TaxTMI Updates e-Newsletter
May 29,2023

Provisional attachment of bank accounts under Section 83 of the CGST Act - cash-credit facility not being a debt and not attachable - availability of efficacious statutory remedy under Section 159(5) read with Rule 159(5) - writ jurisdiction precluded where effective statutory remedy exists in revenue recovery matters

Cash-credit facility not being a debt and not attachable - provisional attachment of bank accounts under Section 83 of the CGST Act - Whether the cash credit facility of the petitioner can be provisionally attached under the power of provisional attachment exercisable by the GST authority. - HELD THAT: - The Court, bound by earlier precedent, held that a cash credit facility is not a debt capable of attachment and therefore cannot be made the subject of provisional attachment under the provisions empowering attachment of bank accounts. While the respondent relied on the statutory power to attach bank accounts to protect revenue, the Court accepted the contention that cash credit is a banking facility used by the assessee for business and is not an attachable debt. The Court noted authorities stressing that the power of provisional attachment is drastic and must be exercised sparingly, but the determinative finding here is that the nature of the cash credit account precludes its attachment under the statutory scheme.

The cash credit facility cannot be provisionally attached and is not an attachable debt; the statutory power of provisional attachment does not extend to the cash credit facility in the facts of this case.

Availability of efficacious statutory remedy under Section 159(5) read with Rule 159(5) - writ jurisdiction precluded where effective statutory remedy exists in revenue recovery matters - Whether the High Court should entertain the petition under Article 226 where an efficacious statutory remedy for release of attached property is available under the GST enactment. - HELD THAT: - Applying settled principles that the High Court will not ordinarily exercise writ jurisdiction when an effective remedy is provided by statute-particularly in recovery of public revenue matters-the Court held that Sub section 5 of Section 159 (and Rule 159(5) procedure) supplies an adequate, speedy and efficacious remedy by way of objection for release of attached property. The Court referred to Supreme Court authorities establishing that where a specific and efficacious statutory remedy exists, relief under Article 226 should not be granted, and therefore the petitioner must pursue the statutory route rather than invoke writ jurisdiction.

The petition is not maintainable in writ jurisdiction insofar as the petitioner seeks relief against attachment when an efficacious statutory remedy under the GST statute is available; the petitioner must pursue the statutory objection procedure.

Final Conclusion: Writ petition dismissed; petitioner directed to pursue the statutory remedy for release of the attached cash credit facility under the provisions of the GST statute.

Maintainability of writ petition in presence of alternative statutory remedy - availability of appeal under Section 107 of the Goods and Services Tax Act, 2017 - exceptions to exercise of writ jurisdiction as enunciated in Whirlpool - constitutional writ jurisdiction under Article 226 - challenge to jurisdiction and breach of principles of natural justice

Maintainability of writ petition in presence of alternative statutory remedy - exceptions to exercise of writ jurisdiction as enunciated in Whirlpool - Writ petition under Article 226 is not maintainable where an equally efficacious statutory remedy in the form of an appeal is available and no exceptional circumstances are made out. - HELD THAT: - The High Court held that the order rejecting the refund claim is appealable before the appellate authority under the GST Act and the petitioner failed to demonstrate any of the exceptional circumstances recognised by the Supreme Court (as in Whirlpool and subsequent decisions) that would justify bypassing the statutory appellate remedy. The Court noted absence of any contention that the impugned order was vitiated by lack of jurisdiction or violation of principles of natural justice, and observed that the vires of the GST provisions were not challenged. On these foundations the Court declined to exercise writ jurisdiction and dismissed the petition.

Petition dismissed for want of maintainability; petitioner to avail remedy under Section 107 of the GST Act, 2017.

Availability of appeal under Section 107 of the Goods and Services Tax Act, 2017 - constitutional writ jurisdiction under Article 226 - Direction regarding conduct of appellate remedy and computation of limitation where writ is dismissed. - HELD THAT: - The Court granted the petitioner liberty to file an appeal under Section 107 and directed that the time spent pursuing the writ petition in this Court shall be excluded for the purpose of computing limitation. The Court further observed that, having regard to the facts and circumstances, the appellate authority should take a lenient view on condonation of delay if such condonation becomes necessary.

Petitioner permitted to pursue appeal; time spent in this Court excluded from limitation and appellate authority urged to be lenient on condonation of delay.

Final Conclusion: Writ petition dismissed for lack of maintainability in view of the alternative statutory remedy under Section 107 of the GST Act, 2017; petitioner permitted to prefer appeal with time spent in this Court excluded for limitation and the appellate authority requested to consider condonation leniently.

Intermediary - place of supply - export of services - refund of input tax credit - Section 13(3)(b) of the IGST Act - Section 13(5) of the IGST Act - scope of show cause notice - service agreement versus master license agreement

Scope of show cause notice - refund of input tax credit - Whether the Appellate Authority could raise and decide grounds with respect to place of supply under Sections 13(3)(b) and 13(5) of the IGST Act which were not the subject-matter of the Show Cause Notice or the Order in Original in the petitioner's appeal. - HELD THAT: - The Court found that the Appellate Authority introduced and relied upon additional grounds-specifically treatment of the petitioner as intermediary and application of place of supply provisions-which were not raised in the Show Cause Notice dated 14.08.2020 or in the Order in Original. The Appellate Authority's conclusions proceeded on a basis different from that which had travelled to it on appeal, including observations implying that providing services on behalf of another party equates to being an intermediary. Such additional grounds could not be raised suo motu in the appeal preferred by the petitioner. For these reasons the impugned order was vitiated and liable to be set aside on this jurisdictional/competence ground. [Paras 28]

Impugned order set aside insofar as it decides additional grounds not arising from the Show Cause Notice or Order in Original.

Intermediary - place of supply - Section 13(3)(b) of the IGST Act - Section 13(5) of the IGST Act - service agreement versus master license agreement - Whether the petitioner, under the Service Agreement, is an intermediary and whether Sections 13(3)(b) and 13(5) of the IGST Act apply to locate the place of supply in India. - HELD THAT: - The Court explained that mere performance of services on behalf of another does not automatically make the service provider an intermediary. It emphasised the need to identify the principal service, the supplier and the purchaser to determine if the petitioner is facilitating or arranging third party supplies; the Order in Original had not undertaken that analysis. On the specific statutory provisions, the Court held that Section 13(3)(b) applies where the physical presence of the recipient or its representative in India is necessary to receive the service; in the Service Agreement the recipient is McDonald's USA and its physical presence in India is not necessary for the services performed by the petitioner. Further, the activities listed in the Service Agreement (such as conducting interviews, reference checks and screening) do not fall within the events or ancillary services contemplated by Section 13(5). While the Court found these provisions inapplicable on the stated facts, it did not finally adjudicate all factual facets of intermediary status because the lower orders had not analysed whether the petitioner was arranging services of third party suppliers. Consequently the matter requires fresh consideration by the Adjudicating Authority in light of these observations. [Paras 24, 25, 30, 31, 32]

Court concluded that Sections 13(3)(b) and 13(5) are not attracted on the material before it and remanded the matter to the Adjudicating Authority for fresh consideration of whether the petitioner is an intermediary after identifying principal service, supplier and purchaser.

Final Conclusion: Impugned appellate order set aside for deciding additional grounds not arising from the Show Cause Notice or Order in Original; on merits the Court held that mere performance of services on another does not ipso facto make the provider an intermediary and that Sections 13(3)(b) and 13(5) of the IGST Act are not attracted on the material before the Court; matter remitted to the Adjudicating Authority for fresh consideration in light of these observations.

Alternative remedy by way of appeal - appeal under Section 107 of JGST Act - duty of appellate authority to decide pending manual appeal expeditiously - acceptance of manual appeal where online filing is not feasible - no adjudication on merits

Alternative remedy by way of appeal - appeal under Section 107 of JGST Act - duty of appellate authority to decide pending manual appeal expeditiously - acceptance of manual appeal where online filing is not feasible - no adjudication on merits - Disposition of the writ petition in view of the availability of an alternate remedy by way of appeal and direction to the appellate authority to decide the pending manual appeal. - HELD THAT: - The Court noted that the petitioner had availed the alternate statutory remedy by filing an appeal under Section 107 of the JGST Act which was pending and being kept dormant by the Department. Having regard to the existence of that efficacious remedy and the earlier order in W.P.(T) No. 1823 of 2021 permitting online filing or, in case of technical difficulty, manual filing, the Court declined to enter into the merits of the taxpayer's challenge. Instead, the writ petition was disposed by directing the Joint Commissioner (Appeals), Dhanbad Division, Dhanbad to decide the manually filed memo of appeal expeditiously - preferably within eight weeks from receipt or production of a copy of this order - and to accept and decide the appeal on the grounds already set out in the memo. The Court emphasised that the appellate authority is to determine the appeal on its merits in accordance with law, and the High Court expressly refrained from adjudicating the substantive issues raised in the petition.

Writ petition disposed; direction issued to the Joint Commissioner (Appeals), Dhanbad Division, Dhanbad to decide the petitioner's manually filed appeal expeditiously (preferably within eight weeks) and to consider the grounds in the memo, without the High Court going into the merits.

Final Conclusion: The writ petition is dismissed in view of the availability of an alternative statutory remedy; the Joint Commissioner (Appeals), Dhanbad Division, Dhanbad is directed to decide the petitioner's pending manual appeal expeditiously (preferably within eight weeks) on the merits, and the High Court has not expressed any view on the substantive merits of the impugned order.

Entitlement to statutory stay of recovery under Sub Section (9) of Section 112 of the B.G.S.T. Act despite non constitution of the Appellate Tribunal - Effect of non constitution of Tribunal on availability of statutory remedy and limitation - Conditional stay subject to deposit as equitable balance - Requirement to present/file appeal upon constitution of the Tribunal

Entitlement to statutory stay of recovery under Sub Section (9) of Section 112 of the B.G.S.T. Act despite non constitution of the Appellate Tribunal - Conditional stay subject to deposit as equitable balance - Whether the petitioner is entitled to the stay of recovery under Sub Section (9) of Section 112 of the B.G.S.T. Act despite non constitution of the Appellate Tribunal - HELD THAT: - The Court held that the petitioner cannot be deprived of the statutory benefit of stay under Sub Section (9) of Section 112 of the B.G.S.T. Act solely because the Appellate Tribunal has not been constituted by the State. In view of the respondents' acknowledgement of non constitution and the consequent denial of the statutory remedy, the Court directed that the stay of recovery shall be granted subject to the petitioner depositing a sum equal to 20% of the remaining amount of tax in dispute, if not already deposited, in addition to amounts earlier deposited under Sub Section (6) of Section 107. The Court deemed any recovery steps to be stayed upon such deposit and relied on parity with earlier orders of this Court granting similar reliefs in comparable circumstances.

Statutory stay under Sub Section (9) of Section 112 granted on deposit of 20% of the remaining disputed tax (in addition to prior deposits); recovery stayed.

Effect of non constitution of Tribunal on availability of statutory remedy and limitation - Requirement to present/file appeal upon constitution of the Tribunal - Consequences of non constitution of the Tribunal and requirement to file appeal once the Tribunal is constituted - HELD THAT: - The Court recognised that the stay is being granted because the State authorities themselves have not constituted the Tribunal and that this relief cannot be open ended. To balance equities, the petitioner is required to present or file the appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and the President or State President enters office. The appeal must be filed observing the applicable statutory requirements after the Tribunal comes into existence to enable consideration on merits. If the petitioner elects not to file the appeal within any period that may be specified upon constitution of the Tribunal, the respondent authorities are at liberty to proceed in accordance with law.

Stay is subject to the condition that the petitioner shall file the appeal before the Tribunal once constituted; failure to file within the period to be specified will permit respondents to proceed further as per law.

Final Conclusion: Writ petition disposed by directing grant of statutory stay of recovery under Section 112(9) of the B.G.S.T. Act on deposit of 20% of the remaining disputed tax (in addition to prior deposits), with the stay being time limited in the sense that the petitioner must file the appeal before the Appellate Tribunal once it is constituted, failing which the authorities may proceed in accordance with law.

Reopening of assessment u/s 147 - scope of enactment of Section 148A - benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act' (TOLA) 2020 - As directed by HC [2023 (2) TMI 1081 - ALLAHABAD HIGH COURT] reassessment proceedings initiated with the notice u/s148 (deemed to be notice u/s148-A), issued between 01.04.2021 and 30.06.2021, cannot be conducted by giving benefit of relaxation/extension under TOLA 2020 upto 30.03.2021, and the time limit prescribed in Section 149 (1)(b) (as substituted w.e.f. 01.04.2021) cannot be counted by giving such relaxation from 30.03.2020 onwards to the revenue.

Also proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA' 2020 will not be available to the revenue.

HELD THAT:- Issue notice returnable on 10.07.2023.

In the meantime, the impugned judgment and order passed by the High Court is ordered to be stayed.

Exemption/ deduction u/s 54 - Purchase of land with superstructure - After demolishing the existing superstructure, the appellant assessee constructed a residential house - as per HC [2018 (8) TMI 864 - MADRAS HIGH COURT] it is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged u/s 45 as the income of the previous year - HELD THAT:- As stated that the tax amount involved in the present case is less than Rs. 2 crores and in view of the Circular No. 17 of 2019 dated 08.08.2019, the present petition need not be decided due to low tax effect.

We dispose of the present Special Leave Petition, leaving the question of law open.

Pending application(s), if any, shall stand disposed of.

Power of transfer under Section 127 of the Income Tax Act - Faceless Assessment / E-assessment Scheme and its interplay with Section 127 - concurrent jurisdiction of Jurisdictional Assessing Officer and National e-Assessment Centre - centralisation to Central Charge for coordinated investigation - administrative convenience of intra-city transfers - absence of a vested right to be assessed under Faceless Assessment

Power of transfer under Section 127 of the Income Tax Act - administrative convenience of intra-city transfers - Validity of impugned orders transferring assessments to Central Circle by exercise of power under Section 127 without prior CBDT sanction - HELD THAT: - The Court held that the impugned orders transferring the petitioners' assessments to the Central Circle were effected under Section 127 of the Act and are in accordance with law. Applying the authoritative guidance of the Constitution Bench in Kashiram Aggarwalla, the Court treated such transfers as administrative orders often made for administrative convenience; when transfers are within the same city or for coordinated investigation, neither recording of elaborate reasons nor prior opportunity to the assessee is a precondition. The Court concluded that the present transfers, stated to be for better coordination and meaningful assessment, do not offend the statutory scheme and are not vitiated for want of CBDT sanction where Section 127 transfers have been validly exercised by the competent authorities. [Paras 1, 4, 42, 68]

Impugned transfer orders under Section 127 are valid and the writ petitions challenging those transfers are dismissed.

Faceless Assessment / E-assessment Scheme and its interplay with Section 127 - concurrent jurisdiction of Jurisdictional Assessing Officer and National e-Assessment Centre - Whether the E-assessment / Faceless Assessment Notifications denude or trammel the power under Section 127 to transfer cases to Central Circle - HELD THAT: - The Court examined the Notifications of 12th September, 2019 and 13th August, 2020 and concluded they do not negate or curtail the power under Section 127. The Notifications authorise the NeAC to transfer cases to the Jurisdictional Assessing Officer (i.e., re-transfer to an officer who retains concurrent jurisdiction) and confer concurrent assessment functions on NeAC, but do not provide authority to supplant Section 127 transfers which change the Assessing Officer having jurisdiction across non-concurrent charges. Thus the Schemes permit facilitation of faceless assessment and re-transfer to jurisdictional officers but do not preclude independent exercise of Section 127 by the competent transferor authorities. [Paras 47, 51, 66]

Faceless/E-assessment Notifications do not displace or extinguish the statutory power of transfer under Section 127; Section 127 continues to apply.

Absence of a vested right to be assessed under Faceless Assessment - Faceless Assessment / E-assessment Scheme and its interplay with Section 127 - Whether an assessee acquires a fundamental or vested right to be assessed by a Faceless Assessing Officer by virtue of amendments to Sections 143(3A) and 143(3B) - HELD THAT: - The Court held there is no vested right to faceless assessment. Section 143(3A) confers discretion on the Central Government to make a Scheme; the Notifications themselves specify the classes of cases and territorial scope to which the Scheme applies. The Court observed that the Board and Government may exclude certain charges (e.g., Central Charges, International Taxation) from the faceless regime; consequently, selection for faceless assessment is not a guaranteed right and transfers to Central Charge may lawfully remove a matter from the faceless process without creating an impermissible vested right. [Paras 60]

No fundamental or vested right exists for an assessee to be assessed by a Faceless Assessing Officer as a matter of law.

Centralisation to Central Charge for coordinated investigation - centralisation of non-search cases - Whether Central Circle jurisdiction is confined to search cases and whether non-search cases can be transferred to Central Charge for coordinated investigation - HELD THAT: - The Court noted CBDT circulars and prior High Court decisions establishing that Central Charge jurisdiction is not limited to search cases. The Board's circulars expressly contemplate centralisation of non-search cases where coordinated investigation, complex enquiries or substantial revenue implications justify centralisation. The Court therefore rejected the contention that only search/seizure cases may be moved to Central Circle and found the transfers here consistent with the administrative practice of centralisation for coordination. [Paras 45]

Central Circle jurisdiction is not confined to search cases; non-search cases requiring coordinated investigation may be lawfully centralised.

Administrative directions and guidelines - limits of CBDT guidelines dated 17th September, 2020 - Whether the CBDT guidelines dated 17th September, 2020 (on compulsory selection and related transfers) prohibit transfers under Section 127 in the present matters - HELD THAT: - The Court held that the September 2020 guidelines govern parameters for compulsory selection during FY 2020-21 and do not curtail the statutory power of transfer under Section 127. Paragraph 3 of those guidelines expressly preserves handling by Central Charges 'as earlier'. Thus the petitioners' reliance on those guidelines to assert an absolute prohibition on transfers under Section 127 was misplaced. [Paras 8, 59]

Guidelines of 17th September, 2020 do not preclude or control the exercise of power under Section 127 in the facts of these petitions.

No guilt by association - coordinated investigation and procedural fairness - Whether transfers in these matters amount to unlawful 'guilt by association' or impermissible labeling without evidence - HELD THAT: - The Court accepted the general principle that there can be no guilt by association, but found that the transfers in this batch were made for purposes of coordinated investigation and meaningful assessment, and not to impose final adverse civil consequences. The Court observed that any connection alleged (e.g., to other named cases) must be tested at the assessment stage where assessees will have opportunity to file explanations; therefore mere transfer for coordination does not violate the principle against guilt by association. [Paras 63]

Transfers made for coordinated investigation do not amount to unlawful guilt by association; assessees retain the opportunity to dispute any asserted connections during assessment.

Final Conclusion: The High Court dismissed the writ petitions challenging the transfer orders, holding that transfers effected under Section 127 to Central Circle were in accordance with law, the Faceless/E-assessment Schemes do not displace Section 127, there is no vested right to faceless assessment, and the petitioners remain free to raise their contentions before the statutory authorities; interim orders are vacated and the petitions are dismissed.

Violation of principles of natural justice - reopening of assessment to be sparingly exercised - adequacy of opportunity to reply to show-cause notice - disclosure of source of information in reopening proceedings - remand for de novo consideration of show-cause stage

Violation of principles of natural justice - adequacy of opportunity to reply to show-cause notice - disclosure of source of information in reopening proceedings - Whether the procedure adopted prior to passing the order under Section 148A(d) complied with principles of natural justice. - HELD THAT: - The Court found that the show-cause notice required the assessee to furnish corroborative details in respect of alleged purchase transactions but did not disclose the source of the information or the basis on which the Assessing Officer entertained doubts. The assessee filed an interim reply and enclosed ledgers but, given the short time granted (compounded by intervening holidays), was unable to furnish bank statements and other documents. The Assessing Officer did not adequately deal with the correctness of the ledger or afford an effective opportunity for the assessee to file comprehensive documents. In these circumstances the limited time and nondisclosure of source rendered the opportunity inadequate and resulted in a breach of natural justice; reopening power must be sparingly used and an effective opportunity at the first instance is required. [Paras 4, 5, 6, 8]

Findings under Section 148A(d) set aside for violation of principles of natural justice and inadequate opportunity to the assessee.

Remand for de novo consideration of show-cause stage - reopening of assessment to be sparingly exercised - Remedial consequence of the procedural defect and the directions flowing from the setting aside of the orders. - HELD THAT: - Because the Court concluded there was violation of natural justice, it set aside both the order under Section 148A(d) and the subsequent assessment order passed under Section 147 during pendency of the writ. The matter was restored to the file of the Assessing Officer at the stage of the show-cause notice under Section 148A(b) for fresh consideration. The Court directed the assessee to submit a comprehensive reply with all supporting documents; directed the Assessing Officer to furnish the documents on which the show-cause notice was based and to afford a personal hearing to the authorised representative; and barred the Assessing Officer from raising the limitation point in those proceedings in view of the Court's finding of a procedural breach. The Assessing Officer is to redo the process in accordance with law. [Paras 9, 10, 11]

Order under Section 148A(d) and assessment under Section 147 set aside; matter remanded to Assessing Officer for de novo proceedings at show-cause stage with specified directions.

Final Conclusion: Appeal allowed; impugned orders under Section 148A(d) and Section 147 set aside for breach of natural justice, matter remanded to the Assessing Officer at the show-cause stage for fresh consideration after the assessee files a comprehensive reply and after the Assessing Officer furnishes the documents relied upon and affords personal hearing; no costs.

Restricted sub-grant - exemption under Sections 11 and 12 - applicability of Section 13(1)(b) - reliance on reassessment order of another assessee - duty of appellate authority to consider entirety of predecessor order - delay and laches vis-a -vis pending statutory appeal - right to personal hearing on appeal

Reliance on reassessment order of another assessee - duty of appellate authority to consider entirety of predecessor order - restricted sub-grant - Whether the appellate authority must consider the entirety of the reassessment order dated 31.12.2016 in the case of CBV, including findings about a restricted sub-grant, while adjudicating the petitioner's appeal against the assessment order dated 28.03.2022. - HELD THAT: - The Court found that the Assessing Officer, in the impugned assessment order dated 28.03.2022 for AY 2013-14, had relied upon only a part of the reassessment order dated 31.12.2016 passed in the case of CBV, whereas paragraph 12 of that reassessment order recorded that CBV had made a restricted sub-grant in favour of the petitioner. In light of this, the Court directed that while disposing of the pending statutory appeal, respondent no. 2 must take into account the entirety of the reassessment order dated 31.12.2016 and the judgments relied upon by the petitioner concerning restricted grants, so that the appellate adjudication addresses all relevant findings and authorities relied upon by both parties. The Court thereby required the appellate authority to consider the full context and reasoning of the predecessor order rather than selective extracts. [Paras 11, 13, 15]

Appellate authority to consider the entirety of the reassessment order dated 31.12.2016 (including findings on restricted sub-grant) and relevant judgments while adjudicating the pending appeal.

Delay and laches vis-a -vis pending statutory appeal - right to personal hearing on appeal - Whether the petitioner's delay in approaching the Court is fatal given that a statutory appeal against the impugned assessment is pending, and what directions, if any, should be given to ensure disposal. - HELD THAT: - The Court acknowledged the respondents' contention of delay and laches but concluded that the pendency of the statutory appeal before respondent no. 2 meant the petitioner was entitled to seek judicial intervention to expedite adjudication. The Court held that delay in approaching the Court was not a sufficient ground to deny relief when an appeal has been pending for an extended period (lodged around February 2019). To remedy the delay in adjudication, the Court directed respondent no. 2 to dispose of all pending appeals at the earliest and in any event within three months from receipt of the judgment, and further directed that the petitioner's authorised representative be granted a personal hearing before a final decision is rendered. [Paras 11, 12, 15]

Delay and laches did not bar relief; appellate authority directed to dispose pending appeal within three months and to grant a personal hearing to the petitioner's authorised representative before finalising the appeal.

Final Conclusion: Writ petition disposed: respondent no. 2 directed to decide the pending appeal (relating to AY 2013-14) within three months, to consider the entirety of the reassessment order dated 31.12.2016 and relevant authorities on restricted grants, and to grant the petitioner a personal hearing before final disposal.

Validity of order under Section 148A(d) of the Income Tax Act, 1961 - Violation of principles of natural justice in reassessment proceedings - Challenge to 148A(d) order by writ petition as exclusive remedy - Quashing of reassessment and remand to the stage of show cause notice - Requirement of adequate opportunity and fresh consideration by assessing officer

Validity of order under Section 148A(d) of the Income Tax Act, 1961 - Challenge to 148A(d) order by writ petition as exclusive remedy - Whether the correctness of an order passed under Section 148A(d) can be tested in an appeal against a subsequent reassessment order. - HELD THAT: - The Court held that the correctness of the order under Section 148A(d) cannot be left to be tested only in an appeal against the reassessment order. The proper remedy to challenge the order under Section 148A(d) is by filing a writ petition before the High Court. The judgment notes that the procedural correctness of the 148A(d) order-including whether an independent enquiry was conducted-constitutes a matter that must be open to direct judicial review by writ and is not foreclosed by subsequent appellate proceedings against the assessment. [Paras 5, 6]

The correctness of the order under Section 148A(d) is susceptible to challenge by writ petition and cannot be left to an appeal against the reassessment order.

Violation of principles of natural justice in reassessment proceedings - Quashing of reassessment and remand to the stage of show cause notice - Requirement of adequate opportunity and fresh consideration by assessing officer - Whether the reassessment proceedings were vitiated by violations of natural justice and introduction of new allegations, and the appropriate relief. - HELD THAT: - The Court examined the chain of events: issuance of multiple show cause notices with varying allegations (18.03.2022, corrigendum 21.03.2022, show cause dated 22.03.2022), the assessee's replies, the order under Section 148A(d) dated 30.03.2022 containing allegations not reflected in earlier show cause notice(s), and subsequent short notice before completion of the assessment on 24.03.2023. On these facts the Court found that principles of natural justice were breached at different stages and that the assessing officer proceeded on a materially different set of allegations which were not fairly put to the assessee. Given the seriousness of reopening assessments, the Court concluded that the reassessment could not stand. Consequently the assessment order was quashed and the matter remitted for fresh proceedings from the stage of the show cause notice dated 22.03.2022, with directions that the assessee be given a comprehensive opportunity to reply, produce documents within a specified time, and that timelines run from receipt of any departmental documents requested by the assessee. [Paras 9, 11, 12, 13, 14]

Reassessment order vitiated by violations of natural justice and fresh/unput allegations; assessment quashed and remitted to assessing officer to redo proceedings from the show cause notice dated 22.03.2022 with directions to afford adequate opportunity.

Final Conclusion: The intra-court appeal is allowed: the order under Section 148A(d) dated 30.03.2022 and the consequential assessment dated 24.03.2023 are quashed; the matter is restored to the assessing officer at the stage of the show cause notice dated 22.03.2022 for fresh consideration, and the assessee shall be afforded adequate opportunity to respond and produce documents.

Challenge to order under Section 148A(d) of the Income Tax Act - final assessment order under Section 147 of the Income Tax Act - availability of statutory appellate remedy - jurisdiction of writ court when an appeal is available - entertainment of writ petition against an appealable order - limitation defence in statutory appeal

Challenge to order under Section 148A(d) of the Income Tax Act - final assessment order under Section 147 of the Income Tax Act - entertainment of writ petition against an appealable order - Writ petition challenging the order under Section 148A(d) cannot be entertained because a final assessment order under Section 147 has since been passed and that final order is an appealable remedy under the statute. - HELD THAT: - The petitioner's challenge to the impugned order under Section 148A(d) was rendered academic by the subsequent passing of a final assessment order under Section 147 on 22 March 2023. The court noted the admitted position that the final order under Section 147 exists and is appealable; in such circumstances the writ forum is not inclined to entertain the petition which does not challenge the final assessment order itself. Consequently the writ petition is dismissed for want of a justiciable challenge in the writ proceedings when an alternative statutory remedy exists.

Writ petition dismissed as the final assessment order under Section 147 is an appealable order and the writ does not challenge that final order.

Availability of statutory appellate remedy - limitation defence in statutory appeal - jurisdiction of writ court when an appeal is available - Dismissal of the writ petition will not prejudice the petitioner's right to prefer an appeal against the order under Section 147; if an appeal is filed within a limited period the appellate authority shall consider it on merits and shall not raise limitation. - HELD THAT: - Although the writ petition is dismissed, the court preserved the petitioner's statutory remedy by permitting an appeal against the Section 147 order. The court directed that if the petitioner files an appeal against the final assessment order within 30 days from the date of the order granting dismissal of the writ petition, the appellate authority shall adjudicate the appeal on merits and shall not raise the point of limitation. This direction is protective of the right to appeal and removes a limitation defence only for the specified window.

Petitioner may file an appeal against the Section 147 order within 30 days; the appellate authority shall consider the appeal on merits and shall not raise limitation.

Final Conclusion: The writ petition is dismissed because a final, appealable assessment order under Section 147 has been passed; the petitioner remains entitled to pursue a statutory appeal, and if such appeal is filed within 30 days the appellate authority must entertain it on merits without raising limitation.

Extrapolation of income - addition based on seized documents - absence of clinching evidence - appreciation of evidence and concurrent findings of fact

Extrapolation of income - addition based on seized documents - absence of clinching evidence - appreciation of evidence and concurrent findings of fact - Deletion of addition for on money in respect of Assessment Year 2015-2016 and permissibility of extrapolation based on seized loose papers - HELD THAT: - The High Court upheld the concurrent factual findings of the Commissioner (Appeals) and the Tribunal that the incriminating loose papers seized in the search did not provide clinching or year specific evidence of receipt of on money for the units recognised in Assessment Year 2015 2016. The authorities below found the seized material related mainly to earlier years and that no statements of buyers or other direct evidence linking the on money to the year under consideration were recorded. Extrapolation at a uniform ratio (41%) from limited entries in the loose papers to the entire turnover was held to be based on assumption and presumption and not sustainable where there is no material to show that the assessee systematically charged on money in respect of the flats/units beyond those reflected in the seized documents. Because the orders below turned on appreciation of evidence and the absence of reliable, year specific incriminating material, there was no substantial question of law arising for interference by this Court. [Paras 5, 6, 7]

The deletion of the addition made for on money in Assessment Year 2015 2016 was justified; extrapolation based on the seized loose papers was not sustainable in absence of clinching, year specific evidence, and the Revenue's appeal is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal, upholding the deletion of the addition for on money in Assessment Year 2015 2016 on the ground that the orders below rested on concurrent appreciation of evidence showing absence of clinching material to justify extrapolation.

Disallowance of unexplained business expenditure - ad-hoc disallowance - rejection of books of account - assessment by estimation - reopening of assessment under section 147 - verification while giving effect to appellate order

Disallowance of unexplained business expenditure - ad-hoc disallowance - rejection of books of account - assessment by estimation - verification while giving effect to appellate order - Validity of the CIT(A)'s allowance to assess deemed profit at 3% of receipts after rejecting the assessee's books and reducing the AO's disallowance. - HELD THAT: - The Tribunal examined the CIT(A)'s findings that the Assessing Officer's blanket disallowance of the entire expenses was not supported by cogent reasons and that ad-hoc disallowances cannot be sustained without justification. The CIT(A) noted the assessee's failure, despite opportunities, to produce complete documentary evidence of the large expenses, and observed the low net profit ratio in the year under consideration compared with earlier years. In those circumstances the CIT(A) rejected the books of account for the purpose of assessment and, as a matter of fair play and in the interest of justice, estimated taxable profit at 3% of the shown receipts-a percentage derived from the assessee's profit ratios in earlier years-and directed the AO to verify facts and grant any further relief found admissible while giving effect to the order. The Tribunal held that the CIT(A)'s approach was a plausible exercise of discretion on the material available and did not exhibit illegality or perversity, therefore the appellate estimate and the direction for verification were sustainable. [Paras 6, 7, 8, 9]

The CIT(A)'s direction to reduce the addition to profit assessed at 3% of receipts subject to verification was upheld and the revenue's appeal was dismissed.

Final Conclusion: The Tribunal found no illegality in the CIT(A)'s order which rejected the books for assessment purposes, estimated profit at 3% of the shown receipts based on earlier years' profit ratios, and directed verification by the AO; the revenue's appeal was dismissed.

Provision for contingent liability - allowability of provisions as business expenditure - burden on revenue to distinguish or overturn prior tribunal findings - reliance on consistent decisions of a Coordinate Bench

Provision for contingent liability - allowability of provisions as business expenditure - reliance on consistent decisions of a Coordinate Bench - Whether the provision made by the assessee for the Shahenshah Scheme is a contingent liability not allowable as deduction, or a permissible provision deductible as business expenditure. - HELD THAT: - The Tribunal examined whether the contested provision was merely contingent or was created on a rational basis and therefore deductible. The Commissioner (Appeals) had deleted the addition relying on earlier decisions in the assessee's own cases for prior assessment years. The Coordinate Bench of the Tribunal had earlier held the provision to be created on a scientific basis (referenced in the order for A.Y. 2006-07), and before the Tribunal no distinguishing facts for the years under consideration were pointed out by Revenue. Revenue also did not place material showing that the earlier Tribunal view in the assessee's case had been set aside, stayed or overruled by a higher forum. In these circumstances the Tribunal found no infirmity in the CIT(A)'s reliance on the consistent earlier findings and declined to treat the provision as a non-deductible contingent liability, thereby dismissing Revenue's appeal for the years under adjudication. [Paras 9, 12]

Addition disallowing the provision for the Shahenshah Scheme is not sustained; the CIT(A)'s deletion is upheld and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal upheld the deletion of the addition for the provision relating to the Shahenshah Scheme, dismissing the Revenue's appeals for A.Y. 2015-16 and A.Y. 2017-18, principally on the basis of consistent earlier Tribunal decisions in the assessee's own cases and absence of any material to distinguish or overturn those decisions.

Addition under section 68 - sales treated as bogus - burden of proof for bogus sales - banking channel receipts as evidentiary support - VAT returns as corroborative evidence - distinction between cash sales and banked receipts in scrutiny

Addition under section 68 - sales treated as bogus - banking channel receipts as evidentiary support - VAT returns as corroborative evidence - Whether sales to five specified parties could be treated as unexplained income and added to assessable income under section 68. - HELD THAT: - The Tribunal upheld the view of the Commissioner (Appeals) that the Assessing Officer erred in treating the sales as unexplained income under section 68 merely because PAN and address particulars of certain purchasers were not available. The appellate authority found that the assessee had recorded the sales in audited accounts, claimed corresponding purchases which the AO accepted, and received payments through banking channels with bank statements produced. The assessee also filed VAT returns reconciling the sales and had paid VAT thereon. The AO did not challenge the purchases, inventory or VAT returns and inconsistently accepted uncategorised cash sales while impugning banked, verifiable receipts. In the absence of reliable evidence proving the transactions to be bogus, the sales could not be added under section 68. The Tribunal found no infirmity in the reasoning of the Commissioner (Appeals) and rejected the Revenue's contentions. [Paras 5, 6]

Order of the Commissioner (Appeals) deleting the addition under section 68 is sustained and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirms the deletion of the addition made under section 68 in respect of the disputed sales for AY 2018-19, holding that sales supported by bank receipts, accepted purchases and VAT returns could not be treated as bogus without reliable evidence to the contrary; Revenue's appeal dismissed.

Penalty for concealment of particulars of income under Section 271(1)(c) - Explanation 1 to Section 271(1)(c) - failure to substantiate explanation deemed concealment - voluntary disclosure versus surrender after detection by department - date of registration of Joint Development Agreement as determinative year of capital gains - distinction between concealment of particulars and furnishing inaccurate particulars of income - power of appellate authority to enhance income

Penalty for concealment of particulars of income under Section 271(1)(c) - Explanation 1 to Section 271(1)(c) - failure to substantiate explanation deemed concealment - date of registration of Joint Development Agreement as determinative year of capital gains - Imposition of penalty under Section 271(1)(c) for non-disclosure of capital gains arising from a Joint Development Agreement in AY 2014-15. - HELD THAT: - The Tribunal upheld the levy of penalty. The assessing officer and the CIT(A) concluded that capital gains arising on account of the registered JDA were chargeable in AY 2014-15 (being the year of registration) and the assessee failed to disclose those particulars in the return and assessment proceedings. Explanation 1 to Section 271(1)(c) applies where an assessee offers an explanation which is not substantiated; the CIT(A) found the assessee's explanation not bona fide and unsubstantiated because the assessee received flats and sold two flats yet did not disclose capital gains on transfer of land. The Tribunal applied the legal principle that concealment is established where material facts relevant to computation of income are not disclosed or explanations are not proved, and held that the CIT(A) correctly exercised his power to impose penalty; reliance on authorities discussing surrender after detection and enhancement at appellate stage supports the conclusion that post-detection acceptance is not voluntary and attracts penalty. The Tribunal found no infirmity in the exercise of discretion to levy the minimum prescribed penalty in the circumstances. [Paras 5, 8]

Penalty under Section 271(1)(c) sustained for concealment of capital gains in AY 2014-15.

Voluntary disclosure versus surrender after detection by department - power of appellate authority to enhance income - distinction between concealment of particulars and furnishing inaccurate particulars of income - Whether the assessee's admission of capital gains at the appellate stage amounted to a voluntary disclosure that would preclude penalty. - HELD THAT: - The Tribunal held the admission at the appellate stage was not voluntary. The enhancement arose only after issuance of an enhancement notice by the CIT(A) and the assessee's acceptance followed that departmental effort. The Tribunal endorsed the reasoning that an addition accepted after detection or enhancement notice cannot be treated as a voluntary, bona fide disclosure that absolves the assessee from penalty; consequently, the appellate enhancement did not convert the surrender into a voluntary offer. The Tribunal also observed that the CIT(A) was entitled to enhance income within his jurisdiction and such enhancement, when followed by an admission that was the product of departmental detection, supports a finding of concealment rather than voluntary disclosure. [Paras 5, 8]

Admission at appellate stage was not voluntary; penalty could be imposed.

Final Conclusion: The appeal is dismissed; the Tribunal affirms the CIT(A)'s imposition of penalty under Section 271(1)(c) for concealment of capital gains arising from the Joint Development Agreement in AY 2014-15, holding that the assessee's appellate admission was not a voluntary disclosure and that the statutory requirements for levy of penalty were satisfied.

Household drawings - estimation of unexplained withdrawals - burden of proof for cash withdrawals - verification of bank records and cheque payments - deletion of additions on evidence

Household drawings - estimation of unexplained withdrawals - verification of bank records and cheque payments - deletion of additions on evidence - Addition of Rs.4.80 lacs made by the AO on account of household drawings for A.Y.2013-14 was not sustainable and was deleted. - HELD THAT: - The assessee, a senior citizen living with his wife, furnished detailed particulars of withdrawals and payments aggregating to Rs.3,96,735/-, including electricity, water, gas, telephone and medical expenses, many of which were paid by account-payee cheque and supported by bank statements. The AO estimated household withdrawals at Rs.40,000 per month and made an addition without accepting the actual particulars furnished by the assessee. The CIT(A) upheld the addition despite obtaining a remand report from the AO. The Tribunal found that the assessee's contemporaneous records and cheque payments sufficiently explained the withdrawals, and that the AO's mere estimation could not be sustained in the face of such evidence. Having regard to the age of the assessee and the nature of the expenses, the Tribunal held that there was no merit in the addition and directed its deletion.

Addition of Rs.4.80 lacs on account of household drawings deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal by deleting the addition of Rs.4.80 lacs relating to household drawings for A.Y.2013-14, holding that the assessee's detailed particulars and bank evidence satisfactorily explained the withdrawals and that the AO's estimate was unsustainable.

Addition as unexplained income under section 68 of the Income-tax Act - Scope of assessment under section 153A where original assessment is completed - Requirement of incriminating material found during search to sustain post-search additions - Application of the ratio in CIT v. Kabul Chawla to assessments completed prior to search

Addition as unexplained income under section 68 of the Income-tax Act - Requirement of incriminating material found during search to sustain post-search additions - Scope of assessment under section 153A where original assessment is completed - Validity of the addition of the forfeited advance as unexplained income under section 68 for AY 2013-14 where the original assessment was completed and no incriminating material was found during search. - HELD THAT: - The Assessing Officer added the forfeited advance to income under section 68 because the assessee did not respond to queries and the other contracting party did not reply to summons. The CIT(A) examined the documents seized and observed they comprised an agreement to sell and its cancellation, and that the forfeiture clause was part of the agreement; the amount was recorded in the assessee's books and credited to the bank account. Relying on the jurisdictional High Court's decision in CIT v. Kabul Chawla, the CIT(A) held that where the assessment for the year was a completed assessment on the date of search, any addition in proceedings under section 153A must have a nexus with incriminating material found in the course of search; mere references to the agreement did not constitute incriminating material. The Tribunal found no infirmity in this view, distinguishing the Department's reliance on other decisions as factually inapplicable, and sustained the deletion of the addition on the ground that the addition was not based on incriminating material discovered during the search but on regular assessment material. [Paras 5, 6]

Addition made under section 68 for AY 2013-14 deleted; Revenue's appeal dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the addition of the forfeited advance for AY 2013-14, holding that in a completed assessment year additions in proceedings under section 153A must be founded on incriminating material found during the search; appeal by the Revenue dismissed.

Capital receipt versus revenue receipt - inextricably linked to the project - overriding obligation / escrow obligation - diversion of income v. application of income - interest on funds held as margin for bank guarantee treated as capital receipt - reduction from project cost / capitalization of receipts

Capital receipt versus revenue receipt - inextricably linked to the project - overriding obligation / escrow obligation - reduction from project cost / capitalization of receipts - diversion of income v. application of income - Toll collections received during the construction period are capital receipts and properly reduced from the cost of the project. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)' finding that, under the concession agreement and escrow arrangement, toll collections during construction had to be deposited in an escrow and mandatorily used for project construction. That legal and contractual framework created an overriding obligation such that the assessee was not free to appropriate the receipts; the receipts were inextricably linked to and applied for capital works. Applying the established distinction between diversion of income (excluded from assessee's income if diverted by overriding title before accrual) and mere application of earned income (which remains taxable when applied after accrual), the Tribunal agreed with CIT(A) that here there was no real income accruing to the assessee during construction but a mode of contribution by the project owner (NHAI) towards capital expenditure. Reliance on precedent where funds were surplus or invested to earn income was distinguished on facts. As Revenue did not demonstrate any legal or factual error in the appellate finding, the Tribunal declined to interfere and dismissed the ground of appeal. [Paras 6, 7, 11]

Addition treating toll collections as revenue was deleted; toll receipts during construction are capital receipts and properly reduced from project cost.

Interest on funds held as margin for bank guarantee treated as capital receipt - inextricably linked to the project - reduction from project cost / capitalization of receipts - Interest earned on fixed deposits maintained as margin for bank guarantees is a capital receipt and may be reduced from project cost. - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that the fixed deposit was maintained as margin money to secure a bank guarantee that was a prerequisite for undertaking the project. The interest earned on such deposits was governed by the concession agreement which required that proceeds be deposited in escrow and used for the project. Following precedents where interest on funds brought for a specific pre project purpose was held to be inextricably linked to capital formation, the Tribunal found the interest to be capital in nature and properly adjusted against capital cost. Revenue did not point to any flaw in the appellate reasoning or to inapplicability of the relied authorities, and therefore the Tribunal upheld the deletion of the addition. [Paras 12, 14, 17]

Addition of interest on fixed deposits was deleted; such interest is capital in nature and reduced from project cost.

Final Conclusion: Both grounds of the Revenue appeal are dismissed: (i) toll collections during construction held to be capital receipts and rightly reduced from project cost; and (ii) interest on fixed deposits held to be capital in nature and rightly adjusted against the capital cost of the project.

Liability of overseas supplier to penalty for aiding and abetting customs evasion - Extra-territorial operation of the Customs Act - Effect of settlement by co-noticees before the Settlement Commission on liability of other noticees - Jurisdiction of DRI officers to issue show cause notices and adjudicate penalties - Penalty under Section 112(a) of the Customs Act

Liability of overseas supplier to penalty for aiding and abetting customs evasion - Extra-territorial operation of the Customs Act - Penalty under Section 112(a) of the Customs Act - Penalty under Section 112(a) was lawfully imposed on the appellant, an overseas supplier, for abetting evasion of customs duty. - HELD THAT: - The Court upheld the concurrent factual findings that the appellant participated in a conspiracy with importers to mis-declare value and to evade customs duty, that false invoices were issued and part consideration was collected in India (including by the appellant's Indian representative) and remitted through hawala. Given that the alleged offences were committed within India and the appellant was present in India through its representative who actively colluded with importers, the contention that the Customs Act has no extra-territorial operation and therefore a penalty could not be imposed on the overseas supplier was rejected. The Tribunal's conclusion that fraud, collusion and forgery vitiate the transaction and justify imposition of penalty under Section 112(a) was endorsed. [Paras 20, 21, 22]

Penalty under Section 112(a) was validly imposed on the overseas appellant for abetting customs duty evasion; the extra-territoriality objection fails.

Effect of settlement by co-noticees before the Settlement Commission on liability of other noticees - Penalty under Section 112(a) of the Customs Act - Settlement by other co-noticees before the Settlement Commission did not extinguish or automatically confer immunity on the appellant. - HELD THAT: - The Court held that settlements by other noticees under Section 127B before the Settlement Commission did not absolve the appellant of liability where the appellant chose not to approach the Settlement Commission and instead contested adjudication. There is no provision in the Customs Act that automatically extends the benefit of a settlement obtained by one noticee to other persons charged in the same show cause notice; the proposal to impose penalties was severable and separate for each noticee. Reliance on authorities concerning different schemes or factual matrices was found inapplicable. [Paras 23, 24, 25, 26, 27]

The appellant is not entitled to immunity or discharge by reason of other co-noticees having settled; its liability was rightly adjudicated.

Jurisdiction of DRI officers to issue show cause notices and adjudicate penalties - Penalty under Section 112(a) of the Customs Act - The challenge to the jurisdiction of DRI officers to issue show cause notices was rejected as misplaced; the adjudication of penalty under Section 122 was within the competence of the Joint Commissioner. - HELD THAT: - The Court observed that the penalty was imposed under Section 112(a) and adjudicated under Section 122 by the Joint Commissioner of Customs, who had jurisdiction to decide levy of penalty. The contention that the show cause notice was issued by officers of DRI who were not 'proper officers' under Section 28(4) did not arise because the notice to the appellant was not under Section 28(4). The Tribunal rightly rejected the jurisdictional objection. [Paras 28, 29]

The objection to DRI officers' jurisdiction to issue the notice is without merit; adjudication by the Joint Commissioner of Customs was competent.

Final Conclusion: The High Court found no substantial question of law, upheld the concurrent findings of fact and law sustaining penalties under Section 112(a) against the appellant, rejected the extra-territoriality, settlement and jurisdictional objections, and dismissed the appeals.

Time limit for refund of duty - application of an amending notification to pending or subsequent refund claims - applicability of Section 27 of the Customs Act to refunds under a conditional exemption notification - strict interpretation of exemption notifications - Board clarification on temporal applicability of refund provisions

Time limit for refund of duty - application of an amending notification to pending or subsequent refund claims - strict interpretation of exemption notifications - Whether the one year time limit introduced by Notification No. 93/2008 applies to the appellant's refund claims filed after the amendment though duty was paid before the amendment. - HELD THAT: - The Tribunal examined the original Notification No.102/2007 and the substituted sub paragraph (c) introduced by Notification No.93/2008 which expressly required filing of the refund claim "before the expiry of one year from the date of payment of the said additional duty of customs". The amendment did not alter the rate or substantive entitlement but introduced a temporal condition. The appellant filed claims after one year and after the amendment came into force. The Tribunal followed the coordinate Chennai Bench in Honda Siel Power Products Ltd., applying the principle that exemption notifications must be strictly construed as settled by the Supreme Court; therefore the time limit in the amended notification applies to refund claims filed after the amendment. The Tribunal also observed that superior court rulings (including the Supreme Court) recognise the legislature's power to amend exemption regimes and that hardship is not a ground for judicial re writing of clear statutory language. On these grounds the claims were held time barred and correctly rejected. [Paras 7, 8, 11, 12]

The one year limitation introduced by Notification No.93/2008 applied to the appellant's refund claims filed after the amendment; the claims are time barred and rejection upheld.

Applicability of Section 27 of the Customs Act to refunds under a conditional exemption notification - Board clarification on temporal applicability of refund provisions - Whether the limitation under Section 27 of the Customs Act automatically governs refund claims under Notification No.102/2007. - HELD THAT: - The Tribunal referred to Board Circular No.6/2008 which clarifies that, in the absence of an express provision making Section 27 applicable in Notification No.102/2007, the normal six month limitation under Section 27 does not automatically apply to refunds under that notification. The circular further records the Board's decision to permit filing of claims up to one year and to incorporate that limit in the notification. On this basis the Tribunal held that Section 27 cannot be read in automatically where the notification does not adopt it, and that the temporal regime for refund claims is governed by the notification as amended and the Board's clarification. [Paras 6, 11]

Section 27 does not automatically apply to refunds under Notification No.102/2007; the temporal limitation is governed by the notification (as amended) and Board clarification.

Final Conclusion: The Tribunal upheld the impugned order rejecting the refund claims as time barred in view of the one year limitation introduced by Notification No.93/2008 and the non applicability of Section 27 to Notification No.102/2007; the appeal is rejected.

Eligibility for duty exemption under Notification No. 52/2003-Cus - sourcing of capital goods by an EOU from a leasing company - joint filing of import documents and joint execution of bond for duty-free imports - consideration as defined in Section 2(d) of the Indian Contract Act, 1872 - adequacy of consideration is immaterial - invocation of extended limitation period for issuance of show cause notice - allegation of suppression of facts - non-confiscation of imported goods and adequacy of penalty in lieu of denial of exemption

Eligibility for duty exemption under Notification No. 52/2003-Cus - joint filing of import documents and joint execution of bond for duty-free imports - consideration as defined in Section 2(d) of the Indian Contract Act, 1872 - adequacy of consideration is immaterial - non-confiscation of imported goods and adequacy of penalty in lieu of denial of exemption - Whether the imported machines were eligible for duty-free treatment under Notification No. 52/2003-Cus and whether failure to jointly file import documents or execute the bond with the owner-importer (Amul) and the nature of the agreement between the appellant and Amul defeated the exemption. - HELD THAT: - The Tribunal accepted that the Exim policy and CBEC Circular require joint filing of import documents and joint execution of the bond where capital goods are sourced from a leasing company. The appellants satisfactorily explained the inability to perform joint EDI filing and the departmental case does not dispute that the machines were received and put to use by the EOU. The adjudicating authority erred in treating absence of an express rental clause as dispositive: consideration is defined in Section 2(d) of the Indian Contract Act and adequacy of consideration is immaterial. The appellants' acts - interest-free financing, provision of free space and related promises - constituted consideration and meant the agreement could not be rejected as a sham without examination of what constitutes consideration. Given that the goods were put to proper use and were not confiscated by the Commissioner, and that Revenue did not contend diversion or non-use, the benefit of the notification could not be wholly denied. Under the circumstances, a direction to allow compliance with the bond condition within a fixed time or to impose a penalty for breach was an appropriate remedial course rather than complete forfeiture of exemption. [Paras 11, 12]

The goods were entitled to the benefits of Notification No. 52/2003-Cus in substance; the absence of joint filing/bond execution and the form of the agreement did not automatically defeat the exemption and a penalty or opportunity to comply would suffice instead of denying the benefit.

Invocation of extended limitation period for issuance of show cause notice - allegation of suppression of facts - sourcing of capital goods by an EOU from a leasing company - Whether the extended time limit for issuance of the show cause notice was correctly invoked on the ground of suppression of facts. - HELD THAT: - The Tribunal found that the lease agreement and documents connected with the ex-bond shipping bill and re-warehousing were within the knowledge of the jurisdictional Central Excise authority and were submitted in the course of processing imports and bonding. No new or hidden documents were unearthed by investigation. Producing documents before Customs does not automatically mean concealment from Central Excise, but here the material was already before the jurisdictional authority. There was therefore no basis to allege suppression of facts that would justify invoking the larger limitation period for issuing the SCN. [Paras 13]

Invocation of the extended limitation period was not justified; the extended time limit for issuing the show cause notice could not be validly invoked on the facts of this case.

Final Conclusion: The Commissioner's order confirming demand and penalties is set aside: the Tribunal holds that the imported machines were, in substance, eligible for benefits under Notification No. 52/2003-Cus (with provision for penalty or time to comply with bond formalities) and that invocation of the extended limitation period for issuance of the show cause notice was not justified; appeal allowed with consequential relief as per law.

Reverse burden of proof under Section 123 of the Customs Act, 1962 - admissibility and evidentiary value of statements under Section 108 of the Customs Act, 1962 - presumption under Section 114 of the Evidence Act - confiscation under Section 111(d) and Section 111(i) of the Customs Act, 1962 - penalty for possession or dealing with goods liable for confiscation under Section 112(b) of the Customs Act, 1962 - treatment of gold as prohibited goods pursuant to the Foreign Trade Policy and import restrictions

Reverse burden of proof under Section 123 of the Customs Act, 1962 - admissibility and evidentiary value of statements under Section 108 of the Customs Act, 1962 - presumption under Section 114 of the Evidence Act - Invocability of Section 123 of the Customs Act, 1962 on the facts of the case. - HELD THAT: - The Tribunal held that Section 123 was rightly invoked. The appellant, in his statement recorded under Section 108, admitted that the recovered metal was remelted foreign gold and that he had no documents to show lawful possession. Such admissions, being admissible and usable as substantive evidence, together with surrounding facts, were sufficient to raise a presumption under Section 114 of the Evidence Act that the gold was illegally imported. Once the presumption arose, the reverse burden under Section 123 shifted to the appellant to prove the goods were not smuggled; the appellant failed to discharge that burden. Reliance was placed on precedent holding Section 108 statements and presumptions under Section 114 as adequate to invoke Section 123. [Paras 6]

Section 123 was correctly invoked by the department and the burden to prove absence of smuggling lay on the appellant.

Confiscation under Section 111(d) and Section 111(i) of the Customs Act, 1962 - treatment of gold as prohibited goods pursuant to the Foreign Trade Policy and import restrictions - Whether the recovered gold was of foreign origin/prohibited and therefore liable to confiscation under Section 111. - HELD THAT: - The Tribunal found the confiscation sustainable. The retracted invoices and bills produced by the appellant did not match the recovered articles in appearance, weight or brand and the seller disowned the seized items. There was no evidence that the gold was imported by designated agencies or that applicable conditions for lawful importation were fulfilled. Given the Foreign Trade Policy restrictions and absence of documentary proof of lawful import or traceable domestic purchase/remelting, the goods remained prohibited/dutiable and were found concealed; therefore confiscation under Sections 111(d) and 111(i) was justified. The appellant's delayed retraction and failure to establish continuity between invoices and seized bars left the presumption of illegal import unrebutted. [Paras 7]

The recovered gold was liable to confiscation under Section 111(d) and/or 111(i) as prohibited/dutiable goods; confiscation was upheld.

Penalty for possession or dealing with goods liable for confiscation under Section 112(b) of the Customs Act, 1962 - Whether the appellant was liable to penalty under Section 112(b). - HELD THAT: - Having held that the appellant possessed gold which he could not prove to be of lawful origin and acknowledging that he purchased at cheaper rates consistent with smuggled goods, the Tribunal applied Section 112(b). That provision penalises persons who acquire or deal with goods which they know or have reason to believe are liable for confiscation. The appellant's failure to discharge the reverse burden and the surrounding circumstances rendered him liable to penalty. The Tribunal declined to read down the provision and endorsed a purposive construction to effectively combat gold smuggling. [Paras 8, 9]

Penalty under Section 112(b) was rightly imposed on the appellant.

Final Conclusion: All three adjudicated questions were decided in favour of the Revenue: Section 123 was properly invoked on the basis of admissible admissions and presumptions; the seized gold was held to be prohibited/dutiable and correctly confiscated under Section 111; and the appellant was properly subjected to penalty under Section 112(b). The appeal is dismissed.

Confiscation for imports effected without requisite import-export code under section 111(d) of the Customs Act - misdeclaration and confiscation under section 111(m) of the Customs Act - penalty under the Customs Act for import-related contraventions where bill of entry under section 46 has not been filed - inapplicability of section 114AA and penalties in absence of documentary ingredients - Prohibition of Benami Property Transactions Act not amenable to concatenation with the Customs Act

Confiscation for imports effected without requisite import-export code under section 111(d) of the Customs Act - penalty under the Customs Act for import-related contraventions where bill of entry under section 46 has not been filed - Whether confiscation under section 111(d) and imposition of penalties could be sustained where no bill of entry under section 46 had been filed and the goods were not otherwise prohibited - HELD THAT: - The Tribunal found on the record that no bill of entry had been filed under section 46 when the goods were seized and proposed for confiscation. The identity of the importer and absence of a valid import-export code could not be conclusively determined until the bill of entry was filed. Confiscation under section 111(d) had been invoked routinely despite the goods not being prohibited for import and without the statutory preconditions being established. Penalties premised on suspected misdeclaration or an anticipated attempt to clear goods against false declarations cannot be imposed on such mere presumptions. In these circumstances the impugned order failed to sustain legally and was set aside. [Paras 5, 7]

Confiscation under section 111(d) and the penalties imposed were not sustainable in the absence of filing of bill of entry and were set aside; appeal allowed.

Misdeclaration and confiscation under section 111(m) of the Customs Act - inapplicability of section 114AA and penalties in absence of documentary ingredients - Whether confiscation under section 111(m) for misdeclaration and penalty under section 114AA could be sustained on the available record - HELD THAT: - The Tribunal recorded that, because no bill of entry had been filed, there was no material on record to establish misdeclaration required for invoking section 111(m). All documents then available were limited to those mandated by section 30 upon the carrier. Consequently, the statutory ingredients for invoking section 114AA were absent and the penalties under that provision could not be sustained. The order was therefore unsupportable on these grounds. [Paras 5]

Findings of misdeclaration under section 111(m) and imposition of penalty under section 114AA were not supported by the record and could not be sustained.

Prohibition of Benami Property Transactions Act not amenable to concatenation with the Customs Act - Whether the Prohibition of Benami Property Transactions Act, 1988 could be invoked or concatenated with the Customs Act to bring the appellant within the scope of customs liability prior to filing of bill of entry - HELD THAT: - The Tribunal held that the Prohibition of Benami Property Transactions Act is an independent statute intended for prosecution and interdiction of benami property and cannot be concatenated with the Customs Act by any enabling provision to supply jurisdictional or substantive basis for customs confiscation or penalties. The adjudicating authority had invoked that Act without empowerment to do so, ostensibly to attribute import liability to the appellant before the bill of entry was filed; such invocation was impermissible. [Paras 6]

The attempt to invoke the Prohibition of Benami Property Transactions Act to establish customs liability was impermissible; that statute cannot be concatenated with the Customs Act for this purpose.

Final Conclusion: The Tribunal set aside the adjudicating order: confiscation and penalties could not be sustained in the absence of a filed bill of entry, misdeclaration was not established on the record, section 114AA was inapplicable for lack of required documentary ingredients, and the Prohibition of Benami Property Transactions Act could not be concatenated with the Customs Act to supply liability; the appeal was allowed.

Provisional release under Section 110A - substantial question of law under Section 130 - perversity standard for appellate interference - baggage exception to Chapter VII (Section 44) - inapplicability of Bill of Entry requirement to baggage/re-import for exhibition - Standing Operating Procedure for hand carried jewellery - bank guarantee condition for provisional release

Provisional release under Section 110A - substantial question of law under Section 130 - perversity standard for appellate interference - Whether the court should interfere with the learned Tribunal's order permitting provisional release of the consignment of 25299.68 grams of gold jewellery. - HELD THAT: - The court held that its appellate jurisdiction under Section 130 is confined to substantial questions of law and does not ordinarily permit re appreciation of findings of fact unless they suffer from manifest perversity. The learned Tribunal had recorded positive findings of fact that the imported jewellery matched the earlier exported jewellery and had been appraised and accepted by the customs appraiser. Absent any showing of perversity in those findings, interference with the discretionary exercise under Section 110A was unwarranted. The court therefore concluded that the learned Tribunal's decision to permit provisional release could not be disturbed on the record before it and that provisional release did not foreclose subsequent adjudication, which remains open to determine confiscation or other liabilities. (See paras 21, 22, 25, 60-73.) [Paras 60, 61, 71, 72, 73]

The court declined to interfere with the learned Tribunal's discretionary order for provisional release of the consignment on merits, noting absence of perversity in the factual findings.

Baggage exception to Chapter VII (Section 44) - inapplicability of Bill of Entry requirement to baggage/re-import for exhibition - Standing Operating Procedure for hand carried jewellery - bank guarantee condition for provisional release - Whether the consignment of 25299.68 grams, described in the proceedings as imported as baggage and handled under the SOP for hand carried jewellery, was entitled to the same provisional release treatment despite absence of a signed/endorsed Bill of Entry and whether any additional bank guarantee could be imposed. - HELD THAT: - The court treated the show cause notice's averments that the jewellery was imported as baggage as prima facialy acceptable for the limited purposes of the review, observing that once goods are acknowledged as baggage the provisions of Chapter VII (including the Bill of Entry requirement) do not apply by operation of Section 44. The court noted that the SOP dated 29 March 2016 prescribes a distinct appraisement and documentary procedure for re imported hand carried jewellery used for exhibitions, and that the learned Tribunal had found the SOP procedure followed and appraisement performed. Given those findings and the acknowledgement in the show cause notice, the court considered it appropriate to extend the same provisional release treatment to the 25299.68 grams consignment. The court further observed that the Supreme Court had affirmed the earlier judgment except for enhancing the bank guarantee quantum and that no further enhancement of the bank guarantee for this consignment could now be directed by the High Court. (See paras 12-19, 25-36.) [Paras 31, 32, 34, 35, 36]

The court allowed the review petition and extended the same provisional release treatment to the 25299.68 grams consignment, holding that baggage/SOP treatment renders the Bill of Entry requirement inapplicable in that context and that no further bank guarantee could be imposed.

Final Conclusion: The review petition is allowed: the court extended the learned Tribunal's order of provisional release to the 25299.68 grams consignment (imported as baggage and appraised under the SOP), declined to re open the Tribunal's factual findings absent perversity, and held that no additional bank guarantee beyond the amount fixed in the earlier order (as modified by the Supreme Court) could be directed.

Statutory pari-passu charge of workmen over secured creditors' security under Sections 529 and 529A - relevant date for distribution is date of winding up or appointment of provisional liquidator - secured creditor's option to realise security outside winding up subject to liability for workmen's portion where proceeds not finally disbursed - custody and control of company's property on appointment of provisional liquidator under Section 456

Statutory pari-passu charge of workmen over secured creditors' security under Sections 529 and 529A - relevant date for distribution is date of winding up or appointment of provisional liquidator - custody and control of company's property on appointment of provisional liquidator under Section 456 - Whether the Bank is liable to bring back and deposit the workmen's portion of sale/receipt proceeds received after the appointment of the Provisional Liquidator - HELD THAT: - The Court applied the legal principles in Jitendra Nath Singh and Bank of Maharashtra to hold that where a company goes into liquidation or a provisional liquidator has been appointed before final disbursement of sale proceeds, Section 529A read with the proviso to Section 529 creates a pari-passu statutory charge in favour of workmen over such proceeds. The relevant date for determining the ratio of distribution is the date of the winding up order or appointment of the provisional liquidator, not the date of sale. Section 456 confirms that on appointment of a provisional liquidator, the company's property, including lease rents, vests in the liquidator (or is under his control). Applying these principles to the facts, the Court found that the sum of Rs. 18,06,210 received by the Bank from the Tribunal-Receiver on 12th November, 2008 was rent payable to the company and was not finally disbursed before appointment of the Provisional Liquidator; accordingly the workmen's statutory charge attached to that amount and the Bank was liable to restitute the workmen's portion. The undisputed computation of the parties established the quantum of the workmen's portion payable by the Bank as Rs. 2,53,977.20, and the Court directed its deposit with the Official Liquidator. [Paras 21, 23, 24, 27, 28]

The Bank is directed to deposit the workmen's share of Rs. 2,53,977.20 with the Official Liquidator within four weeks; the report is partly allowed.

Final Conclusion: The Court allowed the Official Liquidator's report partly and directed Kotak Mahindra Bank Ltd. to deposit Rs. 2,53,977.20 with the Official Liquidator towards workmen's dues within four weeks; application for stay was rejected and there was no order as to costs.

Implementation of Resolution Plan - conditions precedent - exclusion of time from the implementation period - appointment of directors to the board of the corporate debtor - monitoring committee's obligation to oversee and cooperate - performance bank guarantee - leave of the Adjudicating Authority for invocation

Appointment of directors to the board of the corporate debtor - implementation of Resolution Plan - Permission to appoint directors to the board of the Corporate Debtor to enable regulatory and legal compliances was granted. - HELD THAT: - The Appellants sought directions permitting appointment of a requisite number of directors so that corporate and regulatory actions necessary for implementation of the approved Resolution Plan could be undertaken. The application was not opposed by the Successful Resolution Applicant and the Tribunal observed that appointment of directors is essential for taking various regulatory actions as part of general corporate compliances. In those circumstances the Tribunal allowed the application in terms of the prayer permitting such appointments, noting that steps for implementation must be taken by the SRA and be overseen and cooperated with by the Monitoring Committee. [Paras 13]

IA No.1975 of 2023 allowed and permission granted to appoint directors to the board of the Corporate Debtor.

Exclusion of time from the implementation period - conditions precedent - monitoring committee's obligation to oversee and cooperate - Exclusion of the period from 16.11.2022 to 03.03.2023 from the 180-day implementation period under the Resolution Plan was allowed. - HELD THAT: - The SRA sought exclusion of time on the ground that, despite the Adjudicating Authority's order declaring conditions precedent fulfilled, corresponding steps required of the Monitoring Committee were not taken and the MC Lenders had challenged the Adjudicating Authority's order. The Tribunal recorded that after its order of 03.03.2023 declining the MC Lenders' interim relief the parties were directed to cooperate in implementation. Having considered the sequence of events and that the MC Lenders had not taken steps ordered by the Adjudicating Authority, the Tribunal held that exclusion of time was justified for the period up to 03.03.2023 and allowed the SRA's prayer to that extent; the SRA was directed to withdraw the pending IA before the Adjudicating Authority. [Paras 14, 15, 16, 17]

IA Nos.2028-2029 of 2023 allowed and period from 16.11.2022 to 03.03.2023 excluded from the 180-day period; IA No.1863 of 2023 to be withdrawn.

Performance bank guarantee - leave of the Adjudicating Authority for invocation - implementation of Resolution Plan - MC Lenders were restrained from invoking the Performance Bank Guarantee as of the date of the order; any invocation requires leave of the Adjudicating Authority. - HELD THAT: - The Tribunal noted that the Resolution Plan had been approved up to the Supreme Court and that both the SRA and the Monitoring Committee were under directions to take coordinated steps for implementation. While acknowledging that invocation of a Performance Bank Guarantee is a contractual right, the Tribunal held that such invocation is permissible only upon failure by the SRA to implement the Plan. Given that the SRA had undertaken to perform its obligations and the event of failure had not occurred, the Tribunal directed that the MC Lenders shall not invoke the Performance Bank Guarantee at present and, if they seek to invoke it, they must obtain leave of the Adjudicating Authority. [Paras 18, 19, 20]

IA Nos.2159-2160 of 2023 disposed of by directing that the MC Lenders shall not invoke the Performance Bank Guarantee as on date; invocation, if any, only with leave of the Adjudicating Authority.

Final Conclusion: The Tribunal allowed the application for appointment of directors to facilitate implementation of the approved Resolution Plan; excluded the period 16.11.2022 to 03.03.2023 from the 180-day implementation timeline (with the SRA to withdraw its pending IA before the Adjudicating Authority); and restrained invocation of the Performance Bank Guarantee at present, permitting any invocation only with leave of the Adjudicating Authority.

Territorial jurisdiction of NCLT for insolvency proceedings - Enforceability of governing law and forum selection clauses in finance agreements - Concurrent jurisdiction and lender's right to sue in multiple forums - Admission of section 7 application and initiation of CIRP on admitted debt and default - Limitation for filing section 7 following demand/recall notice - Absence of a bona fide dispute as bar to section 7 proceedings

Territorial jurisdiction of NCLT for insolvency proceedings - Enforceability of governing law and forum selection clauses in finance agreements - Concurrent jurisdiction and lender's right to sue in multiple forums - Whether the financial creditor could maintain a section 7 petition before the NCLT, Mumbai notwithstanding clauses in the Loan Facility Agreements providing for English law and English courts. - HELD THAT: - The Loan Facility Agreements expressly stated they are governed by English law and identified the courts of England as having jurisdiction, but also contained provisions (Clause 35.1(c) / Clause 17.7(3)) preserving the lender's right to take proceedings in other competent jurisdictions and to pursue concurrent proceedings. The borrower had irrevocably consented to enforcement and waived immunity. Separately, sub-section (1) of section 60 of the IBC vests territorial jurisdiction of the Adjudicating Authority in the place where the corporate debtor's registered office is located. The corporate debtor's registered office is in Andheri East, Mumbai. Read together, the finance agreements' clauses were for the bank's benefit and did not preclude the lender from initiating insolvency proceedings before the NCLT, Mumbai. Therefore the Adjudicating Authority in Mumbai had territorial competence to adjudicate the section 7 petition. [Paras 12, 13, 14]

The NCLT, Mumbai had jurisdiction to adjudicate the section 7 application and the English-law/forum clauses did not bar the financial creditor from proceeding before the Adjudicating Authority in Mumbai.

Admission of section 7 application and initiation of CIRP on admitted debt and default - Absence of a bona fide dispute as bar to section 7 proceedings - Limitation for filing section 7 following demand/recall notice - Whether the Adjudicating Authority erred in admitting the section 7 application and initiating CIRP where the corporate debtor cited Covid-19 difficulties and asserted intention to repay. - HELD THAT: - The recall/demand notice dated 04.05.2021 preceded filing of the section 7 petition on 02.02.2022, which falls within one year from the demand and thus within limitation for enforcement. The impugned order records that the corporate debtor neither disputed nor denied its liability and had not raised any substantive dispute regarding debt or default; the corporate debtor's plea indicated financial stress and intention to repay but did not constitute a bona fide dispute as to the existence of liability. Given the admitted default on repayment obligations under the two facility agreements and absence of a disputed debt, the Adjudicating Authority correctly found the conditions for admission under section 7 satisfied and lawfully initiated CIRP. [Paras 15, 16, 17, 18]

The admission of the section 7 petition and initiation of CIRP were legally valid; the appeal against the impugned order does not succeed on these grounds.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order admitting the section 7 petition and initiating CIRP against the corporate debtor is upheld. No order as to costs.

Exclusion of time for implementation of resolution plan - modification of approved resolution plan - implementation of resolution plan by stakeholders - directions to financial creditor to execute working capital documents - forensic audit and cooperation of the resolution applicant - eligibility of the resolution applicant under Section 29A

Exclusion of time for implementation of resolution plan - eligibility of the resolution applicant under Section 29A - Exclusion of the period from 18.04.2018 to 18.01.2022 from computation of the time available for implementation of the approved resolution plan. - HELD THAT: - The Adjudicating Authority granted formal exclusion of the period from 18.04.2018 to 18.01.2022 on account of extensive litigation initiated by financial creditors themselves challenging the approval of the resolution plan. The Supreme Court had earlier noted that the corporate debtor was an on going concern and that substantial funds had been infused, and approved exclusion on account of litigation. Given that the lenders were litigating the validity and eligibility of the resolution applicant (including under Section 29A) and thus were not disposed to implement the plan, exclusion of the intervening period was found to be just and fair. The exclusion was an exercise consistent with earlier orders and did not transgress the scheme of the Code. [Paras 9, 11, 12, 13, 14]

The exclusion of 18.04.2018 to 18.01.2022 from the period for implementation of the resolution plan is upheld.

Modification of approved resolution plan - implementation of resolution plan by stakeholders - Whether the Adjudicating Authority's order excluding the aforesaid period amounts to modification of the approved resolution plan. - HELD THAT: - The Tribunal held that the Adjudicating Authority did not modify the terms of the approved plan but only excluded a period from calculation of the timeline for implementation because of litigation. Viability and feasibility of the plan are matters for the approval stage; once approved (and the approval sustained by the Supreme Court notwithstanding findings on eligibility), stakeholders are obliged to implement the plan. The impugned order therefore does not impermissibly alter the plan's substantive terms or its feasibility as assessed at approval. [Paras 11, 12, 14]

The order excluding the period is not a modification of the approved resolution plan and is sustainable.

Directions to financial creditor to execute working capital documents - forensic audit and cooperation of the resolution applicant - Validity of directions issued to the lead bank (SBI) to execute working capital consortium documents and the role of forensic audit/cooperation in implementation. - HELD THAT: - The Adjudicating Authority directed SBI to take steps necessary for implementation (execution of consortium documents, issuance of bank guarantees/LCs, certificates of credit lines and solvency/net worth certificates) as part of giving effect to the approved plan. Those directions were held to be in accordance with the plan and permissible. Repeated or ongoing forensic audits, which in any event produced no adverse findings in earlier sanctioned audits, cannot justify indefinite refusal to implement the plan. The Tribunal recorded the resolution applicant's undertaking to perform its obligations and directed mutual performance: lenders must discharge their obligations and the resolution applicant must cooperate (including with forensic processes) and fulfil plan commitments. [Paras 11, 15, 16, 17]

Directions to the lead bank to execute documents and to the resolution applicant to cooperate with forensic audit and perform plan obligations are upheld; stakeholders must implement the plan as directed.

Final Conclusion: The appeal is dismissed. The impugned order of the Adjudicating Authority (including exclusion of 18.04.2018 to 18.01.2022 and directions for implementation) is upheld; the resolution applicant and the lenders are directed to perform their respective obligations to implement the approved resolution plan.

Maintenance of separate records for availing and utilisation of Cenvat credit - disallowance of Cenvat credit for common inputs/input services without identification - admissibility of Cenvat credit on input services under Works Contract (Composition Scheme) - non-retroactive application of partial exemption concept - evidentiary weight of Chartered Accountant's certificate in tax proceedings

Maintenance of separate records for availing and utilisation of Cenvat credit - disallowance of Cenvat credit for common inputs/input services without identification - evidentiary weight of Chartered Accountant's certificate in tax proceedings - Whether confirmation of demand for non-maintenance of separate records and for availment of Cenvat credit in respect of exempted services was sustainable in absence of identification of common inputs/input services and without addressing the Chartered Accountant's certificate. - HELD THAT: - The Tribunal found that the adjudicating authority confirmed demands without identifying which inputs or input services were common to taxable and exempted services and without qualifying the credits allegedly availed on common items. The appellant had filed ST-3 returns and a Chartered Accountant's certificate asserting site-wise maintenance of records and that Cenvat credit was taken only for sites where Works Contract Service liability was discharged. The adjudicating authority neither analysed nor negatived that certificate nor conducted reasonable verification; demands were confirmed on the basis of allegations in the show cause notices. The Tribunal relied on the principle that a professional certificate cannot be disregarded without cogent evidence and reasons and that confirmation of demands merely on a prima facie reading of returns is legally untenable. The Tribunal therefore held the findings of the adjudicating authority on this aspect to be factually and legally unsustainable. [Paras 6, 7, 11, 12, 13]

Findings confirming demand for lack of separate records and for alleged availment of credit on exempted services set aside for want of identification of common credits and for failure to consider and rebut the Chartered Accountant's certificate.

Admissibility of Cenvat credit on input services under Works Contract (Composition Scheme) - non-retroactive application of partial exemption concept - Whether availment of Cenvat credit on input services in relation to Works Contract Service was impermissible and whether the concept of partial exemption could be applied to the relevant periods. - HELD THAT: - The Tribunal examined the Works Contract (Composition Scheme) rule which bars taking Cenvat credit of duties or cess on inputs used in relation to works contracts but does not bar Cenvat credit of input services. The appellant admitted availing credit only on input services for Works Contract Service and disclaimed credit for exempted Construction Services. The Tribunal found that the adjudicating authority erred in holding that the appellant simultaneously availed abatement and Cenvat credit in contravention of then-existing law. Further, the Tribunal observed that the concept of partial exemption came into effect only from 01.07.2012 and could not be applied retroactively to the periods under adjudication; consequently the adjudicating authority's reliance on partial exemption for the relevant earlier periods had no legal basis. On these grounds the Tribunal accepted the appellant's contention regarding permissibility of input-service credit for Works Contract Service and rejected the adjudicating authority's contrary conclusion. [Paras 8, 9, 10, 13]

Adjudicating authority's disallowance based on an alleged simultaneous claim of abatement and Cenvat credit and its application of the post-2012 partial exemption concept to earlier periods set aside; availment of Cenvat credit on input services for Works Contract Service held permissible as per the applicable rule.

Final Conclusion: The impugned adjudication was quashed: demands and penalties confirmed by the adjudicating authority are set aside because the authority failed to identify common credits or rebut the Chartered Accountant's certificate and erroneously applied the concept of partial exemption to periods prior to its introduction; appeals are allowed.

Levy of service tax on liquidated damages - Service by way of agreeing to the obligation to refrain from an act, to tolerate an act or a situation, or to do an act (clause (e) of section 66E) - Consideration as essential element of taxable service - Deterrent or penal nature of liquidated damages - CBIC guidance and tribunal precedent on taxability under clause (e)

Levy of service tax on liquidated damages - Deterrent or penal nature of liquidated damages - Consideration as essential element of taxable service - Liquidated damages collected prior to 01.07.2012 are not exigible to service tax. - HELD THAT: - For the period prior to 01.07.2012, collections by way of liquidated damages did not fall within any specified taxable service under the definitions prevailing in the Finance Act, 1994. The Tribunal accepted the legal characterisation of such recoveries as penal or deterrent in nature rather than as consideration for any activity performed by the recipient. Consequently, there was no consideration flowing for a taxable service and service tax could not be levied on those recoveries for the period before 01.07.2012.

Demand of service tax on liquidated damages for the period prior to 01.07.2012 set aside.

Service by way of agreeing to the obligation to refrain from an act, to tolerate an act or a situation, or to do an act (clause (e) of section 66E) - CBIC guidance and tribunal precedent on taxability under clause (e) - Consideration as essential element of taxable service - Liquidated damages collected w.e.f. 01.07.2012 are not taxable under clause (e) of section 66E where the recovery is a penal/deterrent measure and not consideration for an agreement to refrain, tolerate or do an act. - HELD THAT: - Although clause (e) of section 66E contemplates taxable activity where one party agrees to refrain from an act, tolerate an act/situation or to do an act in return for consideration, the Tribunal held that liquidated damages imposed for breach or non-performance do not constitute such consideration unless the agreement specifically contemplates a separate obligation coupled with a flow of consideration for that obligation. The decision in South Eastern Coalfields and the CBIC Circular dated 28.02.2023 were relied upon to emphasise that penal recoveries aimed at deterrence do not amount to consideration for a taxable service under clause (e). Taxability depends on the factual existence of an independent contractual arrangement evidencing an agreement to do/abstain/tolerate coupled with consideration, which was absent in the present contracts.

Demand of service tax on liquidated damages for the period w.e.f. 01.07.2012 held unsustainable and set aside.

Final Conclusion: The impugned order demanding service tax, interest and penalty on liquidated damages was unsustainable for both periods; the Commissioner's order dated 10.01.2019 is set aside and the appeal is allowed.

CENVAT credit on input services - Input Service Distributor distribution on pro rata basis under rule 7(d) of the CENVAT Rules - Legality of issuance of Input Service Distributor's invoice to contract manufacturers - Contract manufacturing and allocation of input service credit

CENVAT credit on input services - Input Service Distributor distribution on pro rata basis under rule 7(d) of the CENVAT Rules - Contract manufacturing and allocation of input service credit - Legality of issuance of Input Service Distributor's invoice to contract manufacturers - Parle Biscuits was justified in distributing credits on input services attributable to the final product on a pro rata basis proportionate to the turnover of each unit between its manufacturing plants and its contract manufacturing units, and such distribution authorised the contract manufacturers to avail CENVAT credit. - HELD THAT: - The Tribunal's Larger Bench, after reference, held that distribution of input service credit by Parle on a pro rata basis proportionate to turnover, under rule 7(d) of the CENVAT Rules, was legally permissible and, accordingly, the issuance of Input Service Distributor invoices to contract manufacturing units for attribution of such services to the final product was justified. Having answered the primary question in favour of the appellant, the Larger Bench found it unnecessary to decide the subsidiary question whether, irrespective of that position, the contract manufacturer would be entitled to credit where the input service cost is included in the goods on which excise duty is paid. The present Tribunal applied that Larger Bench conclusion and held that the Commissioner (Appeals) order confirming demand and denying credit could not be sustained. [Paras 11, 44, 45]

The order of the Commissioner (Appeals) dated 24.11.2017 is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the Commissioner (Appeals) order, holding that Parle Biscuits was entitled to distribute input service credit pro rata under rule 7(d) to its contract manufacturing units, enabling those units to avail the credited input services.

Validity of delegated legislation - Rule 8(3A) of the Central Excise Rules - prohibition on utilisation of Cenvat credit - Withdrawal of Cenvat credit facility equating to penal consequence - Principle of presumption of constitutionality of subordinate legislation - Article 14 - reasonableness and proportionality test - Recovery through PLA / manner of recovery under Rule 8(3A)

Rule 8(3A) of the Central Excise Rules - prohibition on utilisation of Cenvat credit - Withdrawal of Cenvat credit facility equating to penal consequence - Article 14 - reasonableness and proportionality test - Portion of Rule 8(3A) mandating payment of duty 'without utilizing the Cenvat credit' is invalid. - HELD THAT: - The Tribunal applied the decisions of the High Courts (notably Gujarat and Bombay) which examined sub-rule (3A) of Rule 8. Those courts held that while Rule 8(3A) as a mechanism for recovery and stricter collection may be within rule-making power, the specific clause forbidding utilization of Cenvat credit imposes a restriction so harsh and disproportionate as to be unreasonable and violative of Article 14 and unduly impair the right to carry on trade under Article 19(1)(g). The prohibition prevents an assessee from availing credit of duty already paid and operates as a penalty without differentiation between types or reasons for default; it thus fails the proportionality and reasonableness tests. In consequence, the impugned portion 'without utilizing the Cenvat credit' was treated as unconstitutional and incapable of being the basis for recovery or penal consequences. The Tribunal, following these precedents, found no merit in the revenue's case founded on that portion of Rule 8(3A) and declined to sustain recovery on that basis. [Paras 4, 5]

The portion of Rule 8(3A) requiring payment of duty 'without utilizing the Cenvat credit' is treated as invalid and cannot support the revenue's demand; the revenue appeal based on that provision is dismissed on merits.

Recovery through PLA / manner of recovery under Rule 8(3A) - Validity of demand where duty was paid by utilization of Cenvat credit - Revenue's contention that the amount paid by utilisation of Cenvat credit should be recovered through PLA / challan and that re-credit should be disallowed was rejected. - HELD THAT: - The revenue's specific plea asking that the duty amount which had been discharged by utilisation of Cenvat credit be ordered for recovery through PLA/Challan (in terms of Rule 8(3A)) and to deny re-credit was considered in the light of the judicial pronouncements invalidating the non-utilisation clause. As the Tribunal followed the High Court decisions holding that the proscription on utilising Cenvat credit is unconstitutional, it found no merit in ordering recovery through PLA or in disallowing re-credit on that legal basis. Consequently, the revenue's appeal seeking such relief was dismissed. [Paras 4, 5]

Revenue's challenge to the manner of recovery (PLA/challan) and denial of re-credit was rejected and the revenue appeal dismissed on merits.

Dismissal for non-prosecution - Rule 20 of CESTAT Procedures Rule, 1982 - Appeals filed by the two directors were dismissed for non-prosecution. - HELD THAT: - The record shows both director-appellants were absent, notices returned with endorsement 'Addressee Left' and no one represented them. The Tribunal applied Rule 20 of the CESTAT Procedures Rules, 1982 and dismissed their appeals for non-prosecution. [Paras 3, 5]

Appeal Nos. E/86796/2013 and E/86797/2013 dismissed for non-prosecution.

Final Conclusion: The Tribunal dismissed the revenue appeal on merits insofar as it was founded on the impugned portion of Rule 8(3A) that prohibited utilisation of Cenvat credit, following High Court precedents that declared that portion invalid; the revenue's prayer for recovery through PLA and denial of re-credit was refused. The individual appeals of the two directors were dismissed for non-prosecution.

Refund of accumulated Cenvat credit under Rule 5 - non-utilization of Cenvat credit as condition for refund - quantification of refund on verification of records - remand for computation by original authority - acceptability of claims made on average basis where substantiation exists

Refund of accumulated Cenvat credit under Rule 5 - non-utilization of Cenvat credit as condition for refund - Appellant entitled to refund of accumulated Cenvat credit where adjustment was not possible and the Tribunal had remanded for quantification. - HELD THAT: - The Tribunal had earlier held that Rule 5 permits refund of Cenvat credit accumulated on account of non-utilisation and remanded the matter to the original authority for quantification after examining records. On remand the appellant furnished documents and the jurisdictional range officer verified the claim and recorded that the calculation of refund claim on average basis was in order. The appellate order rejecting the claim went beyond the Tribunal's directions. Having regard to the Tribunal's interpretation of Rule 5 as a beneficiary provision allowing refund where adjustment is not possible, and the verification report supporting the appellant's computation, the appeal is allowed and the refund ought to be granted subject to quantification by the authority below in accordance with the Tribunal's directions. [Paras 3]

Appeal allowed; appellant entitled to refund which shall be quantified by the original authority after verification of records.

Quantification of refund on verification of records - acceptability of claims made on average basis where substantiation exists - remand for computation by original authority - Rejection of refund on the ground that the claim was made on an average basis was unsustainable where the jurisdictional officer verified and found the calculation in order; matter to be quantified as per remand. - HELD THAT: - The lower authorities rejected the refund primarily because the claim was presented on an average basis and because they were unable to correlate inputs to exports. The Tribunal set aside that rejection and remanded the matter for quantification. On remand, the jurisdictional officer examined the records and reported that the average-basis calculation was in order. The impugned appellate order nevertheless sustained the rejection; the present decision holds that such rejection exceeded the scope of the Tribunal's remand and cannot be sustained when the verifying officer has accepted the computation. The appropriate course is to implement the Tribunal's remand and quantify the refund in accordance with the verified records and applicable safeguards. [Paras 3]

Finding that rejection based on average-basis claim was unsustainable; matter to be quantified by the original authority consistent with verification and the Tribunal's remand.

Final Conclusion: The appeal is allowed: the appellant is entitled to the refund of accumulated Cenvat credit as held by the Tribunal, and the original authority is directed to quantify and grant the refund after verification of records in accordance with the Tribunal's remand.

Excise liability on waste and scrap - Process of manufacture and transformation - Burden of proof on revenue to show manufacture - Cenvat credit and Rule 3(5A) of Cenvat Credit Rules, 2004 - CBEC Circular No. 721/37/2003-CX and West Coast Industrial Gases precedent

Excise liability on waste and scrap - Process of manufacture and transformation - Burden of proof on revenue to show manufacture - Cenvat credit and Rule 3(5A) of Cenvat Credit Rules, 2004 - Whether duty could be levied on clearance of various categories of waste and scrap (including HDPE/PP bags outer wrappers, grinding media, TOR steel, cable and mixed scrap) removed by the assessee who availed Cenvat credit - HELD THAT: - The Tribunal held that the impugned demand for duty on clearance of the assorted waste and scrap was unsustainable. Following the ratio of the Hon'ble Supreme Court in West Coast Industrial Gases Ltd. and the Board's Circular No. 721/37/2003-CX, the court applied the established principle that excise is an incidence of manufacture and goods become excisable only if the raw material has undergone skillful manipulation resulting in a new and different article. The revenue bears the onus to prove that the goods cleared have gone through such a process of manufacture; that onus was not discharged. Decisions of this Tribunal and courts (including Panasonic Carbon India Ltd., Ahmedabad Electricity Co. Ltd., and earlier Ambuja Cements precedents relied upon by the appellant) were held to be applicable and persuasive on the facts, demonstrating that items like emptied drums/containers, outer packaging waste, grinding media attrition and similar factory/workshop scrap arising out of use, wear and tear or non-transformative processes are not dutiable. The Tribunal also noted that the Commissioner (Appeals) had not recorded findings sufficient to sustain the demand under Rule 3(5A) and that the impugned order travelled beyond the scope of the show cause in material respects; accordingly the demand was set aside.

Appeals allowed; impugned order set aside and demand for duty on the clearances of the specified waste and scrap quashed.

Final Conclusion: The Tribunal allowed the appeals, holding that the Revenue failed to prove that the waste and scrap cleared by the assessee had undergone manufacture so as to be excisable; earlier authoritative decisions and the Board's circular were applied, and the demand under Rule 3(5A)/Central Excise law was set aside.

Simultaneous availment of SSI exemption and CENVAT credit - interpretation of exemption notifications concerning goods bearing third party brand names - treatment of job work manufacture bearing the brand name of another person - effect of proviso to paragraph 2(iii) of Notification No. 8/2003 CE - binding effect of Supreme Court precedent under Article 141 of the Constitution

Simultaneous availment of SSI exemption and CENVAT credit - interpretation of exemption notifications concerning goods bearing third party brand names - treatment of job work manufacture bearing the brand name of another person - effect of proviso to paragraph 2(iii) of Notification No. 8/2003 CE - binding effect of Supreme Court precedent under Article 141 of the Constitution - Assessee entitled to avail SSI exemption under Notification No. 8/2003 CE and to claim CENVAT credit on inputs used in manufacture of branded goods cleared on payment of duty, including goods manufactured on job work for others, for the period in dispute. - HELD THAT: - The Tribunal applied the Supreme Court's reasoning in Commissioner of Central Excise, Chennai v. Nebulae Health Care Ltd. (para 17 of that judgment) which held that clearances of goods bearing a third party brand are to be excluded from the scheme of SSI exemption notifications and, where excise duty is paid on such branded goods manufactured for others, the manufacturer is entitled to Cenvat/Modvat credit on inputs used. Having noted the subsequent insertion of the proviso to paragraph 2(iii) of Notification No. 8/2003 CE w.e.f. 11.02.2009, which expressly excludes inputs used in manufacture of specified goods bearing another's brand from the clause, the Tribunal held that, in view of the Supreme Court precedent and the amended Notification, the assessee could avail the exemption for its own branded clearances while simultaneously claiming CENVAT credit for inputs used in manufacture of branded goods cleared on payment of duty (including job work clearances for others). The Tribunal therefore set aside the Commissioner (Appeals) order confirming duty demand and granted consequential relief. [Paras 5, 6]

Appeal allowed; Commissioner (Appeals) order set aside and assessee held entitled to both SSI exemption and CENVAT credit for the period September, 2009 to March, 2010, with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that for the period September, 2009 to March, 2010 the assessee could avail the SSI exemption under Notification No. 8/2003 CE for its own branded clearances and also claim CENVAT credit on inputs used for branded goods cleared on payment of duty (including job work clearances), and set aside the Commissioner (Appeals) order with consequential relief.

Validity of revisional order where communication is delayed - Limitation for revision under Section 34 of the Haryana VAT Act - Presumption that an order was not made on the date it purports to have been made where communication is unexplainedly delayed - Non-communication/non-delivery rendering an order ineffective and violative of principles of natural justice - Statutory obligation to preserve books and effect of destruction after the prescribed period

Validity of revisional order where communication is delayed - Presumption that an order was not made on the date it purports to have been made where communication is unexplainedly delayed - Non-communication/non-delivery rendering an order ineffective and violative of principles of natural justice - Impugned revisional order dated 03.02.2020 which was communicated to the assessee on 29.12.2021 after a delay of 22 months is without jurisdiction and liable to be set aside. - HELD THAT: - The Court held that although the revisional order was dated within the statutory limitation period, unexplained and substantial delay in communicating that order to the assessee disentitles the authority to rely on the purported date of order. The Court applied the principle that, in the absence of any explanation for long delay in service, a presumption arises that the order was not made on the date it purported to have been made. The Court relied on the reasoning in State of Andhra Pradesh vs. Khetmal Parekh and subsequent high court authorities to the same effect, and referred to M/s Ajantha Industries & others vs. Central Board of Direct Taxes and the Gujarat High Court decision in Commissioner of Income Tax vs. Dhatu Sanskar P. Ltd. which hold that non communication is a serious infirmity and that an order likely to have a detrimental effect must be communicated to be effective. Applying these principles to the facts, the revisional order, though dated 03.02.2020, was served only on 29.12.2021 (22 months later) and the respondents furnished no explanation for that delay. The presence of the assessee's representative in the authority's office on the date of passing does not substitute for proper communication to the assessee, and therefore the order could not be permitted to stand.

Revisional order of 03.02.2020 set aside for unexplained delay in communication rendering it ineffective.

Limitation for revision under Section 34 of the Haryana VAT Act - Statutory obligation to preserve books and effect of destruction after the prescribed period - Destruction of books after lapse of statutory preservation period (eight years) and absence of those records supports setting aside the revisional demand when communication was delayed and no explanation was furnished. - HELD THAT: - The Court noted that under the statutory scheme the assessee was not required to preserve account books beyond eight years from the close of the assessment year; the assessment year in dispute was 2010 2011. The notice for revision was issued on 13.09.2019 and the revisional order was dated 03.02.2020 but communicated only on 29.12.2021. Given that the books were lawfully destroyed after the prescribed period, and that the revisional authority offered no explanation for the delay in communication or produced fresh supporting material, the delayed service occasioned prejudice to the assessee. Consequently, even though the revisional order on its face fell within amended limitation provisions, the combination of unexplained delay in communication and lack of preserved records meant the revisional demand could not be sustained.

On account of lawful non preservation of books after eight years and the unexplained delay in communicating the order, the revisional demand cannot be sustained.

Final Conclusion: The writ petition is allowed; the impugned revisional order dated 03.02.2020 and the consequential orders served on 29.12.2021 are set aside because unexplained and substantial delay in communication rendered the revisional order ineffective and prejudicial to the petitioner, particularly given the lawful destruction of account books after the statutory preservation period.

UDIN (Unique Document Identification Number) requirement for Tax Audit Reports - mandatory UDIN per ICAI notification - acceptance of tender bids based on authenticated financial documents - technical evaluation committee's entitlement to verify authenticity of documents

UDIN (Unique Document Identification Number) requirement for Tax Audit Reports - acceptance of tender bids based on authenticated financial documents - technical evaluation committee's entitlement to verify authenticity of documents - mandatory UDIN per ICAI notification - Rejection of the petitioner's technical bids on the ground that the Tax Audit Reports and attendant balance-sheets did not bear the UDIN was justified. - HELD THAT: - The tender required submission of audited balance-sheets, profit and loss accounts and a Chartered Accountant's certificate to establish the prescribed turnover. The petitioner submitted Tax Audit Reports in Forms 3CB and 3CD containing balance-sheets for the relevant years, but those documents did not bear the UDIN. The ICAI notification dated 02.08.2019 made generation of UDIN mandatory for GST and Tax Audit Reports with effect from 1st April, 2019. The Technical Evaluation Committee is entitled to insist on duly authenticated documents which can be relied upon and verified from its own office and is not required to undertake external verification with authorities such as the Income Tax Department. Because the Tax Audit Reports produced by the petitioner lacked the UDIN mandated by the ICAI guidelines, their authenticity could not be satisfactorily established for the purposes of tender evaluation. For these reasons the Committee was justified in not relying on the submitted Tax Audit Reports and in rejecting the technical bids on that ground. [Paras 11, 12, 14, 15, 16]

The rejection of the petitioner's technical bids for non production of Tax Audit Reports bearing the UDIN is upheld and the writ petitions are dismissed.

Final Conclusion: The High Court dismissed the writ petitions, holding that absence of UDIN on the Tax Audit Reports rendered the documents unauthenticated for tender evaluation and justified the Technical Evaluation Committee's rejection of the petitioner's technical bids.