TaxTMI Updates e-Newsletter
Jun 03,2024

Opportunity of personal hearing - consideration of show-cause reply - remand for fresh decision - attachment to determination of tax - order under Section 73 of the Goods and Services Tax Act, 2017

Opportunity of personal hearing - consideration of show-cause reply - order under Section 73 of the Goods and Services Tax Act, 2017 - attachment to determination of tax - remand for fresh decision - Validity of the order dated 30.12.2023 passed under Section 73 of the GST Act and attachment to DRC 07 in view of absence of personal hearing and apparent non-consideration of the assessee's show-cause reply. - HELD THAT: - The communication of attachment to determination of tax did not inform the petitioner that personal hearing would only be granted if specifically prayed for; therefore denying an opportunity for personal hearing was not acceptable. Independently, even if the authority chose not to grant a personal hearing, it remained duty-bound to consider the show-cause reply uploaded by the petitioner on 20.12.2023. The assessing authority's order does not reflect such consideration. In these circumstances, the impugned order is vitiated for failure to afford or consider a hearing/reply and is liable to be set aside. The matter is remanded to the same authority for fresh decision after fixing and communicating a date for personal hearing to the petitioner (to be sent to the email address provided), so that the authority may consider the reply and decide afresh on merits. The respondents are granted liberty to seek modification of this interim direction if advised.

Impugned order dated 30.12.2023 set aside and matter remanded for fresh decision after affording personal hearing and considering the show-cause reply; hearing date to be communicated to the petitioner by email.

Final Conclusion: The writ petition is allowed to the extent that the order dated 30.12.2023 under Section 73 read with the attachment to DRC 07 is quashed and remitted to the same authority for fresh adjudication after fixing and communicating a date for personal hearing; liberty granted to respondents to apply for modification of this order.

IGST vs CGST/SGST on export freight - place of supply - taxability of transportation of goods from India to outside India - sunset of exemption on ocean/air freight - effect of omission of proviso to Section 12(8) and Section 13(9) on place of supply - advance ruling jurisdiction and binding effect

IGST vs CGST/SGST on export freight - place of supply - taxability of transportation of goods from India to outside India - sunset of exemption on ocean/air freight - Liability to pay GST on export freight charged to the exporter (M/s. DCW Ltd.) - HELD THAT: - The Authority examined the taxability of ocean/air export freight following expiry of the exemption 'sunset' clause and the role of the place of supply in determining the nature of tax. With effect from 01.10.2022 the exemption for transportation of goods by vessel/air for exports ceased and such services became taxable. Under the then-existing proviso to the place-of-supply rule (proviso to Section 12(8)) and Section 13(9) the place of supply for transportation of goods to a destination outside India was the place of destination, thereby attracting IGST (inter-state) in cases where both supplier and recipient were in India but the service related to export. Subsequent amendments omitting those provisos (with effect from 01.10.2023) fixed the place of supply at the location of the recipient, converting the transaction into an intra-state supply where both supplier and recipient are located in the same State, thereby attracting CGST/SGST. Applying these legal propositions to the facts submitted (export on CIF basis; freight paid by the exporter to a shipping line/freight forwarder having an office at Thoothukudi), the Authority held that the GST liability in respect of the freight rests with the service provider (shipping line/freight forwarder) and not on the exporter; the exporter receives the freight service as an input and has no further liability for the same service. [Paras 9, 10]

The exporter (M/s. DCW Ltd.) is not liable to pay GST on export freight.

Advance ruling jurisdiction and binding effect - place of supply - Liability of the shipping line/freight forwarder who accepts the goods from the exporter - HELD THAT: - The Authority noted that the question concerning the shipping line/freight forwarder does not pertain to the applicant and falls outside the scope of an advance ruling to be issued to this applicant. While the legal analysis on place of supply and the nature of tax was applied to determine that the service provider bears the GST liability, the Authority observed that it is not required to and will not answer the question directed at a non-applicant. The Authority also recorded the statutory limits and binding effect of advance rulings, which are confined to the applicant and the concerned jurisdictional officer. [Paras 9, 10]

Not answered, as the shipping line is not the applicant in the instant case.

Final Conclusion: The Authority ruled that the exporter (M/s. DCW Ltd.) is not liable to pay GST on export freight; the question on liability of the shipping line/freight forwarder is not answered by the Authority because that party is not the applicant.

Reverse charge (RCM) - place of supply - inter-state supply - IGST liability on export freight - export on FOB basis - advance ruling binding

Reverse charge (RCM) - export on FOB basis - The exporter (applicant) is not liable to pay GST under reverse charge on export freight in FOB exports. - HELD THAT: - The Authority found on the facts stated by the applicant that in FOB exports the overseas buyer (or its agent) arranges and pays for export freight and the exporter neither provides nor receives the freight service. The RCM notifications and the Integrated Tax RCM entries were examined and no entry makes the exporter liable to pay tax under reverse charge for export freight in the facts of this case. Since the exporter is neither supplier nor recipient of the freight service in FOB shipments, the question of payment of GST on RCM basis by the applicant does not arise. [Paras 9, 10]

The question of payment of GST under RCM by the applicant does not arise.

Reverse charge (RCM) - IGST liability on export freight - inter-state supply - place of supply - Queries as to whether the shipping line is liable under RCM, whether the export freight is liable to GST on RCM, whether such freight constitutes an inter state supply subject to IGST, and the taxable value were not answered as they do not relate to the applicant. - HELD THAT: - The Authority declined to adjudicate questions that do not concern the applicant because an advance ruling must relate to supplies undertaken or proposed to be undertaken by the applicant. The shipping line is not the applicant and may be a foreign or Indian entity; the nature of its liability and the place of supply depend on that separate factual matrix. Consequently, the Authority refrained from answering (i) whether the shipping line is liable to pay GST on RCM, (ii) whether the export freight is taxable on RCM, (iii) whether such freight is an inter state supply subject to IGST, and (iv) the taxable value where freight is not known to the exporter. [Paras 9, 10]

Not answered as these issues do not relate to the applicant; no ruling on these questions.

Final Conclusion: The Authority ruled that the applicant (exporter) is not liable to pay GST under reverse charge on export freight for FOB exports; all other queries concerning the shipping line, taxability of export freight, inter state/IGST character and valuation were not answered because they do not pertain to the applicant.

Input Tax Credit - blocked credits under Section 17(5)(d) - plant and machinery exclusion under Section 17 - immovable property / permanently fastened - works contract service

Immovable property / permanently fastened - movable vs immovable - Rotary car parking system is an immovable property and not a movable chattel - HELD THAT: - The Authority applied the test of permanency articulated by the Supreme Court (whether the chattel can be used in the same position elsewhere or only after dismantling) and examined statutory definitions in the General Clauses Act, 1897 and the Transfer of Property Act, 1882. Although constituent parts can be dismantled, the system cannot be moved 'as it is' and is intended by the applicant to be enjoyed permanently with a specific civil foundation. Earlier judicial guidance that machinery embedded for permanent beneficial enjoyment is immovable was followed. On the facts - erection on a specific foundation within the applicant's land, absence of intention or plan to relocate, and functional dependence on the foundation - the rotary car parking was held to be permanently fastened and thus an immovable/civil structure. [Paras 8]

Rotary car parking system is an immovable property.

Blocked credits under Section 17(5)(d) - plant and machinery exclusion under Section 17 - works contract service - Input tax credit on the supply, installation and commissioning of the rotary car parking system is not admissible under Section 17(5)(d) - HELD THAT: - Having held the rotary parking to be an immovable/civil structure and having regard to the Explanation to Section 17, the Authority considered whether the system falls within the inclusion 'plant and machinery' or within the exclusion 'any other civil structures'. The primary object of the rotary system was found to be provision of parking space tied to and reliant on a civil foundation; its constituent parts and mode of erection rendered it analogous to civil structure rather than apparatus, equipment or machinery covered by the 'plant and machinery' inclusion. Further, the installation was found to amount to an addition to immovable property. Consequently the inward supply for construction/addition to immovable property (other than plant or machinery) falls within the ambit of Section 17(5)(d) and attracts the non availability of ITC. [Paras 9]

ITC is not admissible on the rotary car parking system under Section 17(5)(d).

Final Conclusion: The Authority ruled that the rotary parking system is an immovable civil structure and that input tax credit on its supply, installation and commissioning is barred by Section 17(5)(d) of the CGST/TNGST Acts; consequently ITC is not admissible.

Supply of warehoused goods before clearance for home consumption - Schedule III exclusion from supply - Free Trade Warehousing Zone (FTWZ) deemed outside the customs territory - Manufacture and Other Operations in Warehouse (MOOWR) - Deeming fiction and overriding effect of SEZ Act

Supply of warehoused goods before clearance for home consumption - Schedule III exclusion from supply - Free Trade Warehousing Zone (FTWZ) deemed outside the customs territory - Manufacture and Other Operations in Warehouse (MOOWR) - GST liability on sale of goods stored in a 3P FTWZ on 'as is where is' basis to a customer who clears the goods to a bonded MOOWR warehouse - HELD THAT: - The Authority examined statutory provisions and administrative guidance and found that FTWZs are part of the SEZ scheme and are deemed to be outside the customs territory of India and treated as customs bonded warehouses. Clause 8(a) inserted into Schedule III of the CGST Act with effect from 01.02.2019 provides that "supply of warehoused goods to any person before clearance for home consumption" is neither a supply of goods nor a supply of services. Prior CBIC guidance treating tax incidence at clearance became redundant after this amendment. The facts on record (including the into-bond Bill of Entry, the warehousing BOE and subsequent BOE for movement to a bonded warehouse under Rule 46(13)/MOOWR procedures) establish that the imported goods remained warehoused and were cleared to a bonded MOOWR warehouse without payment of customs duty until home-consumption. Given the SEZ deeming and the Schedule III exclusion, the sale of the warehoused goods in the present factual matrix does not constitute a taxable supply under GST. [Paras 9, 10]

GST is not leviable on the sale described, as the transaction is covered by clause 8(a) of Schedule III of the CGST Act.

Final Conclusion: Advance Ruling: GST will not be levied on the sale of goods warehoused in a 3P FTWZ on 'as is where is' basis to a customer who clears those goods to a bonded MOOWR warehouse, since such supply is excluded from levy under Schedule III (clause 8(a)).

Pre-packaged and labelled - pre-packaged commodity (Legal Metrology Act) - requirement to bear declarations under the Legal Metrology Act - GST levy on specified pre-packaged commodities - export treated as zero-rated supply (IGST Act)

Pre-packaged and labelled - pre-packaged commodity (Legal Metrology Act) - requirement to bear declarations under the Legal Metrology Act - GST levy on specified pre-packaged commodities - Export of processed frozen shrimps (HSN 0306) packed in individual printed pouch/box, further packed inside a printed master carton (up to 25 kgs each), attracts GST. - HELD THAT: - The Authority found that the inner packages (weighing 250 g to 2 kg) have a pre-determined quantity and are printed with buyer's design/label, thereby satisfying the definition of a 'pre-packaged commodity' under Section 2(1) of the Legal Metrology Act and falling within the expression 'pre-packaged and labelled' used in the GST rate notifications. There is no exemption in the Legal Metrology Act for packages meant for export from the obligation to bear prescribed declarations. The amendments to the rate notifications substitute 'pre-packaged and labelled' to align with the Legal Metrology Act and were intended to curb avoidance through brand disclaimers. The CBIC FAQs of 18.07.2022, while persuasive, confirm that individual retail packs intended for eventual sale to ultimate consumers remain 'pre-packaged and labelled' even when bundled in larger cartons. Consequently, pre-packaged and labelled frozen shrimps up to 25 kg capture the taxable entry and are liable to GST as per the amended notifications. The Authority therefore held that such printed inner packaging triggers GST liability irrespective of export. [Paras 8, 9]

Export of processed frozen shrimps packed in individual printed pouch/box (inner packs 250 g-2 kg) within printed master cartons (up to 25 kg) is taxable under GST.

Pre-packaged and labelled - pre-packaged commodity (Legal Metrology Act) - requirement to bear declarations under the Legal Metrology Act - GST levy on specified pre-packaged commodities - Export of processed frozen shrimps (HSN 0306) packed in individual plain pouch/box, further packed inside a plain master carton (up to 25 kgs each), attracts GST. - HELD THAT: - The Authority held that the absence of printing on the inner or outer pack does not alter the character of a package that embodies a pre-determined quantity. Where the commodity is pre-packed for an unknown ultimate buyer in quantities of 25 kg or less (per inner packs destined for retail sale), it falls within the scope of 'pre-packaged and labelled' as defined for GST purposes because such packages are required to bear declarations under the Legal Metrology Act and Rules. The CBIC FAQs clarify that even plain packs which require declarations under Legal Metrology rules are to be regarded as pre-packaged and labelled for GST levy. Therefore, plain inner packs and plain master cartons meeting these conditions are likewise taxable under the amended rate notifications, irrespective of export destination. [Paras 8, 9]

Export of processed frozen shrimps packed in individual plain pouch/box within plain master cartons (up to 25 kg) is taxable under GST.

Final Conclusion: The Authority ruled that processed frozen shrimps (HSN 0306) exported in pre-packed quantities of 25 kg or less (whether inner packs are printed or plain and whether outer master cartons are printed or plain) qualify as 'pre-packaged and labelled' under the Legal Metrology Act and, consequent to the amendments in the GST rate notifications, are liable to GST notwithstanding that the supply is by way of export.

Electronic commerce operator - electronic commerce - supply of services through an e commerce operator - deemed supplier and liability to pay tax under Section 9(5) - notification No. 17/2017-Central Tax (Rate) - notified categories of services - compulsory registration where supply is made through an e commerce operator under Section 24(ix) - literal rule of statutory interpretation

Electronic commerce operator - electronic commerce - literal rule of statutory interpretation - Whether the applicant qualifies as an electronic commerce operator - HELD THAT: - The Authority examined the statutory definitions of "electronic commerce" and "electronic commerce operator" and the factual matrix of the applicant's mobile platform. The applicant owns and manages the Vyavshay app through which partners register services, users book services specifying type, date, time and location, and the platform facilitates booking, confirmation and post service feedback. The terms of use restrict offline interaction and require transactions to be concluded through the app, evidencing control and facilitation by the platform. Applying the literal rule of interpretation to the statutory language, the Authority concluded that owning and operating a digital facility that facilitates the supply of services over a network brings the applicant within the definition of an electronic commerce operator. [Paras 7]

The applicant satisfies the definition of an electronic commerce operator.

Supply of services through an e commerce operator - deemed supplier and liability to pay tax under Section 9(5) - notification No. 17/2017-Central Tax (Rate) - notified categories of services - compulsory registration where supply is made through an e commerce operator under Section 24(ix) - Whether supplies made via the applicant's platform fall under Section 9(5) and on which segment the applicant is liable to pay and collect GST - HELD THAT: - Section 9(5) deems certain intra State supplies made through an e commerce operator to be taxable as if the operator were the supplier; Notification No.17/2017 specifies the notified categories. The Authority found that the legislative objective of shifting compliance burden from small service providers to ECOs (as reflected in GST Council materials) supports treating supplies made through such platforms as liable under Section 9(5). The factual features of Vyavshay - facilitation of booking, monitoring till completion, restriction on offline contact, and control aspects in the terms of use - demonstrate that notified services are supplied through the applicant's platform. The Authority further explained that the question whether consideration flows through the ECO is not determinative for applicability of Section 9(5) and that TCS/collection mechanics under Section 52 do not alter the statutory deeming under Section 9(5). Applying these principles, the Authority held that the applicant is liable to pay GST as the deemed supplier for notified services and also liable to pay GST on amounts charged by it for app usage; for supplies other than those notified under Section 9(5) the applicant is liable to pay GST only on the consideration it receives from partners for app usage. [Paras 8]

The supplies made through the applicant's platform fall within Section 9(5) read with Notification No.17/2017; the applicant is liable to pay GST as the deemed supplier for the notified services and on amounts charged for app usage, and for non notified services is liable only for tax on the consideration it receives from partners for use of the app.

Final Conclusion: Advance ruling: (1) the applicant is an electronic commerce operator; (2) notified services supplied through its Vyavshay platform are taxable with the applicant treated as the deemed supplier under Section 9(5) read with Notification No.17/2017, and the applicant must pay GST on the transaction value of such notified supplies and on amounts charged for app usage, while for other supplies it is liable only for tax on its consideration from partners.

Approval under Section 153D - Prior approval necessary for assessment in search cases - Application of mind - Each assessment year - Mechanical approval / rubber stamping

Approval under Section 153D - Application of mind - Each assessment year - Mechanical approval / rubber stamping - Validity of the approval granted under Section 153D of the Income Tax Act in the facts of this case - HELD THAT: - Section 153D requires prior approval to be granted with application of mind for "each assessment year" and the approving authority must independently verify and apply its mind to the draft assessment order. Earlier decisions of High Courts (including PCIT v. Sapna Gupta and Asst. CIT v. Serajuddin and Co.) and this Court's exposition in Anuj Bansal establish that approval cannot be a mere formality or a mechanical act; there must be some indication that the draft orders were perused and the statutory requirements satisfied. In the present matter the ITAT recorded that the approving authority accorded approval on the same day draft assessment orders were sent, granted a single approval purportedly covering multiple assessment years (AY 2011-12 to 2017-18) and granted approval for a large number of cases (43) on that single day. The approval letter did not indicate any perusal or application of mind to the particular draft orders. Having regard to the statutory mandate and the precedents, the High Court examined whether there was any substantial question of law warranting interference with the ITAT's finding that the approval was flawed. Applying the legal principle that approval must be for each assessment year with independent application of mind and noting the factual matrix of same day, aggregated approvals without indication of perusal, the Court found no substantial question of law raised by the Revenue's appeal. [Paras 11, 12, 16, 17, 18]

Revenue's challenge to the ITAT's finding on the approval under Section 153D is dismissed; no substantial question of law found to warrant interference.

Final Conclusion: The Revenue's appeal is dismissed; the High Court declines to interfere with the ITAT's conclusion that the assessment was vitiated for lack of valid approval under Section 153D.

Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income - addition sustained on estimated/adhoc basis - disallowance of purchases on ad hoc basis not amounting to furnishing inaccurate particulars - penalty cannot be levied on estimated income

Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income - addition sustained on estimated/adhoc basis - penalty cannot be levied on estimated income - Levy of penalty under section 271(1)(c) where the assessing officer made disallowance of purchases on an ad hoc/estimated basis - HELD THAT: - The Tribunal held that an addition sustained on an estimated or ad hoc basis does not amount to furnishing inaccurate particulars of income within the meaning of Section 271(1)(c). The Assessing Officer had made an adhoc disallowance of alleged bogus purchases and did not discredit the sales; subsequent appellate orders curtailed the disallowance (CIT(A) to 17.5% and the Tribunal to 8%). The Tribunal relied on the legal principle that penalty for furnishing inaccurate particulars cannot be levied where the assessment adjustment is purely estimated, and specifically noted and relied upon the ratio of the jurisdictional High Court in M/s Nikunj Eximp Enterprises Vs Cit to support this conclusion. Applying this principle to the facts, the Tribunal set aside the CIT(A)'s partial confirmation and directed deletion of the penalty levied by the AO. [Paras 7]

Penalty imposed under section 271(1)(c) on the basis of ad hoc/estimated disallowance of purchases is not sustainable and is deleted.

Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income - disallowance of purchases on ad hoc basis not amounting to furnishing inaccurate particulars - Applicability of the above conclusion to the identical appeals for A.Y. 2010-11 and A.Y. 2011-12 - HELD THAT: - The Tribunal observed that facts and circumstances for A.Y. 2010-11 and A.Y. 2011-12 are identical to A.Y. 2009-10 (save for variance in figures). Therefore, the legal finding that penalty cannot be levied on an estimated addition applies mutatis mutandis to those assessment years. Consequently, the grounds of appeal in those years are allowed in favour of the assessee. [Paras 10]

Grounds of appeal for A.Y. 2010-11 and A.Y. 2011-12 allowed and penalties deleted on the same legal basis.

Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income - penalty cannot be levied on estimated income - Revenue's cross appeal challenging the CIT(A)'s reduction/deletion of penalty for A.Y. 2010-11 - HELD THAT: - The Tribunal, having decided the legal question in the assessee's favour, considered the revenue's contention but found no new cogent evidence to overturn the conclusion. Reiterating that ad hoc estimated disallowances do not satisfy the statutory requirement for levy of penalty under Section 271(1)(c), the Tribunal dismissed the revenue's grounds of appeal which merely sought to uphold penalty despite the additions being estimated. [Paras 13]

Revenue appeal dismissed; CIT(A)'s reduction/deletion of penalty for A.Y. 2010-11 upheld.

Final Conclusion: The Tribunal allowed the assessee's appeals for A.Y. 2009-10, 2010-11 and 2011-12 by deleting penalties under Section 271(1)(c) because the additions were made on an estimated/ad hoc basis and such estimations do not constitute furnishing inaccurate particulars; the revenue's cross appeal for A.Y. 2010-11 was dismissed.

No order against deceased - Section 159 - legal representative to be deemed assessee and continuation of proceedings - Nullity of proceedings in name of deceased - Remand for compliance with Section 159 and fresh adjudication

No order against deceased - Nullity of proceedings in name of deceased - Validity of the order of the CIT(Appeals) passed in the name of the deceased assessee - HELD THAT: - The Tribunal found on the record that the assessee had died on 01.10.2020 and that this fact was not brought to the notice of the department or the first appellate authority. In view of the settled principle that no order can be passed against a dead person and that proceedings against a deceased person must be continued against his legal representative, the order passed by the CIT(Appeals) in the name of the deceased assessee suffers from a fundamental defect and is a nullity. The Tribunal relied on the scheme of Section 159, which deems the legal representative to be the assessee for continuation of proceedings and imposes duties on the department to ensure compliance with that provision before passing any order. Consequently, the impugned appellate order cannot be sustained and must be set aside. [Paras 9, 10]

Order of the CIT(Appeals) dated 28.02.2024 is held to be a nullity as it was passed in the name of the deceased assessee.

Section 159 - legal representative to be deemed assessee and continuation of proceedings - Remand for compliance with Section 159 and fresh adjudication - Post-nullity relief and procedural direction for further disposal of the appeal - HELD THAT: - Having held the CIT(Appeals) order to be a nullity, the Tribunal directed that the matter be remitted to the CIT(Appeals) for fresh disposal after impleading the legal heirs of the deceased assessee. The Tribunal noted authority indicating that once an assessment or appellate order is held to be a nullity, the appropriate course is to direct compliance with Section 159 and remand to the assessing or appellate authority so that proceedings may be continued from the stage at which they stood on the date of death. The remand requires the CIT(Appeals) to afford the legal heirs a reasonable opportunity of hearing and to decide the appeal de novo with the legal heirs on record. [Paras 10]

Matter remanded to the CIT(Appeals) with direction to implead the legal heirs and to dispose of the appeal afresh after affording them a reasonable opportunity of being heard.

Final Conclusion: The appeal is allowed for statistical purposes: the appellate order dated 28.02.2024 is set aside as a nullity for having been passed in the name of the deceased assessee; the matter is remitted to the CIT(Appeals) to implead the legal heirs and to decide the appeal afresh after complying with Section 159 and affording a reasonable opportunity of hearing.

Addition on account of bogus purchases - onus to prove genuineness of transactions - accommodation entries and benami concerns - precedential effect of coordinate-bench ITAT decisions

Addition on account of bogus purchases - precedential effect of coordinate-bench ITAT decisions - onus to prove genuineness of transactions - Sustainment of addition restricted to 6% of purchases treated as bogus and dismissal of Revenue's appeal. - HELD THAT: - The Assessing Officer made an addition of 25% of total purchases treating them as bogus. The Commissioner of Income Tax (Appeals) reduced the disallowance to 6% relying on a coordinate-bench decision of the ITAT, Surat in Pankaj K. Chaudhary (lead in a batch of appeals) which sustained disallowance at 6% of bogus purchases. The Revenue contended that the onus lay on the assessee to prove genuineness and urged restoration of the AO's 25% addition. The Tribunal examined the facts and noted that the present case is squarely covered by the earlier ITAT, Surat decision and by the assessee's own related matters decided in the same batch, with no change in facts warranting a different conclusion. Applying the precedential effect of the coordinate-bench ruling, and observing that the CIT(A) had followed that decision in restricting the addition, the Tribunal confirmed the disallowance at 6% of the purchases treated as bogus and dismissed the Revenue's appeal.

Addition sustained at 6% of purchases treated as bogus; Revenue's appeal dismissed.

Final Conclusion: The Tribunal, following the coordinate-bench ITAT precedent and the assessee's own earlier adjudications in the same batch, confirmed the CIT(A)'s reduction of the AO's 25% addition to 6% and dismissed the Revenue's appeal for AY 2009-10.

Penalty under section 271(1)(c) - additions based on estimation - absence of definite finding on quantum of concealment - recomputation of penalty

Penalty under section 271(1)(c) - additions based on estimation - absence of definite finding on quantum of concealment - Whether penalty under section 271(1)(c) is sustainable where the additions confirmed against the assessee are founded solely on estimation without any definite finding on the quantum of concealed income - HELD THAT: - The Tribunal observed that the sequence of additions - AO treating the entire disputed purchases as bogus, CIT(A) sustaining a 5% net profit, and the Tribunal ultimately restricting the addition to 5% of the disputed purchases - shows that the entire exercise was founded on estimation and did not produce a definite finding on the quantum of concealment. Relying on binding and persuasive precedents of the jurisdictional High Court and coordinate benches, the Tribunal held that penalty under section 271(1)(c) cannot be sustained where the addition is purely estimated and there is no conclusive finding as to the amount of income concealed. Applying that principle to the facts, the Tribunal concluded that the penalty confirmed by the CIT(A) was not sustainable. [Paras 6, 7]

Penalty under section 271(1)(c) set aside as unsustainable because the additions were based purely on estimation and there was no definite finding on the quantum of concealment

Recomputation of penalty - Extent and manner of further proceedings following deletion of penalty - HELD THAT: - Having held the penalty unsustainable, the Tribunal directed that the Assessing Officer be directed to recompute the penalty. The direction contemplates further administrative action limited to recomputation in accordance with the Tribunal's findings and the legal position adopted, rather than reinstatement of the deleted penalty on the same estimated basis. [Paras 7, 8]

Matter remitted to the AO for recomputation of penalty in conformity with the Tribunal's decision

Final Conclusion: The Tribunal partly allowed the appeal: penalty under section 271(1)(c) was held unsustainable because the additions were based solely on estimation without any definite finding of concealed income; the AO is directed to recompute the penalty accordingly.

Service of notice under section 282(1) of the Act - service through ITBA portal - dismissal of appeal for non-prosecution - duty to decide merits in ex-parte orders - remand for de novo disposal

Service of notice under section 282(1) of the Act - service through ITBA portal - Validity of service of hearing notices issued through the ITBA portal - HELD THAT: - The Tribunal held that issuance of hearing notices via the ITBA portal did not constitute valid service in the manner required by section 282(1) of the Act. Reliance was placed on the Punjab & Haryana High Court decision in Munjal BCU Centre of Innovation and Entrepreneurship Vs. CIT (Exemptions) which held that merely placing a notice on the e-portal cannot be treated as effective communication of notice and that natural justice requires actual service in the prescribed manner. On the facts, the CIT(A) had issued hearing notices through ITBA but there was no valid service upon the assessee; accordingly the notices were not validly served. [Paras 5]

Notified hearing notices served through the ITBA portal were held invalid; service was not effected in accordance with section 282(1) and the matter requires fresh hearing.

Dismissal of appeal for non-prosecution - duty to decide merits in ex-parte orders - Validity of CIT(A)'s summary dismissal of the appeal in limine for non-prosecution without deciding the merits - HELD THAT: - The Tribunal found that the CIT(A) dismissed the appeal in limine for non-prosecution without considering the merits of the transfer pricing addition. This course was held to be contrary to settled law; a CIT(A) is not empowered to dismiss an appeal for non-prosecution without addressing the substantive issues and, even in cases where an ex parte order is made, the appellate authority should deal with the merits of the controversy. The Tribunal referenced authority to that effect and concluded that the CIT(A)'s summary dismissal was legally impermissible. [Paras 6]

The CIT(A)'s dismissal of the appeal in limine for non-prosecution, without adjudication on the merits, was held to be contrary to law.

Remand for de novo disposal - Remand for fresh consideration of the transfer pricing addition - HELD THAT: - In view of the invalidity of service and the CIT(A)'s failure to decide the merits, the Tribunal directed that the appeal be remitted to the file of the CIT(A) for de novo disposal. The remand requires the CIT(A) to provide the assessee an opportunity of hearing, examine the merits of the transfer pricing adjustment afresh and pass a speaking order in accordance with law. [Paras 7]

The matter was remitted to the CIT(A) for de novo disposal in accordance with law.

Final Conclusion: The appeal is partly allowed for statistical purposes: notices issued via the ITBA portal were held not to constitute valid service and the CIT(A)'s summary dismissal for non-prosecution without adjudicating merits was unlawful; the matter is remitted to the CIT(A) for de novo disposal of the issues relating to the transfer pricing adjustment for Assessment Year 2015-16.

Requirement of incriminating material for search-based additions - addition under section 68 treated as income from undisclosed sources - reassessment proceedings under section 153A - application of Supreme Court precedent in Abhisar Buildwell on completed/unabated assessments

Requirement of incriminating material for search-based additions - addition under section 68 treated as income from undisclosed sources - application of Supreme Court precedent in Abhisar Buildwell on completed/unabated assessments - Whether additions made under section 153A read with section 143(3) by treating bank deposits as income under section 68 could be sustained in the absence of any incriminating material found during the search - HELD THAT: - The Tribunal found that the Assessing Officer made additions after verifying the bank statements but the assessment order contained no reference to any incriminating material discovered during the search necessary to sustain search-based additions. Relying on the ratio of the Hon'ble Supreme Court in Abhisar Buildwell, which holds that additions cannot be made in respect of completed/unabated assessments where no incriminating material was found under section 132 or requisition under section 132A, the Tribunal concluded that the additions could not be sustained. The Tribunal noted that a Coordinate Bench had earlier deleted similar addition in the assessee's wife's case and, applying the Supreme Court precedent, deleted the additions confirmed by the lower authorities. [Paras 6, 7]

Deletion of the additions made under section 68 (totaling Rs. 17,00,000) upheld; the appeal is allowed.

Final Conclusion: The appeal is allowed and the additions confirmed by the Assessing Officer and the CIT(A) are deleted following the Supreme Court precedent in Abhisar Buildwell; the assessment is thus set aside to the extent of the deleted additions.

Requirement of recording satisfaction under Section 151 - Reopening of assessment under Section 148 - Mechanical approval versus application of mind - Validity of sanction for reassessment proceedings - Consequences of invalid sanction on reassessment

Requirement of recording satisfaction under Section 151 - Mechanical approval versus application of mind - Reopening of assessment under Section 148 - Validity of sanction for reassessment proceedings - Sanction granted under Section 151 was not validly recorded and reopening under Section 148 was therefore invalid. - HELD THAT: - The Tribunal examined the approval placed on record in the proforma where the Joint Commissioner recorded only "Yes, I am satisfied." Applying established principle that the sanctioning authority must apply its mind and record satisfaction that "it is a fit case for issuance of notice under Section 148," the Tribunal held that a mere perfunctory or ritualistic endorsement without recording the requisite satisfaction amounts to mechanical approval. Following the ratio that the protection in Section 151 is a substantive safeguard against arbitrary reopenings, the Tribunal concluded that the approval in the present case did not meet statutory requirements and hence the reassessment proceedings initiated by issuance of notice under Section 148 were invalid. The Tribunal expressly allowed the assessee's jurisdictional ground and disallowed further adjudication of other grounds pending the validity of reopening. [Paras 8, 9, 11]

Ground No. 3 of the Cross Objection allowed; sanction under Section 151 held invalid as mechanically recorded and reassessment proceedings under Section 148 quashed.

Final Conclusion: The Cross Objection is partly allowed on the jurisdictional ground: the approval under Section 151 was held to be mechanically recorded and invalid, rendering the notice under Section 148 and consequent reassessment proceedings unsustainable; Revenue's appeal is dismissed.

Deduction under section 80G - Corporate Social Responsibility and Explanation 2 to section 37(1) - Extension of time for claiming donations for AY 2020-21 under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Timing of claiming TDS credit under section 199 and Rule 37BA

Deduction under section 80G - Corporate Social Responsibility and Explanation 2 to section 37(1) - Whether donations forming part of CSR expenditure are eligible for deduction under section 80G - HELD THAT: - The Tribunal held that disallowance of CSR expenditure under Explanation 2 to section 37(1) does not preclude a claim for deduction under section 80G when the statutory conditions for section 80G are otherwise satisfied. The Explanatory Memorandum to Finance (No.2) Act, 2014 explains Parliament's intent to disallow CSR as a business deduction because it is an application of income, but that does not eliminate the statutory right to claim a Chapter VIA deduction at the stage of computing total income. The Tribunal observed that the legislative scheme places section 80G in Chapter VIA, which applies after gross total income is computed, and that the limited exceptions in section 80G(2) (relating to two specified funds) indicate that other eligible donations, even if made in pursuance of CSR, remain capable of qualifying for deduction. The mandatory/penal character of CSR obligations does not change the philanthropic/voluntary nature required for section 80G if there is no reciprocal benefit and the other conditions of section 80G are met. The Revenue advanced no contrary binding decision and the Tribunal followed consistent coordinate-bench precedents holding that claim under section 80G may be allowed in respect of donations that formed part of CSR, subject to satisfaction of the statutory conditions of section 80G. [Paras 5, 6, 7]

Disallowance confirmed by the authorities was reversed insofar as CSR-linked donations are capable of being claimed under section 80G if the requirements of section 80G are satisfied; the appellant's ground on this issue is sustained.

Extension of time for claiming donations for AY 2020-21 under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Deduction under section 80G - Whether donations paid after 31 March 2020 but on or before 30 July 2020 are allowable for deduction under section 80G in AY 2020-21 - HELD THAT: - The Tribunal noted that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the due date for making donations eligible for claim under section 80G in the return for AY 2020-21 to 30 July 2020. It observed that the CIT(A) failed to take this extension into account when disallowing donations paid after 31 March 2020. The Revenue did not dispute applicability of TOLA. Accordingly donations made up to 30 July 2020 qualify for consideration in AY 2020-21 for section 80G purposes, subject to satisfaction of the statutory conditions. [Paras 4, 5]

Donations made after 31 March 2020 but on or before 30 July 2020 are eligible to be considered for deduction under section 80G for AY 2020-21 in view of the TOLA 2020 extension; disallowance on the sole ground of payment after 31.03.2020 is unsustainable.

Timing of claiming TDS credit under section 199 and Rule 37BA - Whether TDS credit must be allowed in the assessment year in which the corresponding income is offered to tax (not deferred to the year in which TDS appears in Form 26AS) - HELD THAT: - The Tribunal accepted the assessee's submission that under section 199 read with Rule 37BA(3)(ii), credit for tax deducted at source is available in the assessment year for which the income is assessable. Where the assessee follows accrual accounting and has offered the relevant income to tax in AY 2020-21, the corresponding TDS credit (even if reflected in Form 26AS in the subsequent year) must be allowed in AY 2020-21. The assessing officer denied the claimed credit without giving opportunity or reasons; the CIT(A) dismissed the claim for alleged lack of reconciliation without granting a chance to furnish details. The Tribunal relied on a coordinate-bench precedent involving the assessee's group and applied the combined reading of section 199(3) and Rule 37BA(3) to direct allowance of the claimed TDS credit. [Paras 8, 9]

The claimed TDS credit of Rs. 3,87,50,028 was to be allowed in AY 2020-21 because the corresponding income was offered to tax in that year; the assessing officer's/CIT(A)'s denial is reversed.

Final Conclusion: The appeal is allowed: the Tribunal sustained the assessee's claim that CSR-linked donations may qualify for deduction under section 80G if statutory conditions are satisfied (and donations paid up to 30 July 2020 may be claimed for AY 2020-21 under TOLA 2020), and directed allowance of the TDS credit claimed in AY 2020-21 where the corresponding income was offered to tax in that year; the assessing officer's and appellate authority's adverse findings on these points are set aside.

Rejection of books of account and estimation of income under section 145(3) - application of Rule 46A of the Income Tax Rules, 1962 - precedential consistency and binding coordinate-bench orders in assessee's own case - determination and fixation of profit rate on contract receipts - business exigency as a defence for disallowance of interest (S.A. Builders principle) - disallowance under section 14A read with Rule 8D - disallowance of interest under section 36(1)(iii) - treatment of interest income as income from other sources and set-off against finance charges - disallowance under section 40A(3) for cash payments - allowability of business promotion expenditure when income is estimated - deduction under section 80-IA(4)

Rejection of books of account and estimation of income under section 145(3) - application of Rule 46A of the Income Tax Rules, 1962 - precedential consistency and binding coordinate-bench orders in assessee's own case - determination and fixation of profit rate on contract receipts - Validity of CIT(A)'s rejection of books and direction to estimate income and the appropriate rate of profit for contract receipts - HELD THAT: - The Tribunal held that the learned CIT(A) was justified in resorting to estimation because he relied on a consistent, long standing practice in the assessee's own case rather than on fresh evidence, and therefore there was no breach of Rule 46A. The Tribunal accepted that precedent in the assessee's earlier years authorised estimation but, applying the principle that profit rates for estimation must reflect material changes in relevant factors, modified the rate. On the evidence of substantially higher finance charges in later years, the Tribunal reduced the profit rate to 11.5% before depreciation (from the 12.5% directed by CIT(A)) as a fair and reasonable estimate for the assessment year under consideration. [Paras 5, 6, 7, 8]

Direction to estimate income upheld; profit rate modified to 11.5% before depreciation for contract works executed by the assessee.

Deduction under section 80-IA(4) - precedential consistency and binding coordinate-bench orders in assessee's own case - Allowability of deduction under section 80-IA(4) for the assessment year - HELD THAT: - The Tribunal found that the issue was covered by earlier coordinate bench orders in the assessee's own case and that there was no change in facts or circumstances to warrant a different conclusion. The learned CIT(A) examined the works undertaken and, following binding precedents and relevant CBDT guidance, held the assessee entitled to the deduction, a conclusion the Tribunal upheld in the absence of distinguishing material. [Paras 10, 11, 12, 13, 14]

Deduction under section 80-IA(4) allowed; the CIT(A)'s order upheld.

Business exigency as a defence for disallowance of interest (S.A. Builders principle) - disallowance under section 14A read with Rule 8D - disallowance of interest under section 36(1)(iii) - Validity of disallowance of interest under section 14A/Rule 8D and section 36(1)(iii) in respect of funds advanced to joint ventures/sister concerns - HELD THAT: - On a factual review the Tribunal found no contrary material to the CIT(A)'s conclusion that advances and investments in joint ventures (SPVs) were necessitated by business exigency pursuant to NHAI requirements and the constitution of SPVs to execute contracts. Applying the S.A. Builders principle, the CIT(A) concluded, and the Tribunal agreed, that the funds were deployed for business purposes and that disallowance of interest was not warranted. Consequently, the additions made by the Assessing Officer under sections 14A/Rule 8D and 36(1)(iii) were deleted. [Paras 16, 17, 18, 19, 20]

Disallowances under section 14A/Rule 8D and section 36(1)(iii) deleted; CIT(A)'s deletion upheld.

Treatment of interest income as income from other sources - set-off of interest receipts against finance charges in profit and loss account - Whether interest receipts shown in trial balance should be taxed as income from other sources or treated as reduction of finance charges - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the interest received was already adjusted against finance charges in Schedule 16 of the financial statements and therefore could not be taxed separately. The department did not produce material to contradict the factual finding that the interest had been reduced from the finance charge figure debited, so the addition was not sustainable. [Paras 21, 22, 23, 24]

Addition of interest income deleted; CIT(A)'s deletion confirmed.

Disallowance under section 40A(3) for cash payments - estimation of income and inapplicability of section 40A(3) - Validity of disallowance under section 40A(3) for alleged cash payments - HELD THAT: - The Tribunal noted binding High Court authority that when income is determined by estimation, section 40A(3) disallowance cannot be invoked. Independently, the CIT(A) found on facts that the cash payments were made at remote site locations lacking banking facilities for legitimate site-related exigencies; this factual finding was not controverted by the Revenue. On both legal and factual bases the disallowance was untenable. [Paras 25, 26, 29, 30]

Disallowance under section 40A(3) deleted; CIT(A)'s finding upheld.

Allowability of business promotion expenditure when income is estimated - Allowability of business promotion expenses disallowed by AO - HELD THAT: - The CIT(A) accepted the assessee's explanation that the expenses were incurred by directors and staff while visiting sites and that, given estimation of income by rejecting books, no separate addition was warranted. The Tribunal agreed that the CIT(A)'s factual conclusion was not shown to be erroneous and that no further addition should be made when income was estimated. [Paras 32, 33, 34, 35, 36]

Business promotion expenses allowed; no interference with CIT(A)'s order.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal: estimation of income was sustained but the profit rate for contract receipts was reduced to 11.5% before depreciation for AY 2011-12; the allowance under section 80-IA(4) and deletions of various disallowances (sections 14A/Rule 8D, section 36(1)(iii), section 40A(3)), the deletion of the interest income addition, and allowance of business promotion expenses were all upheld.

Admission of additional evidence under Rule 46A of the Income tax Rules - Claim of being prevented by sufficient cause for adducing evidence - Reopening of assessment and notice under section 147/148-validity of reassessment - Unexplained cash deposits and taxation under the doctrine of section 69A - Application of net profit rate to estimate taxable income from business receipts - Assessment completed ex parte under section 144 and consequences for adducing evidence

Admission of additional evidence under Rule 46A of the Income tax Rules - Claim of being prevented by sufficient cause for adducing evidence - Assessment completed ex parte under section 144 and consequences for adducing evidence - Admissibility of additional evidence filed before the Commissioner (Appeals) under Rule 46A - HELD THAT: - The Commissioner (Appeals) admitted documents and purchase/sale bills produced by the assessee under sub rule (1)(b) of Rule 46A on the ground that the assessee was prevented by sufficient cause from producing the evidence before the Assessing Officer, particularly because notices were sent to a non functional postal address/e mail and the assessment was completed ex parte. The CIT(A) recorded reasons in writing, considered the Assessing Officer's remand report and the assessee's rejoinder, and relied on precedents permitting admission of additional evidence where the appellant was so prevented. The Tribunal finds no infirmity in the CIT(A)'s exercise of discretion to admit the additional evidence, noting that the AO did not point out any defect in the documents in remand proceedings and that admission was necessary for disposal of the appeal on merits. [Paras 5, 11, 12, 14, 15]

The admission of additional evidence under Rule 46A was upheld; the CIT(A) correctly admitted the evidence on the ground of sufficient cause and recorded reasons.

Unexplained cash deposits and taxation under the doctrine of section 69A - Application of net profit rate to estimate taxable income from business receipts - Assessment completed ex parte under section 144 and consequences for adducing evidence - Whether entire cash deposits should be treated as unexplained income under section 69A or assessed by applying a reasonable net profit rate - HELD THAT: - The Assessing Officer treated total bank deposits as unexplained money and added the entire amount under section 69A because no explanation was furnished during assessment. On appellate evidence the assessee demonstrated the business modus operandi-trading in bullion in the name 'Riddhi Siddhi Jewels' on commission-producing purchase/sale bills, bank statements and confirmations linking deposits with subsequent payments to sellers. The CIT(A) held that entire receipts could not be regarded as profit and, in light of the reconciliations and precedents, applied a reasonable net profit rate to total deposits. Because the assessee did not conclusively establish the precise net profit, the CIT(A) estimated profit at 1.2% to safeguard revenue. The Tribunal found that the AO ignored the debit/payment side of bank statements and that the assessee had sufficiently explained the source of deposits; no defects were pointed out in remand. Applying settled principle that gross receipts cannot be equated with income, the Tribunal sustained the CIT(A)'s direction to compute taxable income by applying the net profit rate of 1.2% on total deposits. [Paras 16, 17, 18, 19, 20]

The addition treating entire deposits as unexplained under section 69A was reduced by sustaining the CIT(A)'s direction to apply a net profit rate of 1.2% on total deposits; the AO's addition was modified accordingly.

Reopening of assessment and notice under section 147/148-validity of reassessment - Assessment completed ex parte under section 144 and consequences for adducing evidence - Validity of reopening of assessment and notices issued under section 148 - HELD THAT: - The Commissioner (Appeals) had sustained the validity of the notice under section 148 and the reassessment; the Tribunal, having considered the record and the fact that the assessment proceeded ex parte, took cognizance of the CIT(A)'s reasoning in admitting evidence and deciding merits. The Tribunal observed that the CIT(A) considered the service issues raised by the assessee and the remand report, and found no ground to interfere with the CIT(A)'s approach in the proceedings before it. [Paras 8, 11, 12, 14]

The findings sustaining the validity of reopening/notice under section 148 were effectively maintained; no interference with the CIT(A)'s conclusions on the validity of reassessment was made.

Application of net profit rate to estimate taxable income from business receipts - Whether the same conclusions on admission of evidence and application of net profit rate apply to Assessment Year 2012 13 - HELD THAT: - The facts and issues for AY 2012 13 were found to be similar to those of AY 2011 12. The Tribunal applied its reasoning and conclusions in ITA No. 94/Jodh/2020 (AY 2011 12) mutatis mutandis to ITA No. 153/Jodh/2020 (AY 2012 13), thereby sustaining the CIT(A)'s treatment for the later year as well. [Paras 21]

The Tribunal applied the same findings mutatis mutandis to AY 2012 13; the CIT(A)'s order for that year was sustained.

Assessment completed ex parte under section 144 and consequences for adducing evidence - Application of net profit rate to estimate taxable income from business receipts - Challenge in cross objection regarding confirmation of addition (ground pressed in ITA No.114/CO No.03) - HELD THAT: - Grounds 1-3 before the Tribunal were not pressed and were dismissed as not pressed. Ground 4 challenged the CIT(A)'s confirmation of the addition quantified by application of net profit rate (1.2%). The Tribunal found the CIT(A)'s estimation to be well reasoned and judicious, noting that the CIT(A) accepted additional evidence, reconciliations and applied a modest upward adjustment from the assessee's claimed 1% to 1.2% to cover potential revenue leakage. The Tribunal sustained that estimate as fair and reasonable. [Paras 22, 23]

The cross objection was rejected insofar as it sought to disturb the CIT(A)'s application of 1.2% net profit; the addition so computed was sustained.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals): admissibility of additional evidence under Rule 46A was correctly allowed on the ground of sufficient cause; the Assessing Officer's addition of entire cash deposits under section 69A was rightly reduced by applying a net profit rate (1.2%) after acceptance of appellate evidence; the same conclusions were applied to the second assessment year; all cross appeals and cross objections were dismissed.

Reopening of assessment - reassessment proceedings - bogus purchases / accommodation entries - onus of investigation and verification by Assessing Officer - proof of genuineness of transactions - treatment of profit element in alleged bogus purchases - concurrent findings of fact by CIT(A) and ITAT

Reopening of assessment - bogus purchases / accommodation entries - onus of investigation and verification by Assessing Officer - proof of genuineness of transactions - Addition of purchases as bogus solely on information from Sales Tax Department without further enquiries and investigation by the AO - HELD THAT: - The Court accepted the concurrent findings of CIT(A) and the ITAT that the assessee produced ledger copies, purchase bills, bank statements, proof of payments by cheque, PAN details and other documentation to establish the transactions. The Assessing Officer had relied on information from the Sales Tax Department to characterise the purchases as non-genuine but did not issue enquiries under Section 133(6) to suppliers or undertake further investigation. The Court held that merely because the assessee could not produce the dealers in person, the entire purchases could not be treated as bogus; the AO was obliged to make further inquiries to ascertain genuineness. Questions of whether parties or purchases were bogus are essentially factual and, on the material before the AO, did not justify treating the whole amount as non-genuine.

Addition treating entire purchases as bogus set aside to the extent the AO failed to make requisite investigations; concurrent factual findings that transactions were supported by documents upheld.

Treatment of profit element in alleged bogus purchases - concurrent findings of fact by CIT(A) and ITAT - Whether only the profit element in the alleged bogus purchases could be added to the assessee's income and whether the ITAT's estimate of 12.5% gross profit was liable to be interfered with - HELD THAT: - The Court noted that the AO did not dispute the sales made by the assessee from the impugned purchases; in such circumstances, case law supports treating only the profit element arising from alleged bogus purchases as taxable income. The CIT(A) estimated gross profit at 12.5% and the ITAT accepted and limited the addition to that percentage. That allocation and estimate were findings of fact for the quasi-judicial authorities. Absent demonstrable perversity or error in principle in the estimate, the Court declined to interfere with the ITAT's direction limiting the addition to 12.5% of purchases.

Addition limited to the profit element as assessed by the ITAT at 12.5% upheld; no interference with ITAT's factual estimate.

Final Conclusion: The High Court dismissed the appeals, upholding the ITAT's restriction of the addition to the profit element (12.5%) and holding that the Assessing Officer could not treat entire purchases as bogus without conducting further enquiries and verification.

Non-scheduled (passenger) services - non-scheduled (charter) services - Condition No.104 of Notification No.21/2002 - classification as private aircraft - remuneration as determinative test for air transport service - requirement of issuance of passenger tickets - confiscation under Section 111 of the Customs Act, 1962

Non-scheduled (passenger) services - non-scheduled (charter) services - Condition No.104 of Notification No.21/2002 - Whether a non-scheduled (passenger) permit holder can lawfully conduct charter (non-scheduled) operations and whether such use falls within Condition No.104 of the exemption notification - HELD THAT: - The Tribunal held that the question is settled by the Larger Bench decision in M/s. V.R.L. Logistics and related authorities: paragraph 9 records that the issue is no longer res integra. The Larger Bench reasoning (reproduced at paragraph 10 of this order) establishes that the definitions and CAR 1999 expressly permit a non-scheduled (passenger) operator to conduct charter operations (see paras 63, 68-72 of the Larger Bench quoted in the order). Chartering the entire aircraft is a mode of rendering passenger service; nothing in Condition No.104, the Aircraft Rules or the Civil Aviation Requirements excludes charter operations from the ambit of non scheduled (passenger) services. DGCA clarifications (quoted at paragraph 15) corroborate that NSOP (Passenger) permit holders may undertake charter operations. Applying these authorities and regulatory provisions, the Tribunal concluded that use of the aircraft for charter operations is covered by the undertaking under Condition No.104 and does not constitute a breach of the exemption condition. [Paras 9, 10, 15]

A non-scheduled (passenger) permit holder can lawfully conduct charter operations and such use falls within the scope of Condition No.104; therefore charter use did not violate the exemption condition.

Classification as private aircraft - remuneration as determinative test for air transport service - Whether the aircraft was a private aircraft or was used for private purpose - HELD THAT: - The Tribunal applied the test articulated by the Larger Bench: an aircraft used for carriage of persons for remuneration is public transport and not a private aircraft (paragraphs 11-12 reproduced and applied at paragraphs 12-14). The factual findings recorded (paragraph 13) show the aircraft was time shared with group companies under commercial arrangements, was made available to external customers for charter on commercial terms, charged on tariffed/commercial basis and service tax was discharged on such services. The Larger Bench observations that absence of a published tariff does not render use private and that personnel of group companies can be 'members of the public' were applied. On these facts, the Tribunal found the aircraft was not a private aircraft and was not used for private purposes. [Paras 12, 13, 14]

The aircraft was not a private aircraft and was not used for private purpose.

Condition No.104 of Notification No.21/2002 - confiscation under Section 111 of the Customs Act, 1962 - Whether the respondent violated Condition No.104 so as to warrant demand of differential duty, confiscation, interest and penalty - HELD THAT: - The Tribunal examined the terms of Condition No.104 and the Explanation thereto (paragraph 7) together with CAR 1999/2000 and the Larger Bench ratio. Finding that the aircraft was used for non scheduled (passenger) services (including charter) and that such use satisfied the dual tests set out by the Larger Bench - that the use was for air transport service and that it was other than scheduled passenger service (paragraph 14) - the Tribunal concluded there was no violation of Condition No.104. Consequently, the grounds for confiscation and for demand of differential duty and penalties fell away. The Tribunal also distinguished the decision relied upon by Revenue (East India Hotels) on facts (absence of remuneration) and held it inapplicable here (paragraph 16). [Paras 3, 14, 18]

There was no violation of Condition No.104; the demand for differential duty, confiscation, interest and penalty do not survive.

Final Conclusion: The impugned order of the Commissioner dropping the demand was affirmed: the aircraft was validly used for non scheduled (passenger) services (including charter), it was not a private aircraft, and there was no contravention of Condition No.104; all departmental appeals are dismissed.

Rejection of declared value - transaction value - sequential application of Customs Valuation Rules - surrogate value / rule 12 methodology - relationship influencing price / rule 3(4) - assessable value - show cause notice and fresh adjudication

Rejection of declared value - transaction value - Validity of the rejection of the declared transaction value and the re-determination of assessable value - HELD THAT: - The adjudication order rejected the declared transaction value and re-determined assessable value without adequate legal foundation or required reasoning. The order lacks indication of particulars of the imports considered, contemporaneity of benchmark bills of entry, and meaningful assessment of the appellant's transfer pricing submissions. Superficial reliance on comparisons with third party imports and references to expressions such as 'normal price' and 'arms length', without mapping these to the statutory framework, do not satisfy the requirements for rejecting declared value under section 14 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Tribunal found that the rejection was therefore not in consonance with section 14 and the Rules and concluded that the impugned adjudication cannot stand. [Paras 6, 7, 14]

Rejection of declared value and re-determination set aside for want of lawful basis; impugned order quashed on this ground.

Sequential application of Customs Valuation Rules - assessable value - Whether the adjudicating authority followed the prescribed sequence of valuation methods under the Customs Valuation Rules - HELD THAT: - The Rules require ascertainment of assessable value by recourse to rule 4 to rule 9 sequentially, with documentary and factual support. The impugned order however referred to rule 4 and rule 9 together, without specifying for which imports or models each rule was applied, and without discussing adjustments or correctness of derivational computations when adopting transaction values of 'identical goods'. This absence of step wise application and reasoned discussion renders the valuation methodology legally infirm. [Paras 7, 13]

Failure to follow the required sequential valuation process renders the re-determination unsustainable.

Surrogate value / rule 12 methodology - relationship influencing price / rule 3(4) - Appropriateness of mixing or conflating the alternative valuation routes under rule 3(4) and rule 12 (and related rules) - HELD THAT: - The Tribunal held that the impugned order erred in not distinguishing between the two mutually exclusive statutory options for adopting a 'substitute value'-proceeding under the proviso to rule 3(1)/rule 3(4) where relationship influences price, or resorting to surrogate value via rule 12 and the sequential rules. The order mixed and drew re-determined values from rule 4/rule 9 and appeared uncertain in its statutory basis. Rule 3(3)(c) precludes deriving the process under the proviso from the same underlying provisions used to adopt substitute values, and the adjudication failed to respect this demarcation. [Paras 10, 11]

The mixing of valuation routes was impermissible; re-determination based on such conflation is legally defective.

Show cause notice and fresh adjudication - Relief and procedural direction as to disposal of the show cause notice - HELD THAT: - Given the legal infirmities in the impugned adjudication-lack of required reasoning, failure to follow the statutory valuation sequence, and improper conflation of valuation routes-the Tribunal exercised its supervisory jurisdiction to set aside the adjudication order. The statutory obligation of the proper officer to dispose of the show cause notice in conformity with the Customs Valuation Rules requires a fresh decision. Accordingly, the Tribunal restored the show cause notice to the original authority for de novo adjudication after detailed scrutiny of descriptions, submissions and appropriate findings. All substantive issues were left open for consideration anew in the remand proceedings. [Paras 15]

Impugned order set aside; show cause notice remitted to the original authority for de novo adjudication with all issues kept open.

Final Conclusion: The adjudication rejecting the declared transaction value and fixing an enhanced assessable value is quashed for failure to apply the Customs Valuation Rules and to record adequate reasons; the matter is remitted to the original authority for fresh, de novo disposal of the show cause notice in accordance with the statutory valuation framework.

Mis-declaration of export goods - confiscation under the Customs Act, 1962 - mis utilisation of advance authorization and failure to discharge export obligation - director liability for company's export mis representation - merchant/third party exporter accountability - re drawal and re examination of samples - technical test report evidence (Textile Committee) on GSM to determine composition/quality - provisional release on submission of bonds and bank guarantees - penalty for concealment, suppression and misrepresentation in export transactions

Mis-declaration of export goods - technical test report evidence (Textile Committee) on GSM to determine composition/quality - Whether the goods exported under the impugned shipping bills were manufactured out of the exempted/imported fabric as claimed and whether they were mis declared in quality and quantity. - HELD THAT: - The Tribunal accepted the findings that the GSM of the exported garments' samples was materially lower than the GSM of the fabric imported under the cited advance authorization, and that composition declared in the shipping bills differed from laboratory findings. These disparities were treated as establishing lack of correlation between the imported exempted raw material and the exported goods and supporting the conclusion of mis declaration as to quality and quantity. The test reports of the Textile Committee corroborated the earlier in house measurements and no contrary evidence was produced by the appellants to rebut those findings. On these facts the Tribunal found no infirmity in the adjudicating authority's conclusion of mis declaration and in the consequent order of confiscation. [Paras 4, 21, 25]

Findings of mis declaration as to quality and quantity upheld; confiscation of the impugned goods confirmed.

Mis utilisation of advance authorization and failure to discharge export obligation - penalty for concealment, suppression and misrepresentation in export transactions - director liability for company's export mis representation - merchant/third party exporter accountability - Whether the appellants (company and its director) were liable for attempting to export against an already lapsed/cancelled advance authorization and for suppression/concealment, despite the claim of third party/merchant export. - HELD THAT: - The record established that the impugned shipping bills were filed utilising an advance authorization whose export obligation period had expired and which had been the subject of adjudication and penalty. The Tribunal relied on documentary records (IEC records, advance authorization copy) obtained from DGFT and the absence of any evidence from appellants to demonstrate a valid extension or a contractual third party export arrangement. The common directorship and control by the director were found on IEC and related records and the appellant's non cooperation (failure to appear or produce documents) weighed against them. On these facts, the Tribunal agreed that suppression and misrepresentation were made out and that both the company and its director were liable for penalties. [Paras 5, 20, 24]

Liability of the exporter and its director for misuse of the expired advance authorization and for concealment upheld; penalties confirmed.

Re drawal and re examination of samples - technical test report evidence (Textile Committee) on GSM to determine composition/quality - Whether the drawal of samples, offer of re examination and reliance on Textile Committee reports were improper or rendered the findings unreliable. - HELD THAT: - The Tribunal noted that initial samples were drawn in presence of the customs broker's G Card holder and an executive of the exporter. The department offered re drawal and re examination and conveyed the schedule; the appellants declined to participate and expressly stated they did not want re examination. Despite that, the department proceeded to draw fresh samples and obtained independent laboratory reports from the Textile Committee, which corroborated the earlier findings. In the absence of any evidence that the testing process was flawed or that the appellants were prevented from participating, the Tribunal found the sampling and subsequent test reports admissible and reliable for the purposes of adjudication. [Paras 6, 22]

Sampling, offer of re examination and reliance on Textile Committee reports were proper; the reports were accepted as corroborative evidence.

Provisional release on submission of bonds and bank guarantees - Whether the department was at fault for delay in provisional release causing demurrage and other losses to the appellants. - HELD THAT: - The Tribunal recorded that the department had provided shipping bill wise segregation for bonds and bank guarantees and that bonds were submitted on a specified date with provisional release ordered the next day. The appellants did not take delivery and did not respond to departmental communications about release or warehousing options. The department also requested waiver of demurrage from CONCOR. Given the appellant's non cooperation and failure to take the release, the Tribunal rejected the contention that the department's actions caused the claimed financial losses. [Paras 7, 23]

No departmental fault in delay; claims of demurrage and losses attributable to appellants' non cooperation rejected.

Final Conclusion: The Tribunal found no infirmity in the adjudicating authority's conclusions-mis declaration of quality and quantity proven by GSM/composition tests, misuse of an expired advance authorization, and culpability of the exporter and its director for concealment-and accordingly upheld confiscation and imposition of penalties; both appeals are dismissed.

Power to suspend CCSP under HCCAR-2009 - scope of regulation 6(1)(q) limited to Customs Act and subordinate instruments - non-derivation of authority from MSIHC Rules, 1989 - threshold under MSIHC Rules as trigger for approval (not for Customs suspension) - public notice and circular not having force as delegated legislation under section 151A - lack of domain competence of Customs to enforce environmental statutes

Power to suspend CCSP under HCCAR-2009 - scope of regulation 6(1)(q) limited to Customs Act and subordinate instruments - non-derivation of authority from MSIHC Rules, 1989 - Whether the Commissioner of Customs could suspend the appellants as Customs Cargo Service Providers (CCSP) by invoking non compliance with the Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989 (MSIHCR, 1989) through HCCAR-2009. - HELD THAT: - The Tribunal held that HCCAR-2009 empowers action in respect of obligations arising under the Customs Act and rules, regulations, notifications and orders issued thereunder, and does not import enforcement of MSIHCR, 1989. Regulation 6(1)(q) is limited to obligations under the Customs Act and subordinate instruments; it does not confer authority to enforce another statute's regulatory scheme. MSIHCR, 1989 operates independently under environmental enactments and the designated authorities under those laws are the competent forums to determine infractions under those Rules. Consequently, absent a statutory or regulatory 'trigger' within HCCAR-2009 acknowledging MSIHCR, 1989, the Commissioner could not properly invoke MSIHC obligations as the basis for suspension of CCSP approval. The impugned orders therefore rested on an impermissible extension of HCCAR-2009 beyond its statutory compass. [Paras 12, 13, 16]

The Commissioner had no jurisdiction under HCCAR-2009 to suspend CCSPs by enforcing MSIHCR, 1989; the impugned suspension on that basis was unsustainable.

Public notice and circular not having force as delegated legislation under section 151A - lack of domain competence of Customs to enforce environmental statutes - Whether the circular (CBEC Circular No.4/2011) and JNCH Public Notice No.129/2020 could be treated as having legal force under section 151A of the Customs Act so as to support the impugned action. - HELD THAT: - The Tribunal found that neither the circular nor the public notice had been incorporated into HCCAR-2009 by any statutory instrument and do not derive force as delegated legislation under section 151A. Section 151A is concerned with prohibition, restriction or procedure for import/export of goods and does not empower the tax administration to subsume the regulatory content of MSIHCR, 1989. A public notice is a medium of communication and cannot, without statutory backing, be converted into a source of enforcement to expand the Commissioner's powers. Thus reliance on the circular and public notice to justify suspension was legally infirm. [Paras 14]

The circular and public notice cannot be treated as having binding legislative force under section 151A to support the impugned suspension; reliance on them was misplaced.

Threshold under MSIHC Rules as trigger for approval (not for Customs suspension) - lack of domain competence of Customs to enforce environmental statutes - Whether the factual findings (threshold exceedance and safety audit/MPCB notices) justified suspension of the appellants' CCSP approvals. - HELD THAT: - The Tribunal noted the show cause and adjudicatory orders relied upon statistical references to threshold quantities but lacked clear findings required by MSIHCR, 1989 and did not establish the necessary 'trigger' for action under HCCAR-2009. Safety audits were conducted and no allegation of absence of audits for subsequent years was made; the MPCB communications and notices relied upon were proceedings under different statutes and did not amount to determinations under MSIHCR, 1989. The impugned orders blurred jurisdictional boundaries and rested on external notices and emotional conclusions about safety without the requisite statutory basis or domain competence. Given the absence of a proper finding under the relevant hazardous-chemicals regime and the Commissioner's lack of competence to enforce that regime, the factual material did not sustain suspension. [Paras 15, 16]

The material relied upon did not justify suspension of CCSP approvals; the findings were legally inadequate and jurisdictionally misplaced.

Final Conclusion: The appeals are allowed. The impugned orders of suspension and penalties founded on enforcement of MSIHCR, 1989 through HCCAR-2009, and on circulars/public notices lacking statutory force, are unsustainable for want of jurisdiction and proper legal basis; the orders are set aside.

Suspension of registration of an insolvency professional - prescribing non-refundable participation fee in liquidation auctions - appointment of registered valuers and outsourcing of valuation work - conflict of interest and engagement of related entity for support services - circumvention of fee cap under liquidation regulations - fiduciary duty and ethical obligations of a liquidator - misconduct under the Code of Conduct for Insolvency Professionals - purport of the Insolvency and Bankruptcy Code (maximisation of asset value)

Prescribing non-refundable participation fee in liquidation auctions - purport of the Insolvency and Bankruptcy Code (maximisation of asset value) - Petitioner not guilty of contravention for prescribing non-refundable participation fees in the auction advertisements of 2019. - HELD THAT: - The Court accepted that the proviso to Schedule I-(1)(3) of the Liquidation Regulations, which prohibits payment of non-refundable participation fees, was inserted only on 30.09.2021 and was not in force at the time the auction advertisements in 2019 were issued. In the absence of an express regulatory prohibition at that time, the imposition of a modest non-refundable participation fee to deter non-serious bidders could not be treated as a violation of the Regulations or the Code of Conduct. The Court observed that the reserve prices exceeded the participation fees and that there was no applicable regulatory embargo when the fees were prescribed; accordingly, the Board's finding of contravention in respect of this charge was not sustained. [Paras 6, 8]

Charge of prescribing non-refundable participation fee not upheld; no violation of Regulations or Code of Conduct found.

Appointment of registered valuers and outsourcing of valuation work - appointment of registered valuers - outsourcing of valuation - Irregularities found in manner of valuation appointments did not amount to gross misconduct warranting interference with the Board's closure of this charge. - HELD THAT: - The Court found that Mr. Manish Kaneria and Mr. Rakesh Narula were registered valuers in their individual capacities and that valuation reports were signed by them, even though reports or bills also referred to their partnership firms. The respondents did not demonstrate that the valuation reports were questioned or invalid, nor that the valuers to whom parts of the work were outsourced were unregistered. No additional fees were shown to have been paid for outsourcing. While the conduct may not strictly conform to regulatory formalities, the Court concluded that these facts constituted irregularity rather than gross misconduct and therefore did not warrant disturbing the findings relating to valuation. [Paras 9, 11]

Appointment/outsourcing issues treated as irregularity; not sufficient to establish gross misconduct or justify interference.

Conflict of interest and engagement of related entity for support services - circumvention of fee cap under liquidation regulations - fiduciary duty and ethical obligations of a liquidator - misconduct under the Code of Conduct for Insolvency Professionals - Finding of misconduct upheld in respect of appointment of BRAL (a firm in which the Petitioner was a partner) and allowing it to raise fees exceeding the liquidator's fee; this finding did not warrant interference. - HELD THAT: - The Court emphasised the liquidator's fiduciary role and obligation to maximise asset value. It found that appointing BRAL, in which the Petitioner was a partner, on vague terms without any criteria for fixation of fees, and where BRAL's claimed fees exceeded the liquidator's fee, indicated a calculated attempt to obtain higher remuneration and to circumvent the fee limits under Regulation 4. The absence of a cap or clear basis for BRAL's fees and the fact that BRAL was entrusted with substantial responsibilities, together with the relationship of the Petitioner to BRAL, amounted to misconduct in breach of the liquidator's duties and the Code of Conduct. The Court held that the Disciplinary Committee's finding on this charge did not call for interference, while observing that some claimed amounts remained unpaid. [Paras 12, 16, 17]

IBBI's finding of misconduct in respect of appointment and remuneration of BRAL upheld; no interference with that finding.

Final Conclusion: Writ petition disposed: findings of misconduct concerning engagement of BRAL (related firm) and fee arrangements sustained; other charges (non-refundable participation fee and valuation appointment irregularities) not interfered with. Suspension of the Petitioner's registration upheld in principle but punishment modified to the period already undergone by the Petitioner.

Pre-existing dispute - admission of petition under the Insolvency and Bankruptcy Code (Section 9) - prima facie satisfaction on existence of dispute - limited jurisdiction of Adjudicating Authority at stage of Section 9 - invocation of arbitration and consent to arbitration as evidence of dispute - Mobilox principle on disputation

Pre-existing dispute - admission of petition under the Insolvency and Bankruptcy Code (Section 9) - limited jurisdiction of Adjudicating Authority at stage of Section 9 - invocation of arbitration and consent to arbitration as evidence of dispute - Mobilox principle on disputation - There existed a pre-existing dispute between the parties and the Adjudicating Authority erred in admitting the Section 9 petition. - HELD THAT: - The Tribunal applied the test in Mobilox to determine whether a bona fide dispute existed prior to the demand notice. The Corporate Debtor had emailed a final bill on 15.07.2022 prior to the Operational Creditor's demand notice issued later the same day, and had invoked the arbitration clause by correspondence dated 20.07.2022 and by filing an arbitration petition before the High Court which resulted in the appointment of an arbitrator by consent on 22.09.2022. These facts, together with contemporaneous communications and joint measurements (including the Operational Creditor's final bill to the principal employer dated 21.06.2022), established plausible disputed claims requiring adjudication and not susceptible to summary determination. The Adjudicating Authority impermissibly ventured into evaluating the merits of competing contentions and split the transactions in a manner that ignored the Corporate Debtor's pre-existing contentions. At the Section 9 stage the jurisdiction is limited to ascertaining existence of a dispute which is not spurious or frivolous; once such a dispute is shown, the insolvency petition cannot be admitted. The consensual reference to arbitration and the chronology of notices established a pre-existing dispute that warranted dismissal of the Section 9 petition rather than admission. [Paras 8, 9, 10, 11, 12]

The impugned admission under Section 9 was set aside; the Section 9 petition is dismissed and the appeal is allowed.

Final Conclusion: The Tribunal found a pre-existing, non-spurious dispute (established by prior billing, invocation of arbitration and consent to reference) and held that the Adjudicating Authority erred in admitting the Section 9 petition after undertaking merits appraisal; the Section 9 petition is dismissed and the appeal is allowed.

Offence of money-laundering - Anticipatory bail under PMLA / Section 45 - Proceeds of crime - ECIR legitimacy where subsequent scheduled offences are taken on record - Directors' liability and lifting the corporate veil - Non-bailable nature of PMLA offences

Anticipatory bail under PMLA / Section 45 - Non-bailable nature of PMLA offences - Whether the petitioner is entitled to anticipatory bail under Section 438 Cr.P.C. read with Section 45 of the PMLA - HELD THAT: - The Court examined the twin test in Section 45 of the PMLA and applied the settled principle that the rigours of Section 45 apply to anticipatory bail in money laundering cases. Having considered the material collected during investigation, the available forensic/audit material, bank statements and the fact that the investigation is ongoing, the Court held that it could not be satisfied that there are reasonable grounds for believing that the petitioner is not guilty or that he would not commit an offence while on bail. The Court relied on the Supreme Court's guidance that anticipatory bail in economic offences must be sparingly granted because pre arrest protection may hamper interrogation and investigation, and that the Court need only form a view based on probability from the material on record rather than decide guilt beyond reasonable doubt. [Paras 41, 42, 43, 44, 49]

Petition for anticipatory bail is dismissed; petitioner is not entitled to anticipatory bail under Section 45 of the PMLA.

ECIR legitimacy where subsequent scheduled offences are taken on record - Offence of money-laundering - Whether the ECIR registered on 16.11.2021 is rendered invalid because the predicate FIR (FIR Nos. 10 & 11) was held to be a nullity - HELD THAT: - The Court held that the ECIR is not invalidated by the subsequent setting aside/withdrawal of the initial FIRs because four other FIRs alleging scheduled offences were registered and taken on record in the ECIR during the interregnum. Relying on precedent and reasoning that an ECIR is an internal document and that the existence of other FIRs constituting scheduled offences legitimises the ECIR, the Court found that the presence of surviving predicate offences prevents quashing of the ECIR on the ground that the initial FIRs were nullified. [Paras 33, 34, 35, 45, 46]

ECIR survives notwithstanding the nullity/withdrawal of the initial FIRs because subsequent FIRs alleging scheduled offences were taken on record in the ECIR.

Proceeds of crime - Directors' liability and lifting the corporate veil - Whether there is prima facie material to show the petitioner's involvement in diversion/receipt of proceeds of crime and his connection with group companies - HELD THAT: - On the material placed on record - including company directorship records, auditor signed financial statements, bank statements showing transfers from the project company to the petitioner, forensic audit findings, balance sheet entries, and a mapped money trail indicating transfers from project accounts to related companies and to assets - the Court concluded there is sufficient prima facie material to infer the petitioner's involvement in activities falling within the definition of proceeds of crime and money laundering. The Court noted that Section 3 PMLA and the definition of 'proceeds of crime' are wide enough to cover indirect benefit and that a person need not be an accused in the predicate offence to be proceeded against under the PMLA. [Paras 33, 34, 36, 46, 47]

There is prima facie material to link the petitioner to diversion/receipt of proceeds of crime and to his role as director of relevant group companies; this supports continuation of the investigation under the PMLA.

Offence of money-laundering - Whether the fact that the petitioner is not an accused in some predicate FIRs precludes prosecution under the PMLA - HELD THAT: - The Court applied the principle from Pavana Dibbur that a person need not be shown as an accused in the predicate offence to be proceeded against for money laundering. Given that the petitioner is an accused in at least one of the surviving FIRs and that there is prima facie material of proceeds generation and subsequent layering/transfer, the Court held that the absence of his name in some FIRs does not preclude the ED from investigating and prosecuting him under the PMLA. [Paras 46, 48]

Absence of the petitioner's name in some predicate FIRs does not bar PMLA proceedings; prosecution under PMLA can proceed where prima facie material exists.

Cooperation with investigation - Non-bailable nature of PMLA offences - Whether the petitioner's conduct (cooperation/non cooperation) favours grant of anticipatory bail - HELD THAT: - The Court evaluated the petitioner's asserted cooperation (appearances on some dates and compliance with certain interim directions) against the ED's record of multiple summons not complied with and attempts to procure presence leading to issuance of arrest warrants. The Court found the record of non compliance and the issuance of warrants alongside other material militates against granting anticipatory bail. [Paras 7, 37]

Petitioner's overall conduct does not justify anticipatory bail; non compliance with multiple summons and the issuance of arrest warrants weigh against relief.

Final Conclusion: The petition for anticipatory bail is dismissed. The Court finds prima facie material to continue the PMLA investigation against the petitioner, holds that the ECIR remains legitimate by reason of subsequent FIRs taken on record, and records that its observations are limited to the bail application without prejudicing the trial court's final adjudication.

Liability of promoter/developer for service tax on construction of residential complexes - Works Contract Service - Deemed service by builder to buyer pursuant to Explanation to Clause (zzzh) w.e.f. 1.7.2010 - Prospective operation of statutory explanation expanding taxable scope - Board Circular No.108/2/2009-ST dt. 29.01.2009

Liability of promoter/developer for service tax on construction of residential complexes - Board Circular No.108/2/2009-ST dt. 29.01.2009 - Deemed service by builder to buyer pursuant to Explanation to Clause (zzzh) w.e.f. 1.7.2010 - Prospective operation of statutory explanation expanding taxable scope - Demand of service tax under 'Works Contract Service' against the promoter/developer for construction of residential complexes for the period prior to 1.7.2010 is unsustainable. - HELD THAT: - The appellant, a promoter/developer, had ceased payment of service tax from February 2009 relying on Board Circular No.108/2/2009 ST dated 29.01.2009 which clarified that promoter/builder/developer is not liable to pay service tax for construction of residential complexes. The Tribunal noted authoritative decisions, including Krishna Homes and a recent Final Order No.40539/2024, which considered the Explanation to Clause (zzzh) inserted w.e.f. 1.7.2010 and held that the Explanation operates prospectively to deem the builder as provider of construction service to the buyer only from 1.7.2010. Prior to the insertion of that Explanation the promoter/builder who engaged contractors was not chargeable as a service provider vis a vis prospective buyers. Applying these conclusions, the Tribunal held that the demand raised for the period 1.2.2009 to 30.09.2009 (and generally for the period prior to 1.7.2010) could not be sustained and set aside the impugned order. [Paras 7, 8]

Demand of service tax for the period prior to 1.7.2010 set aside; appeal allowed with consequential reliefs.

Final Conclusion: The Tribunal set aside the demand, interest and penalties imposed on the promoter/developer in respect of construction of residential complexes for the period prior to 1.7.2010 (including the period 1.2.2009 to 30.09.2009) and allowed the appeal with consequential reliefs.

Exemption for construction services to educational institutions - levy of service tax on composite works contracts after 01.07.2012 - abatement in valuation of works contracts - penalty for failure to discharge service tax (Section 77) - penalty for suppression/misdeclaration (Section 78)

Exemption for construction services to educational institutions - CBEC Circular No.80/10/2004 dated 17.09.2004 - Demand of service tax for the period prior to 01.07.2012 on construction works executed for educational institutions - HELD THAT: - The Tribunal held that construction of buildings used solely for educational purposes falls outside commercial constructions and is not taxable for the period up to 01.07.2012. The Board's Circular dated 17.09.2004, which distinguishes constructions used for educational, charitable or similar non-commercial purposes from commercial constructions, was applied. The Tribunal followed its earlier decision in M/s. Vijayadeepa Constructions Private Limited where a similar demand was set aside, and held that the impugned demand, interest and penalties for the period 01.10.2008 to 30.06.2012 cannot be sustained. [Paras 6, 7]

Demand, interest and penalties for the period 01.10.2008 to 30.06.2012 set aside.

Levy of service tax on composite works contracts after 01.07.2012 - abatement in valuation of works contracts - Sustainability of demand of service tax for the period 01.07.2012 to 31.03.2013 - HELD THAT: - The appellant did not contest the substantive demand for the period after 01.07.2012. The Department had quantified the demand after allowing abatement applicable to composite contracts. The Tribunal found the demand for service tax with interest for 01.07.2012 to 31.03.2013 to be sustainable and upheld it, noting that the appellant had paid the major part of the tax before issuance of the show cause notice and the balance before adjudication but had not disputed liability on merits. [Paras 6, 7]

Demand and interest for the period 01.07.2012 to 31.03.2013 upheld.

Penalty for failure to discharge service tax (Section 77) - penalty for suppression/misdeclaration (Section 78) - Sustainability of penalties imposed for the period after 01.07.2012 - HELD THAT: - The Tribunal examined the allegations of suppression in the show cause notice and records. It noted that the appellant had obtained registration on 11.02.2013, cooperated with the Department, and paid the tax (partly before the show cause notice and the balance before adjudication). The show cause merely alleged suppression without establishing any positive act of willful concealment. In view of these facts the Tribunal concluded there was no suppression warranting penalty under Section 78 and set aside that penalty, while upholding the penalty under Section 77. The appropriation of amounts paid by the appellant was also sustained. [Paras 6, 7]

Penalty under Section 78 set aside; penalty under Section 77 upheld; appropriation of amount already paid sustained.

Final Conclusion: The appeal is partly allowed: demands, interest and penalties for 01.10.2008 to 30.06.2012 are set aside; demand and interest for 01.07.2012 to 31.03.2013 are upheld; penalty under Section 78 is quashed while penalty under Section 77 and appropriation of amounts paid are sustained.

Composite contracts - construction of residential complex service - works contract service - abatement for materials under Notification No.1/2006 - applicability prior to 1.7.2012

Composite contracts - construction of residential complex service - works contract service - applicability prior to 1.7.2012 - abatement for materials under Notification No.1/2006 - Demand of service tax categorised under construction of Residential Complex Service for composite construction contracts prior to 1.7.2012 is not sustainable. - HELD THAT: - The appellant rendered construction services under composite contracts involving both supply of materials and rendition of services; quantification in the show-cause and orders was made after applying abatement in respect of materials as per Notification No.1/2006. For the period prior to 1.7.2012, the Tribunal has held that tax demands in respect of composite construction contracts could only be raised under the works contract service and not under construction of residential complex service. That line of authority was applied in this case, and a subsequent civil appeal by the Department against the relevant Tribunal decision was dismissed by the Apex Court, lending finality to the principle. Applying these precedents and the facts on record, the demand framed under the head of construction of Residential Complex Service for the tax periods in question cannot be sustained.

Impugned demand, interest and penalties to the extent founded on classification as construction of Residential Complex Service are set aside; appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the tax demand framed under construction of Residential Complex Service for the composite contracts during 2007-08 and 2008-09 (period prior to 1.7.2012), quantified after applying abatement for materials, cannot be sustained and is to be set aside; consequential relief, if any, to follow.

Erection, Commissioning and Installation services - Works Contracts Service - composite contracts - levy of service tax - extended period of limitation - willful suppression - precedent of Commissioner of C.Ex & Cus., Kerala v. Larsen & Toubro Ltd.

Erection, Commissioning and Installation services - Works Contracts Service - composite contracts - precedent of Commissioner of C.Ex & Cus., Kerala v. Larsen & Toubro Ltd. - Demand under Erection, Commissioning or Installation Services for the period upto 1.6.2007 is not sustainable; such composite contracts are taxable only under Works Contracts Service. - HELD THAT: - The works undertaken by the appellant involved supply of materials together with rendition of services, constituting composite contracts. Applying the Apex Court decision in Larsen & Toubro Ltd., composite construction contracts which involve use of materials and rendering of services cannot be subjected to service tax under ECIS prior to 1.6.2007 and must be treated as Works Contracts Service. For this reason the demand framed under ECIS for the period upto 1.6.2007 cannot be sustained and is set aside. [Paras 6]

Demand under ECIS for the period upto 1.6.2007 is set aside; taxability is under WCS.

Works Contracts Service - levy of service tax - Demand under Works Contracts Service for the normal period after 01.06.2007 is valid on merits. - HELD THAT: - Having held that the appellant's contracts are composite, the department's classification and levy of service tax under Works Contracts Service for the post-1.6.2007 period is in accordance with law. The Tribunal finds no merit to interfere with the substantive demand for the normal period and upholds the tax and interest on merits. [Paras 7]

Demand under WCS for the normal (non-extended) period after 01.06.2007 is upheld along with interest.

Extended period of limitation - willful suppression - levy of service tax - Demand invoked by the extended period after 01.06.2007 cannot be sustained in the absence of pleaded or proved willful suppression. - HELD THAT: - The show cause notice contained only a vague allegation that the appellant did not pay service tax to evade tax, without particulars of any positive act of suppression. The appellant had obtained service tax registration and the figures used for assessment were taken from the appellant's own accounts. The question of levy under WCS was the subject of genuine litigation culminating in the Apex Court's decision, making the position arguable. Following the principles in Kaur & Singh and related authorities, invocation of the extended period requires specific allegations of fraud, collusion or willful suppression; absent such particulars, the extended period cannot be invoked. Consequently the demand raised by invoking the extended period is set aside, and penalties for the normal period are also set aside for reasons linked to limitation. [Paras 8, 9, 11, 12]

Extended-period demand after 01.06.2007 is set aside; penalties for the normal period are set aside; normal-period tax (non-extended) is sustained with interest.

Final Conclusion: Appeal partly allowed: demands framed under ECIS upto 1.6.2007 quashed; WCS-demand after 1.6.2007 upheld on merits for the normal period but demands raised by invoking the extended period (and related penalties) are set aside; consequential reliefs to follow.

Transfer of right to use goods - deemed sale under Article 366 (29A)(d) of the Constitution - consensus ad idem as to the identity of goods - control and legal consequences of use - distinction between licence to use and transfer of right to use

Transfer of right to use goods - consensus ad idem as to the identity of goods - control and legal consequences of use - distinction between licence to use and transfer of right to use - Whether the contracts dated 08.06.2009 and 04.07.2012 amounted to transfer of the right to use the launch vessels (deemed sale) or were contracts for service. - HELD THAT: - The Court applied the five-attribute test developed in the concurring opinion in Bharat Sanchar Nigam Ltd. and approved in subsequent Supreme Court decisions, requiring (a) goods available for delivery, (b) consensus as to identity of goods, (c) legal right to use with attendant permissions/licenses, (d) exclusion of the transferor from use for the period, and (e) owner not retaining ability to transfer the same right to others. The contractual terms were examined: technical specifications required launches meeting standards rather than a specific identified vessel; the contractor retained responsibility for crew, operation, consumables, maintenance, replacements, and liabilities for loss or damage; log-books and payment were linked to contractor-entered movements; and the contractor could replace vessels. These features show that substantial control and legal consequences of use remained with the petitioners, the launches were provided with permissive use subject to contractor control, and the clauses required contractor operation and liability. Applying the settled tests and the Supreme Court's reasoning in M/s K. P. Mozika and related decisions, the essential attributes (in particular control and transferor exclusion) required for a transfer of right to use were not satisfied, and therefore the transactions were services and not transfers of right to use goods. [Paras 28, 29, 31, 32]

The contracts are service contracts and do not amount to transfer of the right to use the launch vessels (not a deemed sale).

Deemed sale under Article 366 (29A)(d) of the Constitution - transfer of right to use goods - Validity of the review order dated 03.04.2017 which set aside earlier clarificatory orders that treated the contracts as services, and consequent reliefs. - HELD THAT: - Since the Court held on the merits that the contracts are service contracts and do not satisfy the tests for transfer of right to use goods, the exercise of review that reversed earlier clarifications treating the contracts as services was unsustainable. The earlier clarificatory orders dated 06.06.2015 and 28.08.2015, which held the contracts to be purely service contracts, were therefore restored. The respondents were directed to act upon those clarifications and to process the petitioners' application for refund accordingly. The Court accordingly set aside the impugned review order and remitted the matter to the respondents to take appropriate steps for refund processing. [Paras 6, 7, 33, 34]

The review order dated 03.04.2017 is quashed; earlier clarifications treating the contracts as service contracts are restored and respondents directed to process the refund application.

Final Conclusion: The writ petition is allowed: the contracts for hiring launch vessels are declared service contracts (not transfers of the right to use goods), the review order reversing earlier clarifications is quashed, the earlier clarificatory orders are restored, and the respondents are directed to process the petitioners' refund application; no costs.

Reversal of Cenvat credit under Rule 6(3) and entitlement to benefit under Rule 6(3A) of the Cenvat Credit Rules, 2004 - Attribution of input/input service credit between taxable and exempt supplies - Service tax liability on separately recovered logistic/handling charges where VAT has been paid - Taxability of toll collection activity vis a vis negative list entry for access to road/bridge on payment of toll - Validity of Statement of Demand under section 73(1A) of the Finance Act for subsequent periods - Taxability of dealer discounts/incentives and other miscellaneous receipts - Invocation of extended period of limitation-requirement of wilful suppression

Reversal of Cenvat credit under Rule 6(3) and entitlement to benefit under Rule 6(3A) of the Cenvat Credit Rules, 2004 - Attribution of input/input service credit between taxable and exempt supplies - Whether the option of payment under Rule 6(3) can be applied by the revenue when the assessee did not exercise option under Rule 6(3A), and whether credits attributable to workshop (taxable) services are liable for reversal. - HELD THAT: - The Tribunal held that benefit under Rule 6(3A) is available even if the assessee did not exercise the option at the beginning of the year; revenue cannot unilaterally choose and thrust the Rule 6(3) percentage on the assessee. Reliance on precedents established that the statutory options are for the assessee and non exercise does not empower authorities to apply a particular option on behalf of the assessee. Applying this principle, the Bench accepted the appellants' contention and supporting chartered accountant certificates that workshop input services were exclusively for taxable repair/maintenance services and not for exempted trading activity; accordingly such workshop credits were not liable for reversal. For the respective periods the Tribunal accepted appellants' attributable computations under Rule 6(3A) and ordered appropriation of amounts already deposited towards reversal and interest, directing reversal only to the extent of the attributable credit determined on the accepted ratios. [Paras 11, 13, 14]

Benefit of Rule 6(3A) allowed notwithstanding non exercise of option; workshop credits not liable for reversal; reversal limited to attributable amounts as accepted and appropriation of deposits ordered.

Service tax liability on separately recovered logistic/handling charges where VAT has been paid - Mutual exclusivity of Service Tax and VAT - Whether service tax could be demanded on logistic charges recovered from buyers where VAT was paid on those charges. - HELD THAT: - The Tribunal examined invoicing and past VAT findings and noted that logistic charges were invoiced contemporaneously with sale and VAT had been paid and accepted as part of sale price by the VAT authority in earlier proceedings. Relying on the principle that a transaction cannot be taxed both under service tax and VAT, the Bench held that once VAT has been paid on those charges the revenue cannot demand service tax on the same amounts. The Tribunal further observed that department had not appealed an appellate order in the sister case which had set aside a similar service tax demand. [Paras 16, 18, 20]

Demand of service tax on logistic charges set aside because VAT was paid and service tax and VAT are mutually exclusive.

Taxability of toll collection activity vis a vis negative list entry for access to road/bridge on payment of toll - Distinction between collecting toll as contractor/owner of right and acting as commission agent for NHAI - Whether amounts retained by the appellants on collection of toll under contract with NHAI are taxable as Business Auxiliary Services or fall outside service tax under the negative list. - HELD THAT: - The Tribunal followed its earlier precedents holding that where a bidder secures the right to collect toll by paying a fixed/bid amount and retains the collections on its own account, the activity is not performed on behalf of NHAI and does not constitute a Business Auxiliary Service. The commercial and contractual structure (lump sum/bid payment, transfer of risk/reward to the collector) differentiates such activity from commission based collection on behalf of the authority. Applying these principles and earlier Tribunal decisions, the Bench concluded that the appellants' toll collection activity was not liable to service tax. [Paras 23, 24, 25]

Demand of service tax on toll collection set aside; toll collection under the contract held not to be a taxable Business Auxiliary Service.

Validity of Statement of Demand under section 73(1A) of the Finance Act for subsequent periods - Taxability of dealer discounts/incentives and other miscellaneous receipts - Invocation of extended period of limitation-requirement of wilful suppression - Whether the Statement of Demand issued under section 73(1A) for 2015 16 and 2016 17 based on an earlier SCN (2012 13 to 2014 15) could properly raise demands on other income, and whether miscellaneous receipts/discounts are taxable. - HELD THAT: - The Tribunal held that section 73(1A) permits a statement for subsequent periods only if the grounds for the subsequent period are the same as those in the earlier notice. The original SCN did not propose demands on miscellaneous/other income; accordingly the subsequent Statement of Demand seeking tax on such new heads was procedurally impermissible and liable to be set aside. On merits, the Bench examined the nature of amounts charged to other operating revenue and miscellaneous receipts and accepted the appellants' evidence and CA certificate that large portions represented supplier discounts/incentives, warranty reimbursements, sale of scrap and other non service receipts. Reliance on precedents established that such dealer incentives/discounts are not taxable as Business Auxiliary Services. The Tribunal therefore set aside the demands on other income. Separately, the extended period invocation was rejected as there was no proof of wilful suppression; where interpretation varies or records disclosed transactions, extended limitation is not invocable. [Paras 29, 32, 33, 34, 39]

Statement of Demand under section 73(1A) could not validly raise new demands on other income; demands on discounts/incentives and miscellaneous receipts set aside on merits; extended period of limitation not attracted for the original period.

Final Conclusion: Both impugned orders are set aside. Reversal under Rule 6(3A) is permitted notwithstanding non exercise of option; reversal limited to credits attributable to exempted services as accepted and deposits appropriated. Service tax demands on logistic charges and on toll collection are set aside. Demands raised by subsequent Statement of Demand on other income are set aside both on procedural grounds and on merits; extended period of limitation not attracted. Appeals allowed with consequential relief as per law.

Cenvat credit on CVD paid on imported goods - Distinction between Customs Notification and Excise Notification - Restriction under Rule 3(1) of the Cenvat Credit Rules, 2004 on credit where excise notification exemption is availed - Applicability of concessional CVD under Customs Notification for imported coal - Principle of equivalence of CVD rate to excise duty for level playing field

Cenvat credit on CVD paid on imported goods - Distinction between Customs Notification and Excise Notification - Restriction under Rule 3(1) of the Cenvat Credit Rules, 2004 on credit where excise notification exemption is availed - Applicability of concessional CVD under Customs Notification for imported coal - Cenvat credit of 1%/2% CVD paid on imported steam coal under Customs Notification No.12/2012 Cus is allowable to the assessee. - HELD THAT: - The Tribunal held that the bar on taking Cenvat credit arises only when the benefit of exemption is availed under the Excise Notification (applicable to domestically manufactured goods) and is embodied in the proviso to Rule 3(1) of the Cenvat Credit Rules, 2004. The Customs Notification granting concessional CVD on imported coal operates independently and does not incorporate the Excise Notification's condition denying credit. Consequently, the restriction in Rule 3(1) that disallows credit for goods specified under Sl. Nos. 67 and 128 of Excise Notification No.12/2012-CE applies to domestically manufactured goods and not to imports covered by Customs Notification No.12/2012-Cus. Following earlier Tribunal rulings and the ratio that Excise Notification No.12/2012-CE does not apply to imported coal, the denial of Cenvat credit on the concessional CVD paid on imported steam coal was found to be unsustainable and the demands were set aside. [Paras 13, 14]

The demands denying Cenvat credit of concessional CVD on imported steam coal were set aside and the appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that Cenvat credit of the concessional CVD levied under the Customs notification on imported steam coal is admissible because the Excise Notification's bar on credit applies only to domestically manufactured goods and not to imports covered by the Customs Notification.