TaxTMI Updates e-Newsletter
Jun 14,2024

Remand for fresh consideration - opportunity of personal hearing - set aside - bonafide error in GSTR-3B reporting of Input Tax Credit - correction in annual return in Form GSTR-9 - order under Section 73(9) of the WBGST & CGST Act, 2017 - conditional payment to State Legal Services Authority

Bonafide error in GSTR-3B reporting of Input Tax Credit - correction in annual return in Form GSTR-9 - order under Section 73(9) of the WBGST & CGST Act, 2017 - opportunity of personal hearing - remand for fresh consideration - conditional payment to State Legal Services Authority - Order dated 29th August 2023 issued under Section 73(9) set aside and matter remanded to the proper officer for fresh consideration, with liberty to the petitioners to file a response and for the proper officer to afford hearing and pass a fresh order. - HELD THAT: - The Court found that the petitioners had not been able to represent before the proper officer because their consultant, who should have monitored the portal, left without informing them, and that the reporting error-Input Tax Credit on import of goods being inadvertently reported in the wrong table in GSTR-3B-appears to be a bonafide mistake which the petitioners sought to rectify in Form GSTR-9. In view of these circumstances the Court exercised its supervisory jurisdiction to set aside the impugned order and remand the matter to the proper officer so that the petitioners may file their response within 10 days and the proper officer may, after giving an opportunity of personal hearing, decide the proceedings afresh under Section 73(9) of the said Act within four weeks of affording such hearing. The Court imposed a condition that the petitioners deposit the specified amount with the State Legal Services Authority and produce proof of payment at the time of hearing. The remand is for fresh consideration and adjudication by the proper officer rather than a final decision on the merits by this Court. [Paras 6, 7, 8]

Impugned order set aside; matter remanded to proper officer for fresh adjudication after petitioners file response and are afforded personal hearing, subject to the stated payment condition and prescribed timelines.

Final Conclusion: Writ petition disposed by setting aside the order dated 29th August 2023 under Section 73(9) for financial year 2017-18 and remanding the matter to the proper officer to decide afresh after the petitioners file their response and are given personal hearing; remand is subject to the stipulated deposit to the State Legal Services Authority and the timelines directed by the Court.

Cancellation of GST registration for non-filing of returns - Restoration of GST registration subject to filing returns and payment of tax, interest, fine and penalty - Judicial power to treat writ petition as challenge to cancellation order - Pragmatic approach to revocation to protect revenue and permit continuance of business - Effect of time barred appeal on availability of relief

Judicial power to treat writ petition as challenge to cancellation order - The High Court may, in exercise of its writ jurisdiction, treat the petition as a challenge to the order of cancellation of GST registration dated 27th May 2020 and entertain relief thereagainst. - HELD THAT: - The petitioner sought to challenge the cancellation order though the specific prayer was not incorporated; the Court accepted counsel's submission that the petition can be treated as a challenge to that order and exercised its jurisdiction to do complete justice. The Court proceeded to consider the legality and consequences of the cancellation on merits and in light of the appellant's recourse before the appellate authority, despite procedural imperfections in the framing of pleadings. [Paras 1]

Petition treated as a challenge to the cancellation order dated 27th May 2020 and entertained by the Court.

Cancellation of GST registration for non-filing of returns - Pragmatic approach to revocation to protect revenue and permit continuance of business - Effect of time barred appeal on availability of relief - Whether the order cancelling the petitioner's GST registration should be set aside despite cancellation being on the ground of non-filing of returns and the appeal to the authority being dismissed as time barred. - HELD THAT: - The Court noted that cancellation was effected for continuous non-filing of returns and that there was no allegation of tax evasion or fraudulent conduct by the petitioner. Observing that suspension of registration may be counterproductive to revenue recovery because it prevents the assessee from raising invoices and carrying on business, the Court adopted a pragmatic approach. Taking guidance from the Division Bench decision in Subhankar Golder (supra), the Court concluded that the cancellation order of 27th May 2020 should be set aside on condition that the petitioner files returns for the entire default period and pays the requisite tax, interest, fine and penalty. The appellate order dismissing the appeal as time barred was also directed to stand set aside consequentially, subject to compliance within the stipulated timeframe. [Paras 8, 9, 10, 11]

The cancellation order dated 27th May 2020 is set aside and registration to be restored conditionally upon filing of returns for the period of default and payment of tax, interest, fine and penalty; the appellate order dated 5th February 2024 shall stand set aside if the petitioner complies within the stipulated time.

Restoration of GST registration subject to filing returns and payment of tax, interest, fine and penalty - The procedural directions and timeframe for compliance to secure restoration of registration and facilitation measures to enable filing of returns. - HELD THAT: - The Court directed that if the petitioner complies with the conditions within four weeks from receipt of the server copy of the order, the jurisdictional officer shall restore the registration and set aside the cancellation and the appellate order. To facilitate compliance, the respondents were directed to open the portal within one week so the petitioner can file returns and make requisite payments. The Court made clear that failure to comply within the prescribed four week period would result in the writ petition being automatically dismissed and the benefit of the order not accruing to the petitioner. [Paras 11, 12]

Registration to be restored on compliance within four weeks; respondents to open portal within one week to enable filing and payment; non compliance results in automatic dismissal of the petition.

Final Conclusion: The Court treated the writ as a challenge to the cancellation of GST registration dated 27th May 2020, set aside that cancellation (and the appellate order dated 5th February 2024) subject to the petitioner filing returns for the period of default and paying tax, interest, fine and penalty within four weeks, and directed the authorities to reopen the portal within one week to enable compliance; failure to comply will result in dismissal of the petition.

Condonation of delay - Revocation of cancellation of registration - Acceptance of GSTR-3B returns subject to payment of dues - Compliance with payment of taxes, interest, late fee and penalty - Opening of portal for filing GST returns

Condonation of delay - Revocation of cancellation of registration - Compliance with payment of taxes, interest, late fee and penalty - Delay in invoking the proviso to Rule 23 of the Odisha GST Rules is condoned and the petitioner's application for revocation of cancellation of registration is to be considered on compliance with statutory dues and formalities. - HELD THAT: - The Court, on the representation of the State that it will accept the petitioner's GSTR-3B returns provided the petitioner deposits all taxes, interest, late fee and penalty and complies with other formalities, condoned the delay in invoking the proviso to Rule 23 OGST Rules. The order directs that, subject to the petitioner depositing all dues and complying with requirements, the petitioner's revocation application shall be considered in accordance with law. The Court recorded that a copy of the order be produced before the proper officer and, upon compliance with the stated conditions, the proper officer shall open the portal to enable filing of the GST return. [Paras 3, 4]

Delay in invoking the proviso to Rule 23 OGST Rules is condoned; petitioner to deposit taxes, interest, late fee and penalty and comply with formalities; upon such compliance the revocation application shall be considered and the portal shall be opened for filing returns.

Final Conclusion: The writ petition is disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that, upon the petitioner depositing all dues and complying with formalities, the revocation application will be considered and the portal will be opened to enable filing of the GST return.

Condonation of delay - revocation under proviso to Rule 23 of the Odisha Goods and Services Tax Rules - acceptance of GSTR-3B upon compliance with tax, interest, late fee and penalty - direction to reopen portal to enable filing of GST returns

Condonation of delay - revocation under proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 OGST Rules was condoned and the petitioner's revocation application was directed to be considered. - HELD THAT: - The Court recorded the Revenue's concession that if delay in filing the revocation application is condoned and the petitioner complies with payment of taxes, interest, late fee and penalty, the GSTR-3B filed by the petitioner would be accepted. On that basis the Court condoned the delay in invoking the proviso to Rule 23 of the OGST Rules and directed that the petitioner's application for revocation be considered in accordance with law, subject to deposit of all taxes, interest, late fee, penalty and compliance with other formalities. The order therefore resolves the petition by permitting adjudication of the revocation application after compliance, rather than deciding the merits of revocation independently. [Paras 2, 3]

Delay condoned and revocation application to be considered subject to compliance with tax and related payments and formalities.

Acceptance of GSTR-3B upon compliance with tax, interest, late fee and penalty - direction to reopen portal to enable filing of GST returns - Proper officer shall accept the petitioner's GSTR-3B and open the portal for filing upon production of the order and satisfaction of stipulated conditions. - HELD THAT: - The Court directed that a copy of the order be produced to the proper officer and, subject to the petitioner depositing all taxes, interest, late fee and penalty and complying with other formalities, the proper officer will open the portal to enable filing of the GST return and accept the GSTR-3B. This is a ministerial direction to give effect to the condonation and to permit statutory compliance rather than an adjudication on substantive entitlement to revocation. [Paras 2, 4]

Proper officer to open portal and accept GSTR-3B on production of the order and upon petitioner's compliance with the stated conditions.

Final Conclusion: Writ petition disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules; petitioner's revocation application to be considered and GSTR-3B accepted by the proper officer provided the petitioner deposits all taxes, interest, late fee and penalty and complies with other formalities, and produces a copy of this order.

Amendment of pleadings - Interim release of detained goods on deposit and furnishing of bond - Issuance of notice returnable - Release of goods without prejudice to parties' rights - Hearing to be clubbed with related petition

Amendment of pleadings - Petitioner's application to amend the petition was allowed in terms of the draft amendment. - HELD THAT: - Learned counsel for the petitioner tendered a draft amendment which the Court permitted. The order directs that the amendment be carried out forthwith, indicating the amendment is formally accepted and shall be incorporated into the record without further delay. [Paras 1]

Draft amendment allowed and to be carried out forthwith.

Issuance of notice returnable - Notice was issued and the matter listed to be returnable on the stated date. - HELD THAT: - Having considered the submissions, including the petitioner's contention concerning the grounds recorded in Form GST MOV-11 and the contention relating to actions under the GST Act, the Court directed that notice be issued and fixed the matter for return on the specified date, thereby leaving the substantive contentions to be adjudicated on the returnable date. [Paras 4]

Notice issued; matter returnable on 19.6.2024.

Interim release of detained goods on deposit and furnishing of bond - Release of goods without prejudice to parties' rights - By way of ad-interim relief, the respondent authorities were directed to release the goods and conveyance on deposit and upon furnishing of a bond, subject to the petition and without prejudice to rights and contentions. - HELD THAT: - The Court granted ad-interim relief directing the respondent authorities to release the goods and conveyance upon receipt of the specified deposit from the petitioner and upon the petitioner furnishing a bond for the value of the goods. The release is ordered to take place on receipt of the amount and bond, and is expressly made without prejudice to the parties' rights and contentions, preserving the respondents' and petitioner's positions pending final adjudication. [Paras 5, 6]

Goods and conveyance to be released on deposit and bond; release to be without prejudice to rights and contentions and subject to final outcome.

Final Conclusion: The Court allowed the tendered draft amendment; issued notice returnable on 19.6.2024; and granted adinterim relief directing release of the detained goods and conveyance upon stipulated deposit and bond, subject to the parties' rights and the final outcome. The matter is to be heard along with Special Civil Application No. 8353 of 2022.

Refund of input tax credit - Letter of Undertaking (LUT) requirement - deficiency memo - procedural fairness in administrative processing - manual/physical filing where portal closed - non-rejection for manual filing

Manual/physical filing where portal closed - refund of input tax credit - deficiency memo - Petitioner entitled to file refund application and remove deficiencies manually where the online portal was closed - HELD THAT: - The Court observed that a deficiency memo had been issued pointing out absence of supporting documents and that the petitioner could not rectify the deficiencies online because the portal was closed. Emphasising that procedural rules exist to secure justice and not to defeat legitimate claims, the Court, without adjudicating the merits of the refund claim, allowed the petitioner to file an application manually to complete the requisite documents and cure the deficiencies. The Court directed that such manual filing be permitted for the purpose of enabling consideration of the refund application by the competent authority. [Paras 9, 10]

Petitioner permitted to file the refund application and remove deficiencies manually within two weeks

Procedural fairness in administrative processing - non-rejection for manual filing - Refund claim filed manually shall be considered on merits and shall not be rejected solely because it was made manually - HELD THAT: - The Court directed that if the petitioner files the application and removes deficiencies manually, the competent authority shall consider the claim and take an appropriate decision in accordance with law within a specified time. It expressly held that the claim would not be rejected on the ground that it was made manually, thereby precluding administrative dismissal for failure to use the online portal when the portal was unavailable. [Paras 10]

Competent authority to consider the manually filed claim on merits and not reject it for being manual; decision to be taken within six weeks

Letter of Undertaking (LUT) requirement - refund of input tax credit - Requirement to furnish LUT and other supporting documents remains for entitlement to refund; compliance to be completed by petitioner when filing manually - HELD THAT: - The Court noted the respondents' contention that a Letter of Undertaking had not been uploaded and that statutory rules require LUT and prescribed documents for refund claims. The Court did not decide the merits of the claim or the validity of the deficiency memos but directed that the petitioner complete the requisite documents, including those related to LUT as required under the statutory scheme, when filing manually so that the competent authority can consider the claim in accordance with law. [Paras 6, 10]

Petitioner to complete and furnish requisite documents, including LUT where required, when making manual submission for consideration

Final Conclusion: Writ petition disposed of by permitting the petitioner to file the refund application and cure deficiencies manually within two weeks; the competent authority shall consider the claim and decide in accordance with law within six weeks, and the claim shall not be rejected merely because it was filed manually.

Assessment order passed against deceased person is nullity - Quashing and remand for fresh assessment - Right to opportunity to explain discrepancies in GST returns - Statutory bar on extinguishing predecessor's tax liability

Assessment order passed against deceased person is nullity - Validity of assessment orders dated 22.06.2023 passed in the name of the deceased proprietrix - HELD THAT: - The petitioner's mother, who was proprietrix of the business, died on 13.05.2023, whereas the impugned assessment orders for the stated assessment years were passed on 22.06.2023 in her name. Relying on the principle that an assessment order passed against a person who has died is a nullity, the Court observed that the respondent proceeded to pass the impugned orders unaware of the death. The Court therefore held that the orders in the name of the deceased could not stand and directed quashing of those orders while remitting the matter for fresh consideration. [Paras 2, 3, 8, 9]

Impugned assessment orders passed in the name of the deceased are quashed and set aside; matter remitted for fresh consideration.

Right to opportunity to explain discrepancies in GST returns - Quashing and remand for fresh assessment - Statutory bar on extinguishing predecessor's tax liability - Scope and terms of remand - opportunity to explain discrepancies and interim condition for fresh proceedings - HELD THAT: - The petitioner asserted that discrepancies between GSTR-1, GSTR-3B and auto-populated credits in GSTR-2A required explanation and documentary substantiation. While noting that the petitioner could not, by fiat, extinguish any liability incurred by the deceased in light of the statutory bar on washing away predecessor's tax liability, the Court nevertheless recognised the petitioner's right to explain and substantiate the claimed discrepancies on merits. In exercise of its supervisory jurisdiction the Court remitted the matter to the respondents to pass fresh orders after giving the petitioner an opportunity to be heard, subject to an interim condition that the petitioner deposit 10% of the disputed tax before the respondent. [Paras 4, 5, 6, 8, 9]

Matter remitted for fresh assessment with directions to afford the petitioner opportunity to explain discrepancies; remand conditioned on deposit of 10% of disputed tax.

Final Conclusion: Writ petitions allowed: impugned assessment orders dated 22.06.2023 for assessment years 2017-18, 2018-19 and 2019-20 quashed; matter remitted to respondents for fresh consideration after affording petitioner an opportunity to explain discrepancies, subject to deposit of 10% of disputed tax.

Condonation of delay in filing statutory appeals - power of appellate authority to condone delay beyond 120 days - calculation of delay period for filing appeal under the CGST regime - remand for fresh consideration where delay is condoned

Power of appellate authority to condone delay beyond 120 days - Appellate authority possesses jurisdiction to condone delay in filing an appeal beyond 120 days under the GST legal scheme. - HELD THAT: - The Court relied on existing decisions of this High Court and held that the question whether the appellate authority can condone delay beyond 120 days is no longer res integra. The judgment records that precedents in MAT 81/2022 and Writ Petition No. 2904 of 2023 establish that the appellate authority under the GST Act has the power to condone delay exceeding 120 days. Having found the legal position settled by those authorities, the Court applied that principle to the present proceedings and concluded that the appellate authority erred in holding that no power to condone such delay existed. [Paras 6]

Held that the appellate authority has the power to condone delay beyond 120 days and that this settled principle governs the matter.

Calculation of delay period for filing appeal under the CGST regime - condonation of delay in filing statutory appeals - remand for fresh consideration - The appellate authority's computation of delay as 152 days was erroneous; after deducting the statutory period the actual delay was 53 days and the matter must be reconsidered with power to condone the delay. - HELD THAT: - The Court examined the chronology: the order in original is dated 08.02.2022 and the appeal was filed on 21.07.2022. Applying the statutory limitation period (three months) leaves a residual delay of 53 days. The appellate authority's finding of a 152-day delay was therefore incorrect. In light of the settled law that condonation beyond 120 days is permissible, the appellate authority ought to have considered condonation of the statutory delay while adjudicating the appeal. Consequently, the Court set aside the appellate order dismissing the appeal for delay and remanded the matter to the appellate authority for fresh consideration, including appropriate exercise of discretion on condonation and adjudication on merits. [Paras 7, 8, 9]

The finding of a 152-day delay is set aside; delay of 53 days is noted, the delay is condoned, and the matter is remanded to the appellate authority for fresh consideration.

Final Conclusion: The writ petition is allowed to the extent that the appellate order dismissing the appeal for delay is set aside; the delay is condoned and the matter is remitted to the appellate authority for fresh consideration in accordance with law.

Breach of principles of natural justice - opportunity of personal hearing - quashing of assessment order - reconsideration of assessment on merits - input tax credit claim - rejection of input tax credit under Section 16(4)

Breach of principles of natural justice - quashing of assessment order - Assessment order was set aside for failure to consider the assessee's reply and for not providing a personal hearing. - HELD THAT: - The petitioner filed a reply to the show cause notice on 18.12.2023 and uploaded proof on 20.12.2023, which is on record. The impugned assessment order does not refer to or deal with that reply and the petitioner was not afforded a personal hearing. In these circumstances the order suffers from breach of principles of natural justice warranting interference. The High Court quashed the impugned order and directed that the matter be reconsidered afresh by the assessing officer after providing a reasonable opportunity to the petitioner, including a personal hearing. [Paras 4, 5]

Impugned assessment order quashed for breach of natural justice; matter remanded for fresh consideration.

Opportunity of personal hearing - reconsideration of assessment on merits - input tax credit claim - rejection of input tax credit under Section 16(4) - Assessing officer directed to reconsider the assessee's input tax credit claim after permitting production of relevant documents and hearing, and to pass a fresh assessment order within a specified time. - HELD THAT: - The Court remitted the matter to the assessing officer to enable the petitioner to place all relevant documents on record to justify the input tax credit claim. The assessing officer is required to provide a reasonable opportunity, including a personal hearing, to the petitioner and thereafter issue a fresh assessment order. The fresh order is to be completed within two months from receipt of a copy of the High Court's order. While the judgment notes that rejection under Section 16(4) is the subject of other proceedings, it did not adjudicate that substantive controversy but mandated fresh consideration in light of the principles of natural justice. [Paras 5]

Assessing officer to reconsider ITC claim after hearing and documents; fresh assessment order to be passed within two months.

Final Conclusion: The assessment order dated 04.01.2024 is quashed for breach of natural justice; the matter is remitted to the assessing officer for fresh adjudication of the input tax credit claim after affording a reasonable opportunity including personal hearing, and a fresh order is to be passed within two months from receipt of this order.

Cancellation of GST registration - Belated GST return filing and levy of interest and fee - Revival of registration subject to compliance - Input Tax Credit scrutiny and conditioning - Prohibition on adjustment of tax liability from unutilized ITC - Portal facilitation by GST Network for filing and payment

Cancellation of GST registration - Belated GST return filing and levy of interest and fee - Petitioner to file returns for periods prior to cancellation with tax, interest and belated filing fee within 45 days - HELD THAT: - The Court directed that the petitioner shall file returns for the period prior to the cancellation of registration, if not already filed, and pay the tax dues together with interest and the fee fixed for belated filing within forty five days from receipt of the order. This direction is imposed as a condition for addressing the consequences of the cancellation and for further proceedings leading to restoration of registration.

Returns for the pre-cancellation period must be filed and tax, interest and belated filing fee paid within 45 days.

Prohibition on adjustment of tax liability from unutilized ITC - Input Tax Credit scrutiny and conditioning - Unutilized ITC cannot be used to make or adjust payments until scrutinised and approved by competent officer; only approved ITC may thereafter be utilised for future tax liabilities - HELD THAT: - The Court prohibited payment of tax, interest, fine or fee from any Input Tax Credit that may be lying unutilized or unclaimed in the hands of the petitioner. Any unutilized ITC shall not be utilised until it is scrutinised and approved by an appropriate or competent officer of the Department; only such approved ITC may subsequently be used to discharge future tax liabilities under the Act and Rules. This imposes a pre-condition of departmental scrutiny and approval before ITC utilisation.

Unutilized ITC shall not be adjusted towards dues and shall be utilisable only after departmental scrutiny and approval.

Revival of registration subject to compliance - Belated GST return filing and levy of interest and fee - Petitioner to file returns and pay GST for periods subsequent to cancellation declaring correct value of supplies; registration to be revived upon payment and uploading of returns - HELD THAT: - The Court directed that the petitioner shall pay GST and file returns for the period subsequent to the cancellation by declaring the correct value of supplies. Upon payment of tax and penalty and uploading of returns, the registration shall stand revived forthwith. The restoration is expressly made conditional upon fulfillment of these compliance requirements.

Post-cancellation period returns must be filed and dues paid; registration will be revived on compliance.

Portal facilitation by GST Network for filing and payment - Cancellation of GST registration - Respondent to instruct GST Network to modify portal architecture to enable petitioner to file returns and pay dues within 30 days - HELD THAT: - The Court directed the respondent to take suitable steps by instructing GST Network, New Delhi to make changes in the architecture of the GST web portal so as to allow the petitioner to file returns and to pay the tax, penalty and fine. The respondent was given thirty days from receipt of a copy of the order to carry out this exercise, thereby addressing the petitioner's contention about portal inaccessibility.

Respondent to arrange GSTN portal changes to enable filing and payment within 30 days.

Final Conclusion: Writ petition disposed by directing the petitioner to file and pay returns and dues for periods before and after cancellation (with prohibition on adjustment from unutilized ITC until departmental scrutiny), and by directing respondent to facilitate portal access; registration to be revived on compliance; no order as to costs.

Vires of subordinate legislation - jurisdiction to declare statute or circular ultravires - availability of alternative statutory remedy vis-a -vis exercise of writ jurisdiction under Article 226 - scope of appeal under Section 107 of the Central Goods & Services Tax Act, 2017

Vires of subordinate legislation - jurisdiction to declare statute or circular ultravires - availability of alternative statutory remedy vis-a -vis exercise of writ jurisdiction under Article 226 - High Court's competence to entertain a writ challenging the vires of a statutory circular and whether the statutory appellate forum under Section 107 can decide vires. - HELD THAT: - The Court held that while the existence of an alternative statutory remedy does not oust the High Court's power under Article 226, the High Court should ordinarily exercise its discretion with caution where an efficacious alternative remedy exists. However, where the writ-petition principally challenges the vires of a circular or a provision of subordinate legislation, the power to declare such provision or circular ultravires to the parent Act or the Constitution is vested in the Constitutional Court and not in the statutory appellate authority. Section 107 confers an appellate remedy against orders of the adjudicating authority but, in the court's view, does not empower the appellate authority to adjudicate on the constitutional vires of subordinate legislation. Consequently, when vires is the primary relief claimed, the High Court has the paramount duty to decide that issue rather than relegating the parties to the statutory appeal forum. [Paras 5, 6, 7]

The High Court must decide challenges to the vires of circulars or subordinate legislation; the appellate forum under Section 107 does not possess jurisdiction to declare such provisions ultravires, and the existence of a statutory appeal does not preclude exercise of writ jurisdiction in such cases.

Remand for adjudication - service on Deputy Solicitor General - Disposition of the impugned order and further directions for adjudication of the vires challenge. - HELD THAT: - The Court set aside the Single Bench's order refusing to entertain the writ on the ground of availability of an alternative remedy and remanded the writ-petition to the Single Bench for decision on the primary relief challenging the vires of the circulars, after affording hearing to the parties. The Court also directed that, because constitutional validity of statutory provisions/subordinate legislation is in issue, a copy of the writ petition/application be served immediately on the Deputy Solicitor General in the Circuit Bench. Liberty was granted to the parties to seek listing as per judicial convenience. [Paras 8, 9, 10, 11]

Impugned order set aside; writ-petition remanded to the Single Bench for adjudication on the vires challenge with opportunity of hearing and directed service upon the Deputy Solicitor General.

Final Conclusion: Impugned order refusing entertainment of the writ was set aside; because the primary relief challenges the vires of circulars/subordinate legislation, the High Court must decide that issue - the matter is remanded to the Single Bench for fresh hearing and adjudication, with directions for service on the Deputy Solicitor General and liberty for appropriate listing.

Validity of notice under section 143(2) of the Income-tax Act - Pecuniary jurisdiction of the Assessing Officer - CBDT Instruction No. 1/2011 fixing jurisdiction by returned income - Effect of notice issued by an officer lacking jurisdiction - Inapplicability of section 292BB where notice is wholly absent or nullity

Validity of notice under section 143(2) of the Income-tax Act - Pecuniary jurisdiction of the Assessing Officer - CBDT Instruction No. 1/2011 fixing jurisdiction by returned income - Effect of notice issued by an officer lacking jurisdiction - Inapplicability of section 292BB where notice is wholly absent or nullity - Assessment framed by an Assessing Officer who did not have pecuniary jurisdiction and where notice under section 143(2) was issued by a non-jurisdictional officer is invalid and the assessment is a nullity. - HELD THAT: - The Tribunal examined CBDT Instruction No.1/2011 which allocates pecuniary jurisdiction in metro cities according to returned income. The returned incomes in the present matters fell within the monetary threshold that vested jurisdiction with the ITO (and not the ACIT/DCIT) or vice versa, as prescribed by the Instruction. The statutory scheme requires a valid notice under section 143(2) issued by the competent Assessing Officer as a precondition to assume jurisdiction to frame assessment under section 143(3). A notice issued by an officer who lacked pecuniary jurisdiction is a nullity and cannot confer jurisdiction on the officer who subsequently framed the assessment. Section 292BB, which validates defective service of notice where the assessee has participated, does not cure a complete absence of a valid notice emanating from a competent officer; it is inapplicable where the notice itself is void for want of jurisdiction. The Tribunal distinguished the Apex Court authority relied upon by Revenue on the basis that in that case the assessee had participated and failed to raise jurisdictional objection within the prescribed time; by contrast, in these appeals the assessments were framed by officers without the jurisdiction mandated by the CBDT Instruction and no valid notice was issued by the jurisdictional AO. Applying these principles, the Tribunal held that the assessments for the stated years are bad in law and must be quashed, leaving merits open for future adjudication if necessary. [Paras 6, 8, 11]

Assessment orders for the stated years are quashed as nullities for want of jurisdiction; appeals allowed on legal ground and merits left open.

Final Conclusion: The Tribunal quashed the assessments for AY 2012-13 and AY 2013-14 as void for want of jurisdiction because the notices under section 143(2) and the final orders were issued/framed by officers not having pecuniary jurisdiction as fixed by CBDT Instruction No.1/2011; both appeals are allowed on this legal ground and merits are left open.

Dismissal for non-prosecution - consideration of appeals on merits - statutory obligation under Section 254 of the Income Tax Act - restoration of appeal - Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963

Dismissal for non-prosecution - consideration of appeals on merits - statutory obligation under Section 254 of the Income Tax Act - Whether the Income Tax Appellate Tribunal could lawfully dismiss the assessee's appeal for non-prosecution instead of adjudicating it on merits - HELD THAT: - The Division Bench held that the Appellate Tribunal, acting under the mandate of Section 254 of the Income Tax Act, is statutorily obliged to consider appeals on their merits and therefore cannot sustain a dismissal for non-prosecution without deciding the appeal on merits. The Court relied on the precedent of this Court in Uzhuva Service Co-operative Bank Ltd. v. Income Tax Officer where an identical situation was addressed and the Tribunal's power to dismiss for non-prosecution was held to be legally unsustainable. Applying that reasoning to the facts of this case, the Court found the Tribunal's dismissal of the appeal for non-prosecution to be improper and not in conformity with the statutory duty to decide appeals on merits. [Paras 5, 7]

Appellate Tribunal's dismissal of the appeal for non-prosecution set aside; such dismissals are not legally sustainable where Section 254 requires adjudication on merits.

Restoration of appeal - Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 - Whether the appeal should be restored and remitted to the Appellate Tribunal for fresh adjudication on merits - HELD THAT: - The Court noted that the assessee had not received notice of hearing or the dismissal order and that the application for restoration had been rejected by the Tribunal as belated. In view of the statutory obligation to decide appeals on merits and the Court's precedent, the Division Bench set aside the Tribunal's orders dismissing the appeal and the miscellaneous restoration application. The matter was directed to be restored to the Tribunal's file for hearing and decision on merits. The Court imposed a limited outer time-frame for compliance, directing the Tribunal to hear the appellant and decide the appeal on merits within six months from receipt of this judgment. [Paras 3, 8]

Appeal restored to the Appellate Tribunal (ITA 375/Coch/2016) and remitted for decision on merits after hearing the appellant within six months from receipt of this judgment.

Final Conclusion: Writ appeal allowed; impugned Single Judge order and the Appellate Tribunal orders dismissing the appeal and the restoration application set aside; appeal restored to the Tribunal for adjudication on merits within six months.

Powers of condonation of delay - Section 119(2) of the Income Tax Act, 1961 - timely filing of Income Tax Returns as a prerequisite for claiming deductions - deduction disallowance where return not furnished under Section 80AC - exercise of condonation power only for extraordinary circumstances - statutory compliance with prescribed timeframes

Powers of condonation of delay - Section 119(2) of the Income Tax Act, 1961 - exercise of condonation power only for extraordinary circumstances - timely filing of Income Tax Returns as a prerequisite for claiming deductions - deduction disallowance where return not furnished under Section 80AC - Validity of CBDT's refusal to exercise powers under Section 119(2) to condone delay in filing return for AY 2020-21 - HELD THAT: - The authority's refusal to invoke condonation was upheld. The court noted that although COVID-19 affected FY 2019-20, the statutory deadline for filing was extended to 15.02.2021 and the petitioner's financial statements were finalised and signed on 31.07.2020, yet the return was filed only on 30.03.2021. The authority recorded that the petitioner had a pattern of filing belated returns for multiple assessment years, undermining the contention that the delay was a one off aberration. The claim of financial distress was held to be an afterthought and was contradicted by the petitioner's profit and positive cash equivalents for the year, which disfavoured reliance on financial incapacity. The authority further noted the legal consequence that timely filing is a prerequisite for certain deductions and referred to the rule that deductions under the relevant provisions (as encapsulated by the requirement in Section 80AC) are not allowable unless return is furnished by the due date. The court accepted the authority's legal stance that the power under Section 119(2) is to be exercised only in extraordinary circumstances and not routinely for inadvertence or negligence, and found no error in applying that principle on the facts of the case. [Paras 5, 6, 7]

The refusal to condone the delay in filing the return for AY 2020-21 was unimpeachable and the writ petition is dismissed.

Final Conclusion: The High Court affirmed the CBDT's refusal to exercise condonation powers under Section 119(2) for the return relating to AY 2020-21, holding that the delay was not caused by extraordinary circumstances, the petitioner had filed belated returns repeatedly, financial hardship was not established, and timely filing is material to entitlement to certain deductions; the writ petition is dismissed.

Preliminary enquiry under Section 148A of the Income tax Act - notice under Section 148 - income escaping assessment - accommodation entries - Suspicious Transaction Report (STR) - writ jurisdiction under Article 226

Preliminary enquiry under Section 148A of the Income tax Act - notice under Section 148 - income escaping assessment - accommodation entries - Suspicious Transaction Report (STR) - writ jurisdiction under Article 226 - Challenge to initiation of proceedings under Section 148 consequential to a notice issued under Section 148A(b) alleging accommodation entries and escaped income for AY 2017-18 - HELD THAT: - The respondents relied upon bank statements and an STR based enquiry suggesting that certain receipts involving M/s Metal Impex were accommodation entries and that an amount appeared to have escaped assessment for AY 2017 18, prompting issuance of a notice under Section 148A(b) and consequential notice under Section 148. The petitioner, in response, sought production of the STR or other material but did not deny the transactions nor produced GST invoices or other documents placed before the Court. Having regard to the limited scope of a writ under Article 226 and the material before the Court, the petitioner failed to establish any illegality or breach of jurisdiction in the formation of the tentative opinion to proceed under Section 148. There was therefore no basis for interference with the respondents' decision to issue the notice, and the writ petition could not be sustained. The Court expressly left open the petitioner's rights to raise contentions before the Assessing Officer. [Paras 4, 5, 6]

Writ petition dismissed for failure to establish grounds for interference; petitioner may pursue contentions before the Assessing Officer.

Final Conclusion: The petition challenging the Section 148A(b) notice and consequential notice under Section 148 for AY 2017 18 is dismissed for lack of merit, without prejudice to the petitioner's rights to address the Assessing Officer.

Disallowance under section 40A(3) of the Income Tax Act - Deemed income under section 40A(3A) of the Income Tax Act - Exception under proviso to section 40A(3A) and Rule 6DD(j) - payment on a day when banks were closed - Onus of proof on the assessee to establish exigency and receipt by the payee - Cash payment limit and traceability to prevent false expenditure

Disallowance under section 40A(3) of the Income Tax Act - Exception under proviso to section 40A(3A) and Rule 6DD(j) - payment on a day when banks were closed - Onus of proof on the assessee to establish exigency and receipt by the payee - Whether the cash payments of Rs. 3,47,717/- made on 31.03.2013 are exempt from disallowance under the proviso to section 40A(3A) read with Rule 6DD(j) on account of the day being a bank holiday. - HELD THAT: - The Court accepted the reasoning of the authorities below that although Rule 6DD(j) and the proviso to section 40A(3A) carve out an exception where payments were required to be made on a day on which banks were closed, the onus rests on the assessee to prove that such exigent circumstances existed and that payments were in fact made in cash and received by the payees. The assessee, a cloth merchant, produced no credible documentary evidence to explain why payments had to be made on 31.03.2013 or why payment by cheque was not feasible despite it being a bank holiday, nor did he produce documents showing receipt or declaration of the amounts by the payees. The Commissioner (Appeals) correctly recorded these deficiencies and upheld the disallowance under section 40A(3). The Tribunal affirmed that finding. In view of the absence of believable evidence satisfying the prescribed exception, the payments could not be held to fall within Rule 6DD(j) or the proviso to section 40A(3A), and the disallowance was rightly sustained. [Paras 7, 8, 9]

The disallowance under section 40A(3) / deemed income under section 40A(3A) stands upheld because the assessee failed to prove the applicability of the bank holiday exception under Rule 6DD(j); the writ petition is dismissed.

Final Conclusion: The High Court dismissed the writ petition, upholding the orders of the Commissioner (Appeals) and the Tribunal which sustained the disallowance of the cash payments for AY 2013-14 under section 40A(3)/40A(3A) since the assessee failed to prove entitlement to the bank holiday exception under Rule 6DD(j).

Admissibility of electronic evidence - requirement of E-certificate under Section 65B of the Indian Evidence Act for reliance on electronic records - corroboration of electronic data - binding nature of the CBDT Digital Evidence Investigation Manual issued under Section 119 of the Income-tax Act - reliance on electronic data in absence of statutory certification only if supported by corroborative evidence

Admissibility of electronic evidence - requirement of E-certificate under Section 65B of the Indian Evidence Act for reliance on electronic records - corroboration of electronic data - binding nature of the CBDT Digital Evidence Investigation Manual issued under Section 119 of the Income-tax Act - Whether an addition based solely on electronic data seized during search can be sustained in absence of a certificate under Section 65B and without corroborative evidence - HELD THAT: - The Tribunal examined the fact that the Revenue did not produce the statutory E-certificate under Section 65B for the electronic data relied upon. It applied the principle, as discussed in the cited Madras High Court decision, that the CBDT's Digital Evidence Investigation Manual issued under Section 119 is mandatory for Income-tax authorities and, consequently, where the procedure prescribed by the Manual and the statutory certification under Section 65B are not complied with, the electronic record may be relied upon only if supported by independent corroborative evidence. The Tribunal found that the sale deed relied upon by the Revenue did not mention payment or liability of interest and therefore did not corroborate the WhatsApp-derived electronic entry purporting to show interest payable to the assessee. In the absence of the Section 65B certificate and any corroborative material establishing that the interest was payable or received, the addition could not be sustained and was held to be founded on suspicion rather than concrete evidence. [Paras 6, 7, 8]

Addition of Rs. 60,26,040/- based solely on the electronic data without statutory certification and without corroboration is deleted; appeal allowed.

Final Conclusion: The addition sustained by the authorities on the basis of the electronic data is set aside for want of a Section 65B certificate and absence of corroborative evidence; the assessee's appeal is allowed.

Reopening of assessment - reasons recorded under section 148(2) of the Act - addition under section 69C of the Act - assessment framed under section 147 read with section 143(3) of the Act

Reopening of assessment - reasons recorded under section 148(2) of the Act - assessment framed under section 147 read with section 143(3) of the Act - Validity of the reassessment where additions made did not correspond to the matter recorded in the reasons for reopening - HELD THAT: - The Tribunal found that the reasons recorded under section 148(2) alleged accommodation entries of Rs. 38,75,000/- from M/s Chakradhari Industries. The factual position, however, was that the assessee had recorded purchases of raw material from that party totalling Rs. 47,03,192/-, payments of Rs. 38,75,000/- and an outstanding balance; the assessee had not received any money as alleged. Because no addition was made on the specific issue recorded in the reasons and the AO proceeded to make additions on a different count, the reassessment framed under section 147 read with section 143(3) was held to be without jurisdiction and invalid. The Tribunal relied on precedents of the Calcutta High Court and coordinate Benches which treat additions outside the scope of reasons recorded as vitiating the reassessment. [Paras 7]

Reassessment quashed as invalid because additions did not correspond to the subject-matter of the reasons recorded under section 148(2).

Addition under section 69C of the Act - Sustainability of addition under section 69C where purchases and payments were recorded in books and sources were explained - HELD THAT: - Section 69C applies to unexplained expenditure where the assessee offers no satisfactory explanation about the source. In the present case the assessee had recorded the purchases in its books and disclosed the payments made to M/s Chakradhari Industries with explained sources. The Tribunal concluded that the source of the expenditure was explained and, accordingly, the addition under section 69C was not sustainable. This formed an independent ground for setting aside the assessment. [Paras 7]

Addition under section 69C set aside as unsustainable because the expenditure and its source were recorded and explained.

Assessment framed under section 147 read with section 143(3) of the Act - Disposition of additional grounds raised on merits - HELD THAT: - The Tribunal allowed the appeal on the legal issues noted above and expressly did not decide the merits of other grounds raised by the assessee. Those merit grounds have been left open for future adjudication if required, i.e., they were not finally decided and may be considered later as necessary. [Paras 8]

Merit grounds not decided and left open for future adjudication.

Final Conclusion: The appeal is allowed: the reassessment framed under section 147 read with section 143(3) is quashed as without jurisdiction because additions did not correspond to the reasons recorded under section 148(2), and the addition under section 69C is held unsustainable; other merit grounds are left open.

Registration under section 80G(5)(iii) - Provisional registration and final registration - Time limit for application under the first proviso to section 80G(5) - Extension of filing date by CBDT Circulars - Application in Form No. 10AB under Rule 17A - Effect of amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

Registration under section 80G(5)(iii) - Time limit for application under the first proviso to section 80G(5) - Extension of filing date by CBDT Circulars - Application in Form No. 10AB under Rule 17A - Maintainability of the assessee's application in Form No.10AB under section 80G(5)(iii) and whether it was time barred - HELD THAT: - The Tribunal found that the Commissioner misconstrued the statutory time limit by treating the application as barred because it was filed beyond six months of commencement of activities. The Board (CBDT) had repeatedly extended the deadline for filing applications under the first proviso to section 80G(5), and those extensions were material to the question of maintainability. Taking the latest extension into account, the Tribunal held that the time limit for filing the application in Form No.10AB remained available to the assessee up to the end of June, 2024. Given that the assessee had prior approval under the pre amendment regime and there was no change in its charitable activities, the Form No.10AB filing could not be rejected as time barred. [Paras 7, 8]

Application in Form No.10AB under section 80G(5)(iii) was not time barred and was maintainable; the Commissioner erred in rejecting it on the ground of delay.

Provisional registration and final registration - Entitlement to five-year registration under clause (i) of the first proviso - Effect of amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Whether the assessee, an existing institution previously approved under the pre amendment regime, was entitled to final (five year) approval rather than provisional certification and whether the Commissioner misapplied the procedural route - HELD THAT: - The Tribunal noted that institutions approved under the pre amendment regime were required to apply under clause (i) of the first proviso and, if so, were to be granted approval for five years without enquiry. The Commissioner had granted provisional certification and subsequently cancelled/denied regular registration on the mistaken view that the six month-from commencement rule applied. The Tribunal held that, on the material before it (including prior registration and unchanged charitable activities), there was no justification for denying final registration on the basis adopted by the Commissioner. The authority's procedure in first granting a provisional certificate and then refusing regular registration represented a misconstruction of the statutory scheme and the facts. [Paras 7, 8]

Commissioner misapplied the scheme; the assessee was entitled to registration under section 80G(5) and the Commissioner was directed to grant registration under section 80G(5)(iii) and issue the necessary certificate.

Final Conclusion: The appeal is allowed: the Tribunal held the Form No.10AB application was maintainable in view of CBDT extensions and that the Commissioner misconstrued the statutory scheme and facts; the Commissioner is directed to grant registration under section 80G(5)(iii) and issue the certificate in due course.

Exercise of option under section 115BAA - filing Form 10-IC - mandatory versus directory requirement - substantive right versus procedural requirement - beneficial interpretation - condonation of delay - reliance on precedent distinguishing Wipro Limited

Exercise of option under section 115BAA - filing Form 10-IC - mandatory versus directory requirement - substantive right versus procedural requirement - beneficial interpretation - condonation of delay - reliance on precedent distinguishing Wipro Limited - Delay in filing Form 10-IC did not disentitle the assessee from availing the concessional tax rate under section 115BAA for AY 2022-23 - HELD THAT: - The Tribunal noted that while sub-section (5) of section 115BAA prescribes filing Form 10-IC on or before the due date for furnishing the return, the facts showed the assessee had declared the option for the concessional regime in the tax audit report (Form 3CD) filed before the due date and subsequently filed Form 10-IC belatedly during assessment proceedings. The Tribunal distinguished the decision in Principal Commissioner of Income Tax-III, Bangalore v. M/s Wipro Limited on the ground that Wipro arose from a different statutory and factual matrix and concerned an exemption/deduction regime where the Supreme Court had held timing to be mandatory. Applying the principle that procedural requirements should not defeat substantive rights, and relying on authorities (as discussed in the order) holding that certain supporting filings are directory and may be allowed if produced during assessment, the Tribunal held that the omission to e-file Form 10-IC before the due date was a procedural lapse which did not nullify the assessee's substantive entitlement to the benefit of section 115BAA once eligibility was undisputed and Form 10-IC was filed during assessment. The Tribunal also observed administrative practice reflected in CBDT circulars and the principle of beneficial interpretation in favour of claimants of statutory incentives. On these bases the Tribunal allowed the ground and set aside the CIT(A)'s order. [Paras 6, 8, 9]

Ground No.1 allowed; the assessee is entitled to taxation under section 115BAA for AY 2022-23 despite belated filing of Form 10-IC

Final Conclusion: The order of the CIT(A) is set aside and the appeal is partly allowed by permitting the assessee to avail the concessional tax rate under section 115BAA for AY 2022-23; alternative and general grounds were not adjudicated.

Penalty for failure to furnish tax audit report under Section 271B - Requirement to obtain prior approval before imposing penalty exceeding prescribed limits - Validity of service of penalty order and limitation - Obligation to get accounts audited and furnish audit report under Section 44AB

Requirement to obtain prior approval before imposing penalty exceeding prescribed limits - Whether an order imposing penalty of more than the prescribed threshold is valid when it does not record prior approval of the Joint Commissioner as required under the procedure for imposition of penalty. - HELD THAT: - The Tribunal found from the penalty order that there was no recital stating that prior approval of the Joint Commissioner had been obtained before imposing a penalty exceeding the threshold applicable to subordinate officers. The Revenue could not demonstrate that such approval was in fact taken. Reliance on precedent emphasises that where the requisite approval is not recorded in the order, the penalty order is incompetent and a nullity. In consequence the Tribunal concluded that the penalty order could not stand and has to be set aside; the Revenue remains free to proceed afresh if it can legitimately show that prior approval was obtained. [Paras 16, 17]

Penalty order set aside for lack of recorded prior approval of the Joint Commissioner; order declared incompetent and nullity.

Penalty for failure to furnish tax audit report under Section 271B - Obligation to get accounts audited and furnish audit report under Section 44AB - Whether the notice and the grounds for invoking penalty under Section 271B were valid on the merits in respect of failure to get accounts audited and to furnish the audit report. - HELD THAT: - On facts the Tribunal accepted the Assessing Officer's finding that the assessee failed to get its accounts audited within the stipulated time and did not furnish the audit report required under Section 44AB. The Tribunal found that the assessee did not furnish any reason before the lower authorities explaining the failure to obtain the audit or to file the report, and distinguished the authorities cited by the assessee where plausible reasons and delayed filing had been shown. Accordingly, the show-cause notice and the substantive basis for invoking Section 271B were held to be valid. [Paras 9]

Notice and substantive grounds for penalty under Section 271B upheld on merits (assessee committed the defaults and offered no satisfactory explanation).

Validity of service of penalty order and limitation - Whether the penalty order was barred by limitation or invalid for want of service on the assessee. - HELD THAT: - The Tribunal examined the dates and records relied upon by the Assessing Officer and noted that the penalty order dated 15-03-2022 fell within the extended limitation date of 31-03-2022, rendering the limitation objection untenable. As to service, the Tribunal accepted the Assessing Officer's record showing e portal posting and a postal verification identifier, and did not find merit in the contention that the order had not been served. [Paras 10, 11]

Limitation and service objections rejected; penalty order not barred by limitation and service was held to be validly effected.

Final Conclusion: The appeal is allowed; although the substantive invocation of Section 271B was sustained, the penalty order of Rs. 150,000/- is set aside because it was passed without recording prior approval of the Joint Commissioner; Revenue may proceed further only if it can establish that the requisite prior approval was in fact obtained.

Section 68 unexplained cash credit - section 10(38) exemption on long-term capital gains - role of documentary evidence in proving genuineness of share transactions - STT and regulated stock-exchange transactions as indicia of genuineness - preponderance of probability - section 142(3) opportunity of being heard

Section 68 unexplained cash credit - section 10(38) exemption on long-term capital gains - role of documentary evidence in proving genuineness of share transactions - STT and regulated stock-exchange transactions as indicia of genuineness - preponderance of probability - Deletion of addition made under section 68 by denying exemption under section 10(38) in respect of long-term capital gains on sale of listed shares for AY 2013-14 and AY 2014-15. - HELD THAT: - The Tribunal found that the assessee produced contemporaneous and uncontroverted documentary evidence showing preferential allotment, payment through banking channels, dematerialisation, contract notes, sale on the recognised stock exchange through SEBI-registered brokers and receipt of sale proceeds into the assessee's bank account with STT having been paid. The Assessing Officer's conclusion rested on general investigatory reports, an alleged unusual rise in share prices and reliance on the doctrine of preponderance of probability without adducing cogent material to controvert the assessees' documents or to establish the assessee's participation in price rigging or accommodation entries. The Tribunal held that where the assessee discharges its evidentiary burden by producing reliable documentary proof of genuine transactions on the stock exchange, the burden shifts to the Revenue to establish bogusness, and mere suspicion or conjecture based on investigative reports is insufficient to sustain an addition under section 68. The Tribunal accordingly applied precedents of the jurisdictional High Court in similar factual matrices and concluded that the additions could not be sustained. [Paras 10, 11, 15, 16]

Addition under section 68 relating to sale proceeds of listed shares (challenged denial of exemption under section 10(38)) deleted for AY 2013-14 and AY 2014-15; grounds allowed.

Section 142(3) opportunity of being heard - role of documentary evidence in proving genuineness of share transactions - Validity of the assessment where the Assessing Officer relied on material gathered under inquiry but did not comply with the mandatory requirement of section 142(3) to give the assessee an opportunity of being heard in respect of such material. - HELD THAT: - The Tribunal emphasised that section 142(2) empowers the AO to make inquiries, but section 142(3) uses the word 'shall' and mandates that the assessee be given an opportunity of being heard in respect of any material gathered by such inquiry which is proposed to be used for assessment. The Tribunal held that non-compliance with section 142(3) when the AO proposes to utilise material gathered under inquiry undermines the validity of the assessment, noting that the first appellate authority's view that denial of cross-examination did not vitiate the assessment was inconsistent with the statutory requirement. In the factual matrix, the lack of compliance with section 142(3), coupled with absence of cogent material contradicting the assessee's documentary evidence, weighed against sustaining the additions. [Paras 13, 14]

Assessment completed without compliance with section 142(3) was held to be vitiated to the extent material gathered under inquiry was proposed to be used; such non-compliance contributed to disallowance of the additions.

Final Conclusion: On the facts and documentary record, additions made under section 68 in respect of sale proceeds of listed shares (and consequent denial of exemption under section 10(38)) for AY 2013-14 and AY 2014-15 were deleted; the Tribunal also held that failure to comply with the mandatory requirement of section 142(3) to give the assessee an opportunity of being heard vitiated the assessment reasoning based on inquiry material. Appeals allowed.

Disallowance under Section 40A(2)(b) of the Income-tax Act - fair market value - benchmarking interest rate - related parties - burden of proof under Section 68 of the Income-tax Act - unexplained cash credits

Disallowance under Section 40A(2)(b) of the Income-tax Act - related parties - Disallowance under Section 40A(2)(b) made in respect of payments to unrelated parties - HELD THAT: - The Tribunal held that Section 40A(2)(b) can be invoked only in respect of payments to persons who are related parties as envisaged by that provision. The Tax Audit Report, relied upon by the assessee, identified only three related parties; the Assessing Officer has not brought any material to demonstrate that other payees were related parties within the meaning of the provision. In absence of a finding that the recipients were specified persons under Section 40A(2)(b), the disallowances made in respect of payments to unrelated parties could not be sustained and were liable to be deleted. [Paras 5, 10]

Disallowance under Section 40A(2)(b) in respect of unrelated parties deleted.

Fair market value - benchmarking interest rate - Validity of adopting 11% as the 'fair market value' rate of interest for making disallowance - HELD THAT: - The Tribunal observed that the Assessing Officer and the CIT(A) failed to bring on record any comparable material to establish the prevailing market rate of interest or to demonstrate that the rate paid was excessive vis-a -vis fair market value. Reliance was placed on judicial authorities holding that mere payment of different rates to different parties does not, without more, justify a finding of excess; the AO must ascertain and record the fair market rate and afford the assessee an opportunity to be heard. Given the absence of any benchmark or other material and having regard to facts such as unsecured, high-risk nature of funds and additional evidence filed under Rule 46A (benchmarked rates), the impugned disallowance founded on adopting 11% as fair market value was not sustainable. [Paras 11, 12, 13]

Adoption of 11% as the fair market rate and the resulting disallowance is set aside; the disallowance is not sustained.

Burden of proof under Section 68 of the Income-tax Act - unexplained cash credits - Addition under Section 68 in respect of unsecured loans treated as unexplained - HELD THAT: - The Tribunal found that the assessee furnished substantial documentary evidence (confirmations, PAN, ITR acknowledgements, bank statements) to establish identity, genuineness and creditworthiness of the lenders, thereby discharging the initial onus under Section 68. The Assessing Officer made no independent enquiries (for example under sections 131/133(6)) nor did he record any specific infirmity in the documents; the CIT(A) failed to consider the additional evidence filed on appeal or to note any adverse remarks in the remand report. In these circumstances the addition treated as unexplained loans under Section 68 could not be sustained. [Paras 16, 17, 19]

Additions under Section 68 deleted; assessee's evidences held sufficient and addition is not sustained.

Final Conclusion: The appeal is allowed: disallowances under Section 40A(2)(b) in respect of unrelated parties are deleted; the benchmarking of interest at 11% as fair market value is set aside; additions under Section 68 treating unsecured loans as unexplained are deleted, and the Assessing Officer is held to have failed to discharge the onus of establishing infirmities in the evidences produced by the assessee.

Capital gains exemption under Section 54 - date of acquisition for under construction property - date of possession/occupancy certificate - substance over form - substantive completion and payment as determinative of purchase - commencement of construction prior to transfer not a bar to claim under Section 54 - precedential application of CIT v. Beena K. Jain - possession/payment as relevant date

Capital gains exemption under Section 54 - date of acquisition for under construction property - date of possession/occupancy certificate - commencement of construction prior to transfer not a bar to claim under Section 54 - precedential application of CIT v. Beena K. Jain - possession/payment as relevant date - Whether the assessee was entitled to deduction under Section 54 for AY 2016-17 where the agreement to purchase the new (under construction) property was executed more than one year prior to sale but occupancy certificate, final payment and possession occurred within the permissible period. - HELD THAT: - The Tribunal examined the substance of the transaction and the relevant dates: agreement to purchase executed when the property was under construction, occupancy certificate received by the developer on 16.09.2015, final payment and possession occurring on 03.11.2015 and 16.11.2015 respectively, all within two years from the date of agreement to sell the original asset (22.07.2015). Relying on the jurisdictional precedent in CIT v. Smt. Beena K. Jain and co ordinate decisions, the Tribunal held that where no residential house existed at the date of the booking agreement, the relevant date for claiming exemption under Section 54 is the date when the purchase is substantially completed - manifested by payment of consideration, obtaining occupancy/ completion certificate and handing over of possession. The fact that construction had commenced prior to transfer was not held to be a disqualifying factor, since Section 54 does not prescribe a time limit for commencement of construction and the determinative consideration is completion/possession within the statutory period. Applying these principles to the admitted facts, the Tribunal concluded that the assessee acquired dominion over the new residential house within the prescribed period and thus satisfied the statutory requirement for exemption under Section 54. [Paras 6]

Claim for exemption under Section 54 is allowed as the date of possession (16.11.2015), together with occupancy certificate and final payment, constitutes the relevant date of acquisition and falls within the prescribed period.

Final Conclusion: Appeal allowed: deduction under Section 54 granted for AY 2016-17 on the basis that, for an under construction purchase, acquisition is to be treated as occurring when the property is substantially completed and possession/occupancy and payment are effected within the statutory period.

Maintainability of appeal - representation of deceased assessee / legal heir - defect in appeal form (Form No.36) - incomplete record on file - dismissal for procedural infirmity without adjudication on merits - liberty to refile appeal upon cure of defects

Maintainability of appeal - representation of deceased assessee / legal heir - defect in appeal form (Form No.36) - Appeal filed by the Assessing Officer in the name of the deceased assessee without naming or representing the legal heir is not maintainable. - HELD THAT: - The Tribunal found that the appeal was lodged in the name of the deceased assessee although the assessment order itself was passed in the name of the deceased through his legal heir. The appeal papers, including Form No.36 and the authorization memo, identified the respondent as the deceased person and made no mention of the legal heir who had been placed on record during assessment proceedings. The Tribunal held that an appeal cannot be prosecuted in the name of a dead person and treated this defect as a fundamental infirmity. The Tribunal therefore dismissed the appeal on this ground, while granting the Department liberty to refile the appeal after filing a revised Form No.36 and explaining any delay. [Paras 7, 8, 9, 11]

Appeal dismissed as not maintainable because filed in the name of the deceased without naming the legal heir; liberty granted to file a fresh/revised appeal with corrected Form No.36 and reasons for delay.

Incomplete record on file - dismissal for procedural infirmity without adjudication on merits - Failure to place the complete appellate order of the CIT(A) on file constituted an additional procedural defect warranting dismissal without deciding the merits. - HELD THAT: - The Tribunal noted that the Assessing Officer had not placed pages 5 to 33 of the CIT(A)'s appellate order on record and that only the last line indicating that the appeal was allowed was available. This omission rendered the appeal record incomplete. Coupled with the fundamental defect of prosecuting the appeal in the name of the deceased, the Tribunal exercised its authority to dismiss the appeal on procedural grounds without entering into the substantive merits of the case. The Tribunal made clear that the dismissal was procedural and did not preclude the Department from refiling the appeal after curing defects. [Paras 5, 10, 12]

Appeal dismissed on account of incomplete record and other procedural infirmities; merits not considered; Department permitted to refile after curing defects.

Final Conclusion: The Tribunal dismissed the Assessing Officer's appeal on procedural grounds-primarily because it was filed in the name of the deceased without naming the legal heir and because the record was incomplete-declining to decide the substantive issues, and granted the Department liberty to file a fresh/revised appeal after curing the defects and explaining any delay.

Treatment as unexplained money under section 69A - search and seizure - books of account and cash book as evidentiary proof

Treatment as unexplained money under section 69A - books of account and cash book as evidentiary proof - search and seizure - Whether the sum of cash found during the search could be treated as unexplained money and added to the assessee's income under section 69A, having regard to the balance sheet and cash book produced by the assessee and the explanations offered. - HELD THAT: - The assessee produced before the Assessing Officer and on appeal a balance sheet and cash book showing a cash balance recorded in regular books and explained the cash found as accumulated savings and gifts received by family members, with some amounts attributable to contributions received in the course of social activities. The Commissioner of Income Tax (Appeals) rejected the explanation on the ground that no documentary evidence was furnished during the search and relied on the perceived deviation from the statement recorded under section 132(4). The Tribunal observed that the assessee had in fact filed the books of account and the cash book and specifically relied on the written submissions (para 1.4 reproduced at page 8 of the impugned order) showing a recorded balance close to the cash found and explaining the residual difference. The Tribunal found no material on record contradicting the assessee's claim or justifying affirmation of the addition. Because the documents demonstrating the source and recording of the cash were before the authorities and the Revenue did not produce contrary material, the addition under section 69A was not sustainable and was deleted.

Addition of the cash amount treated as unexplained money under section 69A deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2019-20 by deleting the addition of the cash amount treated as unexplained money under section 69A, concluding that the assessee had produced the balance sheet and cash book and offered a satisfactory explanation which the Revenue failed to rebut.

Classification under Customs Tariff Heading 2008 19 20 - specific tariff entry prevailing over a general entry - binding effect of a Customs Authority for Advance Rulings decision - fitness for human consumption as determined by FSSAI testing - provisional release of seized/imported goods subject to conditions - jurisdiction of the High Court under Article 226 to order release of goods

Binding effect of a Customs Authority for Advance Rulings decision - classification under Customs Tariff Heading 2008 19 20 - The question of tariff classification for roasted areca/betel nuts - HELD THAT: - The Court recorded the CAAR ruling that roasted betel/areca nuts fall under CTH 2008 19 20 and noted that the Division Bench of this Court affirmed that ruling. Consequently, the classification issue stands resolved for the present proceedings and need not be re-examined by this Court. The CAAR ruling, having been made in proceedings to which the customs authorities were parties, is binding on the parties under the statutory scheme relied upon by the Court. The Division Bench's reasoning that a specific tariff entry prevails over a general entry and that HSN explanatory notes are a guiding aid was accepted and left undisturbed. [Paras 8, 9, 10]

Classification of roasted areca nuts is fixed as CTH 2008 19 20 and is not re-opened in these petitions.

Fitness for human consumption as determined by FSSAI testing - FSSAI accredited laboratory testing of jointly drawn samples - Whether the consignments imported contain roasted areca nuts fit for human consumption - HELD THAT: - Pursuant to court directions, samples were jointly drawn and tested by an FSSAI-accredited laboratory. The laboratory reports, placed on record, consistently concluded that the samples are roasted arecanut and conform to the standards specified in Regulation 2.3.55 of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 and relevant contaminants/toxins regulations. The Court treated those findings as determinative of the factual question whether the goods were roasted areca nuts and fit for human consumption. [Paras 11, 12, 13, 14]

The tested consignments are roasted areca nuts and are fit for human consumption as per the FSSAI-accredited laboratory reports.

Jurisdiction of the High Court under Article 226 to order release of goods - provisional release of seized/imported goods subject to conditions - Whether this Court may direct release (provisional or otherwise) of the consignments despite customs authorities having power to provisionally release under the Customs Act - HELD THAT: - The Court acknowledged that adjudicating authorities have power under the Customs Act to provisionally release goods on application and security, but held that the existence of that power does not operate as an absolute bar to exercise of the High Court's jurisdiction under Article 226 in appropriate cases. Given the settled classification, the FSSAI findings on the samples, and unresponded representations made by the petitioners seeking release, the Court concluded that exercise of writ jurisdiction was justified. The Court therefore directed release subject to compliance with specified conditions, without precluding the respondents from undertaking assessment under the Customs Act. [Paras 15, 16, 17]

The High Court may exercise its Article 226 jurisdiction to direct release of the consignments in the circumstances of these cases; the release may be ordered subject to conditions.

Provisional release of seized/imported goods subject to conditions - payment of applicable duties and execution of bond for differential duty - Terms and conditions on which the consignments are to be released - HELD THAT: - The Court directed release of specific consignments to the petitioners on fulfillment of enumerated conditions: payment of all applicable taxes and duties; execution of a personal bond for the differential duty if the goods were classified under the general heading instead of the specific roasted-nut heading; submission of requisite certificates (e.g., phytosanitary); consideration of any request for waiver of demurrage; and proviso that respondents may continue assessment under the Customs Act. The Court ordered provisional release within 48 hours of satisfaction of these conditions and declined to award costs. [Paras 18]

Consignments to be provisionally released within 48 hours on payment of applicable duties, execution of the required bond, submission of certificates and compliance with other conditions specified by the Court.

Final Conclusion: Writ petitions allowed in part: classification held to be CTH 2008 19 20; FSSAI-accredited laboratory reports establish the consignments as roasted areca nuts fit for human consumption; High Court exercised Article 226 jurisdiction to direct provisional release of specified consignments subject to payment of applicable duties, execution of a bond for differential duty, submission of requisite certificates and other conditions; respondents retain the power to assess under the Customs Act.

Deemed export - refund of terminal benefit of excise duty - automatic grant of refund under Chapter 7 of the Foreign Trade Policy - certificate by Department of Atomic Energy as determinative of eligibility - treatment of deemed exports on par with physical exports - eligibility conditions for deemed exports (list 33 / project capacity / Joint Secretary certification)

Deemed export - refund of terminal benefit of excise duty - certificate by Department of Atomic Energy as determinative of eligibility - automatic grant of refund under Chapter 7 of the Foreign Trade Policy - Petitioner entitled to refund of Terminal Benefit of Excise Duty (TED) as deemed export and respondents' orders rejecting the claim quashed. - HELD THAT: - The Court examined Chapter 7 of the Foreign Trade Policy and recorded the eligibility criteria for supplies to nuclear power projects to qualify as deemed exports, namely (i) goods specified in list 33 at Sl. No. 511 of the relevant notification, (ii) project capacity of 440 MW or more, and (iii) certification by an officer not below the rank of Joint Secretary in the Department of Atomic Energy. The Court held that deemed exports are a creation of the Export-Import Policy and are treated on par with physical exports, entitling suppliers to refund of excise duty where the conditions are satisfied. The material on record, including the recommendation/certificate from the atomic energy department dated 09.11.2015 and the contract terms indicating entitlement to TED and the third respondent's obligation to forward the beneficiary's certificate, established the petitioner's statutory entitlement. The respondents' rejection without adequately considering those documents and without personal hearing was unsustainable. Consequently, the Court quashed the impugned orders and directed the implementing authority to grant the refund based on the atomic energy department's recommendation within a stipulated period. [Paras 7, 8, 9, 10]

Impugned orders dated 16.07.2020 and 21.07.2020 quashed; respondents directed to grant refund of TED to the petitioner based on the atomic energy department recommendation dated 09.11.2015 within twelve weeks.

Final Conclusion: Writ petition allowed; orders rejecting the claim for refund of Terminal Benefit of Excise Duty quashed and respondents directed to grant the refund in accordance with the Department of Atomic Energy recommendation within twelve weeks; no costs.

Transfer of winding up proceedings to NCLT under fifth proviso to Section 434(1)(c) - custodia legis and irreversibility test for transfer - deposit of liquidation costs as condition for transfer - treatment of transferred winding up petition as initiation of CIRP under the IBC - restraint on alienation of assets pending initiation of CIRP - invitation of claims under Rule 148 and protection of workmen's claims under Section 53 read with IBC regulations

Transfer of winding up proceedings to NCLT under fifth proviso to Section 434(1)(c) - Transfer of Company Petition No. 317 of 2012 to the NCLT, Mumbai - HELD THAT: - The Court applied the fifth proviso to Section 434(1)(c) and the authorities cited (including A. Navinchandra Steels Pvt. Ltd., Kaledonia and Action Ispat) to conclude that the Company Court retains discretion to transfer a pending winding up petition to the NCLT even after admission, provided no irreversible steps have been taken. On the facts the Official Liquidator was not in possession of the company's properties (possession having been handed over to secured creditors/assignees) and no irreversible actions had been taken by the Official Liquidator that would preclude transfer. In light of the lack of irreversible steps and the petitioner's and applicant-creditor's stance that transfer would facilitate a speedier and more technical resolution, the exercise of the discretionary power to transfer was held appropriate. [Paras 7, 8, 10, 11, 13]

Company Petition No.317 of 2012 is transferred to the NCLT, Mumbai, subject to conditions.

Custodia legis and irreversibility test for transfer - Whether winding up proceedings had reached an irreversible stage precluding transfer - HELD THAT: - Relying on the principle that transfer may be refused only where winding up has reached an irreversible stage (for instance, where actual sales or other irreversible dispositions have occurred), the Court examined the Official Liquidator's actions. The Official Liquidator had taken possession of the registered office and that possession was handed over to Edelweiss pursuant to an earlier order; other properties were in possession of secured creditors or their assignees under SARFAESI. No publication inviting claims under Rule 148 had been made and no irreversible sales by the Official Liquidator were shown to have occurred. Hence the Court found no irreversible stage had been reached. [Paras 2, 3, 4, 7, 8]

No irreversible step had been taken by the Official Liquidator to preclude transfer; transfer therefore permissible.

Deposit of liquidation costs as condition for transfer - Condition of depositing liquidation costs prior to transfer - HELD THAT: - The Court noted the Official Liquidator's entitlement to liquidation expenses and the discretion to condition transfer on payment of costs. Having regard to submissions and practice, the Court directed that the applicant must deposit costs with the Official Liquidator as a condition precedent to transfer, specifying the quantum and timeline in the operative order. [Paras 9, 10, 11]

Transfer granted subject to deposit of costs of Rs.3 lakhs by the applicant with the Official Liquidator within four weeks.

Invitation of claims under Rule 148 and protection of workmen's claims under Section 53 read with IBC regulations - Effect of non-invitation of claims under Rule 148 and protection of creditors/workmen under the IBC upon transfer - HELD THAT: - The Court observed that the Official Liquidator had not published notice inviting claims under Rule 148. The Court addressed the apprehension regarding workmen's and creditors' claims by noting that the insolvency framework (Section 53(1)(b) read with Section 15(1)(c) and relevant IBC regulations) would safeguard such claims in the transferred proceedings, and accepted submissions that the NCLT process would allow active creditor participation. [Paras 4, 8]

Non-publication under Rule 148 did not bar transfer; protections for creditors and workmen are available under the IBC and its regulations in the transferred proceedings.

Treatment of transferred winding up petition as initiation of CIRP under the IBC - restraint on alienation of assets pending initiation of CIRP - Consequences of transfer: treatment as CIRP application and interlocutory restraint on disposition of assets - HELD THAT: - The Court directed that upon transfer the NCLT shall treat the Company Petition as an application for initiation of the Corporate Insolvency Resolution Process under the IBC. Pending initiation of CIRP by the NCLT, the Court imposed interlocutory restraint preventing the company and its directors from selling, alienating, encumbering, or creating third party interests in any movable or immovable assets or dealing with monies in bank accounts, to preserve the assets for the insolvency process. [Paras 11, 13, 14]

The NCLT shall treat the petition as an application for CIRP; until the NCLT initiates CIRP the company and its directors are restrained from alienating or creating third party rights over assets or funds.

Final Conclusion: The application to transfer Company Petition No.317 of 2012 to the NCLT, Mumbai is allowed. The transfer is subject to the applicant depositing Rs.3,00,000 with the Official Liquidator within four weeks; the order of admission dated 28th September 2017 is recalled; the NCLT shall treat the petition as an application for initiation of CIRP under the IBC; and until the NCLT initiates CIRP the company and its directors are restrained from alienating, encumbering, or creating third party rights in respect of the company's assets or bank monies.

Compounding of contraventions under FEMA - Proviso to Rule 8(2) of the FEMA (Compounding Proceedings) Rules, 2000 - Contraventions suspected of money laundering and remit to adjudicating authority - Principles of natural justice in compounding proceedings - Liability for delayed filing of Form FC-TRS

Compounding of contraventions under FEMA - Proviso to Rule 8(2) of the FEMA (Compounding Proceedings) Rules, 2000 - Contraventions suspected of money laundering and remit to adjudicating authority - Validity of returning the compounding application and remitting the matter to the adjudicating authority where the Enforcement Directorate considered the contravention to be suspected money laundering - HELD THAT: - The Court examined Rule 4(1) and Rule 8(2) of the FEMA (Compounding Proceedings) Rules, 2000 and the proviso to Rule 8(2) inserted by notification dated 20.02.2017. Rule 4(1) generally empowers the compounding authority to compound contraventions except those falling under clause (a) of Section 3 (i.e., suspected of money laundering). The proviso to Rule 8(2) provides that where the Enforcement Directorate is of the view that proceedings relate to a serious contravention suspected of money laundering (or terror financing or affecting sovereignty/integrity), the compounding authority shall not proceed and shall remit the case to the appropriate adjudicating authority for adjudication under Section 13. The Court found that the Enforcement Directorate had ongoing investigations under PMLA and had taken the view that the matter involved suspected money laundering; in that factual and legal context the compounding authority was required by the proviso to remit the matter. On this basis the return of the compounding application and remission to the adjudicating authority was held to be in accordance with the Rules and not infirm. [Paras 11, 12, 13]

Return of the compounding application and remission of the case to the adjudicating authority was valid under the proviso to Rule 8(2) and the relevant Rules of FEMA.

Principles of natural justice in compounding proceedings - Liability for delayed filing of Form FC-TRS - Allegation that returning the compounding application without issuance of a show cause notice violated natural justice and whether the petitioner remained liable for delayed FC-TRS filing - HELD THAT: - The petitioner contended that the first respondent returned the compounding application without issuing any show cause notice, breaching natural justice, and alleged mala fides. The Court noted the factual backdrop that a show cause notice and adjudication proceedings had been initiated following investigations under PMLA and that the petitioner had been issued a show cause notice dated 17.04.2017. The Court observed that, apart from procedural contentions, there was an admitted delay in filing Form FC-TRS beyond the 60-day period, attracting liability under Section 13 of FEMA. Given the ongoing PMLA-related investigation and the statutory framework restricting compounding in suspected money laundering cases, the Court found no illegality in the return of the compounding application and rejected the contention of breach of natural justice or mala fide motive. [Paras 6, 8, 9, 13]

Contentions of violation of natural justice and mala fides were rejected; the petitioner remained liable for delayed filing of Form FC-TRS and the return of the compounding application did not amount to an illegality.

Final Conclusion: Writ petitions challenging the return of the compounding application were dismissed; the impugned action of returning the compounding application and remitting the matter to the adjudicating authority was held to be lawful and these petitions are without merit.

Extended period of limitation - suppression of facts with intent to evade - time barred service tax demand - consequential interest and penalty on time barred demand

Extended period of limitation - suppression of facts with intent to evade - time barred service tax demand - Whether the Service Tax demand for the period 2007-08 to 2010-11 is barred by limitation because there was no suppression of facts with intent to evade tax. - HELD THAT: - The Tribunal recorded that the appellant had filed nil returns from April 2007 onwards and, by letter dated 26.10.2007, had specifically intimated the Department about non payment of Service Tax in respect of the relevant services. The Department took no action on that intimation and thereafter issued the Show Cause Notice on 15.10.2012 demanding tax for 2007-08 to 2010-11. In these circumstances the Tribunal found that there was no suppression of fact with intent to evade tax and therefore the conditions for invoking the extended period of limitation were not satisfied. Consequently, the demand confirmed in the impugned order was held to be barred by limitation and not sustainable. [Paras 7, 8]

Demand of Service Tax for 2007-08 to 2010-11 is barred by limitation as extended period cannot be invoked in the absence of suppression with intent to evade.

Consequential interest and penalty on time barred demand - Whether interest and penalties can be sustained when the underlying tax demand is held time barred. - HELD THAT: - Having held the tax demand itself to be not sustainable on limitation grounds, the Tribunal concluded that consequential claims for interest and imposition of penalties could not survive. The Tribunal therefore set aside the demand as well as interest and penalties imposed in the impugned order and allowed the appeal. [Paras 9, 10]

Interest and penalties consequential to the impugned demand do not arise and are set aside.

Final Conclusion: The appeal is allowed: the Service Tax demand for 2007-08 to 2010-11 is held time barred because the extended period could not be invoked in the absence of suppression with intent to evade, and consequential interest and penalties are set aside; the impugned order is set aside with consequential relief as per law.

Proportionate reversal of Cenvat credit as alternative to payment under Rule 6(3) - common input services used for exempted and taxable output services - non-filing of option/intimation letter not fatal where reversal is effected - penalty inadmissible where demand untenable

Proportionate reversal of Cenvat credit as alternative to payment under Rule 6(3) - common input services used for exempted and taxable output services - Whether the appellant is liable to pay 5%/6% of the value of exempted services under Rule 6(3) when proportionate Cenvat credit attributable to exempted services has been reversed. - HELD THAT: - The Tribunal found on record that the appellant maintained separate books for stock-broking and self-trading and that proportionate reversal of Cenvat credit attributable to exempted services was effected - including reversal of transaction charges after it was pointed out by CERA audit. The adjudicating authority had not given credence to these recorded reversals. The Tribunal applied the established approach that where the assessee reverses the proportionate credit on common inputs attributable to exempted services, the condition which Rule 6(3) seeks to address is satisfied and the demand calculated at 5%/6% is not sustainable. The Tribunal relied on prior decisions holding that mere non-filing of an option/intimation letter is a procedural lapse which should not be used to deprive an assessee of the remedy of reversing proportionate credit, and noted legislative developments reflecting the same intent. On these facts, the Tribunal concluded that reversal on record negates the basis for imposing the Rule 6(3) payment. [Paras 7, 8, 9]

As proportionate Cenvat credit attributable to exempted services was reversed, the appellant is not liable to pay 5%/6% of the value of exempted services.

Penalty inadmissible where demand untenable - Whether any penalty is imposable on the appellant in view of the Tribunal's finding on the demand. - HELD THAT: - Given that the Tribunal set aside the demand under Rule 6(3) on the ground that proportionate reversal of input credit had been effected and recorded, there is no sustainable basis for imposing penalty. The Tribunal therefore held that a penalty cannot be sustained where the underlying demand is not maintainable. [Paras 10, 11]

No penalty is imposable on the appellant.

Final Conclusion: The impugned order is set aside: the appeal is allowed as the appellant had effected proportionate reversal of Cenvat credit attributable to exempted services and is not liable to pay 5%/6% under Rule 6(3); consequently no penalty is sustainable and is vacated.

Works contract service - erection, commissioning and installation - classification of service - divisibility of contract - exemption under mega notification No.25/2012 ST (entry 29(h)) - extended period of limitation

Works contract service - erection, commissioning and installation - classification of service - divisibility of contract - payment of VAT under works contract - Whether the appellant's turnkey HVAC/BMS contract for AIIMS Rishikesh is classifiable as works contract service or as erection/commissioning/installation service - HELD THAT: - The Tribunal found that the contract encompassed design, supply, erection, testing and commissioning and therefore involved both supply of goods and provision of services. Documentary aspects of the arrangement (project cost sheet separating material and labour, running account bills separating material/VAT and labour, VAT challans and returns, ledger entries and payment of VAT under works contract) supported classification as a works contract. The statutory definition of works contract service at the material time expressly included erection, commissioning or installation of heating, ventilation and air conditioning and related works; hence the service fell squarely within the taxable category. The appellants' reliance on divisibility arguments and on characterising the activity purely as erection/installation was rejected in view of the contract scope and the statutory definition.

The supply was held to be a works contract service and therefore taxable; demand for the period prior to 01.07.2012 was rightly confirmed.

Exemption under mega notification No.25/2012 ST (entry 29(h)) - Whether benefit of Notification No.25/2012 ST (entry 29(h)) applies to the disputed services - HELD THAT: - The Tribunal recorded that benefit of entry 29(h) of Notification No.25/2012 ST was extended to AIIMS Rishikesh for the period after 01.07.2012, and the adjudicating authority had accordingly dropped demands for the post 01.07.2012 period. The appellants did not demonstrate entitlement to that exemption for periods prior to 01.07.2012.

Benefit of the notification was accepted for the period after 01.07.2012; no exemption established for periods prior to that date.

Extended period of limitation - issue of interpretation - Whether invocation of the extended period of limitation was improper because the classification issue involved an arguable question of law - HELD THAT: - The Tribunal observed that for the period prior to 01.07.2012 the statutory definition plainly covered the services in question and there was no scope for a reasonable doubt that would preclude invocation of the extended period. The appellants' contention that the matter was a debatable question of law did not assist them because the definition clearly included HVAC and related works at the relevant time.

The extended period of limitation was held to be correctly invoked and the limitation defence was rejected.

Final Conclusion: The appeal is dismissed: the services to AIIMS for periods prior to 01.07.2012 are held to be taxable as works contract service and the demands are confirmed, while the benefit of Notification No.25/2012 ST was recognised for the period after 01.07.2012.

Refund proceedings are in the nature of execution proceedings - self-assessment amounts to assessment - refund not maintainable without challenging assessment - refund cannot be used to alter or re-open an assessment - decision in another person's case does not entitle a taxpayer to claim refund - binding effect of decisions of superior courts

Refund proceedings are in the nature of execution proceedings - self-assessment amounts to assessment - refund not maintainable without challenging assessment - refund cannot be used to alter or re-open an assessment - Maintainability of refund claims where service tax was paid by way of self-assessment without any challenge to the assessment. - HELD THAT: - The Tribunal applied the principle that refund proceedings are executionary in character and cannot be used to reopen or modify an assessment. The decision of the Supreme Court in ITC Ltd. was held binding and was treated as applicable to service tax refund claims in light of the Division Bench of the Delhi High Court in B.T. (India) Pvt. Ltd. and subsequent Tribunal practice. Self-assessed returns amount to assessments and, unless varied or modified in accordance with the statutory procedure, cannot be questioned in refund proceedings. The Tribunal therefore held that a refund claim cannot be entertained where the assessment, including self-assessment, has attained finality because allowing refund would impermissibly alter the assessment. [Paras 12, 13, 14, 15, 16]

Refund claims are not maintainable in the absence of challenge to or modification of the assessment (including self-assessment).

Decision in another person's case does not entitle a taxpayer to claim refund - binding effect of decisions of superior courts - Whether the appellant, not a party to the earlier Supreme Court decision in Calcutta Club Limited, can claim refund on the basis of that decision. - HELD THAT: - The Tribunal applied the principle in Mafatlal Industries Ltd. , that a person whose assessment has become final cannot reopen it or claim refund merely because a later decision in another person's case declares the levy to be erroneous. The Tribunal observed that judicial decisions operate retrospectively as a rule of law, but a taxpayer who allowed his assessment to become final must re-open or challenge his own assessment by available statutory remedies; he cannot derive a fresh cause of action solely from a decision in someone else's case. Consequently the appellant's claim founded on the Supreme Court's decision in Calcutta Club Limited was not a permissible basis for refund in the absence of re-opening or challenge of its own assessment. [Paras 17, 18, 19]

A taxpayer cannot claim refund based on a judicial decision in another party's case once his own assessment has become final; the refund claim on that basis is not maintainable.

Final Conclusion: The appeal is dismissed: the refund claims for the specified tax periods are not maintainable because the assessments (including self-assessments) were not challenged or re-opened, and refund cannot be granted on the basis of a decision in another party's case.

Taxability of take-away and home delivery under Restaurant Service - sale of goods versus taxable service - dominant nature of transaction test - definition of service under Section 65B(44) excluding transfer of title in goods - Circular No.334/3/2011-TRU clarification on pick-up and home delivery

Taxability of take-away and home delivery under Restaurant Service - sale of goods versus taxable service - dominant nature of transaction test - Circular No.334/3/2011-TRU clarification on pick-up and home delivery - Sale of food by way of take-away or home delivery does not attract service tax under the category of Restaurant Service - HELD THAT: - The Tribunal held that the activity of take-away and home delivery is predominantly a sale of goods and lacks the essential service elements that attract tax as a restaurant service. Relying on the interpretation of the definition of 'service' and earlier decisions (including Haldiram Marketing Pvt. Ltd. and the Madras High Court in Anjappar), the Tribunal observed that preparation and packing of food for take-away are conditions of sale and that attributes which characterise taxable restaurant services (such as provision of dining facilities, seating arrangements, service at table and other niceties in an air conditioned restaurant) are absent in take-away or parcel transactions. The clarification in Circular No.334/3/2011-TRU and subsequent clarifications recognising pick-up or home delivery as sale were followed. As the facts were identical to those earlier decisions, the Tribunal applied that ratio and concluded there was no service tax liability on the take-away and home delivery transactions. [Paras 6, 7]

The demand of service tax in respect of sale of food by take-away and home delivery is not maintainable and is set aside.

Final Conclusion: The appeal is allowed; the impugned order confirming service tax demand on take-away and home delivery is set aside for Financial year 2013-14 and Financial year 2014-15, the transactions being treated as sale of goods and not taxable restaurant services.

Remand for fresh consideration - Classification of composite contracts as works contract services - Management, maintenance and repair services - Erection, commissioning or installation services - Best judgment assessment - Limitation - Abatement of value of goods and cum-tax benefit - Application of Larsen & Toubro precedent

Remand for fresh consideration - Classification of composite contracts as works contract services - Management, maintenance and repair services - Erection, commissioning or installation services - Limitation - Application of Larsen & Toubro precedent - Abatement of value of goods and cum-tax benefit - Impugned order dated 27.05.2013 set aside and matter remanded to the adjudicating authority for fresh decision in light of earlier Tribunal observations. - HELD THAT: - The Tribunal found that the adjudicating authority had to re-examine, contract-wise, the nature and classification of the services rendered (including whether contracts fall under management, maintenance and repair services or erection, commissioning or installation services, or qualify as composite works contract services) and to apply the legal position stated in the earlier Tribunal order which referred to the Application of Larsen & Toubro precedent. The Tribunal also directed that abatements claimed for supply of goods and the benefit of cum-tax be taken into account where applicable, and that the question of limitation (including parts of the demand beyond five years) be examined afresh. Both parties agreed that the matter should be remanded for a fresh adjudication and the Tribunal accordingly set aside the impugned order and remitted the matter to the original authority for a fresh decision in accordance with the observations recorded earlier.

Impugned order set aside; matter remanded to the adjudicating authority for fresh adjudication in accordance with Tribunal's earlier observations.

Final Conclusion: The appeal is allowed to the extent that the impugned order dated 27.05.2013 is set aside and the matter is remitted to the adjudicating authority for a fresh decision (including contract wise classification, application of relevant precedent, examination of abatements/cum tax benefit and limitation) to be completed within three months from production of a copy of this order.

Cenvat credit - input service - advertising agency service - business auxiliary service - invoicing/documentation not altering nature of service - agency as conduit / recipient of service - precedential effect of Tribunal decisions

Cenvat credit - input service - advertising agency service - agency as conduit / recipient of service - invoicing/documentation not altering nature of service - precedential effect of Tribunal decisions - Admissibility of Cenvat credit claimed by the appellant on service tax shown by advertising agencies in invoices for advertising services relating to publications in print media - HELD THAT: - The Tribunal examined whether the service tax charged and shown in invoices raised by advertising agencies on the appellant for arranging advertisements in print media constituted admissible input service Cenvat credit in the hands of the appellant. The Tribunal noted that the invoices and agreements indicated that the advertising agencies performed activities including preparation and publication of advertisements and issued invoices to the appellant showing service tax on the agency component. The Tribunal accepted the reasoning in earlier coordinate Bench decisions (Bansal Classes; Career Point) that where the agency acts as a conduit and the invoice reflects that the appellant is the recipient of the advertising service, the payment (including service tax charged by the agency) is an input for the appellant and falls within the inclusive definition of input service under the Cenvat Credit Rules. The Tribunal also observed that identical show cause notices for earlier and later periods in the appellant's case had been dropped and that the Commissioner (Appeals) in the subsequent period had accepted the appellant's claim following Tribunal precedent. Having regard to these authorities and the factual position that the advertising agencies invoiced the appellant for advertising services (with service tax shown), the Tribunal held that the Cenvat credit was admissible and that the demand, interest and penalty founded on disallowance of such credit were not sustainable. [Paras 8, 12]

The Cenvat credit claimed by the appellant on service tax shown by advertising agencies in invoices for arranging print-media advertisements is admissible; the impugned order of the Commissioner (Appeals) dated 15.03.2018 is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: the order dated 15.03.2018 of the Commissioner (Appeals) setting aside the Deputy Commissioner's order (which had dropped proceedings) is set aside, and the Cenvat credit claimed for the period October 2011 to March 2012 is held admissible in view of the invoices, the agency-conduit character, and binding Tribunal precedents.

"supply of tangible goods" service - effective control and possession - deemed sale under Article 366(29A) of the Constitution of India - payment of VAT on rentals - service tax liability

"supply of tangible goods" service - effective control and possession - deemed sale under Article 366(29A) of the Constitution of India - payment of VAT on rentals - service tax liability - Whether rental of computers and other IT equipment by the appellant attracted service tax as "supply of tangible goods" service for the period in dispute. - HELD THAT: - The Tribunal examined whether the appellant retained effective control and possession of the rented equipment or whether such control lay with the service recipient. It was noted that the equipment (laptops, desktops, monitors etc.) were used by customers according to their specifications and needs and that effective control over their use lay with the recipients. The appellant was paying VAT on the rental receipts, which was treated as a deemed sale in terms of Article 366(29A) of the Constitution. Relying on earlier Tribunal reasoning in Lindstrom Services P. Ltd. and consistent findings of other Benches and the Commissioner (Appeals) in the appellant's own case, the Tribunal held that where VAT is paid on rentals and effective control of the goods rests with the recipient, the activity does not constitute a "supply of tangible goods" service liable to service tax. The impugned adjudication confirming service tax was therefore unsustainable. [Paras 8, 9, 10]

Impugned order set aside; appellant held not liable to pay service tax under the category of "supply of tangible goods" service for the period in dispute and appeal allowed with consequential relief, if any.

Final Conclusion: The appeal is allowed; the adjudged demand of service tax under the "supply of tangible goods" service is overturned since effective control of the rented equipment lay with the recipients and VAT was paid on the rentals (deemed sale), and the impugned order is set aside with consequential relief, if any.

Reimbursable expenses collected as Pure Agent - Assessable value for service tax - Valuation of taxable services - Rule 5 of Service Tax (Determination of Value) Rules, 2006 - Receipt basis versus accrual basis for service tax liability - Reliance on Chartered Accountant's certificate as evidence - Amendment to valuation provision (prospective effect)

Reimbursable expenses collected as Pure Agent - Assessable value for service tax - Valuation of taxable services - Reliance on Chartered Accountant's certificate as evidence - Rule 5 of Service Tax (Determination of Value) Rules, 2006 - Amendment to valuation provision (prospective effect) - Whether the reimbursable expenses collected by the respondent as 'pure agents' are includable in the assessable value for service tax - HELD THAT: - The Tribunal examined the agreements, invoices and the Chartered Accountant's certificate relied upon by the adjudicating authority and found no reason to doubt the genuineness of the certificate which, the record shows, was issued after verification of primary documents. The adjudicating authority had applied the Board Circular and the law as expounded by higher courts and concluded that the respondent satisfied the conditions of a pure agent, hence reimbursable expenses were not part of the gross amount charged for the taxable service. The Tribunal further relied on the Supreme Court's analysis that Rule 5 went beyond the mandate of Section 67 prior to its statutory amendment and that only after the amendment to Section 67 (with prospective effect) reimbursable expenses would form part of valuation. In absence of any departmental evidence to impugn the certificate or show that the amounts were not genuine reimbursements, the Tribunal held there was no infirmity in the dropping of demand on reimbursable expenses. [Paras 7]

Demand in respect of reimbursable expenses collected as 'pure agents' is rightly dropped; upholding the adjudicating authority's order.

Receipt basis versus accrual basis for service tax liability - Assessable value for service tax - Whether service tax could be demanded on the basis of amounts recorded in the Profit & Loss Account prepared on accrual basis as against returns filed on receipt basis - HELD THAT: - The Tribunal noted that the respondent's financial statements were prepared on an accrual basis while, during the material period, service tax liability arose on receipt basis. The Department's demand was premised on differences between bank statements and accrual accounting entries, but there was no evidence on record to establish that the differential amounts recorded in the Profit & Loss Account represented receipts for taxable services. Having found no evidentiary foundation to treat accrual-recorded amounts as taxable receipts, the adjudicating authority correctly declined to sustain the demand and the Tribunal concurs. [Paras 8]

Demand based on the difference between Profit & Loss Account (accrual) and ST-3 returns (receipt basis) is not sustainable and is rightly dropped.

Final Conclusion: The appeals by the Revenue are dismissed; the order dropping demands both in respect of reimbursable expenses treated as received by the respondent as a pure agent and in respect of amounts claimed on the basis of accrual accounting is upheld.

Section 73(3) of the Finance Act - voluntary payment before issuance of show cause notice bars issuance of notice and precludes penalty - Show cause notice void ab initio where statutory pre condition under Section 73(3) is complied with - Business Auxiliary Service (BAS) - scope; mere provision of space/referral to financial institutions does not attract BAS - Extended period of limitation - requires positive/willful suppression; mere omission or non declaration in returns is insufficient

Section 73(3) of the Finance Act - voluntary payment before issuance of show cause notice bars issuance of notice and precludes penalty - Show cause notice void ab initio where statutory pre condition under Section 73(3) is complied with - Validity of show cause notice and confirmation of demand insofar as five spot memos where the appellant made payment with interest prior to issuance of the show cause notice - HELD THAT: - Section 73(3) permits a person to pay the service tax (and interest) on the basis of his own ascertainment or ascertained by a Central Excise Officer before service of notice and to inform the officer in writing; upon such payment and information the officer shall not serve any notice in respect of the amount so paid and no penalty shall be imposed for that payment. The record shows that for five spot memos the appellant paid the amounts along with interest on 28.12.2015 and informed the department on 31.12.2015, whereas the show cause notice was issued on 10.03.2016. There is no material to suggest any remaining shortfall in those payments. Consequently, the statutory bar under Section 73(3) applies and the show cause notice as regards those five spot memos is void ab initio and the confirmed demands and penalties in respect thereof are unsustainable. The Tribunal relied on consistent authorities holding that payment plus intimation prior to notice precludes penalty and quashes subsequent demands. [Paras 6, 7, 8]

The show cause notice and the confirmed demand (and penalty) in respect of the five spot memos are quashed as Section 73(3) was complied with and the notice is void ab initio.

Business Auxiliary Service (BAS) - scope; mere provision of space/referral to financial institutions does not attract BAS - Whether amounts received as 'incentive received, extension warranty commission and unclaimed creditors written off' (claimed as commission from finance companies) constitute consideration for rendering Business Auxiliary Services - HELD THAT: - The department failed to produce any agreement, arrangement or guidelines evidencing that the finance companies were service recipients or that the appellant undertook substantial activities falling within the contours of BAS. The admitted facts show that the appellant provided space to financial institutions and referred customers seeking loans to them; those actions facilitated the appellant's own vehicle sales rather than promoted the business of the financial institutions. Precedents and the Larger Bench view in Pagaria Auto Center indicate that mere provision of space and associated amenities or mere referrals, absent transactional documents showing substantive BAS activities, do not attract BAS. Amounts recorded as unclaimed creditors written off relate to sale proceeds and cannot be treated as consideration for rendering services. On these facts the demand under Spot Memo No.4 was wrongly confirmed. [Paras 9, 10, 11, 12]

The amount demanded under Spot Memo No.4 does not constitute consideration for Business Auxiliary Services and the confirmed demand (and penalty) in respect thereof is set aside.

Extended period of limitation - requires positive/willful suppression; mere omission or non declaration in returns is insufficient - Whether invocation of the extended period of limitation was justified by alleged suppression of facts due to non declaration in ST 3 returns - HELD THAT: - Invocation of the extended period requires proof of suppression or misrepresentation with intent to evade duty. The mere non declaration of amounts in ST 3 returns, without evidence of any positive act showing mala fide intent, is insufficient to constitute willful suppression. The appellant rectified the omission by payment and there is no material on record demonstrating a deliberate scheme to evade tax. Reliance is placed on appellate and judicial precedents which hold that failure to declare alone does not establish willful suppression. In absence of such evidence, the extended period cannot be invoked and the show cause notice is time barred. [Paras 13]

Extended period of limitation was wrongly invoked; show cause notice is barred by limitation in so far as it relied on alleged non declaration as suppression.

Final Conclusion: The appeals are allowed: the show cause notice and confirmed demands (and penalties) relating to the five spot memos are quashed as Section 73(3) was complied with and the notice is void ab initio; the demand under Spot Memo No.4 is set aside as the amounts do not constitute Business Auxiliary Services; invocation of the extended period is held unjustified for lack of willful suppression.

Transitional provision in Section 142(3) of the Central Goods and Services Tax Act, 2017 - cash payment of refunds of CENVAT credit - re-credit to CENVAT credit account - voluntary deposit treated as CENVAT credit or as "any other amount paid" - examination of unjust enrichment under Section 12B of the Central Excise Act, 1944

Transitional provision in Section 142(3) of the Central Goods and Services Tax Act, 2017 - cash payment of refunds of CENVAT credit - re-credit to CENVAT credit account - voluntary deposit treated as CENVAT credit or as "any other amount paid" - Whether the refund payable in respect of CENVAT credit or other amounts paid under the pre-GST law was required to be paid in cash under Section 142(3) of the CGST Act, 2017 instead of being re-credited to the assessee's CENVAT account. - HELD THAT: - The Court held that Section 142(3) is unambiguous and broadly worded: every claim for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law shall be paid in cash. The phrase "CENVAT credit" and the wider phrase "any other amount paid" encompass voluntary deposits shown as CENVAT credit. Consequently, even if the amount paid by the petitioner was a voluntary deposit, it falls within the scope of Section 142(3) and must be refunded in cash. The Court rejected the consequence of allowing re-credit to the CENVAT account after the GST regime commenced, noting that such a re-credit would frustrate the statutory mandate that refunds accruing on transitional claims be paid in cash. Although the revision authority had directed re-credit and the adjudicating authority followed that direction, the statutory transitional provision prevailed and required cash payment. The Court therefore concluded that respondents should have directed the sanctioning authority to refund the admitted amount in cash, with interest, notwithstanding the earlier direction for re-credit, subject only to the limited exception preserved by Section 11B(2) of the Central Excise Act, 1944. [Paras 11, 12, 13, 14]

The refund of the admitted amount held to be payable under Section 142(3) of the CGST Act, 2017 must be paid in cash rather than by re-credit to the CENVAT account; respondents directed to sanction and pay the amount with accumulated interest within four weeks.

Final Conclusion: Writ petitions allowed; orders directing re-credit set aside to the extent inconsistent with Section 142(3) of the CGST Act, 2017; respondents directed to refund the admitted amount in cash with interest within four weeks.

Availability of alternative statutory remedy before the Appellate Commissioner under Section 35(A) of the Central Excise Act, 1944 - doctrine against circumvention of statutory appellate remedy - pre-deposit requirement for entertaining statutory appeal (10% rule) - judicial review by writ when alternative remedy is efficacious

Availability of alternative statutory remedy before the Appellate Commissioner under Section 35(A) of the Central Excise Act, 1944 - doctrine against circumvention of statutory appellate remedy - Writ petition dismissed on ground of existence of an alternate efficacious remedy under Section 35(A) of the Central Excise Act, 1944. - HELD THAT: - The High Court held that the petitioner has an alternate remedy by way of statutory appeal to the Commissioner of Central Excise (Appeals) under Section 35(A) and that the appellate remedy cannot be circumvented merely because the petitioner believes it may succeed on merits. The court observed that availability of the prescribed appellate forum renders the writ under Article 226 inappropriate for relief in the present dispute and required the petitioner to pursue the statutory channel. [Paras 9]

Writ petition dismissed as alternate remedy under Section 35(A) is available.

Pre-deposit requirement for entertaining statutory appeal (10% rule) - judicial review by writ when alternative remedy is efficacious - Pre-deposit requirement and the fact that only 10% of disputed tax is to be paid for filing the first appeal do not justify exercise of writ jurisdiction. - HELD THAT: - The court noted that the obligation to pre-deposit amounts under Section 35(A) is not a ground to bypass the statutory appeal; further, it recorded that only 10% of the disputed tax is to be deposited by the petitioner for instituting the appeal before the first appellate authority. Accordingly, these considerations do not render the alternative remedy ineffective such as to warrant interference by the writ court. [Paras 10]

Pre-deposit requirement does not preclude statutory appeal and is not a ground for entertaining the writ petition.

Liberty to file statutory appeal and requirement to decide on merits - obligation of Appellate Commissioner to consider relevant decisions - Petitioner granted liberty to file appeal within 30 days and Appellate Commissioner directed to entertain and decide the appeal on merits, including consideration of the cited Inox decision. - HELD THAT: - The court dismissed the writ petition with liberty to file the statutory appeal under Section 35(A) within 30 days from receipt of the order. It directed that if the appeal is filed within the stipulated time, the Appellate Commissioner shall entertain and dispose of it on merits and in accordance with law. The court expressly recorded that the Appellate Commissioner shall consider the decision cited by the petitioner in M/s Inox Products Pvt. Ltd. [Paras 11, 12]

Liberty granted to file statutory appeal within 30 days; Appellate Commissioner to hear and decide the appeal on merits and consider the Inox decision.

Final Conclusion: Writ petition dismissed for lack of alternative remedy being circumvented; petitioner granted liberty to pursue statutory appeal under Section 35(A) within 30 days, with the Appellate Commissioner directed to entertain and decide the appeal on merits and to consider the authorities relied upon by the petitioner.

Condonation of delay - sufficient cause - law of limitation - bona fide and diligence - procedural delay in Public Sector Undertakings

Condonation of delay - sufficient cause - bona fide and diligence - procedural delay in Public Sector Undertakings - Whether the inordinate delay of 891 days in filing the Civil Miscellaneous Petition for restoration of Tax Appeal No. 19 of 2016 ought to be condoned. - HELD THAT: - The Court examined the explanation furnished by the petitioner that the delay resulted from internal procedures of a Public Sector Undertaking, movement of files to the legal section and seeking advice of empanelled counsel. Applying established principles on limitation and condonation of delay, the Court reiterated that the law of limitation serves public policy and that condonation requires demonstration of a "sufficient cause" - an adequate, bona fide, and non-negligent reason preventing timely prosecution of the appeal. Authorities were cited to the effect that government bodies and public authorities cannot routinely claim procedural red tape or internal file movement as sufficient cause absent a plausible and acceptable explanation. Having scrutinised the pleadings and the sequence of events, the Court found that the petitioner remained inactive for 891 days after the Tax Appeal was dismissed for default and that the reasons advanced did not dispel imputations of negligence or lack of bona fides. In light of the jurisprudence emphasising that condonation is discretionary and not a matter of right even when some cause is shown, and that acceptance of explanation should be the exception where negligence or want of bona fides is imputable, the Court concluded that no sufficient cause has been made out to condone the inordinate delay. [Paras 24, 25, 31, 32, 33]

The application for condonation of delay is dismissed and consequently the restoration Civil Miscellaneous Petition is dismissed.

Final Conclusion: The interlocutory application for condonation of delay is dismissed for want of sufficient cause; the Civil Miscellaneous Petition for restoration of the dismissed Tax Appeal is accordingly dismissed and pending interlocutory applications stand dismissed.

Availability of CENVAT credit on specified input services under Rule 6(5) of the CENVAT Credit Rules, 2004 - Concessional rate of duty under Notification No. 1/2011-CE subject to non-availment of CENVAT credit - Overriding effect of Rule 6(5) over sub-rules (1), (2) and (3) of Rule 6 - Use of credit on specified services for manufacture of dutiable (non-exempt) products - Extended period of limitation and imposition of penalty where entitlement to credit is a debatable issue

Availability of CENVAT credit on specified input services under Rule 6(5) of the CENVAT Credit Rules, 2004 - Concessional rate of duty under Notification No. 1/2011-CE subject to non-availment of CENVAT credit - Use of credit on specified services for manufacture of dutiable (non-exempt) products - Extended period of limitation and imposition of penalty where entitlement to credit is a debatable issue - Whether availment of CENVAT credit of input services covered by Rule 6(5) of the CENVAT Credit Rules, 2004 precludes the assessee from claiming the concessional rate of duty under Notification No. 1/2011-CE and whether the demand, interest and penalty confirmed by the adjudicating authority are sustainable. - HELD THAT: - The Tribunal examined Rule 6(5) as a special provision that allows credit of the whole of service tax paid on specified services unless such service is used exclusively in or in relation to the manufacture of exempted goods. Rule 6(5) has an overriding effect over sub-rules (1), (2) and (3) and therefore permits availment of credit on the listed common input services even where the manufacturer produces both dutiable and exempted goods, subject only to exclusion of credit exclusively attributable to manufacture of exempted goods. In the present facts the appellant had not utilized CENVAT credit for payment of duty on DAP and NPK (the goods covered by Notification No. 1/2011-CE) but had paid duty on those fertilizers by cash and had used the credit for other dutiable products removed at normal rate. Applying the principle in Elder Pharmaceuticals (Tri.-Mum.) and the reasoning of the Bombay High Court in ONGC, the Tribunal held that availment of credit under Rule 6(5) would not, by itself, disentitle the appellant to the concessional 1% rate under Notification No. 1/2011-CE. Where entitlement to credit under Rule 6(5) is a debatable question, invocation of the extended period of limitation is not permissible and consequentially penalty and interest based on an unsustainable demand do not survive. On these grounds the demand of duty confirmed in the impugned order was set aside and interest and penalty were held not to arise. [Paras 7]

Availment of CENVAT credit under Rule 6(5) does not bar entitlement to concessional rate under Notification No. 1/2011-CE where such credit was not used for payment of duty on the concessional products; the demand, interest and penalty confirmed in the impugned order are set aside.

Final Conclusion: The appeal is allowed: the Tribunal holds that Rule 6(5) permits CENVAT credit of specified input services without denying the concessional 1% rate under Notification No. 1/2011-CE in the facts of this case; the demand, interest and penalty confirmed by the Commissioner are set aside with consequential relief as per law.

Assignment of Cenvat credit among group units - deemed recipient liability under section 66A of the Finance Act, 1994 - availability and distribution of input service credit - requirement of proceedings under rule 14 for recovery of wrongly taken Cenvat credit - limitation under section 11A of the Central Excise Act, 1944 - registration as Input Service Distributor and prescribed procedural compliance

Assignment of Cenvat credit among group units - deemed recipient liability under section 66A of the Finance Act, 1994 - Competence of authorities to treat tax paid by the company as not discharged because credit was assigned to one unit without issuing proceedings against other units. - HELD THAT: - The company, as deemed recipient under section 66A of the Finance Act, 1994, had discharged the service tax liability on royalty payments. If the law required payment by each individual undertaking, separate proceedings ought to have been initiated against those undertakings; in the absence of notices to the other units, the Central Excise authorities could not infer non-compliance merely because credit was assigned to one manufacturing unit. The dispute is therefore confined to the authority of the company to take and assign the credit to Unit I, and not to non-payment of the service tax itself. [Paras 4]

Held that it was not open to the authorities to conclude the tax liability remained unpaid merely because credit was assigned to one unit without issuing notices to other units; the question is limited to validity of assignment of the credit.

Availability and distribution of input service credit - registration as Input Service Distributor and prescribed procedural compliance - Whether distribution or limitation of Cenvat credit to Unit I could be sustained on account of inclusion/exclusion of trading turnover and for lack of registration as Input Service Distributor. - HELD THAT: - There is no provision in rule 3 of the CENVAT Credit Rules, 2004 that restricts the quantum of credit once the service is an eligible input service. Distribution procedures and documents prescribed under the Service Tax / Input Service Distributor regime are material to lawful distribution. The adjudicating authority's findings that trading turnover should be excluded and that lack of Input Service Distributor registration rendered distribution invalid were not fully examinable on the record before the Tribunal because the original order did not grapple with certain legal contentions and precedents now pressed before the Tribunal. The correctness of the impugned conclusions on procedural non-compliance and on treating challans as invalid documents was therefore not finally adjudicated by this Tribunal. [Paras 5, 7]

Finding on substantive entitlement versus procedural compliance and on exclusion of trading turnover was not finally resolved and requires fresh consideration after hearing the assessee.

Requirement of proceedings under rule 14 for recovery of wrongly taken Cenvat credit - Whether absence of recourse to recovery under rule 14 of the CENVAT Credit Rules, 2004 is fatal to invoking recovery in the impugned proceedings. - HELD THAT: - Rule 6(3D) and Explanation III (as cited) indicate that recovery for failure to pay amounts under sub-rules should be effected in the manner provided in rule 14 for recovery of wrongly taken CENVAT credit. The Tribunal observed that recourse to proceedings under rule 14 had not been taken in the impugned proceedings, and that omission is material and fatal to sustaining the impugned action at this stage. [Paras 5]

Held that absence of proceedings under rule 14 is a material lacuna and is fatal to the present invocation of recovery on that ground.

Limitation under section 11A of the Central Excise Act, 1944 - Extent to which the impugned demands and recovery are barred by limitation. - HELD THAT: - The show cause notice dated 3rd August 2012 extended to five years, but the Tribunal held that demands beyond the normal period of limitation are barred. Only credit assigned to Unit I during the normal period of limitation of one year as computed with reference to the show cause notice, and credit assigned between August 2011 and December 2011, survive; other periods falling outside the limitation are barred from adjudication in these proceedings. [Paras 6]

Proceedings are barred by limitation except for credits assigned within the one-year limitation period computed as per the show cause notice and for credits assigned between August 2011 and December 2011.

Assignment of Cenvat credit among group units - registration as Input Service Distributor and prescribed procedural compliance - Whether the impugned order of the adjudicating authority should be sustained or requires fresh adjudication. - HELD THAT: - Given that (a) material legal contentions and authorities addressing substantive entitlement versus procedural compliance were not dealt with by the adjudicating authority, and (b) limitations aspects restrict the scope of recoverable credits, the Tribunal concluded that it is appropriate to set aside the impugned order and remit the matter for fresh adjudication limited to the period validated under section 11A. The remand requires the original authority to hear the assessee afresh on the submissions, including those relating to Input Service Distributor registration, distribution procedure, admissibility of documents relied upon, and any binding precedents. [Paras 7, 8]

Impugned order set aside in part and remitted to the original authority for fresh adjudication limited to the periods not barred by limitation.

Final Conclusion: The appeal is allowed in part: the impugned order is set aside and the matter is remitted to the original authority for fresh adjudication limited to credits assignable within the one-year limitation period and those assigned between August 2011 and December 2011; other claims are barred by limitation. The original authority must re-hear the assessee on procedural and substantive entitlement issues, including Input Service Distributor registration and the prescribed distribution procedure.

Assessable value - transaction value - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - trade discount - additional consideration - inclusion of money value of facilities in assessable value - principal-to-principal sale - agent/principal distinction - Section 4 of Central Excise Act, 1944

Trade discount - inclusion of money value of facilities in assessable value - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Whether the contractual 'trade discount' representing facilities provided by the buyer is to be treated as 'money value' of facilities and added to the assessable value of CNG for central excise valuation. - HELD THAT: - The Tribunal rejected the lower authorities' conflation of two distinct transactions-(i) the discount foregone by the seller and (ii) facilities provided and borne by the buyer-and held that the authorities had not properly applied the Valuation Rules to determine the value of any alleged facilitation. The Tribunal observed that the contractual arrangement shows the appellant has foregone consideration to the extent of the trade discount, and the lower authorities erred in treating that discount as equivalent to the money value of facilities without determining such value by reference to the Central Excise Valuation Rules, which is essential for legal validity. Consequently the finding that the trade discount is the money value of facilities was not sustained and the impugned orders were set aside. [Paras 5, 6, 7]

The addition of the trade discount as money value of facilities to assessable value is not sustained; the valuation was not determined in accordance with the Valuation Rules and the orders are set aside.

Transaction value - Section 4 of Central Excise Act, 1944 - principal-to-principal sale - agent/principal distinction - assessable value - Whether supplies of CNG to bulk buyers (OMCs, TMT) constitute principal-to-principal sales permitting different transaction values and commercial discounts, rather than being paper transactions or services to be added back to assessable value. - HELD THAT: - Relying on its earlier detailed decision in the appellant's own case, the Tribunal noted that where parties are independent and transactions evidence sale (invoices, joint tickets, VAT paid by both parties, contractual terms fixing retail price and invoicing procedures), the relationship is principal-to-principal. The Tribunal found that discounts to bulk buyers reflect ordinary commercial arrangements for bulk purchases and are permissible under amended Section 4, which accepts different transaction values charged to different customers based on commercial consideration. The Tribunal further distinguished arrangements with dealers/PPs (agent relationship) from sales to OMCs/TMT (principal-to-principal), and held that the revenue's contention of barter or service-like treatment did not apply here. On that basis the Tribunal applied its prior ruling to these identical transactions and reversed the impugned valuation additions. [Paras 6, 7]

Supplies to bulk buyers (OMCs/TMT) are principal-to-principal sales allowing commercial discounts to be reflected in transaction value; the differential was not to be added to assessable value, and the impugned orders are set aside.

Final Conclusion: The Tribunal allowed the appeals, holding that the lower authorities erred in treating the trade discount as the money value of buyer provided facilities without applying the Valuation Rules and that supplies to bulk buyers are principal to principal commercial sales permitting different transaction values; the impugned orders are set aside.

Clandestine removal - Cenvat credit admissibility - burden of corroborative evidence for clandestine clearance - principle of natural justice - non-disclosure of relied documents - extended period of limitation in cases of suppression of facts - suppression of facts - requirement of positive act or deliberate intention

Clandestine removal - burden of corroborative evidence for clandestine clearance - Cenvat credit admissibility - Demand for reversal of Cenvat credit in respect of alleged clandestine removal of 20.636 MT of copper ingots and larger proposed demand based on alleged excess consumption - HELD THAT: - The Tribunal examined whether the department proved clandestine manufacture or clearance sufficient to disallow Cenvat credit. The record showed no unaccounted raw material or finished goods found on search, no evidence of receipt of unaccounted sale proceeds, no investigation of alleged buyers or transport of the purportedly clandestinely cleared material, and all payments passing through bank channels. Reliance on private or departmental test reports without corroborative material such as transport details, buyer identification, financial flow-back or statements is insufficient. Precedents require tangible corroboration before discarding statutory records and allowing inference of clandestine clearance. In the present case the department led no such corroborative evidence; moreover the adjudicating authority accepted a sample report (M/s. Nalwa Steels) showing much higher copper content, which undermines the inference of diversion. Consequently the confirmation of reversal/demand for the 20.636 MT (and the larger proposed demand) was unsustainable. [Paras 5]

Demand/reversal of Cenvat credit confirmed for 20.636 MT and the larger alleged demand based on clandestine removal are unsustainable and cannot be upheld.

Principle of natural justice - non-disclosure of relied documents - Cenvat credit admissibility - Validity of adjudication where a departmental sample report favourable to the assessee (M/s. Nalwa Steels) was not disclosed earlier and relied-upon documents were not furnished - HELD THAT: - Tribunal noted that on remand the adjudicating authority accepted a previously undisclosed report (M/s. Nalwa Steels) showing significantly higher copper content in ingots. The record showed that this report had not been furnished to the assessee nor made a relied-upon document earlier, which formed the basis of the remand directions. Non-disclosure of a material report that supports the assessee amounted to violation of the principles of natural justice and materially affected the department's case. The adjudicating authority's acceptance of that report further undermined the department's initial reliance on other test reports. [Paras 5]

Failure to disclose the material sample report to the assessee violated natural justice and weakened the department's case; the undisclosed favourable report was rightly accepted on remand.

Extended period of limitation in cases of suppression of facts - suppression of facts - requirement of positive act or deliberate intention - Whether the extended period of limitation could be invoked on the ground of suppression of facts to justify recovery beyond the normal period - HELD THAT: - The Tribunal analysed whether there was deliberate suppression or misrepresentation by the assessee that would permit invoking the extended period. Admitted facts established absence of unaccounted stocks, absence of unexplained receipts, regular filing of returns and receipts/payments through banking channels. There was no evidence of a positive act or deliberate intention to conceal facts to evade duty. The department's failure to produce corroborative evidence of evasion and its concealment of material test reports further negated any finding of deliberate suppression. Reliance on Supreme Court authorities requires a positive act or deliberate omission to constitute suppression; that threshold was not met here. [Paras 5]

Invocation of the extended period was unjustified; the show cause notice is time-barred insofar as premised on suppression of facts or deliberate evasion.

Final Conclusion: The Tribunal held that the department failed to prove clandestine removal or suppression of facts; non-disclosure of a material sample report breached natural justice; the extended period was wrongly invoked; consequently the assessee's appeal is allowed and the department's appeal is dismissed, with the show cause notice held to be time-barred.

Requirement to maintain separate accounts for inputs and input services - mandatory procedure for proportionate reversal under Rule 6(3A) of the Cenvat Credit Rules - Cenvat credit not admissible on inputs/input services used for exempted services - demand under the proviso to sub section (1) of Section 73 of the Finance Act for non compliance with Rule 6 - interest recoverable under Section 75 of the Finance Act for disputed Cenvat credit - penalties under Sections 77 and 78 of the Finance Act for various contraventions - verification/remand to original authority to examine adequacy of reversal

Requirement to maintain separate accounts for inputs and input services - Cenvat credit not admissible on inputs/input services used for exempted services - demand under the proviso to sub section (1) of Section 73 of the Finance Act for non compliance with Rule 6 - Whether Cenvat credit availed on input services common to manufacture of dutiable CNG and trading/PNG is liable to be recovered for failure to comply with Rule 6 and whether the consequent amount is demandable under Section 73 - HELD THAT: - The Tribunal considered the provisions of Rule 6 of the Cenvat Credit Rules, 2004 and held that Cenvat credit is not available to the extent inputs or input services are used in relation to exempted goods or exempted services. Rule 6(2) imposes a strict obligation on the manufacturer/provider to maintain separate accounts/inventory for receipt, consumption and use of inputs/input services for dutiable and exempted outputs; alternatively, the statutory option of proportionate reversal as provided in Rule 6(3)/(3A) must be followed. The adjudicating authority found that the assessee did not maintain separate records for input services such as rent a cab, consultancy and pipeline transportation, and failed to produce evidence to show exclusive use of such services for the dutiable activity. The Tribunal accepted that the procedural route under Rule 6(3A) prescribes intimation to the jurisdictional Superintendent, provisional monthly reversal and annual reconciliation, and that mere ad hoc reversal without complying with these procedural steps cannot be treated as valid exercise of the option. In these circumstances, non compliance attracted liability and a demand for the amount computed under Rule 6 was held to be sustainable subject to verification of any reversal actually made by the assessee. [Paras 79, 80, 81, 82, 86]

Findings that failure to maintain separate accounts and non observance of Rule 6(3A) procedure render the proportionate reversal invalid and sustain the demand under Section 73, while directing verification of any reversal claimed by the assessee.

Mandatory procedure for proportionate reversal under Rule 6(3A) of the Cenvat Credit Rules - verification/remand to original authority to examine adequacy of reversal - Whether the assessee's claimed reversal under Rule 6(3A) could be accepted despite alleged non compliance with the procedural formalities and what consequence follows - HELD THAT: - The Tribunal elaborated the procedural pre requisites in Rule 6(3A): written intimation to the Superintendent, provisional monthly determination and payment, and final annual reconciliation. It observed that the assessee made certain reversals and deposits but failed to comply with the statutory procedure (for example, intimation to the jurisdictional Superintendent and monthly provisional payments). The Tribunal noted conflicting contentions by the assessee regarding records and reversal, and relied on precedents holding that while the procedural lapse is material, the department is entitled to verify whether the reversal actually made satisfies substantive requirements. Therefore, a factual verification by the original authority is necessary to determine whether the reversal/deposits already made discharge the statutory obligation under Rule 6(3A). [Paras 79, 80, 81, 82]

Matter remanded to the original authority for verification of the adequacy and compliance of the proportionate reversal claimed by the assessee under Rule 6(3A); substantive entitlement to reversal depends on the outcome of that verification.

Interest recoverable under Section 75 of the Finance Act for disputed Cenvat credit - penalties under Sections 77 and 78 of the Finance Act for various contraventions - Recoverability of interest and imposition/appropriability of penalties and deposits made by the assessee - HELD THAT: - The impugned order included confirmation of interest under Section 75 and imposition of various penalties under Sections 77 and 78. The adjudicating authority appropriated amounts voluntarily deposited by the assessee towards reversal and interest. The Tribunal upheld the principle that interest is leviable on amounts found due for wrongful availment of credit, and that deposits made can be appropriated against confirmed liabilities. Penalty aspects were examined in the context of failure to maintain records and procedural non compliance; the Tribunal noted the impugned order's imposition of penalties but directed that assessment of penalties and their applicability be considered in light of the verification of reversals and factual findings on intentionality and record keeping. [Paras 71, 75, 82, 86]

Interest and appropriation of deposited sums were treated as sustainable, and penalties were upheld as contingent on the findings regarding non compliance; ultimate adjustment to be governed by the verification directed on reversal and records.

Final Conclusion: Proceedings establish that failure to maintain separate accounts for inputs/input services or to follow the proportionate reversal procedure under Rule 6(3A) attracts liability and a demand under Section 73; the Tribunal directed the original authority to verify whether the reversals/deposits made by the assessee comply with the procedural and substantive requirements, and allowed the appeal subject to such verification and consequential adjustments.

Exemption from excise duty for goods supplied against international competitive bidding - eligibility of subcontractor supplies for notification benefit - permission by Assistant Commissioner to remove goods without payment of duty - intention to evade duty and suppression of facts - limitation and extended period of limitation

Exemption from excise duty for goods supplied against international competitive bidding - eligibility of subcontractor supplies for notification benefit - Excisable goods supplied by the appellant to NTPC through BHEL were eligible for clearance without payment of duty under the cited exemption notifications. - HELD THAT: - The Tribunal found that M/s NTPC was the international bidder and M/s BHEL was engaged as its sub-contractor; the appellant supplied goods to execute work awarded to NTPC under international competitive bidding. Consequently, the supplies were for execution of the NTPC contract and fell within the scope of the exemption notifications. The appellant had approached the jurisdictional Assistant Commissioner and obtained permission letters allowing removal of goods without payment of duty, and particulars were disclosed in E.R.-1 returns. On these facts the Tribunal held that the conditions for availing the notification benefit were satisfied and the appellant was eligible to clear the goods without payment of duty. [Paras 8]

The appellant's clearances qualified for exemption; the benefit under the notifications was correctly claimable.

Permission by Assistant Commissioner to remove goods without payment of duty - intention to evade duty and suppression of facts - limitation and extended period of limitation - The demand confirmed by invoking the extended period of limitation is unsustainable because there was no suppression or intention to evade duty and the matter was time-barred. - HELD THAT: - The Tribunal noted that the Assistant Commissioner had formally permitted removal of goods without payment of duty (permission letters reproduced) and that the appellant had intimated clearances in E.R.-1 returns. On this basis the Tribunal concluded there was no suppression of material facts or intention to evade duty. Accordingly, the Revenue could not invoke the extended period of limitation; the show-cause demand for the period 2005-06 to 2006-07 was therefore barred by limitation. Since the substantive demand was set aside as time-barred, the Tribunal held that interest and penalty based on that demand could not be sustained. [Paras 8, 9]

The demand is time-barred and set aside; consequential interest and penalty cannot be imposed.

Final Conclusion: The appeal is allowed: the appellant's clearances were eligible for exemption and, having obtained permissions and disclosed the removals, there was no suppression; the demand for 2005-06 to 2006-07 is time-barred and is set aside, with consequent reliefs as per law.

Transfer of business as a going concern - slump sale - turnover of sales - definition of 'sale' and 'goods' under the MVAT Act - review under Section 25 of the MVAT Act - vivisection of a composite contract - transfer of right to use as sale (deemed sale) - Explanation to slump sale - stamp duty allocation not assignment of values

Slump sale - transfer of business as a going concern - turnover of sales - definition of 'sale' and 'goods' under the MVAT Act - Explanation to slump sale - stamp duty allocation not assignment of values - Slump sale under the BTA does not amount to a taxable sale of goods within the MVAT Act for the financial year 2010-11. - HELD THAT: - The Court examined the BTA as a holistic commercial document and the statutory definitions in the MVAT Act. The assessing officer had held the BTA to be a slump sale and excluded the lump sum consideration from turnover. The reviewing authority relied on Schedule 3.3 (allocation for stamp duty) and treated certain intangible items as separate taxable sales. The Court held that neither 'business' nor 'sale of business' is equated to 'goods' under the MVAT Act so as to create a turnover of sales, and that parties' allocation in Schedule 3.3 was expressly for stamp duty purposes. Applying the settled principle that determination of value for stamp duty does not constitute assignment of values in a slump sale, the Court concluded that the BTA required to be treated as transfer of business as a going concern and not as item wise taxable sales under MVAT. [Paras 55, 64, 66, 73, 83]

The slump sale under the BTA is not exigible to MVAT and the reviewing authority erred in treating parts of the BTA as taxable sales.

Review under Section 25 of the MVAT Act - vivisection of a composite contract - transfer of right to use as sale (deemed sale) - definition of 'sale' and 'goods' under the MVAT Act - The Reviewing Authority exceeded its jurisdiction under Section 25 by dissecting the BTA and re characterising the transaction contrary to the parties' holistic intention. - HELD THAT: - Section 25 permits the Commissioner to review orders where turnover has not been brought to tax or an order is erroneous prejudicial to revenue, but the power does not permit re reading a commercial agreement to attribute an intention contrary to the parties' expressed purpose. The Court found the reviewing authority selectively parsed Section 3.3 and Schedule 3.3 to ascribe a different intent as to treatment of intangible assets, thereby travelling beyond the legitimate ambit of review. The BTA evidenced a lock stock and barrel transfer (slump sale) and the reviewing authority's vivisection to tax temporary licences/use of IPR as separate sales constituted excess of jurisdiction. [Paras 59, 61, 62, 69, 83]

The Reviewing Authority acted in excess of jurisdiction under Section 25 by dissecting the BTA and re characterising the transaction; its review order cannot stand.

Non-application of mind - principles of natural justice - vivisection of a composite contract - transfer of right to use as sale (deemed sale) - The impugned review order is vitiated by non application of mind and breach of principles of natural justice. - HELD THAT: - The show cause notice framed the gist of the proposed review on the basis of Schedule 3.3 allocation for stamp duty, yet the reviewing authority adopted a different basis in the final order (treating temporary licences/rights to use as taxable sales) without confronting the petitioner with that specific case in a clear manner. The order also reproduces large portions of a service tax demand notice, indicating borrowing of reasoning inappropriate for MVAT analysis. The Court held that the petitioner was prejudiced because it was not given an opportunity to meet the precise case ultimately adopted and that verbatim reliance on service tax material demonstrated non application of mind, rendering the order illegal. [Paras 60, 68, 70, 74, 83]

The impugned order is vitiated for non application of mind and defective hearing; it is illegal and unsustainable.

Final Conclusion: The writ petition is allowed. The Court set aside the reviewing order dated 31.03.2021 and the consequent demand notice insofar as they taxable the slump sale under the BTA for FY 2010-11, holding that the BTA constituted a transfer of business as a going concern not exigible to MVAT, that the Commissioner exceeded Section 25 jurisdiction by dissecting the agreement, and that the review order was vitiated by non application of mind and breach of natural justice; parties to bear their own costs.

Compounding of offence - finality of compounding - jurisdiction to conduct inspection and levy - duress and voluntariness of payment - principles of natural justice - alternative efficacious remedy under the statute

Compounding of offence - finality of compounding - Whether the petitioner's admission, agreement to compound and payment amounted to departmental compounding that closed the proceedings. - HELD THAT: - The court found on the record that the petitioner executed a statement and a letter dated 09.02.2012 admitting liability, agreed to departmental compounding in lieu of prosecution and to pay the tax liabilities, and made the requisite payments (Entry Tax, VAT and compounding fee) by cheque and e-payment. Those documents, produced by the petitioner himself, demonstrate that compounding was effected under the statutory scheme and the case stood closed pursuant thereto. Reliance upon authorities concerning absence of assessment or reassessment was not held to be applicable where the dealer had voluntarily subjected himself to compounding under the Act and discharged the amounts without contemporaneous protest on record. [Paras 8, 12]

The admission, agreement to compound and payment effected by the petitioner constituted departmental compounding which closed the proceedings.

Jurisdiction to conduct inspection and levy - delegation of authority - Whether the inspecting officer was empowered to conduct inspection and initiate compounding proceedings. - HELD THAT: - The court accepted the respondents' position that amendments to the Act and consequent notifications enabled delegation of powers by the Commissioner and that an assignment note generated by the Central Processing Unit authorised the Deputy Commissioner (Enforcement), Belgaum to conduct the inspection. In view of the assignment and the statutory delegation, the contention of lack of jurisdiction was held to be unfounded on the facts of this case. [Paras 9, 10]

The inspection and initiation of compounding proceedings by the Deputy Commissioner (Enforcement) were within the delegated authority and the objection to jurisdiction fails.

Duress and voluntariness of payment - principles of natural justice - Whether the petitioner established that the compounding, admissions or payments were made under duress or in violation of natural justice sufficient to vitiate the proceedings. - HELD THAT: - The petitioner alleged coercion, but the record did not show any contemporaneous protest or objection nor material demonstrating an apparent or inherent violation of fundamental rights or principles of natural justice. The court noted that the petitioner had been given opportunity to be heard, participated by filing a statement, and then admitted liability and paid the amounts. On that factual basis the plea of duress was rejected. [Paras 5, 11, 13]

No sufficient evidence of duress or violation of principles of natural justice was shown; the contention is rejected.

Alternative efficacious remedy under the statute - Whether the writ petition was maintainable in face of an alternate remedy under the Act. - HELD THAT: - The court observed that where statutory appeal remedies exist and no fundamental right breach is apparent, writ jurisdiction is not ordinarily to be exercised. Given that the petitioner had a remedy under the KVAT Act (appeal under section 62) and had in fact compounded the offence and paid the amounts, the court found no basis for interference by writ under Article 226. [Paras 11]

Writ petition was not maintainable because an alternate efficacious remedy exists and no exceptional grounds for writ relief were established.

Final Conclusion: The petition is dismissed: the court upheld the departmental compounding and payments as closing the proceedings, rejected the jurisdictional and duress objections on the facts, and declined to exercise writ jurisdiction in the presence of an alternate remedy under the statute.

Applicability of State enactment to financial establishments - Exclusion of banking companies from State financial laws - Definition of "Financial Establishment" under MPID Act - Interaction of Banking Regulation Act and State law - Harmonious interpretation of overlapping statutes

Definition of "Financial Establishment" under MPID Act - Exclusion of banking companies from State financial laws - Interaction of Banking Regulation Act and State law - Harmonious interpretation of overlapping statutes - Whether a co-operative bank not owned or controlled by the State/Central Government is excluded from the ambit of the MPID Act by virtue of applicability of the Banking Regulation Act to co-operative banks - HELD THAT: - The Court examined Section 2(d) of the MPID Act, which defines "Financial Establishment" and expressly excludes (a) a corporation or a co-operative society owned or controlled by the State or Central Government, and (b) a "banking company" as defined in Section 5(c) of the Banking Regulation Act. Attention was given to amendments to Section 56 of the BR Act and prior decisions (including Pandurang Ganpati Chaugule) that treat co-operative banks as subject to the BR Act for certain purposes. The Court held that the State legislature, aware of Section 56(a)'s operation, deliberately made a distinction in the MPID Act between co-operative societies owned/controlled by the State and "banking companies" under the BR Act. Had the legislature intended to exclude from the MPID Act all establishments falling within the BR Act's sweep, it could have done so expressly. Consequently, a co-operative bank which is not owned or controlled by the State/Central Government remains within the definition of "Financial Establishment" under the MPID Act and is not excluded by implication merely because the BR Act applies to it. The Court further observed that the BR Act and the MPID Act operate in different spheres - supervision and regulation by RBI under the BR Act does not and did not render unnecessary the penal provisions of the MPID Act concerning depositor protection and punishable misdeeds. The Court noted corroboration in Suprema l authority (Soma Suresh Kumar) for the approach that both enactments may have concurrent operation in their respective fields. [Paras 24, 25, 26, 27, 28]

A co-operative bank not owned or controlled by the State or Central Government is not excluded from the MPID Act merely because the BR Act applies to it; the writ petition challenging invocation of Section 3 of the MPID Act is dismissed.

Final Conclusion: The Criminal Writ Petition is dismissed; the petitioner's challenge to prosecution under Section 3 of the MPID Act was rejected and the rule is discharged.

Interpretation of tender conditions - inclusion of GST in financial bid - responsiveness of bid - validity of bid evaluation - scope of judicial review in tender matters

Interpretation of tender conditions - inclusion of GST in financial bid - responsiveness of bid - Whether the respondent No.2's quoted service charge of 1.03% was non-responsive because GST at 18% should be treated as included in the quoted percentage, thereby reducing the effective service charge below the minimum 1% prescribed in the NIT. - HELD THAT: - The court examined Clause 10(B) and the note appended thereto and held that the NIT required bidders to quote service charges based on the base figure given at row 7(B) without any indication that GST was to be included in that quote. The template used for filling the financial bid (pages 60-61) mentioning that service charges are 'inclusive of GST' did not override the explicit terms of the NIT. The financial evaluation (page 62) likewise reflected that GST was not included in the quoted percentages. GST, being a statutory imposition, was to be paid over and above the quoted service charge. Consequently, there was no warrant to read into the NIT a requirement that the quoted percentage must be net of GST, and therefore the 1.03% quoted by respondent No.2 could not be treated as falling below the minimum 1% threshold specified in the NIT. [Paras 6, 8, 9]

The court rejected the contention that GST must be deducted from the quoted 1.03%, holding the respondent No.2's bid to be responsive and compliant with the NIT.

Validity of bid evaluation - scope of judicial review in tender matters - Whether the court should interfere with the acceptance of respondent No.2's bid and the consequent award of contract. - HELD THAT: - Applying the narrow principles of judicial review in tender matters, the court observed that interference is not permissible to read terms into the NIT which are not reflected therein. The contract had already been awarded and work commenced. In the absence of any demonstrable illegality or departure from the express terms of the NIT, the acceptance of respondent No.2's bid and issuance of the work order did not call for interference by the writ jurisdiction of the court. Reliance on the established principle that courts should not substitute their view for the contracting authority's evaluation was noted. [Paras 10, 11]

The court declined to interfere with the award of the contract to respondent No.2.

Final Conclusion: The petition challenging acceptance of respondent No.2's bid was dismissed: the NIT did not require that quoted service charges be net of GST, respondent No.2's bid was responsive, and there was no basis for judicial interference in the tender award.