TaxTMI Updates e-Newsletter
Jun 01,2023

Refund of Input Tax Credit for zero-rated supply to SEZ units - time-barred limitation under Section 54(14) of the CGST Act - exclusion of period 01.03.2020 to 28.02.2022 for computation of limitation (CBIC Notification dated 05.07.2022) - condonation of delay on account of COVID-19 and technical glitches

Time-barred limitation under Section 54(14) of the CGST Act - exclusion of period 01.03.2020 to 28.02.2022 for computation of limitation (CBIC Notification dated 05.07.2022) - condonation of delay on account of COVID-19 and technical glitches - Whether the petitioner's refund claim was time-barred and whether the claim should be re examined in light of the CBIC notification excluding 01.03.2020 to 28.02.2022 from limitation, including consideration of condonation of delay. - HELD THAT: - The High Court found that neither the Adjudicating Authority nor the Appellate Authority considered the petitioner's contention that the delay should be condoned and that the computation of limitation requires reconsideration in the light of the CBIC Notification dated 05.07.2022 which directs exclusion of the period 01.03.2020 to 28.02.2022 for filing applications under Sections 54 and 55 of the CGST Act. Given these omissions, the Court did not determine the merits of limitation or condonation but set aside the impugned orders and remanded the matter to the Adjudicating Authority for fresh consideration of whether the refund is time barred after applying the exclusion and for consideration of the petitioner's pleaded mitigating circumstances (including technical glitches and COVID 19) for condonation of delay. [Paras 8]

Set aside the orders rejecting the refund claim and remitted the issue of limitation and condonation to the Adjudicating Authority for fresh consideration in light of the CBIC notification.

Refund of Input Tax Credit for zero-rated supply to SEZ units - due date for filing returns as relevant to limitation - Whether refund claims in respect of supplies made during August 2017 to January 2018 are barred by limitation or require determination with reference to the due date for filing returns. - HELD THAT: - The Court observed that the question whether supplies made in August 2017 to January 2018 are time barred requires consideration with reference to the due date for filing returns for those periods. This factual and legal question was not addressed by the authorities below. The Court therefore remanded this issue to the Adjudicating Authority to examine the applicability of limitation taking into account the relevant return filing dates and the CBIC exclusion, and to decide the matter on merits after such examination. [Paras 7, 8]

Remitted to the Adjudicating Authority for fresh adjudication on whether claims relating to August 2017 to January 2018 are barred by limitation, having regard to return due dates and the CBIC notification.

Final Conclusion: The petition is allowed: the orders dated 26.05.2021 and 25.02.2022 rejecting the refund claim are set aside and the matter is remanded to the Adjudicating Authority for fresh consideration of limitation and condonation issues in light of the CBIC Notification dated 05.07.2022; further proceedings to be undertaken accordingly.

Cancellation of GST registration - maintainability of writ petition in presence of alternative statutory remedies - remedy under Section 13 of the GST Act - appeal under Section 107 of the GST Act - cancellation for absence of valid lease agreement - requirement to produce registered place of business with building number

Maintainability of writ petition in presence of alternative statutory remedies - remedy under Section 13 of the GST Act - appeal under Section 107 of the GST Act - Petition seeking to set aside the order cancelling GST registration was not maintainable before the High Court because alternative statutory remedies were available. - HELD THAT: - The petitioner was directed by the taxing authority to produce proof of the registered business address (including building number) and a valid lease agreement. The petitioner furnished a building tax receipt but did not produce a valid lease agreement. The authority cancelled the GST registration by the impugned order. The Court noted that the petitioner has statutory remedies under Section 13 of the GST Act (for rectification) and under Section 107 of the GST Act (for appeal). In view of the existence of these alternate remedies, the High Court declined to entertain the writ petition and declined to examine the merits of the cancellation order, leaving the petitioner free to avail the specified statutory remedies. The authority was directed to consider any application or appeal filed by the petitioner on its own merits and without being influenced by observations in the judgment.

Writ petition dismissed without prejudice to the petitioner's right to seek rectification or file an appeal under the GST Act; authority to consider any such remedy in accordance with law.

Final Conclusion: The High Court dismissed the writ petition on the ground of alternative statutory remedies being available, leaving the petitioner free to pursue rectification under Section 13 or an appeal under Section 107 of the GST Act; the Court did not adjudicate the merits of the cancellation order.

Attachment under Section 83 of the CGST Act - protection of government revenue - limitation on provisional attachment to secure revenue of another taxable person - objections under Rule 159(5) of the CGST Rules

Attachment under Section 83 of the CGST Act - limitation on provisional attachment to secure revenue of another taxable person - protection of government revenue - Validity of attachment of petitioner's bank accounts under Section 83 when there is no liability of the petitioner and the attachment was aimed at securing revenue of other taxable persons - HELD THAT: - The Court examined whether provisional attachment under Section 83 can be invoked to secure the revenue of third parties. The respondents conceded there was presently no demand or issue regarding the petitioner's own CGST liability and that accounts were attached primarily to secure assets related to merchants using the petitioner's platform. The Court held that Section 83 may be exercised only in respect of the taxable person (or persons specified under Section 122(1A)) whose assets are liable to be attached in the opinion of the Commissioner to protect government revenue. While a debt owed to such a taxable person is an asset of that person and may be attached, the bank account of the debtor (i.e., the person owing the debt) cannot itself be provisionally attached under Section 83. Consequently, the petitioner's accounts could not be attached merely to secure the revenue purportedly due from other merchants using its platform. The Court found no basis to sustain the impugned provisional attachments in the circumstances disclosed and set them aside subject to safeguards ordered below. [Paras 23, 24]

Attachment of the petitioner's bank accounts under Section 83 was not justified where no liability of the petitioner existed and the attachment sought to secure revenue of other taxable persons; the impugned attachments were set aside.

Objections under Rule 159(5) of the CGST Rules - attachment under Section 83 of the CGST Act - Validity of directions in the order dated 01.02.2023 requiring petitioner to obtain NOCs/acknowledgements from recipient banks and conditions for release from attachment - HELD THAT: - The Court reviewed respondent no.1's directions that payments from the escrow/nodal account be allowed only after the petitioner and the bank submit affidavits or obtain acknowledgements from recipient banks, and other conditional releases recorded in the order dated 01.02.2023. The Court found no basis for imposing the requirement that the petitioner obtain NOCs or acknowledgements from recipient banks as a precondition for release. However, in view of parties' positions and the respondents' willingness to lift attachment subject to direct remittances to the specified merchant accounts, the Court directed conditional relief: attachments were set aside provided the petitioner makes payments due to merchants directly into the bank accounts disclosed to the respondents and as recorded in the impugned order; the balance funds were to be transferred to the petitioner's current account. The respondents remain free to take lawful action against merchants or the petitioner if liabilities are established. [Paras 15, 25, 28, 29, 30]

Directions requiring NOCs/acknowledgements were without basis; attachments are vacated subject to the petitioner remitting amounts due directly to the merchants' disclosed bank accounts and transferring the remaining balance to its current account; respondents retain statutory remedies if liabilities are found.

Final Conclusion: The writ petition is allowed. The provisional attachments of the petitioner's bank accounts are set aside; the petitioner shall remit amounts due to merchants directly into the bank accounts disclosed to the respondents (as recorded in the order dated 01.02.2023) and transfer the remaining balance to its current account. The respondents remain at liberty to take lawful action against the merchants or the petitioner if any liability is established and to take protective action in accordance with law to protect government revenue.

Exclusion of limitation period due to COVID-19 - application of Supreme Court order dated 10.01.2022 excluding the period 15.03.2020 to 28.02.2022 for purposes of limitation - entertainment of belated refund applications in light of administrative circular - quashing of adjudicatory order for failure to apply binding law

Exclusion of limitation period due to COVID-19 - application of Supreme Court order dated 10.01.2022 excluding the period 15.03.2020 to 28.02.2022 for purposes of limitation - entertainment of belated refund applications in light of administrative circular - Whether the impugned order rejecting the refund claim solely on the ground of delay was sustainable in view of the Supreme Court's exclusion of the COVID period and the subsequent CBIC circular. - HELD THAT: - The Court accepted the petitioner's submission that the refund application, filed after the expiry of the ordinary limitation, fell within the period excluded by the Hon'ble Supreme Court's order of 10.01.2022 which directed that the period from 15.03.2020 to 28.02.2022 stand excluded for the purposes of limitation and prescribed consequent timelines. The Court noted that the department did not dispute the applicability of the Supreme Court order or the CBIC circular dated 05.07.2022. Having regard to the binding exclusion of the COVID period and the administrative guidance to entertain delayed refund applications, the High Court held that the impugned adjudicatory order could not be sustained insofar as it rejected the refund on the sole ground of delay without applying the said legal directions.

Impugned order dated 27.10.2021 quashed insofar as it rejected the refund solely for delay; petitioner entitled to have the claim considered in light of the Supreme Court order and the CBIC circular.

Quashing of adjudicatory order for failure to apply binding law - remand for fresh decision by adjudicating authority - What relief should follow from quashing the impugned order. - HELD THAT: - The Court remitted the matter to respondent no.4 for fresh adjudication of the refund claim in accordance with law, directing that a reasoned and speaking order be passed after affording a reasonable opportunity of hearing. The Court imposed an expeditious timeframe, preferably within six weeks from presentation of a certified copy of the order, for the revisited decision in light of the Supreme Court's exclusion and the CBIC circular.

Matter remitted to respondent no.4 to decide the refund application afresh and expeditiously, by a reasoned and speaking order after hearing the petitioner, preferably within six weeks of presentation of certified copy of this order.

Final Conclusion: Writ petition allowed; the order refusing refund for delay is quashed and the claim is remitted to the adjudicating authority for fresh consideration in accordance with the Supreme Court's directions excluding the COVID period and the CBIC circular, with a direction to decide the matter by a reasoned order after hearing the petitioner, preferably within six weeks.

Consistency of administrative decisions - Duty to record cogent reasons for deviating from an earlier decision - Precedential value of earlier administrative orders - Res judicata not applicable across different assessment years but precedential effect of earlier findings

Consistency of administrative decisions - Duty to record cogent reasons for deviating from an earlier decision - Whether the notice and order dated 31.07.2022 for assessment year 2015-16 are sustainable where the same Assistant Commissioner took an inconsistent view from his earlier order for assessment year 2016-17 without recording any analysis or reasons. - HELD THAT: - The Court held that administrative authorities must maintain procedural and substantive consistency and, where a decision departs from an earlier decision in substantially similar circumstances, the authority is obliged to record cogent and rational reasons for the divergence. The earlier order dated 28.07.2022 (pertaining to 2016-17) contained a reasoned analysis of documentary material and concluded that no escapement was established; the subsequent order dated 31.07.2022 (pertaining to 2015-16), though by the same Assistant Commissioner, reached an opposite conclusion without any analysis of the documents and merely reiterated allegations arising from another person's statement. The absence of any explanation for the departure rendered the later order arbitrary and unsustainable. The fact that different higher sanctioning officers approved the respective orders did not cure the defect, as the satisfaction recorded in both orders emanated from the same ACIT and there is no indication that the later sanctioning authority was apprised of the earlier reasoned view. [Paras 8, 9, 10, 11]

Impugned notice and order dated 31.07.2022 for assessment year 2015-16 are invalid as they are inconsistent with the earlier reasoned order and lack any recorded reasons for deviation.

Res judicata not applicable across different assessment years but precedential effect of earlier administrative orders - Precedential value of earlier administrative orders - Whether the doctrine of res judicata prevents differing treatment of separate assessment years and what weight an earlier administrative finding carries. - HELD THAT: - The Court acknowledged that res judicata does not apply to income-tax proceedings across different assessment years since each year constitutes a separate assessment unit. However, consistent judicial and administrative practice requires that where facts and law are the same, a subsequent authority should ordinarily follow an earlier view unless there is a material change in facts or law or the earlier decision is per incuriam. Absent such distinguishing reasons, a coordinate or subsequent authority must explain any departure; the rationale is the precedential value of earlier findings to ensure predictability and to avoid arbitrariness. [Paras 7]

Res judicata does not bar reassessment for a different year, but the earlier reasoned finding has precedential value and a later divergent view requires cogent justification.

Final Conclusion: The petition is allowed; the notice and order dated 31.07.2022 issued under Section 148/148A for assessment year 2015-16 are set aside on grounds of inconsistency and failure to record reasons for deviating from an earlier reasoned order, with no order as to costs.

Reopening of assessment under Section 147/148 - notice under Section 142(1) - acceptance of return under Section 143(1) - validity of notice - review petition seeking recall of judgment - power to mould relief - no error apparent on the face of the record

Validity of notice - reopening of assessment under Section 147/148 - notice under Section 142(1) - Validity of the notice dated 31.03.2019 under Section 148 and the consequential notice dated 27.11.2019 under Section 142(1). - HELD THAT: - The Court held that the notices were supported by material capable of triggering enquiry and therefore were not invalid. The Assessing Officer received two distinct pieces of information: (i) cash deposits in bank accounts and (ii) an initial record suggesting non-filing of return. Although the non-filing information was incorrect, the admitted cash deposits gave rise to reasons to believe that income chargeable to tax may have escaped assessment. The AO, on receiving the petitioner's response that a return had been filed and noting that no scrutiny assessment had been carried out, proceeded to examine objections and thereafter issued the Section 142(1) notice. On a holistic view of the reasons recorded for reopening, the notices had a basis and could not be characterised as without jurisdiction or invalid. [Paras 17, 18, 19, 20, 21]

The impugned notices were not invalid and the reopening of assessment was justified on the material before the AO.

Acceptance of return under Section 143(1) - review petition seeking recall of judgment - no error apparent on the face of the record - power to mould relief - Whether the review petition should be allowed on the ground that the assessment order accepted the return and an apparent admission by the revenue rendered the original judgment susceptible to review. - HELD THAT: - The Court observed that the assessment order dated 26.12.2019 accepted the return processed under Section 143(1) and imposed no tax liability. That circumstance had already been taken into account when the writ petition was closed, with the petitioner given liberty to pursue statutory remedies if still aggrieved. The contention that an admission in revenue's pleadings required review was rejected because the underlying factual trigger for reopening (the cash deposits) remained and there was no error apparent on the face of the record warranting recall. The Court reiterated that it may mould relief but such power does not furnish a ground for review absent an error of law or apparent mistake in the judgment itself. [Paras 7, 8, 15, 22]

Review petition dismissed; no error apparent on face of record and acceptance of return does not by itself render earlier disposal erroneous.

Final Conclusion: The review petition is dismissed. The court finds that the notices under Sections 148 and 142(1) were supported by material justifying inquiry despite the return having been filed and accepted subsequently; there is no error apparent on the face of the record and the petitioner remains free to pursue statutory remedies if aggrieved by the assessment order.

Validity of notice under Section 148 of the Income Tax Act - Assessment reopened for escapement of income - Reliance on material seized during search under Section 132 - Scope of judicial review under Article 226 of the Constitution - Compliance with principles of natural justice

Validity of notice under Section 148 of the Income Tax Act - Reliance on material seized during search under Section 132 - Scope of judicial review under Article 226 of the Constitution - Compliance with principles of natural justice - Assessment reopened for escapement of income - Impugned order under Section 148A(d) and the subsequent notice under Section 148 in respect of assessment year 2019-20 are legally sustainable and not vitiated by jurisdictional defect, procedural irregularity or violation of principles of natural justice. - HELD THAT: - The assessing officer recorded reasons and relied upon documents and evidences furnished by the Investigation Wing arising from search and seizure under Section 132, including coded records, statements and corroborative material which, on the material placed before the officer, led to the contemporaneous conclusion that income chargeable to tax had escaped assessment. The High Court found that those material findings based on investigation and evidence could not be reappraised and substituted by the writ court in exercise of Article 226. The Court held that the impugned proceedings did not suffer from lack of jurisdiction, procedural infirmity, or breach of natural justice warranting interference; accordingly the reopening for escapement of income was held to be sustainable on the record before the assessing officer.

Writ petition challenging the order under Section 148A(d) and the notice under Section 148 for AY 2019-20 dismissed; impugned proceedings upheld.

Reliance on material seized during search under Section 132 - Assessment reopened for escapement of income - Direction to the Principal Chief Commissioner of Income Tax to refer cases involving the same broker and modus operandi to the Enforcement Directorate and to file a compliance report. - HELD THAT: - Observing that multiple matters involving identical modus operandi and the same broker (Anil Kasera) had been brought to light, and having regard to the nature and scale of unaccounted cash transactions evident from the investigation material, the Court directed the Principal Chief Commissioner of Income Tax, West Bengal & Sikkim to refer this case and other similar cases to the Enforcement Directorate for further action and to file a compliance report before the Court by the specified date.

Principal Chief Commissioner directed to refer the case and similar matters involving the same broker to the Enforcement Directorate and to file a compliance report before the Court on 13th June, 2023.

Final Conclusion: The writ petition is dismissed; the assessing officer's order under Section 148A(d) and notice under Section 148 for AY 2019-20 are upheld, and the Principal Chief Commissioner is directed to refer this and similar cases involving the named broker to the Enforcement Directorate and to file a compliance report by 13th June, 2023.

Summary order. Corrections directed to the order dated 4th May, 2023: paragraph 7 date to read "21.03.2022" in place of "27.03.2022"; paragraph 8 date to read "20.03.2023" in place of "23.02.2023"; paragraph 14 at page 5 to read "fifteen days" in place of "ten days". The corrected order shall form part of the order dated 4th May, 2023. Urgent certified photostat copy to be furnished on compliance of legal formalities.

Registration under Section 12AA(1)(b) of the Income Tax Act and genuineness of activities - surplus/profit inconsistent with charitable purpose - tests to determine whether an educational institution exists solely for educational purposes and not for profit - monitoring and power to withdraw approval under the proviso to Section 10(23C) read with Section 11

Registration under Section 12AA(1)(b) of the Income Tax Act and genuineness of activities - surplus/profit inconsistent with charitable purpose - tests to determine whether an educational institution exists solely for educational purposes and not for profit - Validity of the Commissioner's refusal to grant registration to the assessee-Trust under Section 12AA(1)(b) on the ground that the Trust did not satisfy the registering authority about the genuineness of its activities and had generated surplus/profit. - HELD THAT: - The Tribunal examined the record and found no material to show that the fee structure or the activities of the Trust were in-genuine, directed to non-charitable or personal purposes, or so structured as to treat the motive as profit-making. The Tribunal held that funds were utilized for educational activities and, absent adverse material, the application could not be rejected and directed grant of registration. The High Court held that the issue is squarely covered by the Supreme Court's decision in M/s Queen's Educational Society (approving earlier High Court decisions), which articulated the tests for determining whether an educational institution exists solely for educational purposes and not for profit and emphasised continuous monitoring and the power to withdraw approval if activities are not genuine. Applying that precedent, the High Court found no substantial question of law arising from the Tribunal's order which had considered relevant aspects and allowed the appeal of the assessee. [Paras 6, 7]

The Commissioner's appeal is dismissed and the Tribunal's direction to grant registration is upheld.

Final Conclusion: The appeal is dismissed; the Income Tax Appellate Tribunal's order directing grant of registration to the Trust is upheld in view of the applicable Supreme Court authority and the absence of adverse material to impugn the genuineness of the Trust's educational activities.

Penalty under section 271(1)(c) - furnishing of inaccurate particulars of income - allowability of payment to regulatory authority as business expenditure under Explanation 1 to section 37

Penalty under section 271(1)(c) - furnishing of inaccurate particulars of income - Whether the penalty imposed under section 271(1)(c) is sustainable where the assessee filed a revised return during assessment proceedings claiming a deduction that was disclosed in the original return and audit report but not claimed earlier. - HELD THAT: - The Tribunal found that the payment to SEBI was disclosed in the audit report and the original return; the assessee merely claimed the amount as a deduction in a revised return filed during assessment proceedings. On these facts the Tribunal held that the claim in the revised return did not amount to furnishing inaccurate particulars of income. Further, the fact that the assessee ultimately accepted the assessing officer's disallowance does not, by itself, permit the inference that the assessee had furnished inaccurate particulars. Applying these facts to the legal test for penalty under section 271(1)(c), the Tribunal concluded that imposition of penalty was unsustainable in the circumstances of the case. [Paras 3, 5]

Penalty imposed under section 271(1)(c) deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the penalty imposed under section 271(1)(c) for Assessment Year 2015-16, holding that the assessee's filing of a revised return claiming a deduction (previously disclosed) did not constitute furnishing of inaccurate particulars of income.

Reopening of assessment under section 147/148-borrowed satisfaction and non-application of mind - Validity of approval under section 151-requirement of independent application of mind - Formal or ritualistic approval by higher authority is insufficient

Reopening of assessment under section 147/148-borrowed satisfaction and non-application of mind - Tangible material from investigation wing-need for independent application of mind - Reassessment proceedings initiated under sections 147/148 were invalid as the Assessing Officer acted on borrowed satisfaction without independent application of mind. - HELD THAT: - The Tribunal found from the reasons recorded that the Assessing Officer primarily reproduced the investigation-wing report, noted an incorrect fact regarding non-filing of return and did not independently examine or link tangible material to form a valid reason to believe that income had escaped assessment. The reasons failed to specify the character of the transactions or to demonstrate how the material received led to the belief of escapement of income. Applying the principle in the cited High Court authorities, information from the investigation wing without further inquiry or independent application of mind does not constitute tangible material sufficient for reopening. Consequently the reassessment proceedings were held to be founded on borrowed satisfaction and lacked valid satisfaction required under sections 147/148. [Paras 6, 7, 8]

Grounds challenging initiation of reassessment under sections 147/148 are allowed; reopening quashed for lack of independent application of mind.

Validity of approval under section 151-requirement of independent application of mind - Formal or ritualistic approval by higher authority is insufficient - Approval under section 151 was invalid because the approving authority's endorsement was merely formal ('approved') and showed no meaningful application of mind. - HELD THAT: - The record disclosed that an approval was obtained from the JCIT, but the approving note consisted only of the single word 'approved'. Following the reasoning of the Delhi High Court in the cited precedent, section 151 requires the higher authority to apply its mind and form an opinion; mere perfunctory or ritualistic endorsement is inadequate. The Tribunal held that the exercise of approving powers appeared to be formal rather than based on consideration of the material, rendering the approval ineffective and the subsequent notice and reassessment unsustainable. [Paras 9, 10]

Ground challenging validity of approval under section 151 is allowed; approval held invalid and consequent proceedings quashed.

Final Conclusion: The Tribunal allowed grounds 3 to 5, quashing the notice and reassessment for AY 2010-11 as initiated on borrowed satisfaction without independent application of mind and without valid approval under section 151; merits of assessment were left undetermined.

Fees for Technical Services - "make available" clause - Article 13(4)(c) of the India-UK DTAA - managerial services vs FTS - tax residency and applicability of DTAA

Fees for Technical Services - "make available" clause - managerial services vs FTS - Article 13(4)(c) of the India-UK DTAA - Whether the consideration of Rs. 83,04,370 received by the assessee from its Indian associated enterprise was taxable as Fees for Technical Services under Article 13(4)(c) of the India-UK DTAA by virtue of the services having "made available" technical knowledge, skill, experience or processes, or alternatively being managerial/consultancy services within the scope of the Article. - HELD THAT: - The Tribunal examined the nature of services rendered under the Business Cooperation Agreement and the documentary record (including sample correspondence) and found that the services consisted predominantly of administrative, accounting, legal review and support functions and continuous operational assistance provided from the UK to BTPL. While such services may qualify as advisory or consultancy for domestic law purposes, Article 13(4)(c) of the DTAA additionally requires that technical knowledge, skill, experience or know how be made available to the recipient so as to equip it to perform the technical function independently in future. The Tribunal applied the settled test that mere rendering of services, even if requiring technical knowledge, does not constitute making that knowledge available unless there is a transfer that enables the recipient to use the technical competence on its own without recourse to the provider. On the facts the Tribunal found that BTPL repeatedly had to rely on the assessee, could not apply or use any technical knowledge independently, and did not receive any development/transfer of technical plans or designs that would enable autonomous use. Consequently the "make available" limb of Article 13(4)(c) was not satisfied. The Tribunal further observed that the services were essentially managerial/ancillary support and, in any event, did not fall within the Article's FTS definition. Reliance on AAR and judicial precedents was considered and the twin requirement (rendering of services plus making available technical knowledge) was held to be unmet on the material, leading to disapplication of Article 13(4)(c) to the receipts in question. [Paras 9, 10, 11]

The receipts of Rs. 83,04,370 are not Fees for Technical Services under Article 13(4)(c) of the India-UK DTAA; grounds 2-7 are allowed in favour of the assessee and the addition is deleted.

Final Conclusion: The appeal is allowed: the Tribunal held that the payments in dispute do not satisfy the "make available" requirement of Article 13(4)(c) of the India UK DTAA and, being essentially managerial/ancillary support services, are not taxable as FTS under the DTAA for AY 2017 18; the penalty contention was not adjudicated at this stage.

Deduction under section 80IC - profits "derived from" eligible industrial undertaking - Attribution of income from sale of scrap to eligible business for incentive deduction - Disallowance under section 14A read with Rule 8D - requirement of AO's satisfaction - Principle of case-specific examination versus application of res judicata in assessment proceedings - Transfer pricing - allocation of common/corporate expenses to an eligible unit and applicability of arm's length markup - Specified domestic transactions - distinction between allocation of shared overheads and supply of services requiring markup

Deduction under section 80IC - profits "derived from" eligible industrial undertaking - Attribution of income from sale of scrap to eligible business for incentive deduction - Principle of consistency in reliance on earlier tribunal decisions in assessee's own case - Claim for deduction under section 80IC for the Roorkee eligible unit including profit component arising from sale of scrap was allowable. - HELD THAT: - The Assessing Officer excluded scrap-sale proceeds from profits eligible for deduction under section 80IC, taking a narrow view of the phrase "derived from" as limited to direct sale of manufactured goods and treating scrap as not a by-product. The Commissioner (Appeals) allowed the claim by relying on earlier decisions of the Pune Tribunal in the assessee's own cases. The Tribunal examined the parties' submissions, noted that the Revenue conceded the issue was covered in favour of the assessee by the Tribunal's earlier orders and that no contrary higher forum decision was shown. Applying the principle of consistency and given the identical factual matrix and the Revenue's inability to distinguish the earlier findings, the Tribunal upheld the CIT(A)'s allowance of section 80IC deduction inclusive of scrap-sale profit. [Paras 4, 5]

Ground No.1 (a),(b) & (c) dismissed; deduction under section 80IC allowed to include sale of scrap for A.Y.2013-14.

Disallowance under section 14A read with Rule 8D - requirement of AO's satisfaction - Principle of case-specific examination versus application of res judicata in assessment proceedings - Disallowance under section 14A read with Rule 8D was sustainable because the Assessing Officer had recorded satisfaction and reasons in the assessment order. - HELD THAT: - The AO computed a disallowance under section 14A r.w.r. 8D after recording reasons why the assessee's computation was not acceptable. The CIT(A) relied on earlier tribunal orders in the assessee's own case to delete the disallowance but did not independently examine whether the AO had recorded satisfaction in the present year. The Tribunal observed that res judicata does not apply to assessment proceedings and that a quasi-judicial authority must compare facts year to year. Examination of the AO's order showed explicit reasoning and satisfaction invoking section 14A r.w.r. 8D (including extracted findings and precedents relied upon). On that basis the Tribunal found the CIT(A)'s reliance on earlier years misplaced and upheld the disallowance. [Paras 6, 7, 8, 10]

Ground No.2 (a) & (b) allowed; disallowance under section 14A r.w.r. 8D sustained for A.Y.2013-14.

Transfer pricing - allocation of common/corporate expenses to an eligible unit and applicability of arm's length markup - Specified domestic transactions - distinction between allocation of shared overheads and supply of services requiring markup - Transfer pricing adjustment levied by TPO by charging a markup on allocation of corporate expenses to the Roorkee unit was not warranted; the allocation of common administrative expenses on turnover basis did not amount to a service transfer requiring an arm's length markup. - HELD THAT: - The TPO treated the allocation of corporate expenses to the Roorkee 80IC unit as a specified domestic transaction and imposed a markup (7.48%) on the allocated cost, asserting the assessee had not included markup in the allocated costs. The CIT(A) found that the exercise was merely an allocation of common administrative expenses (e.g., directors' remuneration, audit fee) between units on a sale/turnover basis and not a transfer of goods or services from one unit to another that would attract a markup under transfer pricing rules. The Tribunal agreed that there was no rendition or receipt of services between units necessitating ALP determination by applying a markup, noted that subsequent assessment years did not feature similar adjustments, and upheld the CIT(A)'s deletion of the TP adjustment. [Paras 11, 12, 13]

Ground No.3 (a) & (b) dismissed; transfer pricing adjustment deleted for A.Y.2013-14.

Final Conclusion: Revenue appeal partly allowed: deduction under section 80IC inclusive of scrap-sale proceeds and deletion of the TP markup were upheld for A.Y.2013-14, while the deletion of the section 14A disallowance was reversed and the disallowance sustained.

Taxability of domain name registration as royalty - characterisation of receipts as royalty versus fees for technical services - penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars - bonafide belief / debatable issue defence to penalty - substantial question of law admitted by High Court - principle that mere untenable claim in return does not amount to furnishing inaccurate particulars

Penalty under section 271(1)(c) for concealment of particulars or furnishing inaccurate particulars - bonafide belief / debatable issue defence to penalty - substantial question of law admitted by High Court - principle that mere untenable claim in return does not amount to furnishing inaccurate particulars - Deletion of penalty under section 271(1)(c) upheld because the taxability of domain registration receipts as 'royalty' was a debatable issue with a substantial question of law admitted by the High Court and the assessee had a bonafide belief. - HELD THAT: - The Tribunal examined whether penalty under section 271(1)(c) could be levied where the assessee did not offer domain registration receipts to tax on a bonafide view and the question of characterization as 'royalty' was under challenge. The appellate history showed that while the Assessing Officer and DRP characterised the receipts as royalty, the assessee had pursued the opposite view and the High Court admitted a substantial question of law in the quantum appeal, demonstrating that the issue was debatable. The Tribunal relied on the settled principle that for levy of penalty under section 271(1)(c) there must be concealment of particulars or furnishing of inaccurate particulars; mere assertion of a claim in the return which is later disallowed does not itself establish inaccurate particulars. The Tribunal placed reliance on the reasoning recorded by the Commissioner (Appeals) that the Assessing Officer did not demonstrate that the assessee's claim was false, that full disclosure had been made during assessment proceedings, and that judicial precedents support non-levy of penalty where the issue is arguable and a substantial question of law has been admitted by a High Court. The Tribunal therefore concluded that imposition of penalty was not exigible in the circumstances of these AYs. [Paras 8, 9, 12]

Penalty under section 271(1)(c) deleted for AYs 2013-14 and 2014-15; appeals of the Revenue dismissed.

Final Conclusion: The Tribunal affirmed the CIT(A)'s deletion of penalty under section 271(1)(c) for AY 2013-14 and 2014-15 because the characterisation of domain registration receipts as 'royalty' was a debatable question of law (a substantial question admitted by the High Court) and the assessee had a bonafide belief and made full disclosure; accordingly both Revenue appeals are dismissed.

Sec. 80P(2)(d) deduction - Revisional jurisdiction under Section 263 - Co-operative society versus co-operative bank - Plausible view of the Assessing Officer - Conflict of High Court decisions - rule favouring assessee

Sec. 80P(2)(d) deduction - Co-operative society versus co-operative bank - Revisional jurisdiction under Section 263 - Plausible view of the Assessing Officer - Validity of the PCIT's revision under Section 263 in dislodging the Assessing Officer's allowance of deduction under Sec. 80P(2)(d) in respect of interest income on deposits with co-operative banks. - HELD THAT: - The Tribunal held that Sec. 80P(2)(d) permits deduction where a cooperative society derives interest from investments made with any other cooperative society; the 2006 insertion of sub section (4) to Sec. 80P excludes cooperative banks from Sec. 80P relief only in relation to claims by the banks themselves but does not, in the Tribunal's view, prohibit a cooperative society from claiming deduction for interest earned from deposits with a cooperative bank that, as a matter of law, is a cooperative society. The Assessing Officer had taken a possible/plausible view in allowing the claim. The Principal CIT, by invoking revisional powers under Section 263, dislodged that plausible view; the Tribunal found this to be an erroneous exercise of jurisdiction. Conflicting High Court decisions were noted, and the Tribunal applied the principle favouring the assessee where non jurisdictional High Court decisions conflict, following authorities cited in the order. In light of coordinate bench decisions and the assessment record showing a plausible view taken by the AO, the Tribunal concluded that the PCIT exceeded jurisdiction under Section 263 and that the AO's order should be restored.

PCIT's revision order under Section 263 set aside; the Assessing Officer's assessment dated 18.01.2021 restored and the appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2018-2019, set aside the PCIT's revision under Section 263 that had dislodged the AO's allowance of deduction under Sec. 80P(2)(d) for interest on deposits with co-operative banks, and restored the assessment dated 18.01.2021.

Charitable purpose - scope of the residuary limb 'advancement of any other object of general public utility' - proviso to section 2(15) - qualification for activities in the nature of trade, commerce or business and the 'actual carrying on' plus quantitative limit - statutory authorities/bodies - regulatory or statutory fees not per se commercial receipts - dominant object test - predominant purpose versus incidental profit-making - quantitative limit of 20% of total receipts - applicability under the proviso to section 2(15) - section 13(8) - non-exclusion of income where proviso to section 2(15) applies

Charitable purpose - scope of the residuary limb 'advancement of any other object of general public utility' - proviso to section 2(15) - qualification for activities in the nature of trade, commerce or business and the 'actual carrying on' plus quantitative limit - statutory authorities/bodies - regulatory or statutory fees not per se commercial receipts - dominant object test - predominant purpose versus incidental profit-making - quantitative limit of 20% of total receipts - applicability under the proviso to section 2(15) - Whether the Improvement Trust is entitled to exemption under section 11 for A.Y. 2016-17 despite receipts from sale of plots/premises and regulatory fees, in view of the amended proviso to section 2(15). - HELD THAT: - The Tribunal examined whether the Trust's activities fall outside 'charitable purpose' by virtue of the proviso to section 2(15) as amended w.e.f. 01.04.2016. It applied the framework established by the Hon'ble Supreme Court in Ahmedabad Urban Development Authority: (i) a statutory body performing town-improvement functions may collect fees/consideration under its parent statute without that collection being treated as commercial receipts per se; (ii) where amounts charged are statutory/mandated and are not significantly higher than cost with only nominal mark-up, such receipts are prima facie excluded from the mischief of 'trade, commerce or business'; (iii) if receipts are significantly higher than cost, the assessing authority must scrutinise whether the activity is in the nature of trade, commerce or business and, if so, whether the quantitative limit (20% of total receipts w.e.f. 01.04.2016) is breached. The Tribunal noted that the Punjab Town Improvement Act confers duties and limited powers of disposal on the Trust in furtherance of public-object schemes; the High Court (in the Trust's earlier controversy) had held sale/disposal of plots and related receipts to be incidental to the statutory town-improvement mandate and not a commercial venture per se. Facts for A.Y. 2016-17 were not shown to differ from those decided for A.Y. 2011-12. Applying the Supreme Court's parameters, the Tribunal concluded that the Trust's statutory mandate and the nature of receipts brought them within the exclusion for statutory public-utility bodies, and therefore the proviso to section 2(15) and section 13(8) did not operate to deny exemption. On that basis exemption under section 11 was held to be allowable for A.Y. 2016-17 and the order under appeal was set aside. [Paras 93, 94]

Exemption under section 11 allowed for A.Y. 2016-17; impugned order reversed and appeal allowed.

Final Conclusion: The appeal is allowed: the Improvement Trust is held entitled to exemption under section 11 for A.Y. 2016-17 insofar as the receipts in question arise in furtherance of its statutory town improvement mandate, and the assessment order denying exemption is set aside.

Commission on accommodation entries - tally seized data - elimination of circular transactions - application of coordinate bench precedent (stare decisis) - protective addition on unexplained cash credits - double addition - verification by assessing officer - valuation by DVO and circle rate (stamp duty value) - inspector's report lacking corroboration

Commission on accommodation entries - tally seized data - elimination of circular transactions - application of coordinate bench precedent (stare decisis) - Rate of commission income to be applied on turnover of accommodation entries. - HELD THAT: - The Tribunal examined the seized Jain folder tally data, accepted elimination of circular transactions from turnover and consideration of the short & excess account. While the ld. CIT(A) had applied a net rate of 1.04% by allowing only an ad hoc 30% deduction of gross commission receipts as expenses, a coordinate Bench in the case of Anand Kumar Jain had analysed the same seized material and held that entire recorded receipts net of recorded payments in the short & excess account yield a net commission rate of 0.47%. Given identical facts and the same search, the Tribunal applied the coordinate bench decision by way of stare decisis and directed the Assessing Officer to give effect to the 0.47% commission rate on the turnover of accommodation entries.

Rate of commission fixed at 0.47% on the turnover of accommodation entries; AO directed to give effect accordingly.

Protective addition on unexplained cash credits - double addition - verification by assessing officer - Treatment of protective additions made by AO in respect of unsecured loans/unexplained cash credits. - HELD THAT: - The ld. CIT(A) found that certain amounts added protectively by the AO represented receipts that at best formed part of the undisclosed commission income already brought to tax and therefore deleted the protective additions as constituting double taxation. The Tribunal noted the parallel adjudication in the brother's case and directed that the AO verify the receipts in the light of that precedent; accordingly the matter is left for verification by the AO rather than unqualified restoration of the additions.

Protective additions deleted by CIT(A) as double addition; AO directed to verify the receipts in accordance with the coordinate bench direction.

Valuation by DVO and circle rate (stamp duty value) - inspector's report lacking corroboration - Addition on account of alleged undervaluation of immovable property based on DVO/inspector's report. - HELD THAT: - The ld. CIT(A) examined the DVO's report (which recorded lack of cooperation and contained no valuation opinion) and the inspector's report (which lacked names, corroborative documentary evidence or comparable sales). The ld. CIT(A) accepted the sale consideration recorded in the registered deed and the circle/stamp valuation authority's figure, concluding that the inspector's uncorroborated enquiry could not sustain an addition. The Tribunal found no reason to interfere with this reasoned conclusion and upheld deletion of the addition.

Addition based on DVO/inspector's report deleted; CIT(A)'s order upheld.

Final Conclusion: The Tribunal, applying a coordinate bench precedent, fixed the commission rate on accommodation entries at 0.47% and directed the AO to give effect; protective additions were deleted by the CIT(A) as constituting double taxation and the AO is directed to verify the receipts as per the precedent; the deletion of the addition based on disputed property valuation was upheld.

Penalty under section 271B for failure to get accounts audited - applicability of section 44AB audit obligation - proviso to section 44AB as a beneficial provision - section 12A(1)(b) audit requirement for charitable/non profit entities - whether a university established by statute is engaged in 'business' - entitlement to exemption under section 10(23C)(iiiab)

Penalty under section 271B for failure to get accounts audited - applicability of section 44AB audit obligation - Validity of penalty levied under section 271B for alleged non-compliance with audit requirements. - HELD THAT: - The Tribunal held that the penalty order suffers from legal infirmity because the Assessing Officer invoked audit provisions without applying judicious mind to whether section 44AB in its main part was attracted. The AO relied on the proviso to section 44AB by treating non-compliance with section 12A(1)(b) (audit under other law) as a default under section 44AB, which the Tribunal found to be legally incorrect. The proviso to section 44AB is a beneficial provision that treats accounts audited under another law as compliance with section 44AB if such audited accounts are furnished with the return; it is not a penal or default provision rendering failure under section 12A(1)(b) as constituting an offence under section 44AB. Moreover, where failure to comply with section 12A(1)(b) occurs, the statutory consequence is denial of exemption under sections 11/12 and not automatic imposition of penalty under section 271B. The Tribunal concluded that the AO and the First Appellate Authority proceeded without correctly identifying or applying the statutory tests for attracting section 44AB and for imposing penalty under section 271B, rendering the penalty unsustainable. [Paras 9, 10, 11]

Penalty under section 271B quashed as levied without proper application of law regarding section 44AB and the proviso thereto.

Whether a university established by statute is engaged in 'business' - entitlement to exemption under section 10(23C)(iiiab) - Whether the assessee, a university established by statute, could be treated as carrying on 'business' for purposes of attracting the audit and penalty provisions. - HELD THAT: - The Tribunal observed that the university was established by a legislative Act with objects and powers directed to teaching and research in law, and was described in the orders below as a local authority. Given the statutory constitution, objects and mode of functioning, the university could not be treated as engaged in 'business' or profit-making in the ordinary sense. The Assessing Officer had not examined the constitution, objectives, powers or mode of achieving the university's objects to reach a conclusive finding of business activity or profit-earning. That absence of inquiry and finding rendered invocation of section 44AB and consequent penal action under section 271B unsustainable on factual and legal grounds. [Paras 8]

Findings treating the university as carrying on business were unsupported; penalty cannot be sustained on that basis.

Final Conclusion: The Tribunal allowed the appeal, quashed the penalty order passed by the Assessing Officer under section 271B and the confirmation by the First Appellate Authority, holding that the authorities erred in law and on facts by misapplying section 44AB (and its proviso) and by failing to examine whether the statutory university was carrying on 'business'.

Reopening of assessment and validity of notice under section 148 - formation of reason to believe and adequacy of reasons for invoking section 147 - change of opinion / reappreciation of recorded material - borrowed satisfaction and reliance on information from investigation wing - allowability of losses on trading in derivatives on a recognized stock exchange under the proviso to section 43(5) - treatment of alleged commission as accommodation entries and addition thereto - assessment under section 153A and disclosure in return

Reopening of assessment and validity of notice under section 148 - formation of reason to believe and adequacy of reasons for invoking section 147 - borrowed satisfaction and reliance on information from investigation wing - assessment under section 153A and disclosure in return - Validity of the notice issued under section 148 for AY 2013-14 and whether the Assessing Officer had valid reasons to invoke section 147. - HELD THAT: - The Tribunal examined the material relied upon by the Assessing Officer, including information under Project Falcon and statements recorded during survey operations, and the fact that the assessee had not claimed the loss in its return and the assessment had been completed under section 153A. The AO formed belief of escapement of income based on alleged reversal trades and third party statements and computed alleged commission. The Tribunal found that the AO's conclusions - that the assessee benefited from non genuine reversal trades and incurred cash commission - were not borne out by the record and were beyond logical inference from the materials on file. Having considered the materials and the manner in which the reasons were formed (including reliance on investigation inputs), the Tribunal held that the reasons recorded did not constitute a valid reason to believe permitting reopening under section 147 and that the reopening order must be treated as non est in law. [Paras 17, 18]

Notice under section 148 issued for AY 2013-14 quashed; reopening under section 147 held invalid.

Allowability of losses on trading in derivatives on a recognized stock exchange under the proviso to section 43(5) - treatment of alleged commission as accommodation entries and addition thereto - Whether the loss from trading in derivatives on the United Stock Exchange and the additions made as alleged commission could be sustained. - HELD THAT: - The Tribunal noted that the United Stock Exchange was notified as a recognized stock exchange and examined the assessee's contract notes and the position of brokers (including a denial by one broker that the assessee was a client). On merits, the Tribunal concluded that the AO's characterisation of the loss as non genuine and the computation of commission were not supported by the record and lacked logical foundation. The Tribunal therefore set aside the AO's disallowance of the loss and the addition for alleged commission; the CIT(A) had quantified commission at a much lower amount and the revenue did not appeal against that quantification. [Paras 16, 17]

Addition disallowing derivative trading loss and the related commission addition set aside; loss allowed and AO's addition treated as unsustainable.

Final Conclusion: The appeal is allowed: the reopening notice under section 148/147 for AY 2013-14 is quashed as not founded on adequate reasons, and the Assessing Officer's disallowance of the derivative trading loss and addition for alleged commission is held unsustainable on the record.

Provisional release - Indian Standard 17049 - import policy condition for restricted/prohibited goods - compliance with licence conditions - mixed question of fact and law

Indian Standard 17049 - compliance with licence conditions - import policy condition for restricted/prohibited goods - Whether the imported Raw Petroleum Coke (RPC) with sulphur content in excess of 7% conforms to IS 17049 and whether such import violates the licence and policy conditions - HELD THAT: - The High Court concluded that the determinative question - whether RPC imported with sulphur content exceeding 7% conforms to the IS 17049 requirement set out in the DGFT licence and thereby complies with the import policy condition for a restricted/prohibited item - had not been decided by the Tribunal. The Court observed that the Tribunal and the Commissioner had proceeded by reference to the end-product (calcined petroleum coke) that the importer proposes to manufacture rather than by examining whether the imported RPC itself satisfies the licence stipulation. The Court held that, as the item is prohibited/restricted, the correct test is whether the import satisfied the licence condition; this raises a mixed question of fact and law which the Tribunal must decide on merits after affording opportunity for submissions. For these reasons the matter could not be finally disposed of by the High Court and requires fresh adjudication by the Tribunal.

Remanded to the Tribunal for fresh consideration and decision on whether the imported RPC conforms to IS 17049 and whether the licence/policy conditions have been violated.

Provisional release - mixed question of fact and law - compliance with licence conditions - Whether the Tribunal's direction for provisional release of the goods having sulphur content exceeding 7% was legally sustainable - HELD THAT: - The Court found the Tribunal's conclusion that 'no harm will be caused' by provisional release to be unacceptable in the absence of a prior determination whether the imported RPC complies with the licence and policy conditions. Because the permissibility of provisional release is contingent upon whether the import itself met the statutory and licence requirements, the propriety of provisional release could not be finally upheld without the Tribunal first deciding the underlying compliance question. Accordingly, the High Court set aside the Tribunal's order granting provisional release and remitted the matter so the Tribunal may decide, as a mixed question of fact and law, whether provisional release was appropriate in the circumstances.

Remanded to the Tribunal to determine, on merits and in accordance with law, whether provisional release was permissible given the sulphur content and compliance with licence/policy conditions.

Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the matter is remanded to the Tribunal to decide, after hearing the parties, whether the imported RPC conforms to IS 17049 and whether provisional release was permissible in view of the licence and policy conditions. The Tribunal was requested to hear the matter at an early date, preferably before July 2023.

Classification of goods - beneficiation - interpretation of tariff headings - customs tariff heading 2614 00 20 vs 2614 00 10 - export duty chargeability - definition of beneficiation under Mineral Conservation and Development Rules, 1988

Classification of goods - beneficiation - customs tariff heading 2614 00 20 vs 2614 00 10 - definition of beneficiation under Mineral Conservation and Development Rules, 1988 - interpretation of tariff headings - export duty chargeability - Whether the Ilmenite exported by the appellant is 'upgraded (beneficiated) Ilmenite' classifiable under CTH 2614 00 20 and not as unprocessed Ilmenite under CTH 2614 00 10, with corresponding export duty consequences. - HELD THAT: - The Tribunal examined the process flow-sheet, certificates from the State Geology and Mines Department and the Department of Atomic Energy, and the definition of "beneficiation" in the Mineral Conservation and Development Rules, 1988, which encompasses regulating size, removing unwanted constituents and improving quality or assay grade. The court rejected the Department's contention that beneficiation necessarily requires chemical treatment or roasting, noting that beneficiation as understood in authorities (including the Apex Court's discussion in Tata Steel and the Board circular) covers physical separation processes that improve grade without chemical reactions. The flow-chart and supporting certifications demonstrated that the appellant's processes achieved the objectives set out in the regulatory definition and thus produced beneficiated/upgraded Ilmenite. The Tribunal followed its earlier reasoning in VV Minerals and the cited clarifications, holding that tariff headings and sub-headings must be applied to their literal description; the sub-heading 2614 00 20 describes Ilmenite upgraded (beneficiated Ilmenite) without an express requirement of chemical treatment or attainment of "synthetic rutile" grade. Applying these principles to the material on record, the Tribunal concluded that the exported product is rightly classifiable under 2614 00 20 and not under 2614 00 10. [Paras 13, 14, 15, 16]

The exported Ilmenite is beneficiated/upgraded Ilmenite and is classifiable under CTH 2614 00 20; the impugned order is set aside and the appeal is allowed with consequential reliefs.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant's processes resulted in beneficiated (upgraded) Ilmenite properly classifiable under CTH 2614 00 20, overturning the Department's classification under 2614 00 10 and granting consequential relief.

Right to be heard - admission of Section 7 application - setting aside admission order - reconsideration on receipt of reply and rejoinder - curing of procedural defects

Right to be heard - admission of Section 7 application - setting aside admission order - reconsideration on receipt of reply and rejoinder - Whether the order admitting the Section 7 petition should be set aside and the matter remitted for fresh consideration taking into account the reply filed by the Corporate Debtor and the rejoinder filed by the Financial Creditor. - HELD THAT: - The Tribunal found on the record that the Corporate Debtor had filed a reply on 29.11.2022 which remained under scrutiny in the DMS and was noted as such by the Adjudicating Authority. The Adjudicating Authority proceeded to admit the Section 7 petition without taking that reply on record or considering it, despite the Financial Creditor having filed a rejoinder. The High Court had directed that the respondent's reply filed on 29.11.2022 be placed on record and the NCLT give opportunity to make submissions. In view of these circumstances and in the interests of justice, the Tribunal concluded that the impugned order admitting the petition ought to be set aside so that the Adjudicating Authority may hear the Section 7 application afresh after placing the existing reply and rejoinder on record and permitting submissions thereon. [Paras 8, 9, 11]

Order dated 28.02.2023 set aside; Section 7 application revived and remitted to the Adjudicating Authority to be heard afresh taking into consideration the reply dated 29.11.2022 and the rejoinder.

Curing of procedural defects - reconsideration on receipt of reply and rejoinder - Whether the Corporate Debtor should be permitted to cure defects in the reply and the timeframe for fresh hearing. - HELD THAT: - The Appellant undertook to cure the defects in the reply. The Tribunal directed that the Appellant shall cure the defects within two weeks from the date of the order. The Tribunal also directed that a copy of the Tribunal's order be produced before the Adjudicating Authority within one week and fixed the Section 7 application for listing before the Adjudicating Authority on 03.07.2023 so that the Adjudicating Authority may consider the application, the reply and the rejoinder and decide in accordance with law. [Paras 10, 11]

Appellant permitted to cure defects within two weeks; directions issued for production of this order before the Adjudicating Authority and for the Section 7 application to be listed on 03.07.2023 for fresh consideration.

Final Conclusion: Appeal allowed in part: impugned order admitting the Section 7 petition is set aside and the matter is remitted to the Adjudicating Authority for fresh hearing after the reply and rejoinder are placed on record; the Corporate Debtor to cure defects within two weeks and comply with timelines prescribed by the Tribunal.

Operational debt - rejection of Section 9 application on payment of claimed debt - reservation of right to claim further interest, penalties or delayed charges - crystallisation of liability by subsequent assessment - payment under protest - maintainability of Section 9 for amounts not claimed in the application

Operational debt - rejection of Section 9 application on payment of claimed debt - Whether the Section 9 application must be closed/rejected once the operational debt as claimed in Part IV of the application is paid by the Corporate Debtor. - HELD THAT: - The Court examined Part IV of the Section 9 application and noted that the Operational Creditor had claimed an operational debt of Rs.17,24,06,024.33 and expressly reserved the right to claim further interest, penalties and/or delayed charges. The Adjudicating Authority recorded that the Corporate Debtor deposited the amount corresponding to the debt claimed in the application. The Bench held that where the debt expressly claimed in the Section 9 application has been paid, there is no occasion to continue the Section 9 proceeding further. The court further observed that the Adjudicating Authority should have closed the Section 9 proceeding rather than permitting the parties to settle the matter amicably within one week, which was unnecessary after payment of the claimed operational debt. [Paras 11, 12, 13, 20]

Section 9 application closed/rejected as the operational debt claimed in the application stood paid.

Crystallisation of liability by subsequent assessment - maintainability of Section 9 for amounts not claimed in the application - reservation of right to claim further interest, penalties or delayed charges - Whether interest levied by the Customs by assessment dated 04.10.2022 formed part of the operational debt claimed in the Section 9 application and could be pursued in the Section 9 proceeding after payment of the principal claimed amount. - HELD THAT: - The Court noted that the interest component was crystallised only upon finalisation of the Customs assessment on 04.10.2022 and therefore could not have been included in the debt as claimed in the Section 9 application filed earlier. The Part IV of the application specifically reserved the Operational Creditor's right to claim further interest, penalties or delayed charges. Given that the debt expressly claimed in the application was paid, the continuation of Section 9 solely for the subsequently quantified interest was not justified. However, the Court made clear that dismissal of the Section 9 application would not preclude the Operational Creditor from pursuing appropriate proceedings in law to recover any liability for interest that may subsist if the Corporate Debtor does not discharge it. [Paras 10, 11, 12, 13, 20]

Interest crystallised by the assessment dated 04.10.2022 was not part of the operational debt claimed in the Section 9 application; Section 9 proceedings could not be continued for that interest, though separate legal remedies remain open.

Payment under protest - maintainability of Section 9 for amounts not claimed in the application - Whether the statement made by counsel on 07.09.2022 amounted to an undertaking by the Corporate Debtor to pay interest as well as safeguard duty and whether the Corporate Debtor could resile from that statement. - HELD THAT: - The Court referred to the order dated 07.09.2022 which recorded that counsel for the Corporate Debtor submitted that 'once assessment of safeguard duty is done by the competent authority, he will make the payment of the same.' The Bench interpreted this statement as referring to payment of the safeguard duty itself and not clearly as an undertaking to pay interest. The Court also observed that the Corporate Debtor paid the claimed amount under protest and that it remains open to the Corporate Debtor to challenge the levy of interest by appropriate legal proceedings. At the same time, the Court noted that if the Supply Agreement renders the Corporate Debtor liable for interest, the Corporate Debtor cannot avoid that liability by merely requesting the Operational Creditor to challenge the interest; legal remedies are available to determine that liability. [Paras 15, 16, 18, 19]

The recorded statement on 07.09.2022 did not amount to an unequivocal undertaking to pay interest; the Corporate Debtor may challenge the interest by appropriate proceedings, but contractual liability for interest, if any, cannot be avoided.

Final Conclusion: The Appeal is allowed: the Section 9 application is closed as the operational debt specifically claimed in the application was paid; the Adjudicating Authority's direction permitting an amicable settlement was unnecessary. The judgment leaves open the right of the Operational Creditor to pursue legal remedies for any interest not discharged by the Corporate Debtor, and the Corporate Debtor remains at liberty to challenge the levy of interest in accordance with law.

Proceeds of crime - money laundering - twin conditions of Section 45 of the PMLA - mens rea in bail consideration - broad probabilities test for bail - medical grounds under proviso to Section 45 of the PMLA

Money laundering - proceeds of crime - twin conditions of Section 45 of the PMLA - broad probabilities test for bail - mens rea in bail consideration - Grant of bail to the petitioner in a money laundering prosecution under the PMLA on the available material and legal tests - HELD THAT: - The Court examined the prosecution case against the petitioner in the context of the PMLA: allegations that the petitioner received shares at a nominal price, took loans from entities controlled by the main accused, and was allegedly involved in layering of proceeds of crime. The Court applied the legal principle that while the twin conditions in Section 45 constrain the grant of bail, they do not operate as an absolute bar; at the bail stage the court must assess the matter on broad probabilities and consider whether there are reasonable grounds to believe the accused is not guilty and is unlikely to offend while on bail. The Court noted the distinction in Vijay Madanlal Choudhary that only property derived directly or indirectly as a result of criminal activity relating to a scheduled offence qualifies as proceeds of crime, and that mens rea is a relevant consideration even at the bail stage. Having weighed the documentary material, the absence of the petitioner's name in the original ECIR and predicate complaint, his commercial background as a developer, the defence explanation regarding the MoU and security shares, repayment of loans and the documentary nature of evidence already filed, the Court found a broad probability in favour of the petitioner. The Court also accepted that the risk of tampering or flight was mitigated by the nature of the evidence and the petitioner's roots. On that basis the balance favoured granting bail subject to stringent conditions. [Paras 31, 33, 35, 36, 37]

Petitioner admitted to bail on furnishing bond and sureties and subject to conditions; liberty granted after applying the broad probabilities test while recognising the twin conditions of Section 45 are not absolute.

Medical grounds under proviso to Section 45 of the PMLA - twin conditions of Section 45 of the PMLA - Whether the petitioner's medical infirmity warranted consideration under the proviso to Section 45 and influenced the bail order - HELD THAT: - The Court considered the petitioner's pleaded and documented medical complaints, prior interim medical bail and ongoing treatment including specialist referrals and procedures. While the petitioner argued that the proviso to Section 45 permits bail on sickness or infirmity without satisfying the twin conditions, the Court observed that medical grounds are a relevant and weighty factor in the exercise of discretion and that the twin conditions do not operate as an absolute prohibition on bail in such cases. On the recorded medical material and the overall assessment of the case on broad probabilities, the Court found the petitioner's serious medical condition to be an additional factor favouring bail and incorporated this consideration into the order granting liberty subject to conditions. [Paras 19, 35, 36, 37]

Medical infirmity was accepted as a material factor; the petitioner was granted bail taking into account his health while imposing conditions to safeguard the investigation and trial.

Final Conclusion: Bail granted to the petitioner in the PMLA prosecution on the basis of broad probabilities and his medical condition, subject to stringent conditions including bond, sureties, surrender of passport, residence and communication conditions, obligations to cooperate with investigation, and a prohibition on tampering or contacting witnesses; the order is confined to the case's peculiar facts and not a precedent for co accused.

Anticipatory bail - pre-arrest bail - wilful non-appearance - non-cooperation with trial - discretion to deny bail in view of conduct of accused - binding precedent of the Supreme Court

Anticipatory bail - wilful non-appearance - non-cooperation with trial - discretion to deny bail in view of conduct of accused - binding precedent of the Supreme Court - Application for anticipatory bail dismissed on account of the applicant's conduct, including prolonged non-appearance and non-cooperation with the trial, despite having availed remedies. - HELD THAT: - The Court recorded that the applicant is one of the accused in proceedings arising from a complaint and has admitted receiving commission for encashing certain cheques. The applicant had earlier been granted bail in related matters but, after dismissal of his Special Leave Petition on 25.09.2018, failed to appear before the trial court and did not justify prolonged non-appearance by invoking only transfer of file or the COVID-19 pandemic. The Court held that such conduct-filing and exhausting remedies and thereafter remaining absent-constitutes wilful non-appearance and non-cooperation with the trial, which disentitles the applicant to pre-arrest/anticipatory bail. Although the applicant relied on the decision in Satender Kumar Antil, the Court observed that while Supreme Court precedents are binding, the facts and the applicant's conduct are determinative; accordingly the anticipatory bail application is dismissed, with a direction that any future regular bail application be decided by the trial court on merits without being influenced by observations in this order. [Paras 3, 5, 7, 8, 11]

Anticipatory bail application dismissed; trial court to decide any bail application on merits uninfluenced by this order.

Final Conclusion: The High Court dismissed the anticipatory bail application, concluding that the applicant's prolonged non-appearance and lack of cooperation disentitle him to pre-arrest relief, while noting that any future bail application must be decided on its own merits by the trial court.

Provisional attachment - Compliance with 'reason to believe' requirement under Sections 5 and 8(1) of the Prevention of Money Laundering Act, 2002 - Power to accept fixed deposit as substitute for attached immovable property - Third-party rights and joint ownership in attached property - Availability of alternative statutory remedies before the Adjudicating Authority and Appellate Tribunal

Third-party rights and joint ownership in attached property - Power to accept fixed deposit as substitute for attached immovable property - Release of attached property No.4 in substitution for the petitioner furnishing a fixed deposit for the estimated value - HELD THAT: - The Court confined its consideration to the alternative relief seeking release of attached item No.4 on the petitioner furnishing a fixed deposit of the value estimated in the provisional attachment. The petitioner asserted joint ownership and that the land had been converted into plots sold to bona fide third parties; he offered a fixed deposit equivalent to the authority's estimated value. The respondent relied on the statutory adjudicatory process under the PML Act and contended that the appropriate remedy lay before the Adjudicating Authority and appellate forum. The Court noted precedent holding that, where attached immovable property under joint ownership is involved, the authorized officer may accept an equivalent fixed deposit for the concerned share. Applying that principle to the material before it - the petitioner's claim of joint ownership and involvement of third-party purchasers, and the offer of security equal to the estimated value - the Court found the alternative prayer just and reasonable. The Court therefore directed release of the specified attached property subject to the petitioner furnishing the fixed deposit security, without adjudicating other objections to the provisional attachment or the show cause notice.

Petition allowed in part; respondent directed to release attached property No.4 on petitioner furnishing fixed deposit of the estimated value.

Final Conclusion: Writ petition allowed in part: attached property No.4 (Survey No.376/2, Alamur Village, Anantapur) is directed to be released upon the petitioner furnishing a fixed deposit of the value estimated in the provisional attachment; no order as to costs.

Adjustment of excess service tax under Rule 6(4A) of Service Tax Rules - Limited adjustment on refund or credit note under Rule 6(3) of Service Tax Rules - Non-obstante clause in sub rule 4A and its overriding effect - Adjustment of excess tax as advance payment and Article 265 implications - Bi partite reconciliation and evidentiary burden on revenue to prove contravention

Adjustment of excess service tax under Rule 6(4A) of Service Tax Rules - Limited adjustment on refund or credit note under Rule 6(3) of Service Tax Rules - Non-obstante clause in sub rule 4A and its overriding effect - Bi partite reconciliation and evidentiary burden on revenue to prove contravention - Whether adjustments made by the appellant for short/excess payments reflected in ST 3 returns for April-September 2007 could be sustained as valid adjustments under Rule 6(4A) despite being entered under the column referring to Rule 6(3), and whether the demand premised on breach of Rule 6(3) was sustainable. - HELD THAT: - The Tribunal found that the adjudicating authority proceeded solely on the basis of entries in the ST 3 return and on a presumption of contravention of Rule 6(3) without confronting or negativing the appellant's reconciliation statements and Chartered Accountant's certificate showing short payments in some months and excess payments in others, and without adducing any evidence that the appellant had failed to refund consideration or issue credit notes as envisaged by Rule 6(3). The Tribunal examined the statutory scheme and observed that sub rule (4A) of Rule 6 contains a non obstante clause and permits adjustment of excess amounts paid against subsequent liabilities; the excess payment may be akin to advance payment where the excess is not due to matters of taxability, classification, valuation or exemption. Reliance was placed on consistent Tribunal precedents which held that a liberal and harmonious construction of Rules 6(3), 6(4A) and related provisions permits adjustment of bona fide excess payments in subsequent periods and that the Revenue must demonstrate a legal basis to deny such adjustment; retention or appropriation of excess paid amounts without authority would be contrary to Article 265. Given that the appellant had made good short payments with interest and had reflected reconciliations, and that the adjudicating authority did not rebut those submissions or demonstrate violation of Rule 6(3), the demand based on alleged wrong adjustment could not be sustained. [Paras 6, 7, 8, 9, 11]

Impugned order confirming demand and imposing penalty set aside; adjustments held admissible under Rule 6(4A) and appeal allowed on merits.

Final Conclusion: The Tribunal allowed the appeal on merits, holding that the appellant was entitled to adjust bona fide excess payments under Rule 6(4A) and that the adjudicating authority's demand founded on an alleged breach of Rule 6(3) was unsustainable in the absence of evidence contradicting the appellant's reconciliations; the impugned order is set aside.

Eligibility of refund under Notification No.17/2009 ST - Time bar of refund claims - one year from date of export (let export order) and partial allowance - Nexus of testing and analysis services with manufacture and export - input services eligible for credit/refund - Invoice address/non existence of one to one correlation not a ground for rejection - Processing of refund on basis of declaration where one to one correlation impracticable (Circular para 3.2)

Time bar of refund claims - one year from date of export (let export order) and partial allowance - Eligibility of refund under Notification No.17/2009 ST - Remand for fresh consideration of refund claims which include some shipping bills within the one year time limit - HELD THAT: - The Tribunal held that Notification No.17/2009 ST prescribes a one year limitation computed from the date of export as per para 2(f), and that where a quarterly refund claim contains both shipping bills within and beyond the one year period the entire quarterly claim cannot be rejected. The adjudicating authority erred in rejecting whole claims; it must segregate and adjudicate invoices/shipping bills that fall within the statutory one year period and grant refund if otherwise eligible. The Tribunal therefore set aside the impugned orders for those appeals and remanded the matter for de novo consideration limited to identifying and deciding the shipping bills within the prescribed period. [Paras 8, 11]

Remand to the adjudicating authority to consider and decide refund claims in respect of shipping bills that are within the one year period; appellant eligible for refund in respect of such bills if other conditions met.

Nexus of testing and analysis services with manufacture and export - input services eligible for credit/refund - Eligibility of refund under Notification No.17/2009 ST - Testing and analysis services (including testing of raw materials) have requisite nexus with manufacture of exported finished products and are eligible for refund/credit under the Notification - HELD THAT: - The Tribunal rejected the departmental view that testing limited to raw materials cannot have nexus with the exported finished goods. It observed that services used for testing raw materials relate to the manufacturing process and thus fall within the ambit of input services, particularly for the period prior to 01.04.2011 when the definition of "input services" had wider scope including "activities relating to business." Further, the Notification imposes no specific condition excluding testing and analysis services. Consequently, denial of refund on the ground that testing related only to raw materials was not sustained. [Paras 9, 13]

Refund/credit allowed in principle for testing and analysis services as they have nexus with manufacture of exported goods; issue decided in favour of the appellants.

Invoice address/non existence of one to one correlation not a ground for rejection - Processing of refund on basis of declaration where one to one correlation impracticable (Circular para 3.2) - Eligibility of refund under Notification No.17/2009 ST - Invoices showing service provider's billing to the assessee's head office do not justify rejection where services and service tax payment are undisputed; declaration under Circular para 3.2 should be accepted for refunds below the stipulated threshold - HELD THAT: - The Tribunal found that invoices addressed to the assessee's head office while the manufacturing unit availed the services do not negate receipt of services or payment of service tax. Where the Department does not dispute that services were received and tax paid, rejection on the ground of invoice address is without basis. The Tribunal further noted Circular No.120/01/2010 ST (para 3.2) permits processing of refunds on the basis of an authorised declaration when one to one correlation is impracticable; for amounts below the specified threshold the assessee's declaration certified by an authorised person ought to be acted upon. The appellants had furnished such a declaration and the claimed amounts were below the threshold, entitling them to consequential relief. [Paras 4, 5, 10, 14]

Rejection of refunds on the ground of invoice address set aside; declaration under Circular para 3.2 to be considered and refunds processed where applicable; issue decided in favour of the appellants with consequential relief.

Final Conclusion: The Tribunal allowed the appeals: in three appeals the impugned orders were set aside and remanded for de novo adjudication limited to segregating and deciding shipping bills within the one year period (with guidance on testing services and invoice/address issues), and in five appeals the refund rejections were set aside and allowed with consequential reliefs, holding testing/analysis services and invoices addressed to the head office do not defeat refund eligibility and that declarations under Circular para 3.2 must be considered where one to one correlation is impracticable.

Exemption for business auxiliary services by a commission agent in relation to sale or purchase of agricultural produce - meaning of "agricultural produce" under Notification No. 13/2003-S.T. as amended by Notification No. 08/2004-S.T. - scope of "manufactured products" exclusion in the agricultural-produce exemption - effect of post-harvest processing on the essential characteristics of agricultural produce - taxability of imported business auxiliary services / commission payments

Exemption for business auxiliary services by a commission agent in relation to sale or purchase of agricultural produce - meaning of "agricultural produce" under Notification No. 13/2003-S.T. as amended by Notification No. 08/2004-S.T. - scope of "manufactured products" exclusion in the agricultural-produce exemption - effect of post-harvest processing on the essential characteristics of agricultural produce - Benefit of the notification-based exemption claimed for commission paid to foreign agents for marketing/sale of tea is available and the demand of service tax is not sustainable. - HELD THAT: - The amended Notification defines "agricultural produce" and expressly includes "tea" within that definition while excluding only specified "manufactured products" such as sugar, edible oils, processed food and processed tobacco. The exclusion is therefore limited to those categories and does not operate as a blanket prohibition against all processing. The processes involved in converting green tea leaf into black tea do not, in the Tribunal's view, alter the essential characteristic of tea; they merely render it marketable in a distinct form. As the Notification does not distinguish between green tea and black tea and the conversion does not result in a product falling within the enumerated category of "manufactured products," the activity remains within the ambit of "agricultural produce." Consequently, business auxiliary services rendered as commission for sale/marketing of such tea qualify for the exemption under the Notification and the service-tax demand based on treating the service as import of taxable business-auxiliary service cannot be sustained. [Paras 7, 10, 11]

Demand of service tax confirmed by lower authorities set aside; exemption allowed and appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that tea (including black tea) falls within the definition of "agricultural produce" in the amended notification and that the commission-paid business-auxiliary services in relation to its sale are exempt; the service-tax demand for the period 2007-08 to 2009-10 was set aside and consequential benefits granted.

Condonation of delay - pre-deposit for statutory appeal - pre-deposit under Section 35-F of the Central Excise Act, 1944 - revival of appeal on compliance with pre-deposit - maintainability of statutory appeal - payment of cost to High Court Legal Services Committee as condition for condonation

Condonation of delay - payment of cost to High Court Legal Services Committee as condition for condonation - Delay of 147 days in filing the appeal was condoned subject to payment of costs. - HELD THAT: - The Court considered the appellant's application for condonation of delay and, after hearing counsel, allowed the delay condonation application subject to the appellant paying the specified cost to the High Court Legal Services Committee by the date directed. The order records that on payment of the cost the delay of 147 days in filing the appeal stands condoned, and the condonation application is allowed. [Paras 2]

Delay condoned subject to payment of the directed cost by 15.06.2023 and the delay condonation application allowed.

Pre-deposit for statutory appeal - pre-deposit under Section 35-F of the Central Excise Act, 1944 - revival of appeal on compliance with pre-deposit - maintainability of statutory appeal - Impugned dismissal of the appeal for non-compliance with the pre-deposit requirement was set aside conditional on the appellant making the pre-deposit and paying the cost within the time directed, and the appeal was ordered to revive for adjudication on merits. - HELD THAT: - The Tribunal had dismissed the appeal solely for non-compliance with the statutory pre-deposit requirement. The Court noted that the appellant (a statutory board) sought time to make the pre-deposit and that the revenue stated it would have no objection if the appellant made good the deposit within one month. Given this position, the Court declined to decide the substantive legal issues and instead exercised its discretion to set aside the impugned order on the stated conditions. The Court ordered that if the appellant pays the cost (as directed) and deposits the pre-deposit required to maintain the appeal on or before the final date fixed, the impugned order shall stand set aside and the appeal shall revive before the Tribunal to be heard on merits. [Paras 3, 4, 5, 6, 8]

If the appellant pays the directed cost and makes the requisite pre-deposit on or before 30.06.2023, the impugned order dated 02.08.2022 shall be set aside and the appeal shall revive for hearing and decision on merits.

Final Conclusion: The application for condonation of delay is allowed subject to payment of the specified cost; further, the Tribunal's order dismissing the appeal for non-compliance with the pre-deposit requirement is set aside on the condition that the appellant pays the cost and makes the requisite pre-deposit by the date directed, upon which the appeal will revive for adjudication on merits.

Specified goods - budgetary support under the Scheme - availing excise duty exemption by manufacture and clearance - 8-digit HSN classification - eligible unit - residual period of exemption - textual interpretation of scheme conditions

Specified goods - availing excise duty exemption by manufacture and clearance - 8-digit HSN classification - budgetary support under the Scheme - Whether a manufacturing unit is entitled to budgetary support under the Scheme in respect of goods manufactured after 01.07.2017 which were not the identical 8 digit HSN items manufactured and cleared with excise exemption prior to 01.07.2017 - HELD THAT: - The Scheme confines budgetary support to "specified goods", defined as those goods that were "being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption" under the earlier exemption notifications. The earlier Exemption Notification, though using a broad 4 digit heading (HSN 3808), granted exemption and specified tariff rates only at the sub item (8 digit) level; therefore entitlement under the Scheme must be determined with reference to the specific 8 digit items for which excise exemption was actually availed and clearance occurred prior to migration to GST. Mere production after 01.07.2017 of an item falling under the broad 4 digit head (3808) is insufficient if that particular 8 digit item was not manufactured and cleared with excise exemption before 01.07.2017. Reading the Scheme otherwise would render the Scheme's definition of "specified goods" redundant and permit new items manufactured post GST to claim budgetary support despite no prior excise exemption history, contrary to the Scheme's expressed conditions. The respondents' rejection of the petitioner's claim in respect of the listed 8 digit tariff headings, on the ground that those items were not manufactured and cleared with exemption prior to 01.07.2017, is therefore consistent with the Scheme's language and purpose. [Paras 41, 43, 44, 48, 51]

Budgetary support under the Scheme is available only for those specific 8 digit HSN goods which the eligible unit had manufactured and cleared by availing excise duty exemption prior to 01.07.2017; goods not so manufactured and cleared before that date are not eligible.

Final Conclusion: The challenge to the respondents' rejection is dismissed: the petitioner is not entitled to budgetary support under the Scheme for the post GST items which were not manufactured and cleared with excise exemption prior to 01.07.2017.

Discrimination under Article 14 - Privity of contract and locus to challenge contractual term - Contractual bargain and unconscionability - Transfer of MODVAT benefit by contractual arrangement

Discrimination under Article 14 - Transfer of MODVAT benefit by contractual arrangement - Clause 13(v) of the supply order and Clause (ii) of the special conditions of the purchase orders are not discriminatory and do not violate Article 14. - HELD THAT: - The Court examined whether similarly situated suppliers were treated differently by imposing a condition for transfer of MODVAT benefit. It held that contracts were negotiated at different times and on differing commercial considerations and that the clauses in question resulted from a bargain in which bulk supply orders were exchanged for a concession by the supplier to transfer the benefit. The arrangement was not shown to be unconscionable or to contravene any statutory provision; mere differences in contractual terms across separate transactions do not, without more, establish hostile discrimination. The Writ Court's finding of discrimination failed to account for the independent commercial context and negotiations giving rise to the impugned clause and therefore could not be sustained. [Paras 15, 16, 17, 18, 19]

Clause 13(v) and the similar Clause (ii) are valid contractual terms and are not discriminatory under Article 14.

Privity of contract and locus to challenge contractual term - Contractual bargain and unconscionability - The writ petitioners lacked locus to challenge Clause 13(v) (a term in the contract between the appellants and SICOP), and the Writ Court erred in allowing such challenge without addressing the corresponding clause in the SICOP-supplier contracts. - HELD THAT: - The Court noted that Clause 13(v) was contained in the supply order between the appellant and SICOP, and the writ petitioners were strangers to that contract; accordingly they had no direct cause of action to impugn that clause. Further, the Court observed that the Writ Court had not dealt with the corresponding Clause (ii) in the SICOP-writ petitioners' supply orders; on examination, that clause was found to be a product of negotiation and not unconscionable. Since the contractual arrangement between SICOP and the writ petitioners effected the transfer of benefit by mutual agreement, the writ petitioners could not successfully challenge the separate clause in the appellant-SICOP contract absent a proper locus and without the Writ Court adjudicating the directly operative clause. [Paras 14, 17, 18, 19, 20]

Writ petitioners had no locus to challenge Clause 13(v) of the appellant-SICOP supply order; the corresponding contractual clause in the SICOP-supplier contracts was not struck down.

Final Conclusion: The appeal is allowed; the impugned judgment quashing Clause 13(v) is set aside as the contractual clauses transferring the MODVAT benefit were bargained for, not unconscionable or discriminatory, and the writ petitioners lacked locus to attack the appellant-SICOP contract; the corresponding SICOP-supplier clause is upheld.

Interest on delayed refund under Section 11BB - date of receipt of application as trigger for interest - statutory rate of interest for delayed refund - entitlement to interest despite contemporaneous investigation or show-cause proceedings

Interest on delayed refund under Section 11BB - date of receipt of application as trigger for interest - statutory rate of interest for delayed refund - Whether the appellant is entitled to interest on delayed payment of the refund claim filed on 28.10.2010 and finally sanctioned on 31.08.2020 - HELD THAT: - The Tribunal applied the legal principle laid down by the Hon'ble Supreme Court in Ranbaxy Laboratories Ltd. which holds that liability to pay interest under Section 11BB commences from the expiry of three months from the date of receipt of the application for refund and not from the date of order of refund. The appellant filed the refund application on 28.10.2010; accordingly the period for commencement of statutory interest expired on 27.01.2011. Although the revenue had initiated proceedings and there was a show-cause notice and an assessment order subsequently set aside by this Tribunal, the ground invoked by the Commissioner (Appeals) - that the competent authority could not decide the refund while the self-credit issue was under investigation - is not a statutory basis for denying interest under Section 11BB. Applying the Ranbaxy ratio, the appellant is therefore entitled to interest at the statutory rate of 6% from 27.01.2011 until the date of credit to the appellant's account. The Tribunal directed the original authority to compute the interest and pay the same within two months from receipt of the order.

The appeal is allowed; the original authority is directed to compute interest from 27.01.2011 at the statutory rate and pay it to the appellant within two months.

Final Conclusion: The appeal is allowed: interest on the refund filed on 28.10.2010 is payable from 27.01.2011 at the statutory rate (6%) until credit, and the original authority is directed to compute and pay the amount within two months.

Conditional exemption - non-mandatory nature of nil-rate exemption - option to pay concessional duty instead of availing exemption - CENVAT credit eligible on duty paid by supplier - Explanation to sub-section (1A) of Section 5A of the Central Excise Act - treatment of duty paid as deposit

Conditional exemption - non-mandatory nature of nil-rate exemption - option to pay concessional duty instead of availing exemption - CENVAT credit eligible on duty paid by supplier - Whether a principal manufacturer is obliged to avail the 'nil' rate exemption under Sl. No. 90 of Notification No. 04/2006-C.E. or may opt to clear goods at the concessional rate under Sl. No. 91, and whether downstream purchasers can avail CENVAT credit of duty paid by such principal manufacturer. - HELD THAT: - The Tribunal held that the exemption under Sl. No. 90 is a conditional, not an absolute, exemption and that a manufacturer cannot be compelled to avail the 'nil' rate. The Bench followed earlier decisions of the Tribunal, including Kovai Maruthi Paper and Boards & ors., which in turn followed Balakrishna Paper Mills & ors., to conclude that an assessee has the option to pay duty at the concessional rate prescribed at Sl. No. 91 instead of availing the exemption at Sl. No. 90. Applying that ratio, the Tribunal found that duty paid by the principal manufacturer at the concessional rate is proper and that downstream users who purchased before the principal manufacturer exhausted the first-clearance exemption are entitled to avail CENVAT credit of such duty. The Department's contention that duty paid without availing exemption must be treated as a deposit under the Explanation to sub-section (1A) of Section 5A was not accepted in view of the cited precedents and the option recognized therein. [Paras 9, 10, 11, 12]

Impugned order disallowing CENVAT credit is set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal followed its earlier precedents and held that the principal manufacturer may opt to pay concessional duty under Sl. No. 91 instead of availing the 'nil' exemption under Sl. No. 90, and accordingly set aside the demand denying CENVAT credit; the appeal was allowed with consequential relief.

Quashing of assessment order and restoration for reframing - opportunity to produce Statutory C-Forms and right to be heard - reassessment/reframing of assessment on production of statutory documents - realisation of demand does not preclude reassessment

Quashing of assessment order and restoration for reframing - realisation of demand does not preclude reassessment - The orders dated 18.09.2020 passed by the fourth respondent are quashed and the assessment proceedings are restored to the fourth respondent for reframing. - HELD THAT: - The Court found that, having regard to the petitioners' pleaded inability to produce Statutory C-Forms at the time of the original assessment and the subsequent possibility of producing such forms, complete adjudication required setting aside the impugned orders and permitting the assessing officer to reconsider the assessment. The Court noted that realisation of the demand pursuant to the communication dated 27.10.2020 did not bar reassessment or reframing where statutory forms could be produced later, and accepted the parties' concession that multiple assessments or reassessments may be permissible if statutory justification is subsequently furnished. In these circumstances the fourth respondent's orders dated 18.09.2020 were quashed and the matter remitted for fresh consideration with liberty to the parties to rely on the statutory forms now available.

Orders dated 18.09.2020 quashed; assessment proceedings restored to the fourth respondent for reframing and reconsideration permitting production of Statutory C-Forms.

Opportunity to produce Statutory C-Forms and right to be heard - reassessment/reframing of assessment on production of statutory documents - The petitioners are granted an opportunity to produce Statutory C-Forms and the fourth respondent is directed to reframe the assessment in light of any such forms within specified timelines. - HELD THAT: - The Court directed that the petitioner shall appear before the fourth respondent on a specified date and is at liberty to produce Statutory C-Forms then or on such further date as allowed. The Court imposed an outer time-limit for the assessing officer to decide on reframing the assessment in the light of the statutory forms produced, thereby ensuring that the exercise of reframing is conducted with due opportunity and within a finite period to avoid protracted proceedings. This direction was given to enable effective and complete adjudication and to prevent multiplicity of unresolved disputes arising from the earlier realization of demand.

Petitioner to appear before the fourth respondent on 26.05.2023 (or such further date) to produce Statutory C-Forms; assessing officer to decide on reframing within four weeks of receipt of such forms.

Final Conclusion: The writ petitions are disposed of by quashing the fourth respondent's orders dated 18.09.2020 and restoring the assessment proceedings for reframing; the petitioner is granted a defined opportunity to produce Statutory C-Forms and the assessing officer is directed to reconsider and decide reframing within the time prescribed, with liberty to place this order before the appellate authority for consequent disposal of pending appeals.

Compliance with essential tender conditions including submission of bank guarantee under Rule-27(4)(iv) of OMMC Rules, 2016 - rejection of bid for non-submission of mandatory documents - strict adherence to terms of tender - no condonation of non-compliance - writ of mandamus - requirement of statutory duty and existence of legal right

Compliance with essential tender conditions including submission of bank guarantee under Rule-27(4)(iv) of OMMC Rules, 2016 - rejection of bid for non-submission of mandatory documents - The petitioner's bid was properly rejected for non-compliance with the mandatory requirement of submitting a bank guarantee or previous year's income tax return as prescribed in the tender notice and Rule-27(4)(iv). - HELD THAT: - The tender notice expressly required submission of a bank guarantee valid for 18 months or the previous year's income tax return calculated as prescribed. The petitioner did not file a bank guarantee within the stipulated period and only produced a bank letter which lacked date, bank name, account number, BG number and bank seal; the petitioner himself admitted the bank guarantee was not produced with the bid due to a technical delay. The tender terms stated that applications missing any of the specified documents would not be considered. Given that the requirement was essential, the Tahasildar was justified in treating the petitioner's bid as defective and rejecting it. The court therefore held that the petitioner's claim to preference on account of a higher bid could not succeed where the bid was void ab initio for non-compliance with mandatory conditions. [Paras 7, 8, 9, 10, 21]

Petitioner's bid was correctly rejected as non-compliant with the essential tender condition of submitting the bank guarantee or prescribed alternative document.

Strict adherence to terms of tender - no condonation of non-compliance - strict compliance with essential tender conditions - The authorities were not obliged to accept documents tendered after the last date and could not relax the essential conditions of the tender; condonation was not permissible where strict compliance was mandated. - HELD THAT: - The Court applied established principles that essential conditions of a tender must be strictly complied with and that a contractual/tendering authority may not condone non-compliance with such conditions. Reliance was placed on precedents upholding that acceptance of post-deadline or incomplete documents would frustrate the sanctity and object of the tendering process. Since the petitioner failed to produce the mandatory bank guarantee within the prescribed timeframe, there was no scope for the competent authority to accept it belatedly or to relax the condition in his favour. [Paras 16, 17, 19, 20, 21]

No interference with the rejection or with the appellate confirmation was warranted because the tender conditions required strict compliance and did not permit acceptance of belated or incomplete documents.

Writ of mandamus - requirement of statutory duty and legal right - The petitioner was not entitled to a writ of mandamus to compel acceptance of his bid because there was no statutory duty breached by the authorities nor a legal right in the petitioner to enforcement where he failed to comply with mandatory tender conditions. - HELD THAT: - The Court reiterated that a writ of mandamus issues only where a statutory duty exists and an aggrieved party has a legal right to its performance. Here, because the petitioner did not comply with the mandatory conditions (bank guarantee/income tax return) as required by the tender and rules, there was no statutory obligation on the authorities to accept his bid, and no enforceable legal right in the petitioner to demand acceptance. Consequently, relief by writ was inappropriate. [Paras 14, 15, 22]

Writ of mandamus not available to compel acceptance of the petitioner's bid; the writ petition must fail.

Allegation of manipulation in rival bid - failure of proof - The allegation that the successful bidder's application was manipulated or corrected improperly was rejected for want of proof. - HELD THAT: - The petitioner's objection that the successful bidder had altered the quoted rate was examined and the record showed that corrections bore the bidder's initials, supporting that the corrected figure represented his offer. The Court found no evidence of interpolation or fraud warranting interference with the award. [Paras 11]

Allegation of manipulation in the rival bid was not established and did not vitiate the award.

Final Conclusion: The writ petition is dismissed: the petitioner's bid was rightly rejected for non-submission of the mandatory bank guarantee/alternative proof within the stipulated time, there was no basis to condone the non-compliance or to issue mandamus compelling acceptance, and the challenge to the rival bidder's offer failed; no order as to costs.