TaxTMI Updates e-Newsletter
May 28,2024

Show cause notice - order of refund under Section 54(3) of the Rajasthan Goods and Services Tax Act, 2017 - appeal under Section 107 of the Rajasthan Goods and Services Tax Act, 2017 - revision under Section 108 of the Rajasthan Goods and Services Tax Act, 2017 - abeyance of proceedings pending reversal of refund order - stay of proceedings pending appellate or revisional remedy

Show cause notice - order of refund under Section 54(3) of the Rajasthan Goods and Services Tax Act, 2017 - appeal under Section 107 of the Rajasthan Goods and Services Tax Act, 2017 - revision under Section 108 of the Rajasthan Goods and Services Tax Act, 2017 - abeyance of proceedings pending reversal of refund order - Whether further proceedings pursuant to the impugned show cause notice could be proceeded with before the refund order under Section 54(3) is reversed in appeal or revision. - HELD THAT: - The Court accepted the petitioner's submission that proceedings arising from the impugned show cause notice could not be validly proceeded with unless the order granting refund under Section 54(3) of the Rajasthan Goods and Services Tax Act, 2017 is first reversed by the competent authority in an appeal under Section 107 or in revision under Section 108. In view of this legal position, the Court directed that further proceedings pursuant to the impugned show cause notice shall remain in abeyance until such time as the refund order is reversed by the appropriate appellate or revisional forum. The order operates as an interim restraint on the departmental action contemplated by the show cause notice, pending determination of the appellate or revisional remedies identified by the Court.

Further proceedings pursuant to the impugned show cause notice shall remain in abeyance until the order of refund under Section 54(3) is reversed in appeal under Section 107 or in revision under Section 108.

Final Conclusion: Notice issued; service completed; matter listed. Interim direction: proceedings under the impugned show cause notice are stayed/kept in abeyance pending reversal of the refund order under Section 54(3) by way of appeal under Section 107 or revision under Section 108.

Release of confiscated goods - pre-deposit under Section 107 of the GST Act - penalty under Section 122 of the GST Act - fine in lieu of confiscation of conveyance - bank guarantee for assessed value - conditions for interim release - protection of revenue interest

Release of confiscated goods - pre-deposit under Section 107 of the GST Act - penalty under Section 122 of the GST Act - fine in lieu of confiscation of conveyance - bank guarantee for assessed value - conditions for interim release - Petition for release of confiscated goods was allowed subject to deposit and specified conditions - HELD THAT: - The Court directed that the petitioner-Firm could have the confiscated goods released on compliance with payment and security requirements specified in the earlier order and by making an additional deposit to satisfy the pre-deposit requirement under Section 107 of the GST Act. The petitioner was required to deposit the penalty and fine amounts earlier ordered, and, in view of the statutory pre-deposit obligation of 10% under Section 107, an additional sum was ordered to be deposited. The Court imposed specific conditions for interim release which include furnishing an attested photocopy of the proprietor's Aadhar card, provision of a cross-cheque to be encashed on court permission in the event of default, filing of an affidavit by a class-I legal heir or near relative vouching for identification and residence, and an undertaking that the petitioner will not later contend non-existence of the goods if released and sold by it. The directions also included provision for the petitioner to furnish a bank guarantee in respect of the assessed value as earlier indicated. The Court considered these conditions necessary to protect the interest of the revenue while permitting release of the goods. [Paras 4, 6, 7]

Civil Review Petition allowed to the extent of permitting release of the confiscated goods on deposit of the required amounts and on compliance with the enumerated conditions; interest of the revenue protected.

Protection of revenue interest - conditions for interim release - Respondents restrained from auctioning the confiscated goods and conveyance until the specified date to enable compliance with the release conditions - HELD THAT: - Having imposed conditions and directed deposit and security, the Court stayed any steps for auction or sale of the confiscated goods and conveyance until the next Friday (24th May 2024) to afford the petitioner an opportunity to comply. The restraint was incidental to the grant of interim relief and directed as a temporary measure pending compliance with the ordered conditions. [Paras 5]

Respondents directed not to take steps for auctioning the confiscated goods or conveyance until the date specified to permit compliance with the Court's directions.

Final Conclusion: Civil Review Petition allowed to the limited extent of ordering release of the confiscated goods on payment of the penalty, fine and additional deposit to satisfy the pre-deposit requirement and on fulfillment of specified identification, security and undertaking conditions; respondents restrained from auctioning the goods/conveyance until the date directed.

Ad interim stay of adjudication order - operation of order passed under Section 73 of the Central Goods and Services Tax Act, 2017 - notice and service on respondent - impleadment of Central Government - tagging of writ petitions

Notice and service on respondent - response time for filing counter-affidavit - tagging of writ petitions - impleadment of Central Government - ad interim stay of adjudication order - Interim procedural directions including issuance of notice on respondent No.3, time to file response, listing, ad interim stay of the operation of the adjudication order dated 29.04.2024, liberty to implead the Central Government, and tagging of another writ petition - HELD THAT: - The High Court issued notice upon respondent No.3 and recorded appearance and acceptance of notice. The Court granted the respondent four weeks to file its response and directed listing of the matter on 26th June 2024. Pending disposal of the writ petition, the Court granted an ad interim stay of the operation of the adjudication order dated 29th April 2024 issued by the Deputy Commissioner of State Tax. The petitioner was permitted to implead the appropriate authority of the Central Government. Writ Petition (T) No. 958 of 2024 was ordered to be tagged along with the instant petition. These directions are procedural and interlocutory, preserving the parties' rights for final adjudication on merits. [Paras 2, 6, 7, 8, 9]

Notice issued to respondent No.3; four weeks' time granted to file response; matter posted to 26th June 2024; ad interim stay of operation of the adjudication order dated 29.04.2024 granted; petitioner given liberty to implead the Central Government; W.P.(T) No. 958 of 2024 to be tagged.

Final Conclusion: Interlocutory relief granted: notice ordered, time fixed for response, matter listed for further hearing, ad interim stay of the impugned adjudication order granted, liberty to implead Central Government allowed, and related petition tagged for joint consideration.

Maintainability of writ petition where statutory appeal is available - exhaustion of alternative remedy - limitation bar for collateral challenge after expiry of statutory appeal period - service by making order available on the common portal - order under Section 74 of the OGST Act, 2017

Maintainability of writ petition where statutory appeal is available - exhaustion of alternative remedy - limitation bar for collateral challenge after expiry of statutory appeal period - The writ petition filed after expiry of the statutory limitation and without availing the statutory appeal is not maintainable and must be dismissed. - HELD THAT: - The Court found that the impugned adjudicatory order was passed on 07.12.2021 and the petition was filed on 18.04.2024, i.e., well after the period of limitation prescribed under the statute. It is not in dispute that the petitioner did not file the statutory appeal available against the order. Applying the principle in Assistant Commissioner (CT) LTU, Kakinada (supra), the High Court held that where a statutory remedy by way of appeal exists and the petitioner has not availed it within the prescribed period, a writ petition filed after expiry of the limitation cannot be entertained as a matter of course. The Court observed that the High Court may entertain pre-expiry challenges in exceptional cases (e.g., jurisdictional excess or breach of natural justice), but cannot disregard the legislative scheme to entertain a delayed collateral challenge after the statutory period has lapsed. In the present case, no such exceptional basis was shown and the petition was therefore non-maintainable. [Paras 6, 7, 10]

Writ petition dismissed as not maintainable for failure to exhaust the statutory appeal remedy and for being filed after the limitation period.

Service by making order available on the common portal - order under Section 74 of the OGST Act, 2017 - The impugned order, though not physically communicated, was deemed served on the petitioner by being made available on the common portal. - HELD THAT: - Relying on Section 169(1)(d) of the OGST Act, 2017, the Court held that any communication made available on the common portal constitutes valid service. Consequently, the petitioner's contention that the order was not brought to its notice could not be accepted, and lack of physical service did not excuse non-availment of the statutory appellate remedy or the delay in approaching the Court. [Paras 9]

The plea of non-service is rejected; the order is deemed served by availability on the common portal.

Final Conclusion: The writ petition challenging the order dated 07.12.2021 under Section 74 of the OGST Act, 2017 was dismissed as not maintainable for failure to exhaust the statutory appeal remedy and for being filed after the statutory limitation; service on the petitioner was deemed effected by availability on the common portal. No order as to costs.

Entertainability versus maintainability of writ jurisdiction under Article 226 - availability of alternative statutory remedy under Section 107 of the CGST Act, 2017 - mandatory compliance of Rule 142 - uploading summary in FORM GST DRC-01 and FORM GST DRC-07 - service of notice and order under Section 169 of the CGST Act, 2017 - waiver of procedural requirement - principle that one who hears must decide and the requirement of personal hearing

Entertainability versus maintainability of writ jurisdiction under Article 226 - availability of alternative statutory remedy under Section 107 of the CGST Act, 2017 - Whether the writ petition under Article 226 should be entertained despite the availability of an appeal under Section 107 of the CGST Act, 2017. - HELD THAT: - The Court held that the writ petition is maintainable but, in the exercise of its discretionary jurisdiction, need not be entertained because an efficacious alternative statutory remedy of appeal under Section 107 is available. The Court surveyed established principles that availability of an alternative remedy ordinarily disentitles a party to writ relief unless an exceptional case is made out (breach of statutory procedure, violation of natural justice or other exceptional circumstances). The petitioner failed to demonstrate any such exceptional circumstance; the grounds pleaded did not amount to the sort of defect warranting exercise of extraordinary jurisdiction. Consequently the Court declined to entertain the writ petition and directed the petitioner to pursue the statutory appeal, permitting the appellate authority to take into account the time spent in the writ proceedings while dealing with limitation. [Paras 18, 19, 20, 30, 31]

Writ petition not entertained in view of availability of appeal under Section 107; petitioner to pursue statutory appeal.

Mandatory compliance of Rule 142 - uploading summary in FORM GST DRC-01 and FORM GST DRC-07 - waiver of procedural requirement - service of notice and order under Section 169 of the CGST Act, 2017 - Whether non-uploading of the summary of the show-cause notice and the summary of the order in FORM GST DRC-01 and FORM GST DRC-07 invalidates the proceedings. - HELD THAT: - The Court observed that Rule 142 and the CBIC Instruction require electronic uploading of summaries, but non-uploading of the summary is a procedural shortcoming distinct from service of notice/order under Section 169. The petitioner had received physical service of the Demand-cum-Show Cause Notice and the Order-in-Original and did not raise non-uploading in its reply to the show-cause notice; by failing to do so the petitioner was taken to have waived the procedural requirement. The Court relied on authority recognizing that mandatory procedural provisions enacted for the benefit of an individual may be waived by that individual. No prejudice from non-uploading was pleaded. Accordingly non-uploading did not furnish an exceptional ground to entertain the writ petition. [Paras 21, 22, 23, 24, 26]

Ground based on non-uploading of FORM GST DRC-01/DRC-07 rejected; non-uploading held not to vitiate proceedings where service under Section 169 occurred and petitioner waived the defect.

Principle that one who hears must decide and the requirement of personal hearing - service of notice and order under Section 169 of the CGST Act, 2017 - Whether the fact that the notice was issued by one officer and the order was passed by another officer, coupled with alleged denial of personal hearing, vitiates the impugned order. - HELD THAT: - The Court found that the Demand-cum-Show Cause Notice specified before whom the petitioner was to show cause and that the record shows multiple dates were fixed for personal hearing, which the petitioner did not attend. The petitioner did not plead lack of notice of hearing dates. In these circumstances the Court concluded that the contention that one authority issued the notice and another passed the order did not amount to a breach of natural justice; the adjudicating authority decided the matter on the notice and the written reply. The dispute about service of hearing notices raised factual questions not fit for resolution in writ proceedings where evidence would be required; such factual disputes are amenable to the appellate forum. [Paras 27, 28, 29]

Contention of invalidity on account of different officers and alleged denial of personal hearing rejected; no established breach of natural justice.

Final Conclusion: The writ petition, though maintainable, is not entertained. The challenges based on non-uploading of summaries (FORM GST DRC-01/DRC-07), change of officer, and alleged denial of personal hearing were rejected; the petitioner is directed to pursue its remedies by way of statutory appeal under Section 107, with the appellate authority to consider the time spent in the writ proceedings for limitation.

Condonation of delay - Review petition - Precedent and stare decisis - Distinguishing contrary High Court decisions - Seizure of cash and stock-in-trade

Condonation of delay - Condonation of delay in filing the review petition (delay of 97 days). - HELD THAT: - The only ground advanced to explain the 97 day delay was that the petitioner is a Government Department and routine procedural formalities caused the delay. The Court found that ground plainly insufficient to explain the inordinate delay and therefore declined to condone the initial delay in filing the review petition. The petition is consequently not entertainable on account of that unexplained delay. [Paras 3, 4, 13]

Application for condonation of delay in filing (CM No.15938/2024) is dismissed and the review petition is not entertained on that ground.

Condonation of delay - Condonation of delay in re filing the review petition (delay of 38 days). - HELD THAT: - Two reasons were stated for the re filing delay: ill health of counsel and the same departmental procedural formalities previously invoked. The Court rejected the latter as a reiteration and inadequate, but treated the ill health of counsel as a persuasive ground. On that basis the Court allowed the application for condonation of delay in re filing and condoned the 38 day delay. [Paras 5, 6, 7, 13]

Application for condonation of delay in re filing (CM No.15941/2024) is allowed and the delay in re filing is condoned.

Review petition - Precedent and stare decisis - Distinguishing contrary High Court decisions - Seizure of cash and stock-in-trade - Whether the order dated 22.08.2023 should be reviewed on the basis of a contrary Kerala High Court decision and whether the controlling Delhi High Court authority applies. - HELD THAT: - Although the Court examined the grounds of review, the earlier decision of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. was found squarely applicable. The review petitioner relied on the Kerala High Court decision in Shabu George & Anr v. State Tax Officer & Ors., which criticized seizure of cash not forming part of stock in trade; but the present Court held that such a contrary view did not furnish a ground to review the order where the controlling Delhi High Court precedent applies to the facts of the case. The Court noted that, in the present case, the respondents did not contend that the seized cash was stock in trade and that the Kerala decision and the earlier Madhya Pradesh decision were already noticed in the controlling Delhi High Court decision. Consequently no ground for review was made out. [Paras 9, 10, 11, 12, 13]

No ground to review the order dated 22.08.2023; the review petition is dismissed on merits in view of binding precedent.

Final Conclusion: The application for condonation of delay in filing is dismissed and the review petition is dismissed; the application for condonation of delay in re filing is allowed and the re filing delay is condoned; remaining connected applications are disposed of.

Refund under Section 54(3) of the CGST Act - annulment of a refund order only by prescribed appellate or revision remedy - power of the authority to reopen or recall its own refund order without initiating appeal or revision - procedure for setting aside a previously issued certificate/order to be followed before invoking alternate statutory provisions - interim protection from coercive action

Refund under Section 54(3) of the CGST Act - annulment of a refund order only by prescribed appellate or revision remedy - power of the authority to reopen or recall its own refund order without initiating appeal or revision - interim protection from coercive action - Whether coercive action could be taken against the petitioner pursuant to the Order-in-Original dated 10.01.2024 which purportedly calls for refund on a different classification, without the authority first invoking the prescribed appellate or revision remedies. - HELD THAT: - The petitioner challenged notices issued after an order under Section 54 was passed in its favour, contending that the same authority cannot annul or revisit that refund order except through the statutory remedies of appeal under Section 107 or revision under Section 108. Reliance was placed on High Court precedents which held that where a statutory scheme prescribes a particular procedure for setting aside or revisiting an earlier certificate/order, the department cannot bypass that procedure and issue show-cause notices or take coercive steps. Having considered the submissions and interim orders of other High Courts on the same question, the Court restrained coercive action against the petitioner, subject to further hearing, as a protective measure pending adjudication on merits. [Paras 9]

Till the next date of hearing, no coercive action shall be taken against the petitioner pursuant to the Order-in-Original dated 10.01.2024.

Final Conclusion: Rule nisi issued; interim protection granted restraining coercive action pursuant to the impugned Order-in-Original dated 10.01.2024 until the next listed hearing (22.07.2024), with liberty to the respondents to file counters and the matter to be heard further.

Non-speaking order - failure to consider reply filed by assessee / noticee - requirement of a speaking order - remand for fresh consideration - opportunity of personal hearing - order under Section 73 of the Central Goods and Services Tax Act, 2017

Non-speaking order - failure to consider reply filed by assessee / noticee - requirement of a speaking order - Impugned order passed under Section 73 was cryptic, did not take into account the reply filed by the petitioner and hence could not be sustained. - HELD THAT: - The Court found that the order under challenge records that no proper reply was submitted and labels the reply as unsatisfactory but does not set out reasons or engage with the petitioner's averments. The impugned order is thus a non-speaking order which fails to consider the reply dated 25.10.2023 and the petitioner's explanation about an inadvertent error in the manner of reporting the credit. For these reasons the order cannot be sustained and requires re-examination by the authority with proper reasons. [Paras 2, 3]

Impugned order set aside for being cryptic and for failure to consider the petitioner's reply.

Remand for fresh consideration - opportunity of personal hearing - requirement of a speaking order - Matter remitted to the proper officer to pass a fresh speaking order after considering the petitioner's reply and after granting personal hearing. - HELD THAT: - The Court directed that the matter be remitted to the proper officer for fresh adjudication with explicit instructions to take into account the reply filed by the petitioner and to afford an opportunity of personal hearing. The Court expressly refrained from expressing any view on the merits of the contentions of either party and reserved all rights and contentions for determination by the authority on fresh consideration. [Paras 4]

Matter remitted for fresh speaking order and personal hearing; merits left open.

Final Conclusion: Impugned order under Section 73 set aside as non-speaking; matter remitted to the proper officer to pass a fresh speaking order after taking into account the petitioner's reply and affording personal hearing; merits not adjudicated.

Appeal against advance ruling - mandatory filing fee for appeal - non-admission of appeal for want of requisite fee - mutatis mutandis application of IGST Act provisions

Mandatory filing fee for appeal - non-admission of appeal for want of requisite fee - mutatis mutandis application of IGST Act provisions - Whether the appeal filed against the advance ruling is maintainable in view of non-deposit of the prescribed fee. - HELD THAT: - The Appellate Authority examined the statutory requirement that an appeal against an advance ruling must be filed in the prescribed form and accompanied by the prescribed fee. Applying the mutatis mutandis operation of the IGST Act, the Authority concluded that the appellant was required to deposit the full fee (totaling twenty thousand) as a precondition for admission of the appeal. The records showed that the appellant deposited only ten thousand under the IGST head and therefore failed to comply with the statutory precondition. Since the appeal was incomplete for want of the requisite fee, the Authority recorded that it could not admit the appeal and proceeded to reject it on that ground without entering into the merits of the underlying tax classification dispute. [Paras 7]

Appeal not admitted and rejected for non-deposit of the requisite fee.

Final Conclusion: The appeal filed by M/s. Subway Systems India Private Limited (Now Eversub India Pvt. Ltd.) is rejected/not admitted because the appellant failed to deposit the requisite fee prescribed for filing an appeal against an advance ruling.

Foreign Tax Credit - Form 67 filing requirement - Rule 128(9) timing of Form 67 - Section 90 / DTAA Article 25 credit - procedural versus substantive requirement - revised return under Section 139(5)

Foreign Tax Credit - Form 67 filing requirement - Rule 128(9) timing of Form 67 - Section 90 / DTAA Article 25 credit - procedural versus substantive requirement - revised return under Section 139(5) - Assessee entitled to foreign tax credit for taxes withheld in the USA for A.Y. 2020-21 despite Form 67 not being filed with the original ITR, and direction to allow FTC limited to the proportion of Indian tax payable. - HELD THAT: - The Tribunal noted that the assessee's salary income was taxed in the USA and that the claim for foreign tax credit under Article 25 of the India-USA DTAA and section 90 of the Act was supported by filing Form 67 subsequently and by filing a revised return. Rule 128(9) prescribes the time for filing Form 67 but does not, in the Tribunal's view, mandate denial of the substantive right to credit where the underlying tax has been paid and Form 67 was placed on record subsequently. The Tribunal treated the filing requirement as procedural/directory and observed there was no legislative intention in the Act or Rules to extinguish the substantive right to FTC for non-compliance with the procedural timeline. Applying section 90 read with Article 25(2)(a), the Tribunal directed the assessing officer (JAO) to allow FTC, subject to the statutory limitation (credit limited to the proportion of Indian tax payable). Reliance was placed on earlier tribunal decisions holding procedural non-compliance should not defeat the substantive claim to FTC. The Tribunal therefore allowed the appeal and remitted to the JAO to grant the credit within the statutory limitation.

Appeal allowed; JAO directed to allow foreign tax credit for A.Y. 2020-21 limited to the proportion of Indian tax payable.

Final Conclusion: The Tribunal allowed the assessee's appeal for A.Y. 2020-21, holding that late or procedural non-compliance in filing Form 67 did not defeat the substantive right to foreign tax credit under section 90 read with Article 25 of the India-USA DTAA, and directed the assessing officer to grant the credit limited to the proportion of Indian tax payable.

Explanation of cash credits under Section 68 - identity, creditworthiness and genuineness of lenders - burden of proof on assessee and shift to Revenue - remand for de-novo consideration to ascertain creditworthiness - faceless assessment remand procedural difficulties

Identity of creditors - explanation of cash credits under Section 68 - Identity of the lenders advancing unsecured loans to the assessee - HELD THAT: - The Tribunal found that the assessee proved the identity of the three persons who advanced unsecured loans during the appellate proceedings before the CIT(A). The Court reiterated the principle under Section 68 that the assessee must explain the identity, creditworthiness and genuineness of amounts credited in its books, and that proof of identity is a distinct and primary limb of this obligation. Although identity was accepted, the Tribunal observed that the remaining limbs were not satisfactorily established or investigated. [Paras 9, 10]

Identity of the lenders held proved but this did not discharge the assessee's overall onus under Section 68.

Creditworthiness and genuineness of lenders - remand for fresh enquiry and verification - reasonable opportunity to Assessing Officer for investigation - Whether the creditworthiness and genuineness of the loan transactions were satisfactorily explained and investigated - HELD THAT: - The Tribunal concluded that the assessee failed to satisfactorily explain the creditworthiness/financial strength of the lenders and the genuineness of the transactions, because the documents furnished before the CIT(A) were not subjected to the requisite enquiry or investigation. The AO had not conducted independent inquiries during assessment proceedings and, although the CIT(A) received additional evidence, he did not provide reasonable and sufficient opportunity to the AO to verify the material-partly due to procedural difficulties in the faceless system. In the interest of justice and having regard to the unexamined nature of the crucial limbs of Section 68, the Tribunal declined to adjudicate on the merits and instead set aside the CIT(A)'s order for de-novo consideration by the AO, directing proper investigation and opportunity to the parties. [Paras 10, 11, 12]

Impugned order set aside and matter remitted to the Assessing Officer for fresh verification and de-novo consideration of creditworthiness and genuineness, with directions to afford reasonable opportunity and for the assessee to ensure compliance.

Final Conclusion: Without adjudicating the merits of the addition, the Tribunal allowed the Revenue's appeal for statistical purposes, set aside the CIT(A)'s order and remitted the matter to the Assessing Officer for de-novo consideration to verify the creditworthiness and genuineness of the loans, directing that the assessee comply with requirements and the AO afford reasonable opportunities before deciding the case.

Condonation of delay during COVID 19 period pursuant to Supreme Court directions - sales commission - marketing services - accruing and arising in India under section 9(1) of the Income tax Act - Fees for Included Services under Article 12(4) of the India USA DTAA - meaning and application of 'make available' under the DTAA

Condonation of delay during COVID 19 period pursuant to Supreme Court directions - Admission of the appeal despite delay in filing - HELD THAT: - The Tribunal noted the appeal was filed 89 days beyond the statutory limitation. The assessee relied on Supreme Court orders condoning delays for the period affected by the COVID 19 pandemic. Applying those directions, the Tribunal exercised its discretion to condone the delay and admitted the appeal for adjudication on merits. [Paras 2]

Delay condoned and appeal admitted.

Sales commission - marketing services - accruing and arising in India under section 9(1) of the Income tax Act - Fees for Included Services under Article 12(4) of the India USA DTAA - meaning and application of 'make available' under the DTAA - Whether the receipts characterised as sales commission are taxable in India as 'Fees for Included Services' under Article 12(4) of the India USA DTAA (and thereby accrue/arise in India under section 9(1)) - HELD THAT: - The Tribunal examined the marketing services agreement and the nature of activities performed by the assessee. It found the assessee's role was limited to identifying and liaising with customers, understanding workflow requirements and communicating those requirements to the Indian entity which alone contracted with and executed the work for end clients. The Tribunal held that these activities constituted marketing/sales commission and did not amount to making available technical processes or the substantive services executed in India. Consequently, the receipts could not be treated as 'Fees for Included Services' under Article 12(4)(b) of the India USA DTAA and were not taxable in India as income accruing or arising under section 9(1). The Tribunal noted prior determinations on similar facts and applied that reasoning to delete the addition made by the assessing officer and upheld that the payments were sales commission rather than FIS. [Paras 8, 9]

Addition held unsustainable; payments treated as sales commission and not taxable in India as Fees for Included Services.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and on merits allowed the appeal by holding that the impugned receipts are sales commission for marketing services and do not constitute 'Fees for Included Services' taxable in India under Article 12(4) of the India USA DTAA or as income accruing/arising in India under section 9(1).

Rejection of books of account under section 145(3) of the Act - estimation of income on non-cooperation and lack of primary evidence - estimation of net profit by reference to past profit and presumptive rate - income includes loss for jurisdictional allocation under CBDT Instruction No. 01/2011

Income includes loss for jurisdictional allocation under CBDT Instruction No. 01/2011 - Validity of notice issued by DCIT in view of CBDT Instruction No. 01/2011 where assessee declared a loss exceeding Rs.30 lakhs - HELD THAT: - The Tribunal held that the CBDT Instruction allocating jurisdiction over corporate returns in metro cities to DCIT/ACIT for cases with income of Rs.30 lakhs and above applies equally where the return discloses a loss, because the inclusive definition of "income" under the Income-tax Act embraces losses. The Tribunal relied on the settled principle in CIT v. Harprasad & Co. P. Ltd. and subsequent authority reaffirming that 'income' includes losses, and concluded that the DCIT was competent to issue notice u/s. 143(2) when the reported loss exceeded Rs.30 lakhs. The assessee's reliance on other decisions was found distinguishable on facts and not decisive on the specific jurisdictional point here. [Paras 9, 10]

Objection to jurisdiction rejected; notice issued by DCIT held valid.

Rejection of books of account under section 145(3) of the Act - estimation of income on non-cooperation and lack of primary evidence - estimation of net profit by reference to past profit and presumptive rate - Validity of rejection of books of account and of estimating net profit at 10% of total receipts - HELD THAT: - The Tribunal upheld the AO's rejection of books under section 145(3) after examining the assessment record which showed that the assessee failed to furnish project-wise details, copies of bills, delivery challans, party-wise ledger accounts, WIP workings and other primary evidence called for under notice u/s. 142(1). The AO recorded specific factual findings that the loss was concentrated in one project, purchases were not supported, and there were discrepancies between sales, WIP and expenses, thereby undermining the reliability of accounts. The assessee neither produced the withheld documents before the AO nor during appellate proceedings and offered no explanation for non-production. Given the non-cooperation and the documented defects, the Tribunal found the AO's satisfaction to be substantiated and the books rightly rejected. As to quantum, the AO estimated net profit at 10% by reference to the assessee's prior year net profit (17.82%) and by noting that a 10% rate is consistent with presumptive norms applied for civil construction; the Tribunal held that the chosen 10% estimate was reasonable and declined to interfere. [Paras 14, 15, 23, 24, 25]

Rejection of books upheld and estimation of income at net profit rate of 10% sustained.

Final Conclusion: Appeal dismissed; jurisdictional objection rejected and the AO's rejection of books of account and consequent estimation of income at 10% upheld as reasonable in view of non-production of primary evidence and recorded factual findings.

Addition on account of notional interest - notional income - concealment penalty under section 271(1)(c) - precedential effect of higher court order

Addition on account of notional interest - notional income - precedential effect of higher court order - Deletion of the addition of Rs. 3,87,075/- computed as notional interest on alleged HSBC, Geneva account for AY 2012-13. - HELD THAT: - The Tribunal examined that identical notional-interest additions in earlier assessment years were adjudicated in the assessee's favour by the Tribunal and thereafter upheld by the Hon'ble Delhi High Court which held that where no incriminating material was found during the search, the Assessing Officer could not compute notional interest on the disputed balance. The facts and law in AY 2012-13 were the same as in the earlier years. Respectfully following the decision of the Hon'ble Delhi High Court, the Tribunal found the impugned addition to be not sustainable and deleted the addition made by the AO and confirmed by the CIT(A). [Paras 8, 9]

Impugned addition of Rs. 3,87,075/- on account of notional interest is deleted.

Concealment penalty under section 271(1)(c) - penalty vacated as consequential - Quashing of penalty imposed under section 271(1)(c) in respect of the deleted addition for AY 2012-13. - HELD THAT: - Having deleted the substantive addition in the quantum appeal, the Tribunal held that the penalty levied under section 271(1)(c) in respect of that addition had no basis to stand. The Tribunal therefore directed the Assessing Officer to vacate the penalty imposed on account of the deleted addition. [Paras 11]

Penalty under section 271(1)(c) is set aside and the AO is directed to vacate the penalty.

Final Conclusion: The appeals are allowed: the notional-interest addition for AY 2012-13 is deleted and the corresponding concealment penalty under section 271(1)(c) is vacated.

Addition under section 68 as cash credits - onus on the assessee to prove nature and source of credits - shifting burden on the Revenue to rebut prima facie proof with cogent evidence - reliance on untested statements recorded during search - retraction affidavit and need for cross-examination of declarant - documentary evidence from public records and banking channels establishing genuineness - allowability of interest expenditure where loan is held genuine and TDS deducted

Addition under section 68 as cash credits - onus on the assessee to prove nature and source of credits - shifting burden on the Revenue to rebut prima facie proof with cogent evidence - reliance on untested statements recorded during search - retraction affidavit and need for cross-examination of declarant - documentary evidence from public records and banking channels establishing genuineness - Deletion of addition of Rs. 1.17 crores treated as unexplained cash credits under section 68 for AY. 2014-15 (and similarly decided for AY. 2015-16). - HELD THAT: - The assessee produced primary documentary evidence - bank entries showing credit by banking channel, confirmations from the lender companies, the lenders' ITRs/balance-sheets showing share capital and reserves, and evidence of repayment and TDS deduction - to establish identity, creditworthiness and genuineness of the alleged loans. Having made out a prima facie case, the evidentiary onus shifted to the Assessing Officer to rebut the same with cogent evidence. The AO relied solely on statements recorded during a search by a third party (Shri Vipul Vidur Bhatt) that those lender companies were paper entities; the assessee produced an affidavit of retraction alleging coercion. The AO did not summon or permit cross-examination of the declarant nor otherwise test the retraction, and did not controvert the primary documents filed by the assessee. In those circumstances, drawing an adverse inference and sustaining the addition was impermissible; the Revenue failed to discharge the onus to rebut the assessee's proof. The Tribunal therefore deleted the addition, following the principle that voluminous and public documentary evidence can shift the burden to Revenue and untested statements cannot safely be the sole basis for adverse findings. [Paras 6, 7]

Addition of Rs. 1.17 crores under section 68 is deleted.

Allowability of interest expenditure where loan is held genuine and TDS deducted - reliance on documentary proof and repayment to sustain deduction - Allowability of interest disallowances: interest disallowance of Rs. 4,80,000 for AY. 2014-15 and Rs. 10,53,000 for AY. 2015-16 is set aside and interest claim allowed. - HELD THAT: - Since the Tribunal held that the loans from the two lender companies were genuine on the basis of documentary evidence (bank transfers, confirmations, lenders' balance-sheets, repayment and TDS compliance), the interest expenditure claimed and previously disallowed cannot be sustained. The interest paid (after deduction of TDS) is allowable once the underlying loan transaction is held to be genuine and has been repaid as evidenced in the record. [Paras 7]

Disallowance of interest is reversed and interest expenditure allowed for the respective assessment years.

Final Conclusion: Both appeals are allowed: the addition of Rs. 1.17 crores treated as unexplained cash credits is deleted and the related interest disallowances for AY. 2014-15 and AY. 2015-16 are reversed, the Tribunal having found that the assessee furnished prima facie documentary proof which the Revenue failed to rebut by cogent and tested evidence.

Concealment of income - Furnishing of inaccurate particulars of income - Penalty under section 271(1)(c) of the Income Tax Act, 1961 - Notice under section 274 read with section 271(1)(c) - Initiation of penalty proceedings must adhere to satisfaction recorded - Where two views are possible penalty is not leviable - Rejection of claim does not ipso facto lead to levy of penalty

Concealment of income - Furnishing of inaccurate particulars of income - Penalty under section 271(1)(c) of the Income Tax Act, 1961 - Initiation of penalty proceedings must adhere to satisfaction recorded - Where two views are possible penalty is not leviable - Rejection of claim does not ipso facto lead to levy of penalty - Whether penalty can be imposed on a limb for which no satisfaction was recorded and no penalty proceedings were initiated - HELD THAT: - The Tribunal examined the assessment and penalty records and found that the AO had recorded satisfaction initiating proceedings for furnishing of inaccurate particulars of income but the notice under section 274 read with section 271(1)(c) was framed in terms of 'concealment of particulars of income OR furnishing of inaccurate particulars' and, ultimately, penalty was imposed treating both limbs interchangeably. Reliance was placed on binding and persuasive authorities holding that concealment and furnishing inaccurate particulars are distinct connotations and that the AO must come to a positive finding on the specific limb relied upon. The Tribunal noted that where there is confusion in recording satisfaction or where penalty is levied on a limb for which no satisfaction was recorded and no proceedings were initiated, the penalty is unsustainable. The Tribunal also observed that mere rejection of a claim does not automatically amount to furnishing of inaccurate particulars and that where two views are possible the levy of penalty is not warranted. Applying these principles to the facts, and having regard to the Ld. Commissioner's conclusion that the AO did not adhere to the limb recorded for initiation while imposing penalty, the Tribunal upheld deletion of the penalty. [Paras 10]

Penalty deleted; Revenue's appeal dismissed insofar as it seeks restoration of the penalty.

Notice under section 274 read with section 271(1)(c) - Initiation of penalty proceedings must adhere to satisfaction recorded - Validity and consequences of a notice issued without specifying the particular limb of section 271(1)(c) for which proceedings were started - HELD THAT: - The Tribunal noted the defect in the notice being not specific about the particular limb but, having affirmed the deletion of penalty on substantive grounds, declined to enter upon separate adjudication of this issue as it would be a futile exercise in the facts of the case. The point was therefore not finally adjudicated by the Tribunal. [Paras 11]

Left unadjudicated by the Tribunal (declined for purposeless adjudication in view of the outcome); no separate decision on the effect of the defective notice.

Final Conclusion: The deletion of penalty under section 271(1)(c) by the Ld. Commissioner is sustained; the Revenue's appeal and the assessee's cross-objections are dismissed. The Tribunal did not separately decide the legal effect of the notice under section 274 read with section 271(1)(c) that did not specify the limb, as adjudication on that point was rendered unnecessary by the outcome.

Time limit for filing Form No.10AB - first proviso to section 80G(5) - timeline for renewal - CBDT circulars and extension of filing deadlines - illegitimacy of clause 5(ii) of Circular No.6/2023 - remand for fresh consideration - direction to decide applications on merits without raising timeline

Time limit for filing Form No.10AB - first proviso to section 80G(5) - timeline for renewal - CBDT circulars and extension of filing deadlines - illegitimacy of clause 5(ii) of Circular No.6/2023 - remand for fresh consideration - direction to decide applications on merits without raising timeline - Application in Form No.10AB filed after the statutory timeline under clause (iii) of the first proviso to section 80G(5) and its rejection as time barred - HELD THAT: - The Tribunal examined whether the application dated 30.03.2023 for registration under clause (iii) of the first proviso to section 80G(5) was barred by the statutory timeline. The bench noted a co ordinate ITAT decision holding that, having regard to CBDT circulars which extended timelines for related forms in light of transitional hardship, the timeline under clause (iii) should be treated as directory and that the extension up to 30.09.2023 ought to be applied to Form No.10AB, with the matter remanded to CIT(Exemptions) for decision on merits. The Tribunal further relied on the decision of the High Court of Madras holding clause 5(ii) of CBDT Circular No.6/2023 dated 24.05.2023 to be illegitimate, arbitrary and ultra vires, and directing that certain applications be treated as within time and decided on merits. Applying these authorities, the Tribunal concluded that the CIT(E)'s rejection on the sole ground of timeline could not stand and that the application must be considered on merits without raising the timeline objection. [Paras 5, 6, 7]

Impugned order rejecting the Form No.10AB application as time barred set aside; matter remitted to the CIT(Exemption) to consider the application on merits without raising the timeline objection.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(Exemption)'s order rejecting the application as time barred, and directed reconsideration of the Form No.10AB application on merits without permitting the timeline objection.

Condonation of delay - perversity of findings - forgery or production of a fake document and requisite knowledge - acceptance and verification of chartered accountant certificate - remand for fresh consideration - right to personal hearing

Condonation of delay - Delay in filing the appeals of 1158 days is condoned. - HELD THAT: - The appellants had an inordinate delay but offered an explanation showing they did not sleep over their rights and diligently prosecuted the matter. Initial advice to file a rectification application before the tribunal, the pendency and dismissal of that application, and the contemporaneous pursuit of criminal proceedings (including filing of complaint, magistrate's order for further inquiry, FIR and subsequent proceedings) constituted a plausible explanation for the delay. On this factual foundation the court exercised discretion to condone the delay. [Paras 1, 3, 4]

Applications to condone delay are allowed and the delay in filing the appeals is condoned.

Forgery or production of a fake document and requisite knowledge - perversity of findings - The finding by the adjudicating and appellate authorities that the appellants knowingly produced a fake chartered accountant certificate is perverse and unsupported by evidence on record. - HELD THAT: - Although the adjudicating authority and the appellate authority concluded that the certificate was fake and held the appellants responsible, there is no material on record to show that the appellants acted with knowledge or deliberate intention to produce a false document. In the absence of such material the courts below ought not to have recorded a finding imputing culpable knowledge to the appellants. That conclusion is therefore set aside as perverse. [Paras 5]

Finding that the appellants knowingly produced a fake document is set aside as perverse for want of supporting material.

Acceptance and verification of chartered accountant certificate - right to personal hearing - remand for fresh consideration - The matter is remanded to the adjudicating authority to verify the chartered accountant certificate and other records, afford opportunity of personal hearing, and decide afresh on merits without being influenced by earlier observations. - HELD THAT: - A chartered accountant certificate is not to be accepted as conclusive 'gospel truth' by the adjudicating authority. The authority is entitled and obliged to verify whether duty has been passed on and may call for additional records; even if an earlier certificate is defective or unacceptable, the assessee can produce another certificate. In light of the absence of proof of deliberate misconduct by the appellants and consistent tribunal practice of permitting re-examination of fresh certificates, the High Court directs remand for fresh consideration. The adjudicating authority must consider the chartered accountant certificate dated 23.11.2016 (R. Rampuria & Co.), call for other documents and records, afford a personal hearing to the authorised representative, test the veracity of documents, and decide on merits in accordance with law uninfluenced by prior adverse observations. [Paras 7, 8, 9, 10, 11]

Matter remitted to the adjudicating authority for fresh decision after verification of the chartered accountant certificate and other records, with an opportunity of personal hearing; prior observations set aside.

Final Conclusion: The appeals are allowed: condonation of delay is granted; the adverse finding that the appellants knowingly produced a fake chartered accountant certificate is set aside as perverse; and the matter is remanded to the adjudicating authority to verify the certificate and related records, afford a personal hearing and decide afresh on merits uninfluenced by earlier observations.

Provisional release under Section 110A - Limitation under Section 110(2) - Statutory proviso excluding six months where provisional release under Section 110A - Conditions for provisional release - Protection of revenue by security

Provisional release under Section 110A - Limitation under Section 110(2) - Statutory proviso excluding six months where provisional release under Section 110A - Effect of the proviso to Section 110(2) where an order of provisional release has been passed under Section 110A - HELD THAT: - The Tribunal allowed the respondent's appeal solely on the ground that no show cause notice had been issued within the six month period under Section 110(2). The Court examined the Board Circular No.1/2017 and the subsequently amended provision which, by the second proviso inserted with effect from 29.3.2018, provides that the specified period of six months shall not apply where an order of provisional release under Section 110A has been passed. The Circular therefore cannot override or apply to the statutory proviso enacted later. The Tribunal's view based on non issuance of a show cause notice within six months is inconsistent with the statutory proviso and cannot stand. [Paras 3, 4, 6]

Tribunal order directing unconditional release on the ground of limitation under Section 110(2) is set aside; the second proviso to Section 110(2) applies where provisional release under Section 110A has been passed.

Conditions for provisional release - Protection of revenue by security - Validity and quantum of securities/conditions imposed for provisional release of seized goods - HELD THAT: - The adjudicating authority had granted provisional release subject to two conditions: execution of a bond for the full estimated value of the goods and provision of a bank guarantee/cash deposit to cover estimated differential duty, probable fine and penalty. The Court found no basis in the adjudication or appellate orders explaining how the provisional estimated value was determined. While there was no reason to interfere with the requirement of a bond for the full estimated value, the Court considered it necessary in the interest of revenue to adjust the second security condition. On a prima facie appraisal and in absence of explained valuation, the Court modified the security structure to require a bank guarantee for a reduced amount and a bond for the remaining portion, directing provisional release on compliance. [Paras 7, 8, 9]

Original bond requirement for full estimated value is affirmed; the bank guarantee/cash deposit requirement is modified to a bank guarantee for Rs. 25,00,000 and a bond for Rs. 40,00,000; goods to be provisionally released on compliance within 10 days.

Final Conclusion: The departmental appeal is allowed; the Tribunal's order is set aside as contrary to the proviso to Section 110(2) where provisional release under Section 110A has been passed, and the conditions for provisional release are modified as indicated, with provisional release directed on compliance within the stipulated time.

Verification of genuineness of duty credit scrip - production of physical scrip before the proper officer - strict compliance with conditions of exemption notifications - caveat emptor in purchase of transferable scrips - fraud vitiates transactions - penalty under section 114A - extended period of limitation

Verification of genuineness of duty credit scrip - production of physical scrip before the proper officer - strict compliance with conditions of exemption notifications - fraud vitiates transactions - Whether the appellants were entitled to exemption by debiting the duty credit scrip and whether the demand for customs duty was rightly confirmed. - HELD THAT: - The Tribunal found that the Foreign Trade Policy, its Handbook of Procedures and the corresponding exemption notifications required production and verification of the physical duty credit scrip before registration/clearance and that these conditions are to be strictly construed. The appellants admitted they did not possess or produce the original physical scrip, did not verify the scrip from DGFT website, and did not produce the scrip before the proper officer at clearance. Given these admitted failures and the requirement of pre-registration verification (as reinforced by Board circulars and HBP para 3.11.3), the appellants could not claim the benefit of the exemption. The Tribunal accepted the department's finding that the original licence had been fraudulently re-registered with altered date and value, and held that the appellant's failure to verify or produce the scrip defeated any claim of good faith and allowed the revenue to deny the exemption and confirm the demand. [Paras 12, 13, 14, 15, 16]

Demand for customs duty was rightly confirmed and the exemption was not available to the appellants for failure to verify and produce the physical scrip.

Caveat emptor in purchase of transferable scrips - penalty under section 114A - extended period of limitation - Whether penalties (including under section 114A) and invocation of extended period of limitation were correctly imposed. - HELD THAT: - The Tribunal held there was no direct evidence that the appellants had prior knowledge of fraud, but emphasised the buyer's duty to take reasonable precautions (caveat emptor) when purchasing an instrument entitling to large tax benefit. The appellants failed to make basic enquiries, did not obtain physical scrips and could not produce them at clearance; such omissions show lack of requisite precautions and breach of conditions for exemption. Since the extended period of limitation was validly invoked on account of fraud and the demand was upheld, the mandatory penalty under section 114A (equal to the duty not paid) was also sustainable. The Tribunal therefore upheld the penalties imposed under the various sections and found no infirmity in the orders challenged. [Paras 18, 19, 20, 21]

Penalties including that under section 114A and invocation of the extended period were rightly imposed and are upheld.

Final Conclusion: The Tribunal upheld the order under challenge: the demand for customs duty was confirmed for failure to verify and produce the duty credit scrip and the penalties (including under section 114A) and invocation of the extended limitation period were sustained; both appeals are dismissed.

Construction of Residential Complex service - builder/promoter liability - prospective effect of the Explanation to Section 65(105)(zzzh) - composite contract/works contract service - abatement and quantification indicating composite nature - appropriation of service tax paid for post-1.7.2010 period

Construction of Residential Complex service - builder/promoter liability - prospective effect of the Explanation to Section 65(105)(zzzh) - composite contract/works contract service - abatement and quantification indicating composite nature - Liability to pay service tax under Construction of Residential Complex service for the period prior to 1.7.2010 - HELD THAT: - The Tribunal applied earlier decisions holding that the Explanation inserted w.e.f. 1.7.2010 to Section 65(105)(zzzh) operates prospectively and expanded the scope of taxable service to treat the builder as deemed provider only from that date. The impugned demand had been quantified after granting the benefit of abatement, establishing that the contracts were composite in nature involving supply of materials and rendition of services; for composite contracts prior to 1.7.2010 the taxable incidence fell under works contract service and not under Construction of Residential Complex service. Applying these principles and relying on precedents including the Tribunal and Apex Court rulings cited, the demand of service tax, interest and penalties for the period up to 1.7.2010 cannot be sustained and is set aside. [Paras 5, 6, 8]

Demand of service tax, interest and penalties for the period up to 1.7.2010 set aside.

Appropriation of service tax paid for post-1.7.2010 period - post-1.7.2010 liability - Validity of appropriation of service tax amount paid for July 2010 to September 2010 - HELD THAT: - The show cause notice and adjudication record the appellant had paid service tax for July 2010 to September 2010 and that amount was appropriated by the authority. The appellant did not contest the appropriation for the post-1.7.2010 period. The Tribunal declined to interfere with the appropriation and left the payment undisturbed. [Paras 7, 8]

Order of appropriation of the service tax paid for July 2010 to September 2010 is not interfered with.

Final Conclusion: The appeal is allowed: the demand of service tax, interest and penalties for the period up to 1.7.2010 is set aside, while the impugned authority's appropriation of service tax paid for July-September 2010 is left undisturbed; consequential relief, if any, to follow.

Cenvat credit admissibility - input service - sales promotion as input service - nexus with manufacture or provision of output service - burden of proof under Rule 9(5) of the Cenvat Credit Rules, 2004

Cenvat credit admissibility - input service - sales promotion as input service - nexus with manufacture or provision of output service - Cenvat credit on event management/hotel charges held to be admissible as input service - HELD THAT: - The Tribunal examined the definition of "input service" in Rule 2(1) of the Cenvat Credit Rules, 2004, including the inclusive part which expressly covers services used for advertisement or sales promotion. Applying that definition and on consideration of the appellant's case and binding/co-ordinate precedents (including decisions referred to by the parties), the Tribunal found that event management/hotel services were used in relation to the appellant's business promotion activities and bore sufficient nexus with the manufacture and marketing of the final product. The Tribunal disagreed with the adjudicating authority's denial of credit for lack of direct utilization in manufacture and held that the impugned order lacked merit, set it aside and allowed the appeal. [Paras 4, 5]

Credit allowed; impugned order set aside and appeal allowed.

Burden of proof under Rule 9(5) of the Cenvat Credit Rules, 2004 - evidentiary nexus requirement - Effect of Rule 9(5) burden of proof on admissibility and its application in the present case - HELD THAT: - The Tribunal noted Rule 9(5), which casts the burden of proof regarding admissibility of Cenvat credit upon the manufacturer or provider of output service claiming such credit. While recording that the onus lies on the appellant to prove admissibility, the Tribunal proceeded to examine the material and precedents and concluded that the appellant had, on the facts and in light of authorities, established the requisite nexus between the disputed services and its business activities. Consequently the Tribunal did not uphold the assessing authority's denial based on alleged failure of proof. [Paras 4, 6]

Although the burden under Rule 9(5) rests on the assessee, the Tribunal found the requisite proof/sufficient nexus established and therefore did not sustain the denial of credit.

Final Conclusion: The appeal is allowed: the Tribunal held that event management/hotel charges qualify as input services when used for sales-promotion/related business activities and, despite the statutory burden of proof on the assessee under Rule 9(5), found that sufficient nexus was established and set aside the impugned order.

Goods Transport Agency service - consignment note requirement - classification as supply of tangible goods for use - reverse charge mechanism - prohibition on double taxation / Article 265 - service tax demand, interest and penalties

Goods Transport Agency service - consignment note requirement - classification as supply of tangible goods for use - Transactions between the appellant and its client for carriage of goods are classifiable as Goods Transport Agency (GTA) service and not as supply of tangible goods for use. - HELD THAT: - The Tribunal examined the terms of the contract and the consignment notes issued by the appellant and held that the essential features of GTA service were satisfied. The agreement and the Carrier Act provisions demonstrate that the appellant performed transportation by road, issued consignment notes (or goods receipts) and carried out obligations and liabilities characteristic of a carrier. The Tribunal relied upon its earlier reasoning and coordinate decisions holding that issuance of consignment notes is determinative of GTA classification and that transport contractors rendering such services fall within the definition of GTA rather than being providers of supply-of-tangible-goods-for-use. On the facts and documentary record for the period in question, the Tribunal concluded the services constituted GTA service. [Paras 4]

The impugned finding that the services were classifiable as supply of tangible goods for use is reversed; the transactions are GTA services.

Reverse charge mechanism - prohibition on double taxation / Article 265 - service tax demand, interest and penalties - No fresh service tax demand can be sustained against the appellant where the service recipient has already discharged tax under the reverse charge mechanism; consequently, the demand, and corollary interest and penalties, cannot be sustained. - HELD THAT: - The Tribunal noted that the service recipient (M/s Inox) had discharged service tax under the reverse charge basis for the same transactions that have been held to be GTA services. Allowing a second levy on the same transaction at the hands of the provider under a different category would amount to double taxation. Such double imposition would be contrary to the statutory scheme and Article 265 of the Constitution. Because the underlying demand on merits could not be sustained, questions relating to extended period of limitation and the imposition of interest and penalties were rendered irrelevant and were not adjudicated on merits. [Paras 5, 6]

The demand made in the adjudication is set aside as unsustainable in view of tax already paid by the recipient; interest and penalties are not taken up.

Final Conclusion: The impugned adjudication order confirming service tax demand and penalties is set aside; the appeal is allowed and the appellant is granted consequential relief.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - resolution plan binding on the corporate debtor and its creditors and other stakeholders - claims not part of an approved resolution plan stand frozen and extinguished - commercial wisdom of the Committee of Creditors is non-justiciable - liquidation of corporate debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016 - continuance of proceedings after winding up/insolvency - Rule 22 of CESTAT Procedure Rules, 1982 - abatement of appeal on liquidation where successor-in-interest does not seek continuance - 2019 amendment to Section 31 of the I&B Code is declaratory and clarificatory

Continuance of proceedings after winding up/insolvency - Rule 22 of CESTAT Procedure Rules, 1982 - abatement of appeal on liquidation where successor-in-interest does not seek continuance - Whether the appeals before the Tribunal survive after NCLT ordered liquidation of the appellant-company in absence of an application by the liquidator for continuance under Rule 22 - HELD THAT: - The Tribunal noted that NCLT by order dated 20.09.2018 directed liquidation of the corporate debtor and appointed a liquidator and that under Rule 22 the appeal abates unless an application for continuance is filed by the successor-in-interest, executor, administrator, receiver, liquidator or other legal representative within sixty days (subject to extension for sufficient cause). No application under Rule 22 was filed by the official liquidator even after more than five years from the NCLT order. In these circumstances the Tribunal held that the appeals must abate in terms of Rule 22 and that it could not proceed further with the matter in the absence of an application for continuance by the liquidator. [Paras 4, 5, 6, 7]

Appeal abates for want of continuance application by the liquidator; the appeals stand abated in terms of Rule 22 of the CESTAT Procedure Rules, 1982.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - resolution plan binding on the corporate debtor and its creditors and other stakeholders - claims not part of an approved resolution plan stand frozen and extinguished - commercial wisdom of the Committee of Creditors is non-justiciable - Whether the Tribunal could proceed with recovery or adjudicatory steps against the corporate debtor after commencement of CIRP / sanction of resolution process or subsequent liquidation - HELD THAT: - Relying on the excerpts from the Supreme Court in Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited and related authorities, the Tribunal recorded that the I&B Code (as interpreted) makes a resolution plan binding on the corporate debtor and its creditors and other stakeholders and that claims not part of an approved resolution plan stand frozen and extinguished; the moratorium under Section 14 operates on commencement of CIRP and the scheme reserves interference with the commercial wisdom of the Committee of Creditors to the limited statutory parameters. On the facts, the NCLT had ordered liquidation, declared the moratorium under Section 14 ceased and directed commencement of liquidation process; accordingly the Tribunal observed that it could not proceed with the appellant's case in view of the insolvency proceedings and the NCLT order. [Paras 2, 3, 4]

In view of the I&B Code jurisprudence and the NCLT order directing liquidation, the Tribunal could not continue recovery or adjudicatory action against the corporate debtor and therefore could not proceed with the appeal.

Final Conclusion: The appeals abate: in view of the NCLT order for liquidation and appointment of a liquidator and absence of any application by the liquidator under Rule 22 for continuance, the Tribunal held that the appeals must abate and the CESTAT could not proceed with the matter in light of the insolvency proceedings and governing I&B Code principles.

Scope of show cause notice - adjudicating authority exceeding the allegations in the show cause notice - principles of natural justice - invocation of extended period of limitation - onus on the department to plead and disclose material for suppression/misdeclaration - maintainability of appeal against Tribunal's order where validity of the order is in question

Maintainability of appeal against Tribunal's order where validity of the order is in question - scope of review by the High Court - Appeal under Section 35G is maintainable before the High Court where the challenge relates to the nature and validity of the show cause notice and the orders passed thereon, rather than to valuation or rate issues. - HELD THAT: - The Court examined whether the present petition was barred because the underlying dispute concerned classification/valuation. Relying on the principle that the determinative factor is the nature of the impugned order, the Court held that where the challenge is to the validity and scope of the show cause notice, invocation of extended limitation and the correctness of the adjudicatory process, the High Court may entertain the appeal. Earlier decisions treating entitlement to file an appeal where the order impugned affects the validity of proceedings were noted with approval. The Court therefore rejected the preliminary objection that the appeal was not maintainable on account of it involving classification/valuation issues and proceeded to adjudicate the substantive challenge to the orders impugned. [Paras 8]

The appeal is maintainable before this Court and may be adjudicated on the challenged validity and scope of the show cause notice and subsequent orders.

Scope of show cause notice - adjudicating authority exceeding the allegations in the show cause notice - principles of natural justice - invocation of extended period of limitation - onus on the department to plead and disclose material for suppression/misdeclaration - Whether the adjudicating authority and the Tribunal exceeded the scope of the show cause notice, violated principles of natural justice and improperly invoked the extended period of limitation. - HELD THAT: - The Court found on review of the order in original that the adjudicating authority proceeded beyond the allegations contained in the show cause notice and based its decision on an inspection conducted after the assessee had filed its reply, rather than on the matters fairly put in issue by the SCN. Such departure from the SCN amounted to a breach of principles of natural justice rendering the adjudication vitiated. With respect to the extended period of limitation, the Court held that the department bears the initial onus to set out material particulars in the show cause notice to demonstrate prima facie suppression, misdeclaration or willful intention to evade duty; mere use of expressions like "suppression of material fact" or "intent to evade" without manifest material in the SCN is insufficient to invoke extended limitation. In the absence of such material in the SCN, the extended period could not be validly invoked. Applying these principles to the facts, the Court concluded that the orders under challenge could not stand. [Paras 11, 12, 13, 14]

The adjudicating authority and the Tribunal acted beyond the scope of the show cause notice and violated principles of natural justice; the invocation of the extended period of limitation was unsustainable for lack of material in the SCN. The show cause notice, the order in original and the Tribunal's order are set aside.

Final Conclusion: The appeal is allowed: the High Court entertains the challenge to the validity and scope of the show cause notice; the adjudicating authority and Tribunal are held to have exceeded the SCN and breached natural justice, and the invocation of the extended period of limitation is held unsustainable for want of material in the SCN; the SCN, the order in original and the Tribunal's order are set aside.

Definition of "manufacture" under section 2(f) of the Central Excise Act - excise liability predicated on representations or declarations to customers - proof versus suspicion in tax adjudication - appreciation and re-appreciation of evidence by an appellate tribunal - imposition of penalty where activities do not amount to manufacture

Definition of "manufacture" under section 2(f) of the Central Excise Act - excise liability predicated on representations or declarations to customers - proof versus suspicion in tax adjudication - appreciation and re-appreciation of evidence by an appellate tribunal - imposition of penalty where activities do not amount to manufacture - Validity of the Tribunal's factual conclusion that the respondents were traders and not manufacturers and consequent dismissal of demands and penalties raised by the revenue - HELD THAT: - The Tribunal conducted a detailed factual appraisal of the material placed before it, including statements of proprietors/directors, inventory observations, absence of manufacturing infrastructure and testing facilities at the declared premises, and documentary records relied upon by the respondents. The Tribunal noted that the primary basis of the show cause notice was representations made by the respondents to customers that they were manufacturers, but recorded the respondents' consistent explanation that such declarations were for procuring business while their actual activity was trading and supply, supported by records and lack of corroborative evidence of clandestine manufacture. The revenue failed to produce positive evidence during the investigational period to rebut the respondents' case - no incriminating supplier statements, no discovery of undisclosed manufacturing facilities, nor procurement of unaccounted raw materials or semi-processed goods indicative of manufacture. The Tribunal correctly applied the legal principle that suspicion, however grave, cannot substitute for proof and carefully re-appreciated the voluminous documents to conclude that the activities did not amount to manufacture and that demands and penalties were unjustified. The High Court found these are factual findings based on appreciation/re-appreciation of evidence and held that no substantial question of law arises out of the Tribunal's order. [Paras 9, 10, 11, 12, 13]

The Tribunal's factual conclusions are upheld; the appeals by the revenue are dismissed.

Final Conclusion: The High Court found that the Tribunal permissibly re-appreciated the voluminous evidence and correctly held that the respondents were traders and not manufacturers; suspicion without proof was insufficient to sustain the demands and penalties, and no substantial question of law arose - the revenue's appeals are dismissed.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation of excisable goods and its relation to imposition of penalty - Admissibility and evidentiary value of voluntary confessional statements - Onus of proof in proceedings for clandestine receipt of excisable goods - Judicial precedent and rule of judicial discipline in administrative tribunals - Reliance on computerized records and contemporaneous data as corroborative evidence

Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation of excisable goods and its relation to imposition of penalty - Penalty under Rule 26 was validly imposed on the appellant on the factual matrix of the case; absence of a separate finding of formal confiscation did not preclude imposition where the material established clandestine dealing in excisable goods. - HELD THAT: - The Court reviewed the adjudicating authority's, Commissioner (Appeals)' and Tribunal's findings that the appellant had procured MS wire rods from SPRML without duty-paid invoices and had sold the goods in the open market. The authorities relied on the proprietor's voluntary statement, computerized ledger entries seized from SPRML, corroborative statements of brokers and transporters, cash-recovery material and SPRML's voluntary deposit of duty. Having considered these materials, the Tribunal concluded that penalty under Rule 26 was imposable on the appellant. The High Court found these to be findings of fact supported by admissible evidence and therefore not raising any substantial question of law warranting interference. [Paras 6, 10, 11, 15, 16]

Penalty under Rule 26 was held to be validly imposed on the facts; no substantial question of law arose to disturb the factual conclusion.

Admissibility and evidentiary value of voluntary confessional statements - Onus of proof in proceedings for clandestine receipt of excisable goods - Reliance on computerized records and contemporaneous data as corroborative evidence - The proprietor's voluntary statement, not retracted and corroborated by computerized ledger entries and other material, was admissible and sufficient to support the imposition of penalty; the onus of proof was met by the department on the facts. - HELD THAT: - The Court noted that the proprietor was confronted with computerized ledger entries showing sales to names used as camouflage and that he acknowledged and signed those entries. There was no retraction addressed contemporaneously to investigators, and the Commissioner (Appeals) and Tribunal rejected the belated alleged retraction as an afterthought. The Court applied the principle in K.I. Pavunny that a voluntary confessional statement, if found voluntary, can form the sole basis for conviction and observed that computerized records (date-stamped) and corroborative statements of brokers/transporters provided further support. On this basis the departmental onus to prove clandestine receipt was regarded as discharged on the facts. [Paras 10, 11, 12, 13, 14]

The voluntary statement and corroborative material were admissible and sufficient; the department satisfied the burden of proof on the facts.

Judicial precedent and rule of judicial discipline in administrative tribunals - The Tribunal was not obliged to follow the earlier Jai Balaji Industries decision where the facts were distinguishable; the existence of finalized favorable orders for other assessees did not automatically entitle the appellant to identical relief. - HELD THAT: - The appellant sought parity with earlier Tribunal decisions in which similarly placed purchasers of SPRML goods succeeded. The High Court examined the Jai Balaji decision and other orders relied upon and found them factually distinguishable: in those matters the department had not conducted the same investigation or produced the same admissions/corroborative material. Because the present case featured an un-retracted voluntary admission by the proprietor together with computerized and other corroborative records, the Court held that the earlier Tribunal orders did not mandate the same result here. [Paras 3, 15]

The plea of judicial discipline / stare decisis was rejected on the ground of factual distinction; earlier orders did not warrant interference with the Tribunal's decision in this case.

Final Conclusion: The High Court found no substantial question of law for consideration: on the facts the penalty under Rule 26 was rightly imposed, the proprietor's voluntary statement and corroborative records were admissible and sufficient, and the cited Tribunal decisions were distinguishable; the appeal is dismissed.

Applicability of Rule 6 of the CENVAT Credit Rules to by products/waste (bagasse and press mud) - Concept of "manufacture" under Section 2(f) and its bearing on excisability - Treatment of non excisable goods as "exempted goods" by insertion of Explanations to Rule 6 - Validity and effect of departmental Circular interpreting Rule 6

Applicability of Rule 6 of the CENVAT Credit Rules to by products/waste (bagasse and press mud) - Concept of "manufacture" under Section 2(f) and its bearing on excisability - Validity and effect of departmental Circular interpreting Rule 6 - Whether the obligation to reverse CENVAT credit under Rule 6 applied to clearances of bagasse and press mud for the period Dec 2016 to June 2017 - HELD THAT: - The Tribunal held that the question is governed by the ratio of the Hon'ble Supreme Court in UOI v. DSCL Sugars, which held that bagasse is agricultural waste and not the result of any process and therefore not a "manufactured" product within Section 2(f); accordingly Rule 6 applies only when there is manufacture of exempted goods and has no application where there is no manufacture. The jurisdictional High Court (Balrampur Chini Mills) applied the DSCL ratio, construed the post 2015 Explanations to Rule 6 and the departmental Circular dated 25.04.2016, and quashed the Circular insofar as it treated bagasse as subject to reversal under Rule 6. The Tribunal accepted the impugned appellate authority's reliance on these precedents and the quashing of the Circular by the High Court, and concluded that for the period in question the demands based on Rule 6 in respect of bagasse/press mud could not be sustained. [Paras 4]

Demands premised on reversal of CENVAT credit under Rule 6 in respect of bagasse and press mud for Dec 2016 to June 2017 are unsustainable and the appeals by the revenue are dismissed.

Final Conclusion: The revenue's appeals are dismissed; the Tribunal upheld the Commissioner (Appeals) decision to drop the Rule 6 demands in respect of bagasse and press mud for the period Dec 2016 to June 2017, relying on the DSCL Supreme Court ratio and the jurisdictional High Court's quashing of the departmental Circular. Stay applications disposed of.

Maintainability of writ petition - Article 226 jurisdiction - Article 12 - State or instrumentality - public function / public duty test - effect of subsequent privatisation on writ jurisdiction - equitable relief and subsequent events - Section 14 Limitation Act - saving for time spent in litigation

Article 12 - State or instrumentality - public function / public duty test - effect of subsequent privatisation on writ jurisdiction - Whether respondent No.3 (Air India Limited) after disinvestment and transfer of 100% shares ceased to be a 'State' or instrumentality under Article 12 and therefore not amenable to writ jurisdiction under Article 226. - HELD THAT: - The Court applied the established tests for determining when a body is a 'State' - financial, functional and administrative dominance or pervasive control by the Government - and noted that transfer of 100% shareholding to Talace India Pvt. Ltd. resulted in cessation of Government ownership and deep pervasive control. In those circumstances respondent No.3, having been disinvested and operating for commercial purposes without pervasive State control, could no longer be treated as 'State' or instrumentality within Article 12. Following precedents and the cumulative Ajay Hasia / Pradeep Kumar Biswas principles, the Court held that a private entity not discharging public duty is not amenable to writ jurisdiction under Article 226, and that the High Court could not issue extraordinary writs to such private respondent after privatisation. [Paras 31, 32, 33, 36, 37]

Respondent No.3 ceased to be a 'State' after disinvestment and therefore writs under Article 226 could not be issued to it post privatisation.

Maintainability of writ petition - Article 226 jurisdiction - equitable relief and subsequent events - Whether the appellants could be non suited because, during pendency of their writ petitions, the employer changed from a Government entity to a private entity. - HELD THAT: - The Court examined competing authorities and concluded that although the writ petitions were maintainable when instituted, the exercise of extraordinary writ jurisdiction must be addressed at the date of decision. Because respondent No.3 had become a private entity not performing public functions by the time the writs were finally heard, the High Court could not issue writs to it. The Division Bench's approach - denying equitable relief under Article 226 while granting liberty to seek alternate remedies - was held to be permissible. The Court further observed that the appellants were not thereby extinguished of legal rights but would have to seek relief before an appropriate forum. [Paras 38, 40, 42]

Appellants could be non suited from obtaining writ relief against the private employer; they were relegated to other appropriate fora with their legal rights preserved.

Delay in disposal - equitable relief - effect of subsequent privatisation on writ jurisdiction - Section 14 Limitation Act - saving for time spent in litigation - Whether delay in disposal of the writ petitions entitled the appellants to continue the writs against the private entity. - HELD THAT: - The Court held that delay in disposal cannot supply jurisdiction where none exists at the date of decision. Even accepting that subsequent events may, in narrow circumstances, influence equitable relief, delay alone cannot justify maintaining writ jurisdiction against a private entity that no longer falls within Article 12. The Division Bench's protective measure of preserving the appellants' right to approach other forums and the observation that Section 14 of the Limitation Act may assist in such proceedings were noted. [Paras 39, 43]

Delay in disposal did not entitle continuation of the writs against the disinvested private respondent; the writs were rightly held not maintainable for that reason.

Final Conclusion: The appeals were dismissed. The Court upheld the High Court's finding that after disinvestment respondent No.3 was not a 'State' or instrumentality and therefore not amenable to writs under Article 226; the appellants were relegated to pursue remedies before appropriate forums, with their rights and limitation related protection noted.