TaxTMI Updates e-Newsletter
Jun 16,2023

Dismissal of special leave petition - affirmation of High Court view - exemption under Notification No. 12 of 2017-CT (Rate) - scope of the expression 'licence to occupy land is a supply of services' in Clause 2(a) of Schedule II

Dismissal of special leave petition - affirmation of High Court view - The special leave petition filed by the Builders Association of Navi Mumbai is dismissed and the view of the High Court affirmed. - HELD THAT: - The Supreme Court found no good ground to take a different view from that expressed by the High Court and therefore dismissed the special leave petition. The Court's conclusion is confined to its agreement with the High Court's decision; it did not undertake fresh examination of matters which were the subject of separate contentions.

Special leave petition dismissed; High Court view maintained.

Exemption under Notification No. 12 of 2017-CT (Rate) - scope of the expression 'licence to occupy land is a supply of services' in Clause 2(a) of Schedule II - Questions concerning the exemption under Notification No. 12 of 2017-CT (Rate) and the scope and ambit of Clause 2(a) of Schedule II were not examined and are left open for consideration. - HELD THAT: - The Court expressly refrained from examining (a) the exemption purportedly granted by Notification No. 12 of 2017-CT (Rate) dated 28.06.2017 effective 01.07.2017, and (b) the scope and ambit of the expression in Clause 2(a) of Schedule II that 'licence to occupy land is a supply of services'. Both matters were left open, not adjudicated upon, and remain available for future determination.

Issues regarding the stated exemption and the scope of Clause 2(a) of Schedule II left open for future adjudication.

Final Conclusion: The special leave petition is dismissed with the Supreme Court concurring with the High Court's view; however, the Court did not decide the question of the Notification No. 12 of 2017-CT (Rate) exemption nor the scope of the Clause 2(a) Schedule II expression 'licence to occupy land is a supply of services', and those matters remain open.

Special audit and prerequisites under Section 66 of the CGST Act, 2017 - Formation of opinion that value is not correctly declared or input tax credit not within normal limits - Prior approval of Commissioner before directing special audit - Non-application of mind and arbitrariness in administrative orders - Interim restraint against coercive action

Special audit and prerequisites under Section 66 of the CGST Act, 2017 - Formation of opinion that value is not correctly declared or input tax credit not within normal limits - Non-application of mind and arbitrariness in administrative orders - Impugned order directing Special Audit prima facie did not record or reflect formation of the requisite opinion under Section 66 and therefore showed apparent non-application of mind. - HELD THAT: - The Court examined the impugned order dated 16.11.2020 which appointed a Chartered Accountant for Special Audit. The Court observed that, as required by Section 66, the authority must form an opinion that either the value has not been correctly declared or the credit availed is not within normal limits, taking into account the nature and complexity of the acts and the interest of revenue. The impugned order prima facie does not exhibit consideration of these condition precedents or contemporaneous records reflecting such consideration. On that basis the Court found a prima facie lack of application of mind in the administrative exercise directing Special Audit.

Court recorded a prima facie finding of absence of requisite consideration under Section 66 and treated the impugned order as showing apparent non-application of mind.

Prior approval of Commissioner before directing special audit - Interim restraint against coercive action - Relief against coercive action pending consideration of the challenge to the Special Audit order. - HELD THAT: - Having noted the prima facie deficiency in the impugned order and in view of the statutory scheme under Section 66 and Section 107 of the CGST Act, 2017, the Court granted interim protection. The respondents were directed not to take any coercive action against the petitioner until the returnable date of the writ petition. The Court also recorded that the Chartered Accountant entrusted with the Special Audit had not yet proceeded with the audit. Procedural directions were given for service of an extra copy of the petition on respondents and issuance of notice returnable in three weeks.

Respondent authorities restrained from taking coercive action against the petitioner until the returnable date; notice issued and matter posted after three weeks.

Final Conclusion: Writ petition admitted for hearing; notice issued returnable in three weeks; on a prima facie appraisal the Special Audit order dated 16.11.2020 appears to lack the requisite recorded formation of opinion under Section 66 and, accordingly, respondents are restrained from taking any coercive action against the petitioner until the returnable date.

Service tax exemption for advocates - negative list of services - quashing of demand and cessation of proceedings - administrative direction to tax authority to prevent harassment

Service tax exemption for advocates - quashing of demand and cessation of proceedings - Legality of the assessment order dated 22.05.2023 demanding service tax from the petitioner, a practicing advocate. - HELD THAT: - The respondents produced an order dated 06.06.2023 recording that proceedings against the petitioner were dropped. In view of the respondents' own action in dropping the proceedings, the Court disposed of the writ petition challenging the assessment order. The petitioner's contention that advocates rendering legal services fall within the negative list and are exempt from service tax was noted in submissions, and the termination of departmental proceedings rendered the challenge to the specific assessment order wholly uncontroversial for adjudication.

Writ petition disposed as departmental proceedings assessed on 22.05.2023 were dropped by respondents by order dated 06.06.2023.

Negative list of services - administrative direction to tax authority to prevent harassment - Whether a direction should be issued to the GST Commissioner to refrain from issuing notices for service tax/GST to advocates providing legal services falling within the negative list. - HELD THAT: - Relying on representations from members of the Bar and the Court's concern to prevent harassment of practicing advocates, the Court directed the Commissioner, GST to issue clear instructions to the GST Commissionerate in Lucknow that notices demanding payment of service tax/GST should not be issued to lawyers rendering legal services that fall within the negative list under the service tax regime. The direction is administrative in character and addressed to the Commissioner to ensure uniform practice and to avoid issuance of notices where exemption applies.

Commissioner, GST directed to issue clear directions to the GST Commissionerate in Lucknow to refrain from issuing notices for payment of service tax/GST to advocates rendering services covered by the negative list.

Final Conclusion: The writ petition was disposed of after respondents dropped the departmental proceedings against the petitioner; additionally, the Court directed the Commissioner, GST to instruct the Lucknow Commissionerate not to issue notices demanding service tax/GST from advocates rendering services falling within the negative list, to prevent harassment.

Provisional attachment ceasing to have effect after one year under Section 83(2) of the Central Goods and Services Tax Act, 2017 - provisional attachment - show cause notice pending adjudication

Provisional attachment ceasing to have effect after one year under Section 83(2) of the Central Goods and Services Tax Act, 2017 - provisional attachment - Whether the provisional attachment orders challenged in the petition remain in operation after the expiry of one year from their date of issue. - HELD THAT: - The Court examined the operation of Section 83(2) of the Central Goods and Services Tax Act, 2017, which provides that provisional attachment orders made under Sub section (1) cease to have effect after the expiry of one year from the date of the order. Respondents pointed out, and the material before the Court shows, that more than one year has elapsed since issuance of the provisional attachment orders challenged in the petition. In view of the statutory mandate, the provisional attachment orders automatically ceased to be in operation on the expiry of the one year period. The Court accordingly declared that the impugned orders of attachment at Annexures A, A1, A2, A4 and A5 are no longer in operation from the expiry of that period and directed the bank authorities to take note of the same forthwith. [Paras 3, 4]

The provisional attachment orders have ceased to have effect by operation of law after one year and are declared no longer in operation; bank authorities to be informed.

Final Conclusion: Writ petition disposed of as the provisional attachment orders challenged ceased to operate by virtue of Section 83(2) of the CGST Act; consequential direction issued to bank authorities.

Show-cause notice - reasons to believe - production of record for judicial perusal - non-disclosure of records to the party - interim deferment of proceedings - GST on mining lease/royalty - audit under Section 65 of the GST Act

Show-cause notice - reasons to believe - production of record for judicial perusal - Whether the court should examine the material forming the basis of the show-cause notice to satisfy itself that 'reasons to believe' exist. - HELD THAT: - The Court observed that the demand rested not only on the question of levy of GST on mining lease/royalty but also on other specific claims set out in the notice. Given this, the Court was inclined to examine the records relating to the show-cause notice to determine whether the statutory 'reasons to believe' existed or whether the notice was a pretence. Accordingly, the respondent (issuing authority) was directed to produce the records relating to the show-cause notice for the perusal of the Court. The order confines production to inspection by the Court and does not grant a right to obtain copies of those records by the petitioner. [Paras 11, 12, 13]

Records relating to the show-cause notice are to be produced to the Court for its perusal so that the existence of 'reasons to believe' can be examined; copies will not be given to the petitioner.

Non-disclosure of records to the party - production of record for judicial perusal - Whether the petitioner is entitled to copies of the records produced to the Court. - HELD THAT: - The Court made clear that the records were called only for the Court's perusal and therefore directed that copies of any part of the record would not be made available to the petitioner. The direction was explicit and intended to limit disclosure to judicial inspection only. [Paras 13]

Petitioner is not entitled to copies of the record produced; inspection is limited to the Court alone.

Interim deferment of proceedings - show-cause notice - Whether the proceedings against the petitioner should be stayed or deferred pending the Court's perusal of the records. - HELD THAT: - As an interim measure pending the Court's examination of the produced records, the Court directed the issuing authority to defer the proceedings arising from the show-cause notice until the next date of listing. This provisional relief preserves the petitioner's position while the Court considers whether the notice was founded on adequate material. [Paras 14]

Proceedings on the show-cause notice are deferred as an interim measure until the next date of listing.

Final Conclusion: The Court directed production of the records underlying the show-cause notice for its perusal to examine whether 'reasons to believe' exist, refused to permit the petitioner to obtain copies of those records, and granted an interim deferment of the proceedings until the next listing date.

Quashing of show-cause notice for cancellation of registration - Cancellation of registration under Section 29 read with Rule 22(1) - Vagueness of notice and failure to disclose particulars - Insufficiency of technical glitch on portal as a defence - Right to be heard / audi alteram partem - Liberty to issue fresh notice with particulars and opportunity of hearing

Vagueness of notice and failure to disclose particulars - Quashing of show-cause notice for cancellation of registration - Impugned show-cause notice dated 06.01.2023 is liable to be quashed for being cryptic and devoid of necessary particulars enabling a meaningful response. - HELD THAT: - The show-cause notice merely recites a conclusion that registration appears liable to be cancelled because it was obtained by 'fraud, willful misstatement or suppression of facts' without setting out any factual particulars, documentary references or material particulars to enable the noticee to furnish an effective reply. The Court relied on its earlier decisions which hold that a notice bereft of particulars makes the proceeding a mere formality and cannot be sustained. In the present case the absence of any details in the notice and omission to supply supporting material rendered the notice invalid and the consequent proceedings founded on that notice unsustainable. [Paras 10, 13, 14]

Impugned show-cause notice dated 06.01.2023 quashed and set aside as being without reasons and cryptic.

Insufficiency of technical glitch on portal as a defence - Right to be heard / audi alteram partem - Explanation that details were not provided due to a technical glitch in the departmental portal does not validate issuance of a vague show-cause notice nor cures the failure to afford particulars and a meaningful opportunity of hearing. - HELD THAT: - The respondents relied on a systemic inability to upload particulars on the common portal as justification for omitting details. The Court observed that such an explanation cannot be a valid reason for issuing vague notices and that the absence of particulars defeats the noticee's ability to reply or to avail the right of personal hearing. Consequently, the technical difficulty pleaded by the department does not sustain the impugned notice and cannot justify cancellation proceedings initiated on its basis. [Paras 7, 11, 14]

Technical glitch explanation rejected as a basis to issue a vague notice; right to be heard requires particulars to be furnished.

Liberty to issue fresh notice with particulars and opportunity of hearing - Quashing of show-cause notice for cancellation of registration - While the impugned notice is quashed, the respondent authorities are permitted to proceed afresh by issuing a fresh notice incorporating particulars and thereafter providing a reasonable opportunity of hearing; registration to be restored in the meantime. - HELD THAT: - The Court quashed the defective notice and directed restoration of the petitioner's registration forthwith. Concurrently, the Court granted liberty to the respondents to issue a fresh notice that sets out particulars of the alleged fraud, willful misstatement or suppression of facts and to afford the petitioner a reasonable opportunity to reply and be heard, after which appropriate action may be taken in accordance with law. The Court clarified that it has not examined the merits of the underlying allegations. [Paras 14, 15, 16]

Registration restored; respondents may issue a fresh notice with particulars and provide reasonable opportunity of hearing; merits not adjudicated.

Final Conclusion: Writ petition allowed. The show-cause notice dated 06.01.2023 is quashed for being cryptic and devoid of particulars; registration of the petitioner is restored and the respondents are at liberty to issue a fresh notice containing specific reasons and particulars and to afford a reasonable opportunity of hearing, the merits of the case remaining unexamined.

Summary order. Petition dismissed as withdrawn with liberty to file a fresh petition with adequate pleadings and proper relief; pending applications disposed of.

Authority to pass order under Section 130 of the OGST/CGST Act - authorization for inspection, search and seizure - principle against bias / nemo judex in causa sua - appealability and availability of alternative remedy

Authorization for inspection, search and seizure - authority to pass order under Section 130 of the OGST/CGST Act - Validity of the authorization in favour of the search and seizure officer and his competence to pass the demand order under Section 130 of the OGST/CGST Act - HELD THAT: - The Court recorded that the Joint Commissioner of State Tax, Enforcement Range, Bhubaneswar issued authorization on 22.12.2022 in favour of the officer who conducted the search and seizure. The officer, having been vested with the power to inspect, search and seize, carried out the operation and subsequently passed the demand order under Section 130 of the OGST/CGST Act imposing penalty and fine. The Court held that where an order is passed under Section 130 (which deals with confiscation and penalty in lieu thereof), the officer authorised to effect search and seizure was competent to pass the order under that provision. The contention that the officer thereby acted as judge in his own cause was rejected because the impugned order was not framed under Sections 73 or 74 of the Act, where different adjudicatory constraints would have applied. [Paras 6]

Authorization was valid and the search and seizure officer was competent to pass the order under Section 130; the challenge based on alleged bias / being judge in his own cause is rejected.

Appealability and availability of alternative remedy - Appropriate remedy and disposition of the writ petition in view of the availability of appeal - HELD THAT: - The Court noted that the impugned order is appealable. Having rejected the core jurisdictional challenge, and in view of the existence of an alternative statutory remedy, the Court declined to entertain the writ petition on merits. The petitioner was granted liberty to pursue the remedy of appeal or other appropriate proceedings before the competent authority instead of seeking relief by writ. [Paras 6]

Writ petition disposed of; petitioner granted liberty to pursue the available appellate remedy against the impugned order.

Final Conclusion: The challenge to the confiscation/adjudication order was dismissed: the search and seizure authorization was valid and the authorised officer was competent to pass the order under Section 130 of the OGST/CGST Act; the writ petition is disposed of with liberty to pursue the statutory appeal or other appropriate remedy.

Regular bail - right to bail under Section 167 CrPC - custodial interrogation unnecessary where complaint filed and evidence is primarily documentary - compounding of tax liability under Section 138 of the CGST Act - interim bail to continue until trial or quashing of complaint - liberty to raise legal issues in appropriate proceedings

Regular bail - custodial interrogation unnecessary where complaint filed and evidence is primarily documentary - interim bail to continue until trial or quashing of complaint - Whether the interim bail granted to the petitioners should be confirmed and made absolute pending trial or quashing of the complaint. - HELD THAT: - The Court recorded that the petitioners had remained in custody for 70 days, the complaint had already been filed against them and cognizance taken, and the evidence in the case was primarily documentary. On these facts the Court found that further custodial interrogation of the petitioners was not necessary. The respondent informed the Court that it would not object to confirmation of the earlier interim bail order, while reserving legal questions (including the scope for compounding under Section 138 of the CGST Act) for determination in other proceedings. In view of these considerations the Court made the interim bail order of 30th September 2021 absolute, subject to the existing conditions, until the trial concludes or the complaint is quashed, and granted liberty to the petitioners to pursue the legal issues in an appropriate forum. [Paras 3, 4, 5]

Interim bail confirmed and made absolute until trial or quashing of the complaint; petitioners granted liberty to raise the reserved legal issues in appropriate proceedings.

Final Conclusion: The interim bail earlier granted to the petitioners is made absolute until trial or quashing of the complaint; the petitioners may pursue the legal questions reserved by the Court in separate appropriate proceedings. Petitions disposed of.

Interim protection from recovery - stay of recovery without pre-condition - parallel proceedings by State and Central authorities - operation of Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 in relation to prior Central proceedings

Interim protection from recovery - stay of recovery without pre-condition - Whether the appellants could be directed to deposit an additional 20% of the disputed tax as a pre-condition for interim protection from recovery after having earlier deposited 10%. - HELD THAT: - The High Court examined the order of the learned Single Bench which had directed deposit of 20% of the disputed tax as a condition for interim protection. Having regard to the facts and the legal controversy before the Court, it held that recovery proceedings should be stayed without imposing any further pre-condition on the appellants. The Court accordingly set aside the condition of deposit imposed by the Single Bench and restrained the authorities from initiating coercive recovery measures until the writ petition is disposed of. [Paras 6]

Condition directing deposit of 20% as pre-condition for interim protection is set aside; recovery proceedings stayed without pre-condition until disposal of the writ petition.

Parallel proceedings by State and Central authorities - operation of Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 in relation to prior Central proceedings - Whether the State Authority may proceed further with proceedings where the Central Authority had earlier initiated an investigation and issued show cause notice in respect of the same subject-matter. - HELD THAT: - The Court noted that the Central authority (DGGI) conducted searches and initiated investigation on 13.11.2018 and had issued a show cause notice prior to the State's show cause notice. The appellants' request for rectification to drop State proceedings on that basis was rejected by the State. In view of the central proceedings being earlier and more comprehensive, and having considered the legal issue concerning parallel initiation of proceedings under the two regimes (including the relevance of Section 6(2)(b) of the WBGST Act), the Court restrained the State and Central authorities from taking coercive recovery steps until the writ petition is finally disposed of. The Court did not adjudicate the full merits of the conflict but granted interim relief to prevent coercive action pending resolution. [Paras 3, 6]

Authorities restrained from initiating coercive steps in respect of the disputed tax pending disposal of the writ petition; interim restraint granted in light of earlier Central proceedings and pending adjudication.

Final Conclusion: The Single Bench's direction to deposit 20% of the disputed tax as a pre-condition for interim protection is set aside; coercive recovery proceedings by the authorities are stayed without any pre-condition until the writ petition is disposed of, and time for filing the State's affidavit-in-opposition is extended as directed.

Refund of excess input tax credit - writ of mandamus - administrative consideration of refund claim - time-bound direction for disposal of representation

Refund of excess input tax credit - administrative consideration of refund claim - time-bound direction for disposal of representation - Petitioner's application for refund of eligible excess ITC for January to March 2018 to be submitted and considered by the competent authority within fixed timeframes. - HELD THAT: - The petitioner sought a writ of mandamus for refund of eligible excess input tax credit relating to January to March 2018, following earlier communications between the petitioner and departmental officers which resulted in referrals between the third and fourth respondents and no final action. The State, through its counsel, accepted willingness to consider the petitioner's claim provided a manual application with supporting documents is filed with the fourth respondent. In view of that concession and the absence of a final departmental decision, the Court directed the petitioner to submit a manual application with supporting documents to the fourth respondent within two weeks, and directed the fourth respondent to consider the request and pass appropriate orders on merits and in accordance with law within eight weeks thereafter. The direction is procedural and time bound to secure administrative disposal of the pending refund claim rather than an adjudication on the merits of the claim itself. [Paras 4]

Petitioner to file a manual application with supporting documents within two weeks; fourth respondent to consider and decide the refund claim on merits and in accordance with law within eight weeks.

Final Conclusion: Writ petition disposed directing the petitioner to make a manual application to the concerned officer within two weeks and directing the officer to consider and decide the refund claim for January to March 2018 on merits within eight weeks; no costs.

Permission to amend pleadings - challenge to order-in-original - ad-interim relief - stay on coercive recovery - refund of integrated tax

Permission to amend pleadings - challenge to order-in-original - Grant of the draft amendment enabling incorporation of challenge to the order-in-original dated 27.3.2023. - HELD THAT: - The Court allowed the draft amendment dated 06.04.2023, which was on the record of the petition, permitting the petitioners to incorporate therein a challenge to the order-in-original passed by the competent authority after filing of the petition. The amendment was directed to be carried out immediately, thereby formalising the inclusion of the challenge within the writ proceedings. [Paras 1]

Draft amendment dated 06.04.2023 granted and to be carried out immediately, enabling challenge to the order-in-original dated 27.3.2023.

Ad-interim relief - stay on coercive recovery - refund of integrated tax - Grant of ad-interim protection restraining coercive recovery in respect of the refund of integrated tax already paid. - HELD THAT: - Having heard the petitioner and noting a related petition involving similar challenge, the Court issued notice to the respondents returnable on 22.06.2023 and granted ad-interim relief. The respondents were directed not to undertake any coercive recovery from the petitioner concerning the refund of integrated tax already paid until further orders. The order is protective and interlocutory in nature, preserving the petitioner's position pending further adjudication. [Paras 6]

Notice issued returnable on 22.06.2023; respondents restrained from making any coercive recovery regarding the refund of integrated tax already paid until further orders.

Final Conclusion: The Court permitted the petitioner to amend the petition to challenge the order-in-original dated 27.3.2023 and granted ad-interim relief by restraining respondents from executing any coercive recovery in respect of the refund of integrated tax already paid; notice was issued returnable on 22.06.2023.

Provision for Warranty Expenses - Deduction from gross receipts under Section 37 - Provision for Liquidated Damages - Provision for Miscellaneous/Inventory Obsolescence - Provision for Leave Travel Assistance - Sales Promotion expenditure (including after sales service) - Accrual accounting and present obligation - Compliance with the ratio in Rotork Controls India Pvt. Ltd.

Provision for Warranty Expenses - Accrual accounting and present obligation - Compliance with the ratio in Rotork Controls India Pvt. Ltd. - Deduction from gross receipts under Section 37 - Provision for warranty expenses claimed by the assessee is allowable as business expenditure in the facts of these cases. - HELD THAT: - The Court found that the assessee, a manufacturer of sophisticated capital goods, made warranty provisions on an accrual basis based on past experience and technical estimates, uniformly following an accounting policy of providing 0.5% of sales. The tribunal recorded that the provision is reversed and offered to tax on expiry of the warranty period, demonstrating absence of tax evasion. Applying the principle in Rotork Controls India Pvt. Ltd., where provision for liabilities in respect of an 'army' of sophisticated goods supported by systematically maintained data is deductible, the Court held that similar historical trend and data justify the deduction under Section 37. Consequently the tribunal's acceptance of the assessee's estimate and practice was upheld. [Paras 9, 11]

Provision for warranty expenses is allowable and the tribunal's orders rejecting Revenue's challenge are upheld.

Provision for Liquidated Damages - Provision for Miscellaneous/Inventory Obsolescence - Provision for Leave Travel Assistance - Sales Promotion expenditure (including after sales service) - Claims for provision for liquidated damages, miscellaneous provisions, leave travel assistance and sales promotion expenses were held allowable in the assessee's circumstances. - HELD THAT: - Liquidated damages represented amounts actually deducted by customers for delay and constituted ascertainable expenditure in the profit and loss account; the assessee followed the practice consistently and refunds, if any, are credited back. Miscellaneous provisions covered inventory and work in progress rendered unusable due to order cancellations or technology changes in a customer specific capital goods business and were therefore properly provided for. Leave Travel Assistance was recognised as an employee travel concession under the taxation scheme and not a sum falling under the special proviso governing certain payments; thus it was not governed by section 43B(f). Sales promotion expenditure included after sales service obligations and ordinary marketing costs; the assessee had mechanisms (including adding back expenses where TDS non compliance was reported) and the tribunal's acceptance that such expenses are allowable was not in error. The tribunal examined each ground and rejected Revenue's contentions. [Paras 10, 11]

The tribunal's conclusions allowing or not disturbing these provisions and expenditures are sustainable and the Revenue's appeals on these grounds are dismissed.

Final Conclusion: All appeals filed by the Revenue challenging the ITAT orders for Assessment Years 2012-13, 2007-08 and 2011-12 are dismissed on the merits; the tribunal's findings upholding the assessee's warranty and other provisions and related expenditures are affirmed and no order as to costs is made.

Re-opening of assessment under Section 147 - notice under Section 148 - reference to Transfer Pricing Officer under Section 92CA in the course of assessment proceedings - order of Transfer Pricing Officer null and void ab initio where reference made without pending assessment - material to form belief that income has escaped assessment

Reference to Transfer Pricing Officer under Section 92CA in the course of assessment proceedings - order of Transfer Pricing Officer null and void ab initio where reference made without pending assessment - Validity of the Assessing Officer's reference to the Transfer Pricing Officer when no assessment proceedings were pending - HELD THAT: - The scheme of Sections 92 to 92F contemplates determination of arm's length price in the course of assessment proceedings. A reference under Section 92CA(1) is permissible where the Assessing Officer deems it necessary or expedient during assessment; the TPO determines the arm's length price under Section 92CA(3) and the Assessing Officer computes total income in conformity with that determination under Section 92CA(4). The CBDT Instruction No.3/2003 reinforces that cases are to be selected for scrutiny before a reference to the TPO is made. Where no notice under Section 143(2) was issued and no assessment proceedings were pending, the Assessing Officer was precluded from making a reference to the TPO. Consequently, the reference in the present case made before initiation of assessment proceedings was invalid. [Paras 6, 8, 10, 11]

Reference to the TPO was invalid because it was made when no assessment proceedings were pending; such reference could be made only in the course of assessment proceedings.

Order of Transfer Pricing Officer null and void ab initio where reference made without pending assessment - material to form belief that income has escaped assessment - Validity of the TPO's Order and its sufficiency as material for re-opening the assessment under Section 147/148 - HELD THAT: - Because the reference to the TPO was invalid, the subsequent order passed by the TPO under Section 92CA(3) is a nullity. The Assessing Officer must base his belief that income has escaped assessment on material on record; relying on an order that is void ab initio cannot constitute valid material to form such belief. In the absence of any independent application of mind by the Assessing Officer apart from reliance on the invalid TPO order, the prerequisites for re-opening under Section 147/148 were not satisfied. [Paras 5, 6, 11]

The TPO's order is void ab initio and could not be the basis for recording reasons to re-open the assessment; consequently the re-opening under Section 147/148 was not valid.

Final Conclusion: The Tribunal's conclusions are upheld: the reference to the TPO made when no assessment proceedings were pending was invalid; the TPO's order is void ab initio and cannot serve as material to re-open assessment; the reassessment proceedings under Sections 147/148 are therefore unsustainable. Appeal dismissed; no substantial question of law arises.

Deduction of tax at source under Section 194LA - Exemption under the second proviso to Section 194LA - No income tax on awards under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Compensation payable under an award under the Act of 2013

Deduction of tax at source under Section 194LA - Exemption under the second proviso to Section 194LA - No income tax on awards under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - Compensation payable under an award under the Act of 2013 - Whether tax is required to be deducted at source under Section 194LA on compensation paid pursuant to an award passed under the Act of 2013 - HELD THAT: - The Court examined the scope of Section 194LA which mandates deduction of ten per cent at source on sums paid as compensation on compulsory acquisition of immovable property other than agricultural land. The Court held that the second proviso to Section 194LA exempts deduction where the payment is made in respect of any award or agreement which has been exempted from levy of income-tax under Section 96 of the Act of 2013. Section 96 of the Act of 2013 unambiguously provides that no income tax shall be levied on any award or agreement made under that Act (subject to the limited exception in Section 46). The Court rejected the respondent's attempted distinction between agricultural and non-agricultural land for the purpose of denying the exemption, concluding that where compensation is payable under an award passed under the Act of 2013 the award is tax-exempt and consequently no deduction at source under Section 194LA is permissible. The Court also found that the Special Land Acquisition Officer's communication and the Principal District and Sessions Judge's order withholding a portion of the payable amount overlooked these statutory provisions and caused prejudice to the petitioner. [Paras 21, 22, 23, 24, 25]

No tax is required to be deducted at source under Section 194LA on compensation paid pursuant to an award under the Act of 2013; the impugned order withholding tax is quashed and the compensation must be paid without TDS.

Final Conclusion: Writ petition allowed; the order dated 21.04.2023 in EP No.610/2018 is quashed and the entire compensation payable under the award passed under the Act of 2013 shall be paid to the petitioner without deduction of tax at source; copies of this order are to be circulated to courts handling land acquisition matters and to Special Land Acquisition Officers for compliance.

Approval by the Disciplinary Authority for initiation of major penalty proceedings and for issuance/approval of charge memo - requirement of application of mind by the Competent/Disciplinary Authority - ex post facto approval and non est charge memorandum - compliance with the mandate in B.V. Gopinath for two stage approval - quashing of charge sheet warranted only in rare and exceptional cases - requirement of a speaking order by the disciplinary authority

Approval by the Disciplinary Authority for initiation of major penalty proceedings and for issuance/approval of charge memo - compliance with the mandate in B.V. Gopinath for two stage approval - Whether the Competent Authority had taken independent decisions approving initiation of major penalty proceedings and approving the charge memo in accordance with the law laid down in B.V. Gopinath - HELD THAT: - The Court examined the note sheets and records showing a decision of the Competent Authority on December 1, 2005 approving initiation of major penalty proceedings and further approvals recorded on August 17, 2014 relating to issuance of a fresh charge sheet and approval of the draft memorandum under Rule 14. The Court held that these entries indicate that (i) initiation was approved in 2005 in respect of the petitioner, and (ii) the charge memo dated August 28, 2014 was issued after being approved by the Competent Authority on August 17, 2014. Applying the principle in B.V. Gopinath that the Disciplinary Authority must approve both initiation and the charge memo (and may appoint inquiry/presenting officers), the Court found that the mandate of B.V. Gopinath has been complied with in the present case and that the approvals reflect application of mind by the Authority. [Paras 14, 15, 18, 22, 23]

The approvals for initiation and for issuance/approval of the charge memo by the Competent Authority were valid and in conformity with the requirements of B.V. Gopinath.

Requirement of application of mind by the Competent/Disciplinary Authority - ex post facto approval and non est charge memorandum - quashing of charge sheet warranted only in rare and exceptional cases - requirement of a speaking order by the disciplinary authority - Whether the charge memo was vitiated by mechanical issuance or ex post facto approval, warranting quashing under the authorities relied upon by the petitioner - HELD THAT: - The petitioner relied on minutes of a 2003 meeting and authorities (including B.V. Gopinath, Chairman cum MD, Coal India and Sunny Abraham) to contend that there was non application of mind or only ex post facto approval rendering the charge memo non est. The Court found that a subsequent specific decision in 2005 approving initiation in respect of the petitioner and the 2014 approvals show application of mind. The Court distinguished the Sunny Abraham facts (where ex post facto approval was held defective) and the Coal India line (which emphasises that the disciplinary authority must apply its mind and pass a speaking order), concluding that those precedents did not invalidate the present approvals. The Court also noted the settled principle that quashing a charge sheet is exceptional and that no illegality in the 2014 memorandum was shown. [Paras 15, 16, 19, 24, 26]

The contention of mechanical issuance/ex post facto approval was rejected; the charge memo was not vitiated on those grounds and did not merit quashing.

Final Conclusion: Writ petition dismissed; the High Court upheld the Tribunal's conclusion that the Competent/Disciplinary Authority validly approved initiation and the charge memo in compliance with B.V. Gopinath, and found no ground to quash the departmental proceedings.

Consideration of assessee's replies to show cause notice - Reconsideration under Section 148A(d) of the Income Tax Act - Validity of reassessment notice under Section 148 of the Income Tax Act - Investment in shares as a capital account transaction - Escapement of income chargeable to tax

Consideration of assessee's replies to show cause notice - Reconsideration under Section 148A(d) of the Income Tax Act - Whether the order passed under Section 148A(d) correctly considered the detailed replies filed by the assessee to the show cause notice. - HELD THAT: - The High Court found that the impugned order under Section 148A(d) did not advert to or consider the substantive replies filed by the assessee (Annexures G and J). The order recorded that no details were furnished as to source of remittances and purchases, but the Court observed that the table in Annexure G contains such particulars and relevant explanations for each transaction. Because the authority failed to examine and record reasons addressing those replies, the order under Section 148A(d) cannot stand and requires fresh consideration. The Court therefore set aside the impugned order and directed the authority to reconsider the replies and pass a fresh order under Section 148A(d), taking those replies into account. [Paras 5]

Order under Section 148A(d) set aside and remitted for fresh consideration of the assessee's replies at Annexures G and J.

Validity of reassessment notice under Section 148 of the Income Tax Act - Whether the reassessment notice issued under Section 148 (Annexure-B) could be sustained in view of the setting aside of the Section 148A(d) order. - HELD THAT: - The Court set aside the impugned order under Section 148A(d) and, consequentially, quashed the notice issued under Section 148 (Annexure-B). The setting aside of the procedural order which led to the notice resulted in vacation of the notice without adjudicating the substantive merits of the proposed reassessment. The Court expressly left all substantive contentions open for consideration in the remanded proceedings. [Paras 6]

Notice under Section 148 set aside consequential to the quashing of the Section 148A(d) order; substantive issues remain open.

Investment in shares as a capital account transaction - Escapement of income chargeable to tax - Whether the contention that investments in shares are capital account transactions and not taxable income was finally decided. - HELD THAT: - The petitioner argued that investments in shares are capital transactions and that this proposition is no longer res integra. The Court did not adjudicate this substantive contention on merits. Instead, having found procedural infirmity in the Section 148A(d) order, the Court left all contentions, including the characterisation of share investments and the question of escapement of income, open for consideration in the fresh proceedings directed by the Court. [Paras 6]

Substantive contention regarding characterisation of share investments and escapement of income not decided; kept open for reconsideration.

Final Conclusion: Impugned order under Section 148A(d) set aside for failure to consider the assessee's replies; authority directed to reconsider those replies and pass a fresh order. Consequentially the Section 148 notice is set aside. All substantive contentions, including the characterisation of share investments, are left open for fresh consideration.

Reassessment proceedings - approval of the specified authority - escaped income threshold under Section 149(1)(b) - limitation period exceeding three years - quashing of notice under Section 148A(b) and 148A(d) - quashing of notice under Section 148

Reassessment proceedings - approval of the specified authority - escaped income threshold under Section 149(1)(b) - limitation period exceeding three years - quashing of notice under Section 148A(b) and 148A(d) - quashing of notice under Section 148 - Validity of the reassessment notices issued for AY 2017-18 in the absence of approval and where the alleged escaped income is below the statutory threshold after more than three years have elapsed - HELD THAT: - The Court accepted the factual assertions in the writ petition as uncontested because the revenue did not file a counter-affidavit and conceded that the alleged escaped income is below Rs.50,00,000. Given that more than three years have passed since the end of the assessment year and that the reassessment proceedings lacked the requisite approval of the specified authority, the reassessment could not validly proceed. On these grounds the Court found the impugned notices and order to be legally unsustainable and liable to be set aside.

Impugned notice dated 21.05.2022 under Section 148A(b), order dated 28.07.2022 under Section 148A(d), and consequential notice dated 28.07.2022 under Section 148 are quashed; reassessment proceedings cannot progress.

Final Conclusion: Writ petition allowed; reassessment notices and order quashed for AY 2017-18 as the escaped income was below the statutory threshold, requisite approval was absent, and more than three years had elapsed; interim order vacated.

Condonation of delay in filing appeals - deletion of disallowance under Section 14A: applicability where no exempt income claimed - binding effect of coordinate bench precedents and finality of Supreme Court order

Condonation of delay in filing appeals - Applications for condonation of delay in filing and re-filing the appeal were allowed. - HELD THAT: - The Court considered applications by the appellant/revenue seeking condonation of delay of 105 days in filing and 125 days in re-filing the appeal. The respondent/assessee did not oppose the prayers. Having regard to the concession and the material placed on record, the Court allowed the applications and disposed of them accordingly. [Paras 3]

Applications for condonation of delay allowed; applications disposed of.

Deletion of disallowance under Section 14A: applicability where no exempt income claimed - binding effect of coordinate bench precedents and finality of Supreme Court order - Whether the Tribunal was justified in deleting disallowance under Section 14A in respect of AY 2014-2015 where no exempt income was claimed. - HELD THAT: - The Court noted that the appeal concerns AY 2014-2015 and challenges the Tribunal's deletion of the Section 14A disallowance. The Court observed that the issue is covered by a coordinate-bench judgment in Cheminvest Limited v. Commissioner of Income Tax-VI and by the decision in Commissioner of Income-tax, Central 1, Chennai v. Chettinad Logistics (P.) Ltd. It was further noted that a special leave petition against the latter decision was dismissed by the Supreme Court on grounds of delay as well as on merits. In view of these precedents and the finality indicated by the Supreme Court's order, the Court found that no substantial question of law arises for consideration. [Paras 5, 6, 7, 9, 10]

Appeal closed as no substantial question of law arises; Tribunal's deletion of the Section 14A disallowance stands.

Final Conclusion: Applications for condonation of delay were allowed; on merits the appeal against deletion of the Section 14A disallowance (AY 2014-2015) was closed as the issue is covered by binding precedent and no substantial question of law arises.

Condonation of delay - disallowance under Section 14A - exempted dividend income - no substantial question of law - application of precedent: Joint Investments Pvt. Ltd.

Condonation of delay - Application for condonation of delay of 49 days in filing the appeal - HELD THAT: - The application filed on behalf of the appellant seeking condonation of delay of 49 days was considered. The respondent did not oppose the prayer. On that basis the Court exercised its discretion to condone the delay and disposed of the application accordingly. [Paras 3]

Delay of 49 days in filing the appeal is condoned.

Disallowance under Section 14A - exempted dividend income - application of precedent: Joint Investments Pvt. Ltd. - no substantial question of law - Whether disallowance under Section 14A can exceed the amount of dividend income exempt under Section 10(34) - HELD THAT: - The admitted dividend income exempt under Section 10(34) was Rs.45,06,37,556/-. The assessee had itself made a Section 14A disallowance and the Assessing Officer sought an additional disallowance which, in combination, would exceed the exempt dividend income. This Court held that the ratio in Joint Investments Pvt. Ltd. applies: Section 14A permits disallowance only to the extent of expenditure incurred in relation to tax-exempt income and cannot be interpreted so as to disallow an amount that swallows the entire tax-exempt income (or exceeds it). Applying that principle, the Court found no substantial question of law arising for consideration and therefore declined to entertain the appeal on merits. [Paras 10, 11, 12, 13, 14]

The appeal is closed as no substantial question of law arises; disallowance under Section 14A cannot exceed the exempted dividend income as indicated by the cited precedent.

Final Conclusion: Consent was given to condone the delay of 49 days. On the substantive point (AY 2014-15) the Court applied its earlier decision in Joint Investments Pvt. Ltd. and held that disallowance under Section 14A cannot be allowed to exceed the exempt dividend income; no substantial question of law arises and the appeal is closed.

Disallowance under section 14A read with Rule 8D - credit for TDS and prepaid taxes as per Form 26AS - binding nature of appellate directions on Assessing Officer

Disallowance under section 14A read with Rule 8D - binding nature of appellate directions on Assessing Officer - Recomputation of disallowance under section 14A read with Rule 8D by the Assessing Officer in accordance with directions of the CIT(A). - HELD THAT: - The Tribunal found on the admitted facts that the assessee had initially computed a disallowance under section 14A read with Rule 8D, and subsequently reworked the disallowance in light of contemporaneous High Court decisions to a substantially lower amount; these factual contentions were not controverted by Revenue. The CIT(A) in earlier rounds had directed the AO to re-calculate the disallowance in accordance with the jurisdictional High Court directions, but the AO failed to comply in successive appeal-effect orders. The Tribunal reiterated the settled principle that directions of superior appellate authorities are binding on the Assessing Officer and cannot be ignored unless stayed or overruled by a higher forum. In consequence, the Tribunal directed the AO to rework the disallowance under section 14A read with Rule 8D as per the directions of the CIT(A) and in accordance with law, after affording the assessee an opportunity of hearing and on production of required details. [Paras 11]

Assessee's ground on disallowance under section 14A read with Rule 8D allowed; AO directed to recompute the disallowance in accordance with the CIT(A)'s directions and law.

Credit for TDS and prepaid taxes as per Form 26AS - binding nature of appellate directions on Assessing Officer - Grant of credit for TDS and other prepaid taxes claimed by the assessee as reflected in Form 26AS and as directed by the CIT(A). - HELD THAT: - The Tribunal recorded that CIT(A) had in earlier proceedings specifically directed the AO to grant credit for prepaid taxes and TDS as per the assessee's Form 26AS and to rework tax and interest consequences, but the AO did not comply in appeal-effect orders. Given that the assessee's claim for credit was not shown to be bogus and that appellate directions are binding on the AO unless stayed or set aside, the Tribunal ordered that the AO promptly grant the credits to which the assessee is lawfully entitled. The AO was directed to call for necessary documents and afford the assessee an opportunity to file required details before allowing the credits. [Paras 16]

Assessee's ground on non-grant of TDS and prepaid tax credit allowed; AO directed to promptly grant lawful credits in accordance with the CIT(A)'s directions and law.

Final Conclusion: The appeal is allowed: the Assessing Officer is directed to re-compute the section 14A disallowance in accordance with the CIT(A)'s directions and to grant the legitimate credit of TDS and prepaid taxes as per Form 26AS after providing opportunity to the assessee and on production of requisite documents.

Condonation of delay - penalty under section 270A - demand under section 156 - assessment reopened under section 147 - credit for TDS before charging interest under sections 234A/234B/234C - maintainability of penalty proceedings - ex parte disposal for non-appearance

Demand under section 156 - assessment reopened under section 147 - Validity of the demand raised consequent to the assessment and challenge to the assessment outcome - HELD THAT: - The Tribunal noted that the assessment was finalised under section 147 but the returned income of the assessee was accepted by the Assessing Officer and there were no specific additions challenged before the CIT(A) or this Tribunal. The grounds in the assessee's appeal were general, alleging that demand under section 156 was raised on account of inaccurate particulars, but did not identify any prejudicial addition or error in the assessment process. In that factual and procedural posture the Tribunal found no infirmity in the CIT(A)'s disposal and saw no basis to interfere with the consequential demand raised by the revenue.

The CIT(A)'s conclusions on the demand were upheld and no interference was called for.

Condonation of delay - Condonation of delay in prosecuting the appeal before the CIT(A) - HELD THAT: - The Tribunal recorded that the CIT(A) had accepted the application for condonation of delay. There was no challenge to that exercise of discretion by the CIT(A) and the Tribunal did not find any illegality or perversity in the acceptance of the condonation.

The CIT(A)'s order condoning delay was sustained.

Penalty under section 270A - maintainability of penalty proceedings - Maintainability of imposition of penalty under section 270A at the stage considered by the CIT(A) - HELD THAT: - The Tribunal noted that the CIT(A) dismissed the challenge regarding initiation of penalty proceedings under section 270A as premature and not maintainable. The Tribunal found no reason to interfere with the CIT(A)'s conclusion that the matter was premature for adjudication at that stage.

The CIT(A)'s view that the penalty issue was premature and not maintainable was affirmed.

Credit for TDS before charging interest under sections 234A/234B/234C - Allowing credit for TDS before computing and charging interest under sections 234A, 234B and 234C - HELD THAT: - The CIT(A) directed the Assessing Officer to allow specified TDS credit before charging interest under the interest provisions. The Tribunal observed that the AO had initially computed interest taking a higher total income figure, whereas the assessee's total income as accepted was lower. The CIT(A)'s direction to give effect to the TDS credit and to compute interest after taking the admitted total income was in favour of the assessee and correctly reflected the entitlement to TDS credit prior to interest computation.

The direction to allow the TDS credit and to recompute interest accordingly was upheld.

Recomputation of interest - verification before allowing TDS credit - Recomputation of interest taking total income of the assessee as accepted and allowing further TDS credit subject to verification - HELD THAT: - The CIT(A) directed recomputation of interest under section 234A after treating the total income at the returned/accepted figure rather than the higher figure earlier taken by the AO. The CIT(A) also directed allowance of additional TDS credit upon verification of records. The Tribunal found these directions to be justified, noting that they corrected the AO's earlier computation and provided for verification steps before allowing the additional credit.

The CIT(A)'s directions for recomputation of interest on the correct income and for allowing TDS credit after verification were sustained.

Final Conclusion: There is no infirmity in the impugned order of the CIT(A); the CIT(A)'s decisions condoning delay, treating the penalty matter as premature, directing allowance of TDS credit and directing recomputation of interest were upheld and the appeal by the assessee is dismissed.

Arm's length price - transfer pricing adjustment - Comparable Uncontrolled Price (CUP) method - Transactional Net Margin Method (TNMM) - functional comparability - segmental accounts requirement - reliance on tribunal precedents in assessee's own case

Functional comparability - segmental accounts requirement - reliance on tribunal precedents in assessee's own case - Exclusion of Container Corporation of India Ltd. from the list of comparables for benchmarking the provision of ground handling services. - HELD THAT: - The Tribunal examined the acceptability of Container Corporation of India as a comparable relying on its earlier appellate findings in the assessee's own appeals for preceding assessment years. The prior analysis recorded that Container Corporation is predominantly a government company whose operating income arises from freight, terminal and other activities without segmental accounts; it is not service-oriented (very low employee-cost ratio) and has a vastly larger turnover and asset base operating under near-monopoly conditions. Those differences in functions, assets and risks (FAR) were held to make its FAR profile not akin to the assessee. As there is no material change in facts for the assessment year under appeal, the Tribunal followed its earlier conclusions and directed exclusion of Container Corporation of India as a comparable. [Paras 7, 8]

Container Corporation of India Ltd. excluded from the comparable set and directed to be removed by the Assessing Officer.

Functional comparability - Transactional Net Margin Method (TNMM) - reliance on tribunal precedents in assessee's own case - Exclusion of Sanco Trans Limited from the list of comparables for benchmarking the provision of ground handling services. - HELD THAT: - The Tribunal relied on its earlier findings in the assessee's prior assessment years where Sanco Trans was held to be primarily engaged in customs clearing, forwarding and container freight station activities with a significant portion of revenue being passive (hire and warehousing charges) and no segmental accounts. The audited accounts showed handling charges to be a minority share of total revenue and employee-cost ratio inconsistent with a service-oriented entity. For these FAR reasons the Tribunal previously rejected Sanco Trans as a comparable. Facts being identical for the year under appeal, the Tribunal followed the prior decisions and held Sanco Trans cannot be treated as a comparable. [Paras 9, 10]

Sanco Trans Limited excluded from the comparable set and directed to be removed by the Assessing Officer.

Final Conclusion: Following its earlier decisions in the assessee's own cases for preceding assessment years, the Tribunal directed exclusion of Container Corporation of India Ltd. and Sanco Trans Limited from the comparable set; appeal partly allowed and Assessing Officer directed to exclude these comparables, rendering the remaining grounds redundant.

Condonation of delay - revisionary jurisdiction under section 263 of the Income-tax Act - scope and sufficiency of enquiries by the Assessing Officer in scrutiny assessments - application of section 68 to cash deposits during demonetisation - plausible view doctrine in revisionary proceedings - relevance of CBDT guidelines/SOP for demonetisation-related verification

Condonation of delay - Delay of 286 days in filing the appeal was condoned. - HELD THAT: - The assessee explained that the order under section 263 was not noticed by its accountant due to oversight of emails and the order came to notice only on receipt of a subsequent notice; the appeal was filed promptly after professional advice. Applying the test of sufficient and reasonable cause and following the principles in Collector, Land Acquisition v. Katiji, the Tribunal found the explanation adequate to justify condonation. Accordingly the delay in filing the appeal before the Tribunal was condoned. [Paras 2, 3]

Delay of 286 days in filing the appeal is condoned.

Revisionary jurisdiction under section 263 of the Income-tax Act - scope and sufficiency of enquiries by the Assessing Officer in scrutiny assessments - application of section 68 to cash deposits during demonetisation - plausible view doctrine in revisionary proceedings - relevance of CBDT guidelines/SOP for demonetisation-related verification - Impugned order under section 263 setting aside the assessment was quashed and the assessment sustained. - HELD THAT: - The Tribunal reviewed the AO's questionnaire(s), replies and the paper book (pages 1-198) and recorded that the AO had issued repeated notices under section 142(1), received detailed replies including date wise deposit particulars, bank statements and debtor ledgers and thereafter passed the assessment on a plausible view that the cash deposits by third parties during demonetisation were genuine and related to trade debtors. The Pr.CIT's view that the AO had not conducted necessary enquiries as per CBDT guidelines was negatived: the AO's enquiries tracked the CBDT checklist and the assessee's replies (including the 28.12.2019 submission) were not followed by further queries, indicating satisfaction. The Tribunal reiterated that section 263 requires the order to be both erroneous and prejudicial and cannot be used to substitute the Commissioner's opinion for a plausible view taken by the AO. Given the AO's enquiries and recorded satisfaction, the assessment could not be held to be erroneous and prejudicial merely because the Pr.CIT would have taken a different view. Accordingly the revision order under section 263 was set aside. [Paras 17, 24, 25, 32, 33]

Order passed under section 263 is quashed; assessment confirmed as not erroneous or prejudicial to revenue.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and allowed the appeal on merits by setting aside the Principal Commissioner's order under section 263, holding that the Assessing Officer had made adequate enquiries into demonetisation period cash deposits, taken a plausible view supported by the records and CBDT guidance, and therefore the assessment was not erroneous and prejudicial to the revenue.

Effect of IBC-approved resolution plan on enforceability of tax demands - Moratorium under the Insolvency and Bankruptcy Code and extinguishment of statutory dues - Maintainability of statutory appeal where assessment order is rendered unenforceable - Direction to tax authority to pursue recovery before NCLT/NCLAT

Effect of IBC-approved resolution plan on enforceability of tax demands - Moratorium under the Insolvency and Bankruptcy Code and extinguishment of statutory dues - Maintainability of statutory appeal where assessment order is rendered unenforceable - Whether the assessment order for A.Y. 2017-18 was enforceable and whether the appeal before the CIT(A) was maintainable or rendered infructuous by the IBC resolution plan and orders of NCLT/NCLAT. - HELD THAT: - The Tribunal recorded that the resolution plan approved by the NCLT and affirmed by the NCLAT included the tax liability for A.Y. 2017-18 and, by operation of the IBC orders, the tax demand in respect of that assessment year could not be recovered from the assessee. The CIT(A) had held the appeal to be infructuous on that basis and directed the Assessing Officer to pursue any remedy before the NCLT/NCLAT. The Tribunal accepted that when the assessment order is unenforceable as a result of the approved resolution plan and appellate orders under the IBC, the assessee has no genuine grievance in respect of recovery and an appeal before the tax appellate authority becomes functionally infructuous. The Tribunal also noted that coordinate benches had, in similar circumstances, treated such appeals as allowed for statistical purposes and rectified earlier dismissals; applying that decision-making practice, the Tribunal allowed the appeal of the assessee (effectively recognising that no actionable demand exists) while observing that the question of enforcement, if the Revenue wishes to pursue it, lies before the adjudicating authorities under the IBC. [Paras 6, 7]

The assessment order for A.Y. 2017-18 is unenforceable insofar as recovery from the assessee is concerned because the approved resolution plan and orders of the NCLT/NCLAT include that assessment year; the appeal before the CIT(A) was functionally infructuous, and the Tribunal, following coordinate benches, allowed the appeal (with the Assessing Officer directed to seek remedy before the NCLT/NCLAT if required).

Disallowance under section 14A read with Rule 8D - Treatment of disallowance for computation of book profits under section 115JB - Capitalisation of interest and disallowance under section 36(1)(iii) - Unexplained cash credit under section 68 read with penal provisions - Allowability of foreign travelling expenses - Computation and levy of interest under section 234C - Credit for Dividend Distribution Tax and interest under section 115P - Deduction under section 36(1)(viia) and section 36(1)(viii) - Whether the substantive assessment additions and disallowances raised in the grounds of appeal were adjudicated on their merits by the tax authorities or the Tribunal. - HELD THAT: - Although the assessee advanced multiple substantive grounds challenging various additions and disallowances (including under section 14A read with Rule 8D, additions to book profit under section 115JB, capitalization/disallowance under section 36(1)(iii), additions under section 68 read with penal provisions, foreign travelling expense disallowance, interest under section 234C, credit of DDT and interest under section 115P, and deductions under section 36(1)(viia) and (viii)), the Tribunal did not decide those grounds on their merits. The Tribunal's disposal proceeded from the finding that the resolution plan and the NCLT/NCLAT orders rendered the assessment unenforceable; accordingly, the substantive tax-contentions were left undetermined in the present proceedings and were not adjudicated by the Tribunal.

The substantive assessment issues and grounds of appeal were not decided on merits in these proceedings and therefore remain undetermined for consideration in the appropriate forum or in accordance with the orders of the NCLT/NCLAT.

Final Conclusion: The Tribunal held that the approved IBC resolution plan and NCLT/NCLAT orders rendered the tax demand for A.Y. 2017-18 unenforceable, making the statutory appeal before the CIT(A) functionally infructuous; following coordinate-bench practice the Tribunal allowed the appeal (noting that the Assessing Officer, if he wishes to pursue recovery, must approach the NCLT/NCLAT). The substantive additions and disallowances raised in the grounds of appeal were not decided on their merits in these proceedings and remain undetermined.

Capital receipt - revenue receipt - Technology Upgradation Fund Scheme (TUF) interest subsidy - explanation 10 to section 43(1) - treatment of subsidy in profit and loss account - binding precedents of coordinate bench

Technology Upgradation Fund Scheme (TUF) interest subsidy - capital receipt - revenue receipt - treatment of subsidy in profit and loss account - binding precedents of coordinate bench - Interest subsidy received under the Technology Upgradation Fund Scheme is a capital receipt and not chargeable to tax for Assessment Year 2009-10. - HELD THAT: - The Tribunal examined the characterisation of the interest subsidy received under the TUF scheme. Although the assessee had credited the subsidy by way of netting it off against interest expense in the profit and loss account, the coordinate bench had previously considered the scheme and, following decisions of High Courts, held the TUF subsidy to be capital in nature. The Tribunal noted the coordinate bench's reasoning (including detailed examination and reliance on High Court decisions) and observed that earlier remands had led the AO to re-adjudicate the matter; however, the subsequent coordinate-bench rulings squarely in favour of the assessee support treating the subsidy as capital receipt. On that basis the Tribunal upheld the CIT(A)'s conclusion and dismissed the AO's grounds challenging that characterisation. [Paras 6, 7]

The interest subsidy under the TUF scheme is capital in nature and not taxable; the revenue's grounds challenging the CIT(A)'s allowance are dismissed.

Explanation 10 to section 43(1) - Technology Upgradation Fund Scheme (TUF) interest subsidy - Explanation 10 to section 43(1) does not operate to convert the TUF interest subsidy into a taxable revenue receipt in the assessee's case. - HELD THAT: - The departmental contention that Explanation 10 to section 43(1) rendered the subsidy taxable was considered and rejected in light of the coordinate-bench decisions (and the High Court authorities they followed). The Tribunal observed that the coordinate bench examined the applicability of Explanation 10 in related assessments and held that it did not alter the capital character of the TUF subsidy. Consequently the AO's reliance on Explanation 10 was negatived and the CIT(A)'s view affirmed. [Paras 6, 7]

Explanation 10 to section 43(1) is not applicable so as to treat the TUF interest subsidy as taxable revenue in this assessment.

Final Conclusion: The appeal filed by the assessing officer is dismissed; the TUF interest subsidy for Assessment Year 2009-10 is held to be a capital receipt not chargeable to tax, and the challenge based on Explanation 10 to section 43(1) is negatived. The assessee has not pressed its cross-objection, which is dismissed.

Re-opening of assessment under section 148 - representative-assessee versus individual capacity - effect of obfuscated notice and PAN mismatch on notice validity - attribution of enhanced capital gains to a single co-owner where multiple vendors/co-owners exist - application of section 50C in valuation of transfer of agricultural land within municipal limits

Re-opening of assessment under section 148 - representative-assessee versus individual capacity - effect of obfuscated notice and PAN mismatch on notice validity - Validity of reassessment where notice was issued to the assessee as legal heir (representative-assessee) but communications and PAN used were of his individual capacity and the Assessing Officer completed assessment in the assessee's individual capacity. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the status of the assessee was obfuscated from the inception because the reasons for reopening, and the notice, related to income of late Smt. V. Rajyalakshmi and were directed to the assessee as her legal heir, whereas subsequent communications (including PAN) and the return taken on record related to the assessee in his individual capacity. The assessee's reply treating his original individual return as response to the section 148 notice was found to be justified in those circumstances. The Assessing Officer, despite showing the assessee as Legal Representative in the order, relied on the PAN and return reflecting the assessee's individual professional income; on this basis the Tribunal found no error in the CIT(A)'s view that assessment could not be validly concluded in the assessee's individual capacity where reopening reasons and notice pertained to the deceased's income and the representative status was not consistently and correctly invoked. [Paras 8, 13, 14, 19]

Reassessment completed in the assessee's individual capacity was invalid in view of the obfuscated status and PAN/communication mismatch; the CIT(A)'s allowance on this ground is upheld.

Attribution of enhanced capital gains to a single co-owner where multiple vendors/co-owners exist - nominee doctrine and pre-existing rights of others - Whether the Assessing Officer could attribute the entire enhanced capital gain to the assessee alone when the sale deed showed three vendors/co-owners, payments were made as to a nominee, and no enquiries were made about other vendors or their legal representatives. - HELD THAT: - The Tribunal agreed with the CIT(A) that the sale deed disclosed three vendors and that the amount was deposited in the assessee's bank account as a nominee, not as sole legal representative of the deceased. There was no finding by the Assessing Officer that the assessee had appropriated the entire amount excluding other co-vendors or that other legal heirs had been treated. Relying on precedents (CIT vs. Muthukarupan and CIT vs. Kumararani Smt. Meenakshi Achi) and a coordinate bench decision, the Tribunal held it would be a travesty of justice to pick out one co-owner and attribute the entire enhanced income to him alone. In absence of enquiries and findings about other co-owners or their representatives, the addition solely in assessee's hands was unsustainable. [Paras 15, 16, 17, 18]

Addition attributing the entire enhanced capital gains to the assessee alone is not sustainable; the CIT(A)'s relief on this ground is affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order: the reassessment was vitiated by obfuscated status and PAN/communication inconsistency and the Assessing Officer could not single out the assessee to attribute the entire enhanced capital gains where the sale deed disclosed multiple vendors and no enquiries were made about other co-owners or their representatives.

Bail - Statement under Section 108 of the Customs Act - Compounding of offence under the Customs Act - Confiscation under the Customs Act - Expeditious trial in accordance with Section 309 Cr.P.C.

Bail - Statement under Section 108 of the Customs Act - Compounding of offence under the Customs Act - Prayer for grant of bail rejected - HELD THAT: - The applicant sought enlargement on bail after alleging that the recovered gold was ancestral and produced supporting papers, and contended that the offence was amenable to compounding under Section 137(3) of the Customs Act. The prosecution relied on the recovery of two rectangular bars and a small piece totalling 1999.640 grams, alleged admissions recorded under Section 108 of the Customs Act, and pleaded that the gold had been smuggled and was liable to confiscation. The Court considered the rival contentions and the material placed on record and found that the applicant failed to point out any good ground for grant of bail. Weight was accorded to the prosecution case including the recovery and the voluntary statement under Section 108, and the Court was not persuaded to enlarge the applicant on bail at this stage. [Paras 10, 11]

Bail application rejected

Expeditious trial in accordance with Section 309 Cr.P.C. - Direction to conclude trial expeditiously - HELD THAT: - Although bail was refused, the Court directed that the trial be concluded expeditiously, preferably within six months, in accordance with Section 309 Cr.P.C. and having regard to the principles laid down by the Apex Court in the cited authorities, subject to there being no legal impediment to such expedition. [Paras 12]

Trial to be concluded expeditiously, preferably within six months

Final Conclusion: Bail refused for lack of good ground; trial of the case directed to be completed expeditiously, preferably within six months, in accordance with Section 309 Cr.P.C.

Anti-dumping duty on imported goods - domestic industry injury requirement - product not manufactured domestically - scope of goods subject to anti-dumping notification - onus of contestation before appellate authority

Anti-dumping duty on imported goods - domestic industry injury requirement - product not manufactured domestically - Whether anti-dumping duty under the notification dated 06.12.2021 could be imposed on aluminium based copper clad laminates imported by the respondent. - HELD THAT: - The Commissioner (Appeals) recorded a categorical finding that aluminium based copper clad laminates imported by the respondent are not manufactured in India and therefore the condition of injury to domestic industry was not satisfied. That finding was not controverted by the appellant in the appeals before this Tribunal. The respondent further placed an affidavit from the Treasurer of the Indian Printed Circuit Association affirming that such laminates are not manufactured in India due to lack of technology. In the absence of any contention or evidence from the appellant to show domestic manufacture or injury to domestic industry, the statutory precondition for imposition of anti-dumping duty was not met. Consequently, the appeals challenging the Commissioner (Appeals) order could not be sustained.

The Tribunal dismissed the three appeals filed by the Department and upheld the conclusion that anti-dumping duty could not be imposed on the imported aluminium based copper clad laminates because they are not manufactured in India and no domestic injury was established or contested.

Final Conclusion: Appeals dismissed; impugned assessment orders set aside insofar as they sought to impose anti-dumping duty on aluminium based copper clad laminates which the Commissioner (Appeals) found, and the Department did not contest, are not manufactured domestically and hence no domestic injury was shown.

Self-assessment orders are appealable - appeals to Commissioner (Appeals) - order of assessment - re-assessment on verification under Section 17 - reasoned/speaking order

Self-assessment orders are appealable - appeals to Commissioner (Appeals) - order of assessment - Appealability of a self-assessment order to the Commissioner (Appeals). - HELD THAT: - The Tribunal held that a self-assessment order constitutes an "order of assessment" and therefore falls within the ambit of appeals to the Commissioner (Appeals). Relying on the reasoning extracted from the decision of the Supreme Court reproduced in the impugned order, the Tribunal observed that the expression "any decision or order" in the provisions governing appeals is wide enough to include self-assessment orders. The Tribunal rejected the position that absence of a separate speaking order or a lis precludes an appeal against self-assessment, noting that on verification, if the self-assessment is found unsatisfactory, re-assessment under Section 17(4) may follow, but that does not deprive the affected person of the right to appeal the original self-assessment order. [Paras 4]

The Tribunal concluded that self-assessment orders are appealable and that the Commissioner (Appeals) erred in rejecting the appeal solely on the ground that self-assessment is not appealable.

Remand for reconsideration - reasoned/speaking order - Appropriate remedy where the Commissioner (Appeals) rejected the appeal on the erroneous premise that self-assessment is not appealable. - HELD THAT: - Having found that the Commissioner (Appeals) decided the matter without the benefit of the Supreme Court's conclusion that self-assessment orders are appealable, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for fresh consideration. The remand was directed so that the Commissioner (Appeals) may reconsider the appeal on merits in light of the correct legal position and the Apex Court's reasoning; the Tribunal did not decide the merits of the underlying assessment itself. [Paras 5]

Impugned order set aside and matter remanded to the Commissioner (Appeals) for reconsideration in accordance with the correct legal position on appealability of self-assessment orders.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order that had rejected the appeal as non-appealable, held that self-assessment orders are appealable, and remanded the matter to the Commissioner (Appeals) for fresh consideration in light of the correct legal position.

Requirement of passing a speaking order under Section 17(5) of the Customs Act, 1962 - principles of natural justice - reassessment of declared value - opportunity of personal hearing before deciding enhanced valuation

Requirement of passing a speaking order under Section 17(5) of the Customs Act, 1962 - reassessment of declared value - principles of natural justice - opportunity of personal hearing before deciding enhanced valuation - Whether the enhancement of the declared value by re assessment could be sustained without issuance of a speaking order and without affording a personal hearing to the appellant. - HELD THAT: - The adjudicating authority enhanced the value declared in the bill of entry by way of re assessment. The record contains a request by the appellant for a speaking order (Exhibit C) and the Department enhanced value contrary to the appellant's declaration. As such, the mandatory requirement of passing a speaking order as contemplated by Section 17(5) was not complied with. Where valuation is enhanced by the department in contradiction of the importer's declared value, the proper officer must pass a speaking order and afford the importer a reasonable opportunity of personal hearing in accordance with the principles of natural justice before deciding the matter afresh. The absence of a speaking order and the lack of afforded hearing rendered the impugned decision unsustainable, necessitating remand for fresh adjudication consistent with the statutory requirement and natural justice. [Paras 4, 5]

Impugned order set aside and matter remanded to the proper officer to pass a speaking order in terms of Section 17(5) and to grant a reasonable opportunity of personal hearing before deciding afresh.

Final Conclusion: Appeal allowed in part; impugned order set aside and remitted for fresh decision by the proper officer who shall pass a speaking order under Section 17(5) and afford the appellant a reasonable personal hearing in accordance with the principles of natural justice.

Customs valuation - transaction value - manufacturer's website valuation - benefit of Notification No.21/2002-Cus, 2002 - Board's Circular No.1/2005-Cus - confiscation - redemption fine and penalty

Customs valuation - transaction value - manufacturer's website valuation - Validity of rejecting the declared transaction value and adoption of a valuation from the manufacturer's website which was not proposed in the show-cause notice. - HELD THAT: - The adjudicating authority rejected the declared value and adopted a manufacturer's website value though that valuation was not part of the show-cause notice. The Tribunal noted that the adjudicating authority's chosen value was not proposed in the show-cause notice and that the Revenue did not challenge the adjudicating authority's rejection of the proposed value. In these circumstances the Commissioner (Appeals) correctly held that a value (from the manufacturer's site) not proposed in the show-cause notice could not be taken as the assessable value and that, absent any other acceptable value, the declared transaction value should be accepted. [Paras 4]

Declared transaction value accepted; valuation from manufacturer's website could not be adopted when it was not proposed in the show-cause notice.

Benefit of Notification No.21/2002-Cus, 2002 - Board's Circular No.1/2005-Cus - Whether the imported vehicle was to be treated as new for grant of benefit under Notification No.21/2002-Cus having regard to temporary registration and dates of manufacture, shipment and registration. - HELD THAT: - The record shows the vehicle was manufactured in June 2007, invoiced in June 2007, shipped in July 2007 and first registered in August 2007 for movement to the port. The Commissioner (Appeals) applied Board's Circular No.1/2005-Cus which provides that temporary registration for transportation from showroom/factory to airport does not defeat the Notification. The Tribunal accepted that the registration related to transit purposes and that, on the facts, the vehicle could not be treated as old or used; accordingly the assessee was entitled to the benefit of the Notification. [Paras 5, 6]

Vehicle treated as new; benefit of Notification No.21/2002-Cus granted in view of temporary registration and the manufacturing/shipment dates.

Confiscation - redemption fine and penalty - Whether the vehicle was liable for confiscation and whether redemption fine and penalties were imposable. - HELD THAT: - Because the declared value was accepted and the vehicle was held to be new and entitled to the Notification benefit, there was no basis to treat the vehicle as liable for confiscation. The Tribunal observed that the facts were not controverted by cogent evidence and that physical examination at import found the vehicle to be new. Consequentially, redemption fine and penalties could not be imposed. [Paras 6, 7]

Goods not liable for confiscation; redemption fine and penalty not imposable.

Final Conclusion: The appeal by the Revenue is dismissed; the Commissioner (Appeals) order upholding the declared value and granting benefit of Notification No.21/2002-Cus stands, with no confiscation, redemption fine or penalty imposed.

Right to cross-examination - principle of natural justice - remand for fresh consideration - preservation of seized goods pending adjudication - confiscation and penalty under Section 111(b) & (d) and Section 112(b) of the Act

Right to cross-examination - principle of natural justice - Whether the appellants were denied a fair opportunity to cross-examine the crucial witness and whether the matter requires reconsideration in light of that denial. - HELD THAT: - The Tribunal found that the appellants were not permitted to cross-examine Shri Siddhartha Mehta, whose recorded statement was relied upon by the Department to establish the date of delivery of the gold. The Tribunal noted that the statement of the appellants' employee had been retracted and that the inability to test the evidence of the crucial witness vitiated the adjudicatory process. Applying the principle of natural justice, the Tribunal concluded that the adjudicating authority must afford the appellants an opportunity to cross-examine Shri Mehta and revisit the factual finding as to delivery date before finally deciding on the proposals for confiscation and penalty. [Paras 9]

Remanded to the Adjudicating Authority to permit cross-examination of Shri Siddhartha Mehta and to reconsider the decision in light of such cross-examination.

Remand for fresh consideration - preservation of seized goods pending adjudication - Scope and directions for remand including production of delivery records and interim treatment of the seized goods and timeline for completion. - HELD THAT: - The Tribunal directed the adjudicating authority to obtain and furnish to the appellants the Brinks India records showing delivery of the goods after the invoice was prepared, so that the date and circumstance of delivery can be tested. The remand was limited to these evidentiary steps and reconsideration at the adjudication level following compliance with natural justice. The Tribunal further directed that the Department shall not dispose of the seized goods until finalization of the issue and instructed that, because the matter concerns the year 2017, the adjudicating authority should complete proceedings within four months from communication of the order. [Paras 9, 11, 12]

Directed production of Brinks India delivery records, stayed disposal of the seized goods until final adjudication, and directed the adjudicating authority to conclude proceedings within four months.

Final Conclusion: The appeal is disposed of by remanding the matter to the Adjudicating Authority for limited fresh consideration: (a) afford the appellants an opportunity to cross examine Shri Siddhartha Mehta; (b) furnish and consider Brinks India delivery records; the Department is restrained from disposing of the seized goods and the adjudicating authority is directed to complete proceedings within four months.

Classification of goods as data projectors - applicability of exemption under Sr. No. 17 of Notification No. 24/2005-Customs - Advance Ruling Authority refrain from ruling where the question is pending in applicant's own case - proviso to Section 28-I(2)(a) of the Customs Act, 1962

Classification of goods as data projectors - Advance Ruling Authority refrain from ruling where the question is pending in applicant's own case - proviso to Section 28-I(2)(a) of the Customs Act, 1962 - Whether CAAR should adjudicate classification and exemption of the specified projector models, or refrain from allowing the advance ruling because the same question is pending in the applicant's own case before a customs officer/appeal forum. - HELD THAT: - The Authority examined the technical features of the subject projectors and compared them with projectors already the subject of an order-in-original (No. 142/2022-23) pending before the jurisdictional Commissioner/Commissioner (Appeals). Although model numbers differ, the Authority found the technical features and principal functionality of the projectors in the present application were not distinctly dissimilar from those already under adjudication. The proviso to Section 28-I(2)(a) precludes the Authority from allowing an advance ruling where the question raised is already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court. Applying that statutory prohibition to the facts before it, and noting that the applicant had itself declared the matter as pending at Sr. No. 11 of the CAAR-1 form, the Authority concluded that it could not allow the application. The Authority also recorded that the applicant failed satisfactorily to explain material discrepancies raised during hearing and did not demonstrate that the present models were materially different from those pending adjudication. In view of these findings the Authority refrained from passing a ruling under the cited proviso. [Paras 6, 7]

Application not allowed; CAAR refrained from passing a ruling as the question is already pending in the applicant's own case before a customs authority under the proviso to Section 28-I(2)(a).

Final Conclusion: The Authority declined to pronounce an advance ruling on classification and exemption of the specified projector models because the same question is pending in the applicant's own case before a customs officer/appeal forum; accordingly the application was not allowed under the proviso to Section 28-I(2)(a).

Re-import exemption under Notification No. 45/2017-Cus. - transfer between FTWZ/SEZ and Domestic Tariff Area not constituting import/re-import - definition of "export" and "import" under the Special Economic Zones Act, 2005 - exclusion by second proviso where goods exported by a unit in FTWZ/SEZ - inapplicability of CBIC Circular No. 21/2019 to warehousing transfers

Re-import exemption under Notification No. 45/2017-Cus. - transfer between FTWZ/SEZ and Domestic Tariff Area not constituting import/re-import - definition of "export" and "import" under the Special Economic Zones Act, 2005 - exclusion by second proviso where goods exported by a unit in FTWZ/SEZ - inapplicability of CBIC Circular No. 21/2019 to warehousing transfers - Whether exemption under serial no. 5 of Notification No. 45/2017-Cus. is available on re-import of equipment from FTWZ/SEZ to DTA where the goods were earlier moved from DTA to FTWZ for warehousing and no export incentives were availed. - HELD THAT: - The Authority found that the applicant's proposed movement of goods from DTA to FTWZ and back cannot be equated with re-imports under Notification No. 45/2017-Cus. because the SEZ Act and SEZ Rules assign distinct meanings to 'export', 'import' and 'procure', and transfers between FTWZ/SEZ and DTA for warehousing do not fall within the statutory meaning of import/re-import for customs purposes. The applicant's reliance on a contractual obligation to send equipment to FTWZ and on Notification No. 50/2017-Cus. does not transform such warehousing transfers into exports/re-exports under the Customs statute; Notification No. 50/2017-Cus. prescribes separate conditions for concessional import and non-fulfilment leads to consequences but does not create a deeming re-export for application of Notification No. 45/2017-Cus. Further, units in FTWZ/SEZ hold goods for dispatch and where such units effect supplies to DTA, those goods would be treated as exported by the FTWZ/SEZ unit; the second proviso to Notification No.45/2017-Cus. excludes goods which have been exported by a hundred percent EOU or a unit in a Free Trade Zone from the residuary re-import exemption. The CBIC Circular No.21/2019, relied on by the applicant, was issued in a different context (exhibition/consignment) and does not make exporters/importers in the present warehousing scenario similarly placed; it cannot be read to alter the statutory import/re-import concept. On these bases the Authority concluded that the movments relied upon by the applicant do not satisfy the condition of re-import under Notification No.45/2017-Cus. and the proviso excluding goods exported by FTWZ/SEZ units applies, rendering the residuary exemption inapplicable. [Paras 10, 11, 12]

Notification No. 45/2017-Cus. is not applicable and the applicant is not eligible for exemption under serial no. 5 in respect of the proposed transfers between FTWZ/SEZ and DTA.

Final Conclusion: The advance ruling holds that transfers of goods between FTWZ/SEZ and DTA for warehousing, as described by the applicant, do not qualify as re-imports under Notification No.45/2017-Cus.; consequently the residuary exemption at serial no. 5 is not available to the applicant.

De novo investigation - power of superior courts to order reinvestigation/reinvestigation - jurisdictional facts for initiation of investigation under the PMLA - offence of money laundering under Section 3 PMLA (person, process/activity, proceeds of crime) - power to inspect court records and obtain third party copies under Rules of Criminal Practice, 2019 (Rule 237/Rule 238/Rule 210) - maintainability and locus of victims to assail investigative or quashing orders - contempt for non compliance with Supreme Court directions - constitution of a Special Investigation Team

De novo investigation - power of superior courts to order reinvestigation/reinvestigation - Validity of the High Court order directing de novo investigation in Criminal O.P. No.15122 of 2021 - HELD THAT: - The Court examined whether the High Court was justified in directing reinvestigation ab initio and in language which purported to "wipe out" earlier investigation. Applying the principles in Vinay Tyagi concerning the narrow and exceptional power to order de novo investigation, the Court held that the impugned order used expressions (for example, reinvestigation ab initio; wiping out the earlier investigation; collect fresh evidence without reference to earlier investigation) that went beyond permissible scope and effectively nullified earlier investigation and this Court's earlier directions. The Court found that the operative portion of the High Court order (paragraphs 79-81) could not be sustained and that the impugned direction to start reinvestigation ab initio was impermissible in the form issued. Accordingly the appeals against the de novo investigation order were allowed and Criminal O.P. No.15122 of 2021 was set aside, with a direction that the Investigating Officer shall proceed with further investigation in all cases including offences under the PC Act. [Paras 49, 79, 80, 81, 133]

Order directing de novo investigation in Criminal O.P. No.15122 of 2021 set aside; further investigation to proceed and offences under the PC Act to be included.

Jurisdictional facts for initiation of investigation under the PMLA - offence of money laundering under Section 3 PMLA (person, process/activity, proceeds of crime) - Whether ED could register ECIR and issue summons without prior identification of proceeds of crime or property representing proceeds of crime - HELD THAT: - The Court analysed Section 3 and the definition of "proceeds of crime" in Section 2(1)(u) and held that where predicate offences are scheduled offences involving corrupt receipt of illegal gratification, the elements addressed by Section 3 (person, process/activity such as acquisition/possession/use, and product/proceeds of crime) are present on the face of the FIRs. The Court rejected the contention that ED must first identify a specific property representing proceeds of crime before registering an Information Report or issuing summons; acquisition of bribe money itself falls within the processes enumerated in Section 3 and therefore may furnish the foundational facts for ED action. The Court further observed that much material about complaints and alleged amounts was already in public domain and ED seeking certified documents or conducting inspection under established procedures was not a fishing expedition. [Paras 96, 98, 100, 104, 112]

ED was entitled to register ECIR and proceed; objections that ED lacked jurisdictional facts or could not issue summons on the available material were rejected.

Power to inspect court records and obtain third party copies under Rules of Criminal Practice, 2019 (Rule 237/Rule 238/Rule 210) - Challenge to the High Court order of 30.03.2022 permitting ED inspection of Special Court records under Rule 237 - HELD THAT: - The Court considered the Trial Court order refusing certified copies of unmarked documents and the High Court's direction permitting ED to conduct inspection under Rule 237 and thereafter file third party copy applications. It held that Rule 231(3) (which restricts grant of certified copies of unmarked documents to accused) was not offended by permitting inspection under Rule 237 followed by formal copy applications. Section 65B (admissibility of electronic records) does not bar ED from inspecting electronic records; it only affects admissibility at trial. Consequently the challenge to the High Court order was dismissed. [Paras 120, 122, 123, 124, 133]

Appeal against the High Court order permitting ED inspection under Rule 237 dismissed; High Court order stands.

Maintainability and locus of victims to assail investigative or quashing orders - Maintainability of appeals by victims/third parties and objections to locus raised by accused - HELD THAT: - The Court examined objections that several appellants lacked locus or had unclean hands and recalled that earlier proceedings had rejected similar maintainability objections. The Court recognised the limited role historically accorded to victims but emphasised that where complainants and accused form collusive arrangements that subvert investigation, victims and public interest bodies have legitimate locus to challenge orders that derail investigation. The Court rejected repeated attempts by accused to resurrect locus objections already addressed, and held that appellants such as unsuccessful candidates and public interest NGOs had sufficient locus in the circumstances. [Paras 32, 33, 34, 35]

Objections to maintainability and locus were rejected; appellants challenging the de novo order had sufficient locus.

Extension of time for completion of investigation - Appeal challenging High Court orders dated 27.11.2019 and 01.11.2021 refusing/declining extension of time for completion of further investigation - HELD THAT: - The Court held that refusal to grant extension did not render the direction for further investigation infructuous. A Final Report under Section 173(8) had in fact been filed on 08.03.2021 and the matter progressed to become CC No.24 of 2021. The apprehension that investigation could not proceed due to denial of extension was therefore unfounded. [Paras 125, 126, 133]

Appeal dismissed; investigation to proceed and Further/Final Reports to be filed within two months.

Contempt for non compliance with Supreme Court directions - Contempt petitions alleging willful disobedience by investigating officers/State - HELD THAT: - The Court considered allegations that Police had willfully disobeyed this Court's directions and that offences under the PC Act had been omitted or stays not vacated. Noting the complex interplay of orders (including the High Court order of 31.10.2022 which temporarily undid earlier directions), the Court accepted the State's explanation that the investigating agency's hands were constrained by interim orders and other actors, and declined to initiate contempt proceedings at that stage while leaving open the right to revisit if future disobedience occurs. [Paras 127, 128, 129, 133]

Contempt petitions dismissed without prejudice to re raise if future disobedience is shown.

Constitution of a Special Investigation Team - Interlocutory application for constitution of a Special Investigation Team and appointment of Special Public Prosecutor (I.A. No.26257 of 2023) - HELD THAT: - The Court rejected the interlocutory application at this stage, observing that blame for investigative failures was not attributable solely to the Police and that a substantive, adequately pleaded petition may be entertained later if material establishes foul play. Liberty was granted to the applicant to return with a substantial petition if justified. [Paras 130, 131, 132, 133]

I.A. dismissed with liberty to renew by substantive petition supported by material.

Final Conclusion: All appeals against the High Court order dated 31.10.2022 directing de novo investigation are allowed and that portion of the order is set aside; appeals against the Division Bench order dated 01.09.2022 are allowed and that order set aside so ED may proceed; the appeal against the High Court order permitting ED inspection is dismissed; the appeal against refusal/denial of extension of time is dismissed; contempt petitions and the interlocutory application for a Special Investigation Team are dismissed (liberty to renew the SIT request on a substantive foundation); investigatory authorities are directed to proceed further, include offences under the PC Act and file reports within the time ordered by this Court.

Dismissal for delay and laches - show-cause notice under Section 73 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 - requirement of a reasoned and speaking order - opportunity of hearing - direction to dispose pending proceedings within a specified time - administrative enquiry to fix departmental responsibility for delay - statutory limitation and time-bar

Dismissal for delay and laches - statutory limitation and time-bar - Writ petition filed after inordinate delay was dismissed on the ground of laches and delay in approaching the court. - HELD THAT: - The petitioner challenged a show-cause-cum-demand notice dated 23rd December, 2020 by filing the writ petition on 13th April, 2023, after about 2 years and 4 months, despite having filed a reply to the notice on 5th February, 2021 which remained pending. The Court criticised the petitioner for the delay in invoking constitutional remedy instead of challenging the notice earlier, and observed that the petitioner sought to take advantage of the Revenue's inaction which allowed the proceeding to become time-barred. Having regard to the petitioner's inordinate delay and attempt to benefit from the departmental lapse, the writ petition was dismissed.

Writ petition dismissed for delay and laches.

Show-cause notice under Section 73 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 - requirement of a reasoned and speaking order - opportunity of hearing - direction to dispose pending proceedings within a specified time - Pending departmental proceedings on the impugned show-cause notice must be concluded by the Commissioner by passing a reasoned and speaking order after affording hearing, within a stipulated period. - HELD THAT: - Although the writ petition was dismissed for delay, the Court directed that the dismissal shall not prevent the Commissioner from disposing of the pending show-cause notice in accordance with law. The Commissioner is required to pass a reasoned and speaking order after giving an opportunity of hearing to the petitioner or its authorised representative. The Court fixed a time-limit to ensure final adjudication and to prevent further prejudice caused by administrative inaction.

Commissioner to dispose of the pending show-cause notice by a reasoned, speaking order after hearing within four weeks from communication of the order.

Administrative enquiry to fix departmental responsibility for delay - direction to dispose pending proceedings within a specified time - Chief Commissioner directed to inquire into the Commissioner's lapse in concluding the impugned proceedings and to take disciplinary decision within a fixed period. - HELD THAT: - The Court expressed strong disapproval of the Commissioner's delay in adjudicating the show-cause notice and directed that a copy of the order be forwarded to the Chief Commissioner of CGST. The Chief Commissioner was directed to take note of the conduct, hold an enquiry into the lapse, fix responsibility, and take final decision in accordance with service rules. The Court specified a time-frame for completion of the enquiry and decision-making to ensure administrative accountability.

Chief Commissioner to conduct enquiry and take final decision under service rules within eight weeks from communication of the order.

Final Conclusion: The writ petition was dismissed for inordinate delay and laches; however, the Commissioner was directed to dispose of the pending show-cause notice by a reasoned, speaking order after hearing within four weeks, and the Chief Commissioner was directed to hold an enquiry and take disciplinary/service action within eight weeks to fix responsibility for the departmental lapse.

Classification of services - Works Contract Service - commercial and industrial construction service - abatement under Notification No.1/2006-CE - extended period of limitation under Section 73(1) - fraud, collusion, wilful mis-statement or suppression

Classification of services - Works Contract Service - commercial and industrial construction service - Whether the appellant's activity of supplying and laying pipes for GIDC is classifiable as Works Contract Service - HELD THAT: - The Tribunal examined the contract documents and found the works involved both supply of pipes/materials and the service of laying them as per engineering drawings, satisfying the Explanation to the definition of works contract. Reliance was placed on precedent treating laying of pipes for water supply/drainage as falling within the Explanation (ii)(b) to the definition of works contract service. Having regard to the composite nature of the contracts and the filing of ST-3 returns and payment of service tax under Works Contract Service, the Tribunal concluded that the activity is properly classifiable under Works Contract Service and that the demand treating it as Commercial and Industrial Construction service is without merit. [Paras 4]

The service is classifiable as Works Contract Service and the Order in Original confirming the contrary classification is set aside.

Extended period of limitation under Section 73(1) - abatement under Notification No.1/2006-CE - fraud, collusion, wilful mis-statement or suppression - Whether the department could invoke the extended period of limitation for the demand or whether the demand is barred by limitation - HELD THAT: - The Tribunal noted that the assessee had consistently filed returns under Works Contract Service, had corresponded with the department in 2008 seeking clarification and had paid service tax under protest. No findings of fraud, collusion, wilful mis-statement or suppression were recorded. Given that the dispute was interpretational and the assessee had made disclosures and engaged with the department, the Tribunal held that the extended period under Section 73(1) could not be invoked and the demand for the extended period is barred by limitation. [Paras 4]

Demand based on the extended period is barred by limitation and is set aside.

Final Conclusion: The appeal is allowed: the activity is held to be Works Contract Service and, in the absence of fraud or suppression and having regard to prior returns and correspondence, the extended period of limitation cannot be invoked; the Order in Original is set aside for the period 2007-08 to 2010-11.

Manpower Recruitment or Supply Agency Service - Contract for execution of work versus supply of manpower - Payment on tonnage/unit basis as indicium of contract for work - Services incidental to manufacturing (job-work) not taxable as MRSA

Manpower Recruitment or Supply Agency Service - Contract for execution of work versus supply of manpower - Payment on tonnage/unit basis as indicium of contract for work - Services incidental to manufacturing (job-work) not taxable as MRSA - Whether the appellants' activities fall within the ambit of Manpower Recruitment or Supply Agency Service and are therefore liable to service tax - HELD THAT: - The Tribunal examined the work orders and invoices and found the contracts were for execution of specified works as part of manufacturing activity and not mere supply of manpower. The contracts provided for payment on a tonnage/unit basis and not on a per-person or man-hour basis; invoices corroborated that payment was for works executed on tonnage/unit rates. Where payment is by unit/quantity and the contractor determines the manpower necessary to complete the work, the arrangement is characteristic of a contract for execution of work rather than a manpower supply contract. The Tribunal relied on earlier decisions of the Tribunal which held that contractors paid on quantity/unit basis do not render Manpower Supply Service (CST Kolkata Vs Anmol Biscuits Ltd. ; Dhanashree Enterprises v. CCE ; Divya Enterprises ). Applying that principle, the Tribunal held the services in these appeals were contracts to execute manufacturing-related tasks (incidental to completion of manufacture) and therefore did not attract levy as Manpower Recruitment or Supply Agency Service

The impugned demands under Manpower Recruitment or Supply Agency Service are set aside and the appeals are allowed.

Final Conclusion: Appeals allowed; impugned orders confirming demand of service tax under Manpower Recruitment or Supply Agency Service are set aside with consequential reliefs, if any.

Taxability of cross border services under reverse charge - application of Section 66A read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - scope of Rule 3(ii) - exclusion where services wholly performed outside India - clearing and forwarding agency service provided wholly outside India

Taxability of cross border services under reverse charge - scope of Rule 3(ii) - exclusion where services wholly performed outside India - clearing and forwarding agency service provided wholly outside India - Whether clearing and forwarding agency services performed wholly outside India are exigible to service tax under Section 66A when read with Rule 3(ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - HELD THAT: - The Tribunal examined Section 66A and Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, noting that services specified in sub rule (ii) (which includes clearing and forwarding agency services) are treated as taxable only when performed in India. The Tribunal accepted the factual finding that the services were provided and consumed outside India and held that, insofar as such services are wholly performed outside India, Rule 3(ii) excludes them from service tax liability under Section 66A. The Tribunal relied on its earlier decisions in the appellant's own cases where identical facts led to the conclusion that such activities, being wholly performed outside India, are not exigible to service tax. A decision cited by Revenue where part performance occurred in India was distinguished on facts as inapplicable.

Demand for service tax, interest and penalty raised under the reverse charge mechanism for clearing and forwarding services wholly performed outside India is unsustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal set aside the demand, holding that clearing and forwarding agency services wholly performed outside India are not exigible to service tax under Section 66A read with Rule 3(ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006; appeal allowed with consequential relief.

Waiver of penalty under section 80(1) of the Finance Act, 1994 - retrospective amendment and litigational confusion on taxability of renting of immovable property service - availability of statutory waiver under section 80(2) of the Finance Act, 1994 and its relationship with section 80(1) - reasonable cause / bona fide belief as basis for exclusion of penalty

Waiver of penalty under section 80(1) of the Finance Act, 1994 - reasonable cause / bona fide belief as basis for exclusion of penalty - retrospective amendment and litigational confusion on taxability of renting of immovable property service - Whether penalties proposed under sections 76, 77 and 78 could be dropped by applying section 80(1) in view of the confusion and litigation on taxability of renting of immovable property service for the period 1.6.2007 to 31.12.2011. - HELD THAT: - The Tribunal accepted the adjudicating authority's finding that there was genuine confusion and ongoing litigation concerning levy of service tax on renting of immovable property after its introduction from 1.6.2007 and that retrospective amendments and subsequent judicial developments contributed to that confusion. The Court noted that the later insertion of sub-section (2) to section 80 (providing conditional waiver on payment within a prescribed time) does not preclude application of the original sub-section (1). On the material on record the adjudicating authority had recorded that the respondent municipality entertained a bona fide belief of non-liability and, being a statutory body, there was no evidence of mala fide intention to evade tax. Reliance was placed on earlier Tribunal decisions recognising that a bonafide doubt or reasonable cause regarding taxability is a valid ground for exoneration from penalty under section 80. In view of these findings, the Tribunal found no infirmity in the exercise of discretion to drop penalties under section 80(1) and declined to substitute its satisfaction for that of the original authority. [Paras 9, 10, 11, 13]

The Tribunal sustained the adjudicating authority's invocation of section 80(1) and held that penalties under sections 76, 77 and 78 were correctly dropped.

Final Conclusion: The appeal by the Revenue was dismissed and the impugned order confirming service tax but dropping the penalties under section 80(1) was sustained.

Agreeing to the obligation to refrain from an act, to tolerate an act or situation, or to do an act - consideration as essential element of a declared service - declared service under section 66E(e) of the Finance Act, 1994 - service tax levy on declared services - distinction between contractual penalty/liquidated damages and consideration for tolerating or refraining from an act

Declared service under section 66E(e) of the Finance Act, 1994 - consideration as essential element of a service under section 65B(44) - liquidated damages/compensation not constituting consideration for tolerating or refraining from an act - Whether the amount received by the appellant from the foreign supplier as damages/settlement for breach of contract was a taxable declared service under section 66E(e) of the Finance Act, 1994. - HELD THAT: - The Tribunal held that a service under section 66E(e) requires an agreement by one party, for consideration, to refrain from an act, tolerate an act or situation, or to do an act, and therefore there must be a flow of consideration specifically for that obligation. The recovery of liquidated damages or compensation for breach of contract does not, by itself, amount to consideration for tolerating or refraining from an act because such payments are imposed to deter breach and to enforce contractual performance rather than to procure an independent obligation to tolerate or refrain. The Tribunal relied on the reasoning in South Eastern Coalfields Ltd. that penal or compensatory clauses in contracts are safeguards of commercial interest and are not consideration for a service; it observed that only where an agreement specifically contemplates an obligation to refrain/tolerate and there is an express or implied consideration for that obligation would section 66E(e) apply. The Departmental Circular dated 03.08.2022 was noted as consistent with this approach, emphasising that an agreement to do or refrain from an act should not be presumed merely because money changes hands, and that payments like liquidated damages ordinarily do not constitute 'consideration' for tolerating an act or situation. Applying these principles to the facts, the Tribunal found that the settlement amount of EURO 8.5 million was received as compensation for breach of contract and not as consideration for agreeing to tolerate or refrain from an act; hence the impugned demand under section 66E(e) could not be sustained. [Paras 21, 23, 24, 25, 26]

The amount received on settlement was not a declared service under section 66E(e) and therefore not subject to service tax.

Final Conclusion: The Commissioner's order confirming service tax demand and penalties on the settlement amount is set aside; the appeal is allowed.

Refund under Cenvat Credit Rules, 2004 - verification of documentary evidence - remand for fresh verification - principles of natural justice - reverse charge (refund of Service Tax paid on RCM)

Refund under Cenvat Credit Rules, 2004 - verification of documentary evidence - remand for fresh verification - Whether the refund claims totalling Rs.2,78,640/- should be remanded to the Adjudicating Authority for verification of documentary evidence and fresh adjudication following principles of natural justice. - HELD THAT: - The Tribunal found that the appellant had produced original documents and photocopies which, except for a non-uniform date format, matched invoice details, value particulars and Service Tax entries. The Commissioner (Appeals) rejected certain claims on the ground that invoice dates did not tally. The Tribunal accepted the appellant's explanation that the discrepancy arose from the date format and observed that the claims are otherwise verifiable against departmental records and the documents produced. Considering the verifiability of the documentary evidence and the need for fact based scrutiny, the Tribunal held that the matter requires fresh verification by the Adjudicating Authority rather than final rejection on the invoice date point alone. The Adjudicating Authority is directed to verify the documentary evidence, afford the parties opportunity under the principles of natural justice and pass a fresh order within four months from communication of the Tribunal's order. [Paras 4]

Matter remanded to the Adjudicating Authority for verification of documentary evidence and fresh adjudication in accordance with principles of natural justice within four months.

Final Conclusion: The appeal is allowed to the extent that the refund claims aggregating Rs.2,78,640/- are remanded to the Adjudicating Authority for verification and fresh decision after following principles of natural justice; other small/unpressed claims are not pursued and the appeal is disposed of.