - Petition for inclusion of khasra no. 294, Village Bhamrola, Tehsil Kichha, in the list annexed to Notification No. 50/2003-CE was not maintainable and is dismissed. - HELD THAT: - The Court confined its consideration to the prayer for inclusion of the specified khasra number and followed the view expressed by a Co-ordinate Bench in earlier proceedings, which had examined the same grievance and declined to direct inclusion of specified khasra numbers. The earlier decision concluded that directing inclusion would amount to encroaching upon executive policy and administrative discretion in granting area-based fiscal exemptions. The present petitioner's contention that exclusion of a khasra number was merely a procedural omission and that the Office Memorandum operated to confer substantive entitlement was rejected; the Court held that the matter touches policy and the exercise of administrative discretion, which the Court would not substitute by issuing a mandamus. The Court further treated the prior disposition as amounting to an implied refusal and applied the principle of res judicata to decline re-adjudication of the same relief under Article 226. [Paras 4, 6, 7, 8, 9]

Writ petition seeking inclusion of the khasra number in the notification dismissed; petition not admitted.

Final Conclusion: The writ petition seeking direction to include the specified khasra number in the area-based exemption notification is dismissed; the earlier judicial decision and the policy character of the matter preclude grant of the requested mandamus, and the interim stay application is disposed of.

Condonation of delay - appeal under section 35G / 34G of the Central Excise Act, 1944 - substantial question of law - extended period of limitation - service tax liability for supply of manpower - appellate tribunal as last fact-finding authority - remand for redetermination of duty liability

Condonation of delay - substantial question of law - Condonation of delay in filing the appeal and whether a substantial question of law arises for consideration. - HELD THAT: - The Court exercised its discretion to condone the delay of 970 days in filing the appeal despite the respondent's strong objection, stating that if a substantial question of law existed the Court would be required to decide it and refusal to condone delay might frustrate the ends of justice. Having heard the parties, the Court found that no substantial question of law arose from the materials placed before it. Consequently, after allowing the application for condonation of delay, the Court concluded that the appeal did not raise any substantial question of law warranting interference with the Tribunal's order and dismissed the appeal.

Delay condoned; no substantial question of law found; appeal dismissed.

Extended period of limitation - service tax liability for supply of manpower - appellate tribunal as last fact-finding authority - Validity of the Tribunal's factual conclusion that the extended period of limitation was not available to the Revenue and the related treatment of taxable value for manpower supply services. - HELD THAT: - The Tribunal, on the material before it, recorded that the assessee had been filing ST-3 returns and disclosing facts, that inquiry and statements were taken in 2011, and that the taxable value had been assessed with reference to sales bills; it further observed that the adjudicating authority had adopted figures including service charge rather than basic service value and that the main contractor's payment of service tax had not been taken into account below. On these factual findings the Tribunal held that the extended period of limitation could not be invoked by the Revenue and remitted the matter to the Adjudicating Authority to re-determine duty liability in accordance with the directions issued by the Tribunal. The High Court treated these as factual determinations by the Tribunal and found no substantial question of law to entertain in respect of those findings.

Tribunal's factual conclusion upheld for purposes of this appeal; extended period of limitation held not available to Revenue by Tribunal and matter remanded for re-determination of duty liability.

Remand for redetermination of duty liability - Scope and consequence of remand to the Adjudicating Authority by the Tribunal. - HELD THAT: - The Tribunal directed that, in light of its factual findings regarding disclosure in ST-3 returns, assessment basis and the non-consideration of main contractor's tax payments, the matter be remitted to the Adjudicating Authority for re-determination of the duty liability in accordance with the Tribunal's directions. The High Court declined to disturb that course, treating the remand as an appropriate exercise to ensure computation and determination consistent with the Tribunal's findings and directions.

Matter remanded to the Adjudicating Authority for re-determination of duty liability as directed by the Tribunal.

Final Conclusion: The High Court allowed condonation of delay but found no substantial question of law warranting interference, dismissed the appeal, and left intact the Tribunal's factual conclusions including its view that the extended period of limitation was not available to Revenue; the matter is remitted to the Adjudicating Authority for re-determination of duty liability in accordance with the Tribunal's directions.

Transfer to Call Book - non-intimation of Call Book transfer to the noticee - non-compliance with Board circulars on Call Book review and prior approval - inordinate and unexplained delay in revival of adjudication proceedings - prejudice to defence caused by long delay - quashing of show cause notices revived after prolonged delay

Inordinate and unexplained delay in revival of adjudication proceedings - quashing of show cause notices revived after prolonged delay - Validity of revival of show cause notices after a delay of 8 to 13 years - HELD THAT: - The Court found that original show cause notices were issued between 2007 and 2012 and were revived in 2020-2021 after long gaps. The respondents did not demonstrate that any conscious, considered decision to transfer the matters to the Call Book had been taken in compliance with the prescribed procedure, nor did they explain or justify the long interregnum. Relying on the consequences of delay on evidence and memory, and consistent authorities cited by the Court, such delayed resurrection of proceedings attributable to the revenue was held to defeat the purpose of a show cause notice and to be unjustified. Accordingly, revival of the proceedings after such gross, inordinate and unexplained delay was held to be unsustainable.

Revival of the show cause notices after the long unexplained delay was quashed.

Transfer to Call Book - non-compliance with Board circulars on Call Book review and prior approval - non-intimation of Call Book transfer to the noticee - Whether the transfer of the original show cause notices to the Call Book complied with mandatory Board instructions and whether the noticees were informed - HELD THAT: - The Court examined the relevant Board circulars requiring prior approval of the Commissioner for transfer to the Call Book, periodic review of Call Book cases and formal intimation to the noticee. The respondents did not aver that prior approval was obtained, did not specify when any decision to transfer was taken, and conceded that no intimation of the Call Book transfer had been given to the petitioners. The reply's explanation attributing transfer to pendency of other litigation (M/s J.K. Cement) was found inadequate, in particular because that litigation was registered after issuance of several of the impugned SCNs. On these facts the Court concluded that the mandatory procedures in the circulars were not shown to have been followed.

Transfer to the Call Book (if any) was not shown to have complied with mandatory Board instructions and no intimation was given to the petitioners.

Prejudice to defence caused by long delay - quashing of show cause notices revived after prolonged delay - Whether the petitioners suffered prejudice by reason of non intimation and long delay, and whether that prejudice warranted judicial relief - HELD THAT: - The Court accepted that in absence of any communication over many years the petitioners were entitled to reasonably conclude that proceedings were not being pursued and therefore had no reason to preserve evidence or documents. Citing the adverse effects of delay on memory and availability of evidence, and consistent High Court precedents, the Court held that such non intimation coupled with prolonged delay caused grave prejudice to the petitioners' ability to defend the proceedings. In view of this prejudice and the failure to demonstrate procedural compliance, continuation of the revived proceedings could not be permitted.

Prejudice to the petitioners was established and furnished a ground to quash the revived proceedings.

Final Conclusion: The impugned show cause notices and the revival notices (as detailed in the judgment) were quashed on the grounds of unexplained long delay, failure to demonstrate compliance with mandatory Board instructions regarding Call Book transfers and non intimation causing prejudice to the petitioners; the writ petitions are allowed with no order as to costs.

Eligibility of Cenvat credit for outward goods transport service - place of removal - FOR destination sale - interpretation of Rule 2(l) of Cenvat Credit Rules, 2004 - transfer of property in goods under Section 19 of the Sale of Goods Act

Eligibility of Cenvat credit for outward goods transport service - FOR destination sale - Outward freight paid on deliveries made on FOR basis is an eligible input service for Cenvat credit. - HELD THAT: - The Tribunal found on the materials on record - insurance policy and Chartered Accountant certificate - that the appellant retained title and bore transit risk until delivery at the customers' premises. Applying the principles in the Apex Court decisions dealing with FOR sales, and the department's Circular No.1065/4/2018, the Tribunal held that where ownership remains with the seller until delivery, the point of sale is at the buyer's premises and the outward transport service qualifies as an input service under the Cenvat Credit Rules. The Tribunal noted there was no material produced by the department to controvert the appellant's documents and relied on earlier decisions (including the appellant's own earlier order) holding outward freight in FOR sales to be eligible for credit. [Paras 5, 7, 8]

The demand and disallowance of Cenvat credit in respect of outward transport service for FOR deliveries was set aside and credit allowed.

Place of removal - interpretation of Rule 2(l) of Cenvat Credit Rules, 2004 - transfer of property in goods under Section 19 of the Sale of Goods Act - Place of removal in the appellant's case is the customer's premises where property in goods passed, not the manufacturer's premises, and Ispat Industries (supra) is distinguishable on facts. - HELD THAT: - While acknowledging the Apex Court's observation in Ispat Industries that premises referred to in Rule 2(l)(b)(iii) are referable to the manufacturer, the Tribunal observed that Ispat itself recognised that the critical question is when and where the property in goods passes. Relying on Section 19 of the Sale of Goods Act and Apex Court authorities dealing with FOR destination contracts, the Tribunal held that where the contract and documentary evidence show transfer of ownership upon delivery at buyer's premises, the place of sale (and hence place of removal) is the buyer's premises. The facts here showed retention of title and transit risk by the seller until delivery; accordingly Ispat was factually distinguishable and the Commissioner (Appeals) erred in applying it. [Paras 6, 8]

The place of removal was held to be the customer's premises and the Commissioner (Appeals) decision applying Ispat was set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and directed that Cenvat credit of outward transport service in respect of FOR deliveries (May, 2017 to June, 2017) be allowed, holding the place of removal to be the customer's premises as ownership passed on delivery.

Normal price under Section 4(1)(a) - ex-factory (factory gate) price - value determined under Section 4(1)(b) read with Valuation Rules - extended period of limitation-fraud, collusion, wilful mis-statement or suppression of facts - penalty under Rule 173Q of the Central Excise Rules, 1944

Normal price under Section 4(1)(a) - ex-factory (factory gate) price - There was a genuine factory gate price which could be treated as the normal price under Section 4(1)(a) for the relevant period - HELD THAT: - The Tribunal examined the documentary ledgers of ex-factory dispatches for the years falling in 1991 to 1995 and found sales to a large number of buyers at factory gate, not limited to the narrow categories relied upon by Revenue. Employee statements recorded during investigation were contrary to the ledgers produced by the assessee; Revenue produced no documents to impeach the genuineness of the ledger prices or to show that the buyers constituted only special classes. The Tribunal held that proportion of factory gate sales to total sales is irrelevant under Section 4(1)(a) and that the conditions for a normal wholesale price (wholesale sale at time and place of removal to non-related buyers for price as sole consideration) were satisfied on the evidence, therefore the ex-factory price must be accepted as the deemed value under Section 4(1)(a). [Paras 15, 18]

Finding that a genuine factory gate price existed and must be accepted as the normal price under Section 4(1)(a)

Proviso (i) to Section 4(1)(a) - class of buyers - ex-factory (factory gate) price - The factory gate price was not confined to any particular buyer or limited class of buyers - HELD THAT: - Revenue argued factory gate sales were only to four categories (individuals, employees, a trading company and PSUs) and so any ex-factory price would be limited to those classes. The Tribunal reviewed the ledgers showing numerous distinct buyers (dealers, actual user companies, PSUs and others) across the years and found no evidential basis to treat factory gate sales as limited to special classes. Accordingly, the proviso to Section 4(1)(a) did not restrict the ex-factory price to a particular class in this case. [Paras 16]

Factory gate price was not limited to any particular buyer or class and applied for valuation purposes

Value determined under Section 4(1)(b) read with Valuation Rules - depot sale price as assessable value - The confirmation of demand based on depot sales/prices could not be sustained once a normal price under Section 4(1)(a) was established - HELD THAT: - The Tribunal reiterated that when a normal price under Section 4(1)(a) exists it is the deemed value for charging duty and other sale prices (including depot prices) are irrelevant for valuation. Consequently, the Commissioner's confirmation of differential duty computed on depot prices (with partial abatements) was unsustainable in law because the ex-factory price, held genuine on the evidence, governed assessable value. [Paras 18]

Demand confirmed on depot prices set aside because assessable value is the accepted ex-factory price under Section 4(1)(a)

Extended period of limitation-fraud, collusion, wilful mis-statement or suppression of facts - penalty under Rule 173Q of the Central Excise Rules, 1944 - Extended period of limitation was not invocable and penalty under Rule 173Q could not be sustained - HELD THAT: - The Tribunal found absence of any material to establish the statutory prerequisites for invoking the extended five-year period (fraud, collusion, wilful misstatement or suppression with intent to evade duty). The assessee had filed price declarations and there was no evidence of intentional concealment; the mere difference of view on valuation is insufficient to justify extended limitation. Since the demand based on depot prices was set aside, the concomitant penalty under Rule 173Q also could not be sustained. [Paras 19]

Extended limitation inapplicable and penalty under Rule 173Q quashed

Final Conclusion: On the documentary evidence of ex-factory dispatches, the Tribunal accepted the assessee's factory gate price as the normal price under Section 4(1)(a) for 1991 to 1995, held that the price was not confined to any special class of buyers, set aside the demand computed on depot prices and quashed the penalty and invocation of the extended period of limitation; the assessee's appeal allowed and Revenue's appeal rejected.

Conditional exemption - absolute exemption - option to pay duty under alternative notification entries - availment and utilisation of Cenvat/Cenvat credit - invocability of Section 11D for recovery where duty collected and deposited - classification of exemption entries under Section 5A of the Central Excise Act, 1944

Classification of exemption entries under Section 5A of the Central Excise Act, 1944 - conditional exemption - absolute exemption - Exemption entry at Sl. No.90 of Notification No.4/2006-C.E. is a conditional exemption and not an absolute exemption. - HELD THAT: - The Tribunal noted Section 5A recognises two categories of exemption notifications: absolute (no condition) and conditional (subject to conditions). The entry at Sl. No.90 carried two conditions for availing benefit and therefore was a conditional exemption. The notification did not operate as an unconditional exemption as contemplated by Section 5A(1A). This classification informed the consequent rights and liabilities of the assessee under the notification. [Paras 4]

Sl. No.90 is a conditional exemption entry; not an absolute exemption.

Option to pay duty under alternative notification entries - availment and utilisation of Cenvat/Cenvat credit - Assessee validly exercised the option to pay duty under entries other than Sl. No.90 and to avail Cenvat credit; that option could not be disturbed by the Department. - HELD THAT: - The Tribunal held that where the notification contains alternative entries (some conditional, some unconditional), an assessee who opts to pay duty under a different entry and avails Cenvat credit cannot be compelled to adopt the nil-rate entry. There was no stipulation in the notification that the assessee was mandated to follow Sl. No.90 to the exclusion of other entries. Consequently, the appellant's self-assessment under a different entry and concomitant availment and utilisation of Cenvat credit did not contravene the Cenvat statutory scheme. The Tribunal also treated earlier decisions relied upon by Revenue as distinguishable on facts because those dealt with unconditional exemptions where Modvat/Cenvat was not permissible. [Paras 4, 6, 7]

The appellant was entitled to pay duty under other applicable entries and to avail and utilise Cenvat credit; the Department could not force payment under Sl. No.90.

Invocability of Section 11D for recovery where duty collected and deposited - Section 11D could not be invoked for recovery where Revenue did not allege that duty collected by the assessee was not deposited with the Government Exchequer. - HELD THAT: - The Tribunal observed that since it was not the case of the Revenue that the duty amount collected by the appellant had not been deposited into the Government Exchequer, the precondition for invoking Section 11D for recovery was absent. Given the appellant's lawful option to pay duty under a different notification entry and the absence of any allegation of non-deposit, the statutory recovery provision could not be applied to fasten liability. [Paras 4]

Provisions of Section 11D could not be invoked for recovery in the present facts.

Final Conclusion: Impugned adjudication confirming demands set aside; appeal allowed in favour of the appellant.

CENVAT credit entitlement on inputs sent to job-workers and after rescission of special registration - Reasonable steps under Rule 9(3) of the CENVAT Credit Rules - Fraudulent availment of CENVAT credit on bogus invoices and consequence of fraud - Validity of addendum to a show-cause notice and extended period where fraud is involved - Imposition and quantification of penalty under Rule 13 of the CENVAT Credit Rules read with Section 11AC - Revenue neutrality principle in allowance of CENVAT credit

CENVAT credit entitlement on inputs sent to job-workers and after rescission of special registration - Revenue neutrality principle in allowance of CENVAT credit - Appellants entitled to avail CENVAT credit on inputs used by them even after rescission of Rule 12B, subject to facts and verification. - HELD THAT: - The Tribunal held that entitlement to CENVAT credit is not dependent solely on registration under erstwhile Rule 12B. Rule 4(5)(a) permits availing credit on inputs sent to job-workers, and precedents and Board circulars treating input-stage rebate and manufacture broadly support allowing credit where duty-paid inputs were used and final goods cleared (revenue-neutrality principle). The Tribunal therefore found no hesitation to hold that irrespective of registration under Rule 12B, the appellants are entitled to CENVAT credit on inputs used by them, while remanding factual aspects where necessary for verification. [Paras 15, 16, 17, 18, 19]

CENVAT credit availed after revocation of Rule 12B is in order subject to factual verification and principles of revenue neutrality.

Validity of addendum to a show-cause notice and extended period where fraud is involved - The addendum dated 17.9.2007 was held to be a valid supplementation of the original show-cause notice and within time where fraud is established. - HELD THAT: - The Tribunal found the addendum to the original show-cause notice did not raise a distinct or separate cause of action but supplemented allegations concerning inadmissibility of credit; it did not create an additional demand beyond the original show-cause notice. Given subsequent investigative material showing fraudulent availment, the proviso extending time for issuance (where fraud is involved) was rightly invoked and the addendum was held legally valid and within time. [Paras 20, 21, 26]

Addendum is valid and not time-barred in view of findings of fraud and its supplementary nature to the original notice.

Reasonable steps under Rule 9(3) of the CENVAT Credit Rules - Fraudulent availment of CENVAT credit on bogus invoices and consequence of fraud - A portion of the CENVAT credit was fraudulently availed on the basis of bogus/non existent suppliers and must be recovered with interest and attracts equal penalty under the Rules and Act. - HELD THAT: - Applying Rule 9(3), the Tribunal emphasised the obligation of a claimant of CENVAT credit to take reasonable steps to satisfy itself about the identity and existence of suppliers. The revenue produced evidence that several alleged suppliers were non existent or issued invoices without actual movement of goods; cheques were encashed by third parties unconnected with suppliers; and some suppliers were adjudicated or found to be fraudulent in earlier proceedings. On these facts the Tribunal concluded that credit amounting to the specified sum was fraudulently availed, required reversal/recovery with interest, and attracted penalty under Rule 13 read with Section 11AC. [Paras 22, 23, 24, 25, 26]

Credit found to have been fraudulently availed to the extent identified; recovery with interest and imposition of penalty ordered.

Imposition and quantification of penalty under Rule 13 of the CENVAT Credit Rules read with Section 11AC - Penalty imposed on Shree Nathji Textiles was set aside; penalty on promoters reduced in view of differential roles; departmental appeal on penalty quantification dismissed as infructuous to extent it challenged aspects rendered unnecessary. - HELD THAT: - The Tribunal found no basis for penalty on Shree Nathji Textiles where existence and return of goods were established, and therefore quashed the penalty imposed on that supplier. Regarding penalties on individual persons, the adjudicating authority had not delineated differing roles; records showed cooperation by one person and non-cooperation by another. Applying proportionality, the Tribunal reduced the penalty on Shri Prakash Jokhani from the figure imposed to a lesser sum. Since the Tribunal upheld entitlement to credit for the larger demand and limited fraud findings to a quantifiable portion, the Revenue's appeal challenging penalty quantum became infructuous to the extent indicated. [Paras 27, 28, 29]

Penalty on Shree Nathji Textiles set aside; penalty on Shri Prakash Jokhani reduced; departmental appeal dismissed as infructuous insofar as it attacked aspects rendered unnecessary by the decision.

Final Conclusion: The Tribunal allowed the appellants' entitlement to CENVAT credit notwithstanding rescission of Rule 12B, upheld recovery (with interest) and penalty for fraudulently availed credit to the quantified extent, validated the addendum to the show-cause notice, set aside penalty on Shree Nathji Textiles, reduced penalty on Shri Prakash Jokhani, and dismissed the Revenue's appeal as infructuous to the extent indicated.

CENVAT credit on input services - place of receipt of input services - amalgamation and single registration - Rule 6(3A) reversal for trading activity - penalty and interest for denial of credit - binding precedents of the Tribunal

CENVAT credit on input services - place of receipt of input services - amalgamation and single registration - Admissibility of CENVAT credit on input services where services were invoiced to and received by the assessee after amalgamation though physically received at an external warehouse with a separate earlier registration. - HELD THAT: - The Tribunal examined whether CCR rules require that input services received by a manufacturer must be received within factory premises and whether the existence of a separate First Stage Dealer/External Warehouse registration prior to amalgamation precludes the assessee from taking CENVAT credit after amalgamation and notice to authorities. Relying on earlier decisions of the Tribunal, the Bench accepted that the CCR rules do not mandate physical receipt at factory premises as a precondition for availing credit and that, where amalgamation has been effected with due intimation to the jurisdictional authority and invoices are raised to the assessee, input services can be treated as received by the manufacturer. The Tribunal also noted that the assessee had reversed credit proportionate to trading activity under Rule 6(3A) and that subsequent orders for later periods-uncontested by the Department-had held the services to be natural inputs for manufacture. In view of binding Tribunal precedent and the factual finding that proportionate reversal had been made, the denial of credit was unsustainable.

The denial of CENVAT credit was set aside and the Order-in-Original dated 07.12.2015 was quashed.

Rule 6(3A) reversal for trading activity - penalty and interest for denial of credit - binding precedents of the Tribunal - Validity of interest and equivalent penalty imposed for alleged erroneous availment of CENVAT credit when reversal under Rule 6(3A) had been undertaken and subsequent authorities had accepted admissibility for related periods. - HELD THAT: - The Tribunal observed that the assessee had undertaken reversal of credit proportionate to its trading activity in terms of Rule 6(3A). It further noted that for subsequent periods the adjudicating and appellate authorities had held the input services to be natural inputs for manufacture and admissible as CENVAT credit, and the Department had not challenged those findings. Applying the Tribunal's precedents and on the facts that no ineligible credit remained after proportionate reversal, the imposition of interest and equivalent penalty premised on denial of credit was not warranted.

The demand, interest and penalty confirmed in the Order-in-Original were set aside along with that order.

Final Conclusion: Appeal allowed; the Order-in-Original No. PUN-EXCUS-001-PR.COM-041-15-16 dated 07.12.2015 is set aside insofar as it denied CENVAT credit and confirmed interest and penalty, the Tribunal following its precedents and the factual finding of proportionate reversal under Rule 6(3A).

Reversal of Cenvat credit treated as if no credit was availed - Time of reversal immaterial for entitlement to exemption notification - Entitlement to exemption under Notification subject to reversal satisfying condition

Reversal of Cenvat credit treated as if no credit was availed - Time of reversal immaterial for entitlement to exemption notification - Whether subsequent reversal of Cenvat credit satisfies the condition of Notification No.30/2004-CE so as to entitle the assessee to exemption - HELD THAT: - The Tribunal held that subsequent reversal of Cenvat credit operates effectively as if no credit had been availed and thereby satisfies the condition of the exemption notification. The Bench relied on the reasoning in Mangal Textile Pvt. Ltd., which applied the principle in M/s. Chandrapur Magnet (Wires) Pvt. Ltd. that reversal of credit amounts to restoration of the pre-credit state. The Tribunal observed that earlier decisions, including Hello Minerals Water (P) Ltd. and other authorities, treat the timing of reversal as immaterial for the purpose of entitlement to the notification; reversal even at a later stage (including at appellate stages) has been accepted as meeting the condition. Applying these authorities to the facts, the Tribunal found that the appellant had reversed the credits (including furnace oil credits subsequently) and therefore met the notification condition for the periods in dispute, so that demands based on non-fulfilment of that condition could not be sustained.

Subsequent reversal of Cenvat credit satisfies the condition of Notification No.30/2004-CE; the appellant is entitled to the exemption.

Final Conclusion: The appeal is allowed. The impugned order is set aside and the appellant granted consequential relief by treating the reversal of credit as satisfying the notification condition; demands insofar as dependent on non-fulfilment of that condition cannot be sustained.