TaxTMI Updates e-Newsletter
Jun 17,2023

Life tax - cost of the vehicle - net invoice price - inclusion of GST and compensation cess in consideration - refund of excess tax - no taxation except by authority of law

Life tax - cost of the vehicle - net invoice price - inclusion of GST and compensation cess in consideration - refund of excess tax - Whether life tax under the Sixth Schedule to the A.P. Motor Vehicles Taxation Act, 1963 is to be levied on the 'cost of the vehicle' defined as the amount actually paid by the purchaser (net invoice price) and whether tax collected on a higher invoice figure inclusive of certain components must be refunded. - HELD THAT: - The Court examined the statutory scheme and earlier decisions holding that life tax is leviable on the 'cost of the vehicle' as the amount actually paid by the purchaser to the dealer (the consideration for transfer) and not on an ex showroom price. Reliance was placed on precedents which treat the invoice/purchase consideration as determinative of purchase value and which recognise dealers' discounts as legitimate adjustments to the consideration. The respondents contended that the cost includes IGST and compensation cess paid and therefore the invoice total inclusive of such taxes constitutes the consideration. The Court accepted the settled principle that life tax must be computed on the invoice sale price representing the consideration actually paid to the dealer (net invoice price) and, on the facts before it, held that the respondents had collected life tax in excess of what was payable under the Sixth Schedule. The Court noted the availability of administrative sanction for refunds of tax paid in excess and concluded that the excess amounts collected in the two petitions should be refunded within the time directed. [Paras 19, 20, 21]

Writ petitions allowed; respondents directed to refund the excess life tax collected from the petitioners within four weeks; no order as to costs.

Final Conclusion: The Court held that life tax under the Sixth Schedule is to be levied on the 'cost of the vehicle' as the consideration actually paid (net invoice price), and directed refund of the excess life tax collected in the two petitions within four weeks.

Refund of unutilized input tax credit on export of goods and services - statutory interest under Section 56 of the CGST Act, 2017 - opportunity of hearing under Rule 92(3) of the CGST Rules - non est / non-existing order - re-credit to electronic credit ledger - processing of original refund application

Refund of unutilized input tax credit on export of goods and services - processing of original refund application - re-credit to electronic credit ledger - Original refund application dated 04.03.2019 for the period July, 2017 to March, 2018 must be processed and cannot be set aside on the ground that the petitioner should file a fresh refund application. - HELD THAT: - The Court found that the petitioner filed Form GST-RFD 01A on 04.03.2019 and was, by e-mail and portal entry dated 22.10.2019, informed that the refund had been sanctioned pending issuance of payment advice. The department later communicated that the refund was rejected by Order No. 91 dated 18.10.2019, but admitted that no such order exists in the official record. No opportunity of hearing under the procedural mechanism (Rule 92(3) of the CGST Rules) was afforded before the purported rejection. Re-credit of the claimed amount in the electronic credit ledger did not change the substantive entitlement, particularly as the petitioner had sufficient unutilized ITC in later periods and had not utilized the re-credited amount. In these circumstances the Court held that the alleged Order No. 91 is non est and that respondents cannot insist on a fresh application when a valid original application remains pending and unadjudicated in law. The Court therefore directed respondents to process the claim on the basis of the original application. [Paras 16, 17, 18, 20]

Refund claim filed by ARN AA200318232092U dated 04.03.2019 for July, 2017 to March, 2018 to be processed on the basis of the original application.

Statutory interest under Section 56 of the CGST Act, 2017 - right to interest where refund retained without right - principles of natural justice and Rule 92(3) of the CGST Rules - Petitioner is entitled to statutory interest on the refundable amount from expiry of 60 days from date of receipt of the refund application until payment, and respondents cannot defeat interest entitlement by directing a fresh application where the original application was irregularly treated as rejected without due process. - HELD THAT: - Relying on the principle that money received and retained without right carries the obligation to refund with interest, the Court held that because no valid rejection order is on record and no opportunity was given in breach of Rule 92(3), the petitioner retains the right to interest under Section 56. Directing a fresh application would cause loss of the statutory interest which accrued from expiry of the 60-day period after filing the original application. The Court therefore directed processing of the original application together with interest at the statutory rate until payment. [Paras 18, 20]

Respondents to pay interest under Section 56 of the CGST Act, 2017 from expiry of 60 days from 04.03.2019 until payment, along with processing of the original refund application.

Final Conclusion: The writ petition is allowed: the respondents are directed to process the refund claim made by ARN AA200318232092U dated 04.03.2019 (period July, 2017 to March, 2018) on the basis of the original application and to pay statutory interest under Section 56 of the CGST Act, 2017 from expiry of 60 days after 04.03.2019 until payment; the processing and payment are to be completed within three weeks of production/receipt of this order.

Provisional attachment of property under Section 83 of the CGST Act - Exhaustion of statutory remedy under Rule 159(5) of the CGST Rules before approaching writ court - Delegation of power to Additional Director General by executive notification for exercise of powers under the CGST Act - Invocation of Section 83 consequent to proceedings under Chapter XV (penalties and prosecution) including proceedings under Section 74

Exhaustion of statutory remedy under Rule 159(5) of the CGST Rules before approaching writ court - Writ jurisdiction as extraordinary remedy where alternate efficacious remedy exists - Whether the petitioner was obliged to invoke the statutory remedy under Rule 159(5) before filing the writ petition challenging provisional attachment orders. - HELD THAT: - The Court observed that Rule 159(5) expressly provides a procedure for a person whose property has been provisionally attached under Section 83 to move the Commissioner for lifting of the attachment. Given the availability of this specific and efficacious statutory remedy, the exercise of constitutional writ jurisdiction under Article 226 is not appropriate except in extraordinary circumstances. The petitioner proceeded to the High Court without first availing the remedy under Rule 159(5), and the Court relied on well-established principles that writ jurisdiction should not be invoked where an alternative remedy exists. [Paras 9, 10, 11]

The petitioner should have exhausted the statutory remedy under Rule 159(5); absence of such exhaustion disentitles the petitioner to relief in this writ petition.

Delegation of power to Additional Director General by executive notification for exercise of powers under the CGST Act - Competence of delegated authority to pass provisional attachment orders - Whether the first respondent (Additional Director General) had authority to pass the provisional attachment orders under Section 83. - HELD THAT: - The Court examined the delegation by the Government (Ext.R1(a)) read with the scheme of the CGST Act (including provisions concerning appointment and delegation) and found express investment of power upon the Additional Director General. Distinguishing the Bombay High Court decision cited by the petitioner, which turned on absence of on-record authorisation, the Court held that in the present case there was an authorised delegation enabling the first respondent to exercise powers under Section 83. Consequently, the plea that the first respondent lacked competence was rejected. [Paras 12, 13, 14]

The first respondent was empowered, by express delegation, to pass orders in the nature of Ext.P6 under Section 83.

Provisional attachment of property under Section 83 of the CGST Act - Invocation of Section 83 consequent to proceedings under Chapter XV (penalties and prosecution) including proceedings under Section 74 - Whether issuance of show cause notices under Section 74 and the ongoing investigation justified provisional attachment under Section 83 to protect government revenue. - HELD THAT: - On the material placed before it, the Court noted that show cause notices under Section 74 had been issued alleging substantial and fraudulent availment of input tax credit from non-existent suppliers and that the investigation under Section 67 disclosed prima facie fraudulent activity exposing the revenue to significant risk. The Court accepted the respondents' stance that proceedings under Section 74 fall within Chapter XV and accordingly fall within the ambit of Section 83, thereby providing a statutory basis for provisional attachment to safeguard the revenue pending adjudication. [Paras 7, 8]

Provisional attachment under Section 83 was legally tenable in view of the ongoing proceedings under Section 74 and the prima facie findings of fraudulent availing of input tax credit.

Final Conclusion: The writ petition challenging the provisional attachment orders is dismissed on the ground that the petitioner did not first avail the statutory remedy under Rule 159(5); the Additional Director General was held competent to pass the attachment orders and the provisional attachments were warranted by the pendency of proceedings under Section 74 to protect revenue. Dismissal is without prejudice to the petitioner's right to invoke the statutory remedy.

Interim protection from coercive recovery - attachment and de-freezing of assets - classification of skill games for GST - payment of GST on platform fees

Interim protection from coercive recovery - attachment and de-freezing of assets - Grant of interim protection against coercive recovery proceedings and partial de-freezing of attached funds in pursuance of the show cause notice dated 19.05.2023 - HELD THAT: - Relying on the earlier order dated 29.09.2021 in CWP-18780-2021 where the State had given an assurance not to initiate coercive steps pending examination by an empowered Group of Ministers, the Court extended similar interim protection in the present petition. The Court recorded that the Group of Ministers is examining whether skill games facilitated by the petitioner are to be treated as a game of chance and taxed at the higher rate, and noted the petitioner's contention that GST at 18% has been paid on platform fees. In view of these circumstances and the prior statement by the State, the Court directed that no coercive steps be taken for recovery of the amount claimed in the show cause notice dated 19.05.2023 and ordered that 50% of the amount attached be defreezed to enable the petitioner to carry on day-to-day operations. The Court also directed respondents' counsel to inform the Court about the stage of the investigation and adjourned the matter for further consideration.

No coercive steps shall be taken for recovery under the show cause notice dated 19.05.2023 and fifty per cent of the attached amount is to be defreezed to enable the petitioner to continue its operations, with the matter adjourned for further hearing.

Final Conclusion: Interim relief granted: coercive recovery proceedings stayed and half of the attached funds released for business continuity; further proceedings adjourned while the investigation/consideration continues.

Interpretation of Section 16(4) of the CGST Act - entertainment of writ petition despite availability of statutory appeal - interim stay on coercive recovery subject to deposit - conditional relief pending final adjudication

Interpretation of Section 16(4) of the CGST Act - entertainment of writ petition despite availability of statutory appeal - Writ petition entertained though the impugned order is appealable, because a pure question of law involving interpretation of Section 16(4) of the CGST Act is raised. - HELD THAT: - The Court accepted that the order under challenge is ordinarily appealable under the statute but observed that the controversy raised pertains to a pure question of law relating to interpretation of Section 16(4) of the CGST Act. Relying on precedent invoked by the petitioners, the Court exercised writ jurisdiction to entertain the petition for final hearing, subject to conditions stated in the order. The petitioners' challenge to constitutional validity of Section 16(4) and the Rules was noted but not pressed, and thus not decided.

Writ petition entertained for final hearing on condition of compliance with interim deposit; constitutional challenge not pressed and not adjudicated.

Interim stay on coercive recovery subject to deposit - conditional relief pending final adjudication - Interim protection against coercive recovery was granted on condition of payment of 10% of the disputed tax within two weeks. - HELD THAT: - The Court granted conditional interim relief: if the petitioners pay 10% of the disputed tax amount within two weeks, respondents shall refrain from taking coercive recovery action arising from the impugned order. The order specifies that failure to make the payment within the stipulated time will render the interim protection ineffective. Procedural directions were also given for filing of affidavits and listing for final hearing.

Interim stay on coercive action permitted subject to deposit of 10% of the disputed tax within two weeks; failure to deposit nullifies the interim protection.

Final Conclusion: Writ petition entertained on a pure question of law relating to Section 16(4) of the CGST Act; conditional interim protection granted permitting no coercive recovery if petitioners deposit 10% of the disputed tax within two weeks; matter listed for final hearing with directions for exchange of affidavits.

Detention of goods - statutory appeal under Section 107 of the CGST Act - provisional release of goods under Section 129 of the CGST Act - judicial interference with administrative orders for being cryptic or lacking reasons

Detention of goods - judicial interference with administrative orders for being cryptic or lacking reasons - Impugned detention order challenged as cryptic and warranting judicial interference - HELD THAT: - The Court examined the impugned order challenged in the writ petition and noted that the Writ Court had recorded the availability of statutory remedies. The petitioner failed to establish any infirmity in the detaining order that would justify interference by this Court. The High Court declined to set aside or interfere with the detention order on the ground asserted that it was cryptic or lacked sufficient reasons. [Paras 4]

Writ Appeal dismissed; no interference with the impugned detention order.

Statutory appeal under Section 107 of the CGST Act - provisional release of goods under Section 129 of the CGST Act - Availability and exercise of statutory remedies including appeal under Section 107 and provisional release under Section 129 - HELD THAT: - The Court noted that the Writ Court had recorded that the impugned order was amenable to a statutory appeal under Section 107 and that Section 129 permits an application for provisional release of goods upon fulfillment of the prescribed conditions. The High Court affirmed that the petitioner may pursue the statutory appeal and is granted liberty to move an application for provisional release before the second respondent; any such application is to be considered expeditiously. A timeline of ten days from receipt of this order was fixed for approaching the appellate authority. [Paras 4, 5]

Liberty granted to file appeal under Section 107 within ten days and to seek provisional release under Section 129; such applications are to be considered expeditiously.

Final Conclusion: The writ appeal is dismissed; the impugned detention order is not interfered with. The appellant is permitted to file the statutory appeal under Section 107 of the CGST Act within ten days of receipt of this order and may apply for provisional release under Section 129 of the CGST Act, which application the authorities are directed to consider expeditiously.

Unreasoned order - principles of natural justice - opportunity of personal hearing - speaking order - remand for fresh adjudication - notice under Section 61 read with Rule 99(1) - order under Section 74 of the CGST Act

Unreasoned order - notice under Section 61 read with Rule 99(1) - The impugned order lacks reasons and does not deal with the notice issued or the petitioner's reply. - HELD THAT: - The Court observed that the order passed under the relevant statutory provision contains no discussion or reference to the notice dated 05.11.2020 or to the petitioner's response dated 05.12.2020. The absence of any reasoning or consideration of the material placed by the petitioner renders the order an unreasoned order. An order which does not address the statutory notice and the explanation furnished cannot stand as a valid adjudicatory determination. [Paras 7, 8, 11]

The impugned order is set aside on the ground that it is unreasoned and does not consider the notice or the petitioner's reply.

Principles of natural justice - opportunity of personal hearing - speaking order - remand for fresh adjudication - order under Section 74 of the CGST Act - The order was passed without affording the petitioner a personal hearing, violating principles of natural justice, and the matter was remanded for fresh adjudication after hearing. - HELD THAT: - The Court found that the petitioner's request for a personal hearing was rejected and that no opportunity of being heard was afforded before passing the impugned order. This omission was held to vitiate the order for want of compliance with the principles of natural justice. The respondent conceded that the order could be set aside. Accordingly, the matter is remitted to the Proper Officer to pass a fresh, speaking order after affording the petitioner an opportunity of being heard, ensuring that the fresh adjudication addresses the statutory notice, the petitioner's submissions and contains reasons. [Paras 5, 6, 9, 10, 12]

The petition is allowed; the impugned order is set aside and the matter is remanded for fresh adjudication after affording the petitioner a personal hearing and for issuance of a speaking order.

Final Conclusion: The writ petition is allowed; the order dated 21.06.2021 is set aside and the matter is remitted to the Proper Officer to pass a fresh speaking order after affording the petitioner an opportunity of being heard in respect of the period July, 2017 to October, 2020.

De novo adjudication - duplicate adjudication - pre-GST adjudication - post-GST claim - effect of prior adjudication on fresh claims in liquidation

De novo adjudication - effect of prior adjudication on fresh claims in liquidation - Petitioner permitted to file a fresh claim before the liquidator and the liquidator directed to adjudicate the claim de novo notwithstanding the earlier rejection and the National Company Law Tribunal's order. - HELD THAT: - The High Court, accepting the petitioner's submission that the proceedings before the Central Authorities concerned pre-GST periods and service tax, held that the petitioner may file a fresh application before the liquidator accompanied by the Central Authorities' proceedings. The court ruled that on receipt of such fresh application the liquidator is to consider and adjudicate the claim afresh (de novo), irrespective of the earlier rejection and the Tribunal's decision, and to endeavour to complete adjudication without further delay. The court observed that allowing de novo consideration avoids foreclosing a distinct post-GST claim merely because a related pre-GST proceeding had been earlier decided.

Fresh application permitted; liquidator to adjudicate claim de novo notwithstanding earlier rejection and NCLT order.

Pre-GST adjudication - post-GST claim - duplicate adjudication - Proceedings by Central Authorities under the Finance Act, 1994 (service tax) relating to periods up to June 2017 do not preclude adjudication of a subsequent post-GST claim by the liquidator and therefore do not operate as an absolute bar to fresh consideration. - HELD THAT: - The Court noted that the Central Authorities had adjudicated liability for the period up to June 2017 under the Finance Act, 1994, and that the petitioner's claim before the liquidator concerned post-GST periods. On that basis the Court concluded that the earlier service-tax adjudication does not have a direct bearing on the post-GST claim and would not justify a permanent refusal to consider the fresh claim. The Tribunal's earlier concern about duplicate adjudication was acknowledged, but the High Court directed that duplication be avoided by permitting de novo consideration only after the Central proceedings are placed before the liquidator; if the Central claim is dismissed, the liquidator may proceed to adjudicate the petitioner's claim afresh.

Central Authorities' pre-GST adjudication up to June 2017 does not preclude liquidator from de novo adjudication of a post-GST claim.

Final Conclusion: The petition is disposed by permitting the petitioner to file a fresh application before the liquidator with a copy of the Central Authorities' proceedings; the liquidator is directed to adjudicate the claim de novo notwithstanding earlier rejection and the NCLT order, and to endeavour to decide the fresh claim without further delay.

Interim protection against coercive recovery - Challenge to vires of Sub Rule (10) of Rule 96 of the CGST Rules, 2017 - Parity of interim relief with other petitions

Interim protection against coercive recovery - Refund of integrated tax - Petitioner granted interim protection against coercive recovery in respect of refund of integrated tax already paid. - HELD THAT: - The Civil Application sought a direction restraining the respondents, particularly respondent No.4, from adjudicating the show cause notice dated 09.11.2022 and from taking coercive steps. The Court noted that numerous petitions raising the question of the vires of Sub Rule (10) of Rule 96 of the CGST Rules, 2017 had been entertained and that interim protection had been granted in other matters. In view of parity with those matters and the pendency of the main Special Civil Application, the Court directed that no coercive recovery shall be made from the petitioner in respect of the refund of the integrated tax already paid until further orders, and allowed the Civil Application. The order is recorded to remain on the file of the main petition. [Paras 6, 7]

Civil Application allowed; respondents restrained from making any coercive recovery in respect of the refund of integrated tax already paid pending further orders; order to remain on record of the main petition.

Final Conclusion: The Court granted interim relief restraining coercive recovery of the integrated tax refund already paid by the petitioner pending further orders in the main Special Civil Application; the Civil Application is allowed and the order is kept on record.

Maintainability of writ petition in presence of an alternate statutory remedy of appeal - Limitation under Section 107 of the OGST Act - Scope of extraordinary jurisdiction under Article 226 of the Constitution - Cancellation of provisional registration for failure to enrol under Section 139(1) - Obligation on assessee to intimate payment and seek rectification of demand - Applicability of prescribed GST rate for works contract service

Maintainability of writ petition in presence of an alternate statutory remedy of appeal - Limitation under Section 107 of the OGST Act - Scope of extraordinary jurisdiction under Article 226 of the Constitution - Whether the writ petition challenging assessment orders/demands is maintainable in view of limitation and availability of an alternative statutory remedy. - HELD THAT: - The Court found that the demands for 2017-18 and 2018-19 were raised by orders dated 17.03.2020 and 29.07.2021 respectively but the petitioner challenged those orders only in 2023. The authority's contention that the petitions are time-barred under Section 107 of the OGST Act and that an appeal lay against the assessment orders was accepted. Given the existence of the statutory appellate remedy and the delay of over two years in approaching the High Court, the exercise of extraordinary jurisdiction under Article 226 was held inappropriate. The Court emphasised that where an alternative efficacious remedy is available under the statute, relief by writ will not ordinarily be granted, particularly after unexplained or inordinate delay. [Paras 5, 6, 7]

Writ petition not maintainable and liable to be dismissed as barred by limitation and because an alternative statutory remedy of appeal was available.

Cancellation of provisional registration for failure to enrol under Section 139(1) - Obligation on assessee to intimate payment and seek rectification of demand - Applicability of prescribed GST rate for works contract service - Whether the petitioner's contention of having paid the demanded dues, and the challenge to assessment based on a provisional ID, entitled him to remand for reassessment or to quash the demands. - HELD THAT: - The Court recorded the petitioner's assertion of payment through GSTR-3B but noted that, if payment was made, it was incumbent on the petitioner to notify the revenue and seek rectification of the demand. Instead, the petitioner waited for years before approaching the Court. The assessment record showed that a provisional ID had been allotted but the petitioner failed to complete enrolment on the common portal, leading to cancellation of provisional registration under Section 139(1). The Court also noted that the rate of GST for works contract service applicable at the relevant time was 12% as prescribed by the referred notifications. In view of these facts and the procedural posture, the petitioner could not, belatedly, seek a remand for reassessment in lieu of pursuing the prescribed appeal remedy. [Paras 3, 4, 6]

Petitioner's plea of prior payment and challenge to assessment on basis of provisional ID do not justify remand or quashing of demands; proper course was to seek rectification with the authority or file the statutory appeal.

Final Conclusion: The writ petition challenging the demands for 2017-18 and 2018-19 is dismissed as time-barred and not maintainable in view of the availability of an alternative statutory remedy; the petitioner's failure to enrol and to seek rectification after alleged payment precludes relief by way of writ or remand.

Principle of natural justice - right to fair hearing - availability of statutory appeal - speaking adjudication order - jurisdiction of adjudicating authority - procedural irregularity

Principle of natural justice - right to fair hearing - procedural irregularity - Whether non-supply to the petitioners of the objection and written submission filed by Kolkata Municipal Corporation in the adjudication proceeding amounted to violation of the principle of natural justice warranting interference. - HELD THAT: - The Court found that the impugned adjudication order was an elaborate speaking order recording facts and the contentions raised by both the KMC and the petitioners. The adjudicating authority had jurisdiction, had issued show-cause notice, and had afforded the petitioner an opportunity of personal hearing and considered the petitioners' objections and written submissions. The mere fact that KMC, an interested party, was allotted a different hearing slot and that its objection/submission was not separately furnished to the petitioners was characterised as a hyper-technical contention which did not amount to denial of natural justice. The Court emphasised that the relevant enquiry is whether the petitioner had notice of the issues, opportunity to be heard and whether its contentions were dealt with in the adjudication order - requirements which, on the record, were satisfied - and there was no demonstrated procedural irregularity that would justify quashing the order at writ stage.

No violation of the principle of natural justice or denial of right to fair hearing was found; challenge on this ground was rejected.

Availability of statutory appeal - speaking adjudication order - jurisdiction of adjudicating authority - Whether the writ petitions should be entertained notwithstanding the availability of an alternative statutory appellate remedy against the adjudication order. - HELD THAT: - The Court observed that the impugned order is an appellable, speaking order and that there was no lack of jurisdiction in its passing. Having concluded that procedural prerequisites (show-cause notice, opportunity of hearing, consideration of objections) were complied with and without adjudicating the merits of the order, the Court held that the existence of an effective statutory appeal furnished an adequate alternative remedy. In view of that availability, the Court declined to entertain the writ petitions and dismissed them at the motion stage.

Writ petitions dismissed on the ground that an alternative statutory appeal is available; the merits of the adjudication order were not gone into.

Final Conclusion: The writ petitions challenging the service-tax adjudication were dismissed: the Court found no breach of natural justice or procedural irregularity warranting exercise of writ jurisdiction and held that the availability of a statutory appeal rendered the petitions liable to be dismissed without considering the merits.

Refund of Input Tax Credit - limitation period under Section 54 of the CGST Act - relaxation of limitation by CBIC notification - exclusion of the period from 01.03.2020 to 28.02.2022

Refund of Input Tax Credit - limitation period under Section 54 of the CGST Act - relaxation of limitation by CBIC notification - exclusion of the period from 01.03.2020 to 28.02.2022 - Whether the petitioner's refund claim for ITC relating to April, 2018 was time barred and whether the CBIC notification relaxing/excluding the period 01.03.2020 to 28.02.2022 applies to permit consideration of the claim on merits. - HELD THAT: - The Adjudicating Authority had held the refund application filed on 23.02.2021 to be barred by the two year limitation under Section 54 of the CGST Act. The respondents produced Notification No.13/2022 (Central Tax) issued by the CBIC, which excludes the period commencing 01.03.2020 to 28.02.2022 for the purpose of computing the limitation for filing refund applications under Sections 54 and 55. The respondents' counsel conceded that the petitioner's claim falls within the relief afforded by the notification. In view of the notification and the concession, the court concluded the claim could not be summarily rejected as time barred and required reconsideration on merits. [Paras 2, 3, 4, 5]

Impugned orders rejecting the refund claim as time barred are set aside and the application is restored to the Assistant Commissioner, CGST, Division Mayur Vihar for fresh decision on merits within six weeks.

Final Conclusion: The petition is allowed; the orders rejecting the refund claim as time barred are set aside in view of the CBIC notification excluding 01.03.2020 to 28.02.2022, and the refund application is remitted for fresh adjudication on merits within six weeks.

Conclusive certificate under the Kar Vivad Samadhan Scheme (KVSS) - immunity from reopening of assessment under the KVSS except in case of misdeclaration - reopening after payment-no jurisdiction to reopen once Form 3 issued - change of opinion of Assessing Officer is not a valid ground for reopening - onus on Assessing Officer for notices issued after four years-failure to disclose fully and truly all material facts

Conclusive certificate under the Kar Vivad Samadhan Scheme (KVSS) - immunity from reopening of assessment under the KVSS except in case of misdeclaration - reopening after payment-no jurisdiction to reopen once Form 3 issued - Validity of notice under Section 148 after declarant had obtained Form 3 under the KVSS and paid the determined sum - HELD THAT: - The Court held that a determination by the Designated Authority under the KVSS and the subsequent issuance of the certificate (Form 3) after payment is intended to be conclusive in respect of the tax arrears and sums so determined. Once the declarant pays the amount determined under Section 90, the immunity under Section 91 becomes effective. In that situation there is no jurisdiction for the Assessing Officer to reopen the assessment by issuing a notice under Section 148/143 of the Income-tax Act, except where the proviso to Section 90(1) applies because any material particular in the declaration is found to be false. In the present case Revenue did not contend that any material particular in the declarant's submission was false, nor was there any order withdrawing the Form 3 certificate; accordingly the reopening notice could not be sustained on that basis. [Paras 15]

Notice under Section 148 quashed insofar as it sought to reopen matters covered by the Form 3 certificate under the KVSS.

Change of opinion of Assessing Officer is not a valid ground for reopening - queries raised and considered during original assessment - Whether reopening was justified where the matters/issues had been raised, replied to and dealt with during the original assessment - HELD THAT: - The Court agreed with the proposition that where the Assessing Officer had raised queries during the original assessment proceedings, received respondent's replies and dealt with those matters in the assessment order, a subsequent attempt to reopen the same subject-matter amounts to a mere change of opinion. Such change of opinion does not furnish valid reasons to believe that income chargeable to tax has escaped assessment. The facts showed that the Portfolio Management Scheme issue (including dealings with the specified company) had been expressly dealt with in the assessment, and thus the reopening was impermissible on this ground. [Paras 16]

Reopening cannot be sustained as it was based on a mere change of opinion where the issue had already been considered in the assessment.

Onus on Assessing Officer for notices issued after four years-failure to disclose fully and truly all material facts - Legal consequence and burden where notice under Section 148 is issued after four years from the end of the relevant assessment year - HELD THAT: - The Court noted that where a notice under Section 148 is issued after the expiry of four years from the end of the relevant assessment year, the Assessing Officer must demonstrate that income chargeable to tax has escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts necessary for assessment. The reasons to believe in the present case contained no assertion or whisper that the petitioner had failed to disclose such material facts; accordingly the statutory onus was unmet. [Paras 17]

Notice issued after four years is invalid in absence of reasons showing failure by the assessee to disclose fully and truly all material facts.

Final Conclusion: Writ petition allowed; the notice to reopen assessment for Assessment Year 1992-1993 was quashed and set aside on the grounds that the KVSS certificate (Form 3) after payment is conclusive barring misdeclaration, the reopening constituted impermissible change of opinion as the matters had been considered in the original assessment, and the Assessing Officer failed to discharge the onus required for a notice issued after four years.

Mandatory compliance with GKN Driveshafts procedure for disposal of objections after reasons are furnished - Effect of non-compliance with mandatory procedural requirements on validity of reassessment - Reopening of assessment under Section 148 and reassessment under Section 147

Mandatory compliance with GKN Driveshafts procedure for disposal of objections after reasons are furnished - Effect of non-compliance with mandatory procedural requirements on validity of reassessment - Whether the reassessment notice and consequent reassessment and consequential notices for AY 2011-12 are vitiated because the Assessing Officer did not dispose of the objections filed by the assessee after reasons for reopening were furnished as required by GKN Driveshafts - HELD THAT: - The Court applied the procedure laid down in GKN Driveshafts that, once reasons for issuing a notice under Section 148 are furnished, the assessee is entitled to file objections and the Assessing Officer must dispose of those objections by passing a speaking order before proceeding with reassessment. The Court noted binding precedents of the Division Bench of this Court in Deepak Extrusions and W.A. No. 919/2019 which treat the GKN procedure as mandatory. The Assessing Officer communicated the reasons (Annexure-F) and the assessee filed objections (Annexure-J), but no speaking order disposing those objections was recorded before passing the reassessment order under Section 143(3) read with Section 147. Practical difficulties or the approaching limitation date were held to be no excuse for non compliance. The Court rejected the Revenue's contention, based on Home Finders, that non-compliance would only require remand while preserving the notice; it held that in light of the Division Bench precedents and the Apex Court's mandate in GKN, failure to follow the mandatory procedure vitiates the reassessment. Consequently, the reassessment order and the related notices were set aside.

Reassessment order for AY 2011-12 and the notices under Section 148 and consequent notices are set aside because objections were not disposed of by a speaking order after reasons for reopening were furnished, in breach of the mandatory GKN procedure.

Final Conclusion: The Court set aside the notice under Section 148 (Annexure-D), the reassessment order under Section 143(3) read with Section 147 (Annexure-K) and the consequential notices (Annexures-L and M) for assessment year 2011-12 on the ground that the Assessing Officer failed to dispose of the assessee's objections by a speaking order after reasons for reopening were furnished, in contravention of the mandatory procedure established by the Apex Court in GKN Driveshafts and followed by Division Bench precedents of this Court.

Assessment under Section 148A(d) of the Income Tax Act - Notice under Section 148A(b) of the Income Tax Act - Verification of contested transactions and escaped income - Personal hearing before passing assessment - CBDT Instruction No.1 of 2022

Assessment under Section 148A(d) of the Income Tax Act - Notice under Section 148A(b) of the Income Tax Act - Personal hearing before passing assessment - Whether an assessment order could be passed without verifying the assessee's factual assertions in the reply and without according personal hearing. - HELD THAT: - The petitioner did not submit a response to the Section 148A(b) notice in time; a reply was filed after the impugned order under Section 148A(d) was passed. The CRID accompanying the notice listed certain transactions which the assessee, in his belated reply, disputes (notably denial of any transaction with the person referred to as Dayanand Singh). Given that the factual assertion could affect the computation of alleged escaped income, the Court directed that before the Assessing Officer proceeds to pass any assessment order the AO must verify the assertion recorded in the reply and accord a personal hearing to the petitioner and/or his authorised representative. The Court did not decide the substantive correctness of the factual claims or the validity of the assessment; it mandated fact verification and an opportunity of personal hearing as prerequisites to passing the assessment order. [Paras 5, 6]

Petition disposed with direction that the Assessing Officer shall verify the petitioner's assertions in the reply and accord personal hearing before passing the assessment order.

Verification of contested transactions and escaped income - CBDT Instruction No.1 of 2022 - Whether the factual disputes raised in the petitioner's reply require fresh consideration by the Assessing Officer prior to assessment. - HELD THAT: - The petitioner's reply, though filed after the order under Section 148A(d), raises a specific factual contention denying one of the transactions relied upon by the revenue. The Court recorded that if that transaction is excluded, the alleged escaped income would fall below a stated threshold relied upon by the petitioner in submissions. In view of this, the Court remanded the factual verification to the Assessing Officer for fresh consideration and directed that such verification be undertaken before passing the assessment. The Court's direction applies irrespective of the earlier issuance of the Section 148A(d) order and includes affording the petitioner a personal hearing; the Court did not rule on the correctness of CBDT Instruction No.1 of 2022 but required that the AO's exercise of power take into account the petitioner's factual assertions. [Paras 4, 6]

The factual dispute concerning the transactions is remanded to the Assessing Officer for verification and fresh consideration, with a direction to afford personal hearing before passing assessment.

Final Conclusion: Writ petition disposed; Assessing Officer directed to verify the petitioner's factual assertions recorded in the reply and to accord personal hearing to the petitioner or his authorised representative before passing the assessment order; pending application closed.

Reassessment proceedings where taxable income may have been brought to tax in another legal entity - order under Section 148A(d) requiring a speaking order and consideration of the assessee's replies - setting aside notice issued under Section 148 and remand for fresh consideration after personal hearing - penalty dropped under section 271(1)(b) as indicia of absence of deliberate concealment

Reassessment proceedings where taxable income may have been brought to tax in another legal entity - penalty dropped under section 271(1)(b) as indicia of absence of deliberate concealment - Whether the Assessing Officer properly appreciated the petitioner's reply and documentary evidence (dissolution deed, IEC, ITR, prior assessment/penalty order) before forming a belief to issue reassessment proceedings. - HELD THAT: - The Court observed that material was placed before the AO indicating the partnership firm was dissolved and converted into a proprietorship, that the proprietorship had its own PAN and IEC, and that prior proceedings (including an order dropping penalty) had accepted the explanation. The determinative question for reassessment was whether any taxable income had been shown in the hands of either the firm or the proprietorship; the AO was obliged to apply his mind to that fact-issue. The Court found that the AO had not adequately considered the petitioner's submissions and supporting documents and therefore could not be said to have taken a sufficiently reasoned view on whether reassessment was warranted on the merits. [Paras 11]

Issue not finally adjudicated on merits; matter remanded to the AO for fresh consideration of the petitioner's replies and documents, including the effect of the order in which penalty was dropped.

Order under Section 148A(d) requiring a speaking order and consideration of the assessee's replies - setting aside notice issued under Section 148 and remand for fresh consideration after personal hearing - Whether the impugned order dated 30.03.2023 under Section 148A(d) and the consequential notice dated 30.03.2023 under Section 148 should be sustained or set aside, and what remedial directions should follow. - HELD THAT: - The Court set aside the impugned order and the consequential notice because the AO had failed to appreciate the petitioner's factual and documentary submissions. The Court directed that the AO shall afford the petitioner (or his authorised representative) a personal hearing, may seek further responses/documents if necessary, and must pass a fresh, speaking order dealing with all factual and legal submissions. The AO is at liberty to reopen proceedings only after such reconsideration and in accordance with the determinative factual and legal analysis to be recorded in the fresh order. [Paras 12, 13]

Impugned order dated 30.03.2023 and consequential notice of even date set aside; matter remitted to the AO to afford personal hearing and pass a fresh speaking order after considering all submissions and documents.

Final Conclusion: The writ petition is disposed of by setting aside the order dated 30.03.2023 under Section 148A(d) and the consequential notice dated 30.03.2023 under Section 148; the AO is directed to give the petitioner a personal hearing, consider the documentary evidence (including the prior order dropping penalty), and pass a fresh speaking order on reassessment for AY 2016-17.

Condonation of delay - limitation - diligence in prosecuting rights - no special latitude to Government in limitation - rejection of appeal for delay

Condonation of delay - limitation - diligence in prosecuting rights - reliance on subsequent decision - Application for condonation of delay in filing the appeal was dismissed. - HELD THAT: - The Court found a delay of 1223 days in presenting the appeal from the date the certified copy was received. The explanation for delay was held to be deficient and self-serving. The decision to file the appeal was taken only after this Court's later decision in Principal Commissioner of Income Tax-5 v. Swati Bajaj and the revenue was found not diligent in prosecuting its right; the Court held that a party cannot seek condonation by relying on a subsequent judgment where it failed to act with due diligence. The Court also rejected any contention that the Government is entitled to greater latitude in matters of limitation, observing that the Government is to be treated as any other litigant.

Application for condonation of delay (IA No.GA/1/2022) dismissed.

Rejection of appeal for delay - consequences of dismissal of condonation - Filing of the appeal was rejected as a consequence of the dismissal of the condonation application and the related interim application was closed. - HELD THAT: - Following the dismissal of the condonation application, the appeal instituted by the revenue was treated as time-barred and consequently rejected. The interim application for stay was closed as a corollary to the dismissal of the condonation petition and the consequent non-maintainability of the appeal.

Appeal (ITAT/189/2022) rejected and application for stay (IA No.GA/2/2022) closed.

Final Conclusion: The High Court dismissed the revenue's application for condonation of delay, holding the explanation inadequate and the department not diligent; accordingly the time barred appeal was rejected and the related stay application closed.

Disallowance under section 14A read with Rule 8D - disallowance of interest expenditure in relation to exempt income - presumption of investment from own/non interest bearing funds - limited remand for verification of quantum of exempt income

Disallowance under section 14A read with Rule 8D - disallowance of interest expenditure in relation to exempt income - presumption of investment from own/non interest bearing funds - Deletion of addition made by the Assessing Officer under section 14A read with Rule 8D. - HELD THAT: - The Tribunal accepted the assessee's factual demonstration that investments yielding exempt dividend were made out of non interest bearing/own funds and that no expenditure was incurred to earn the exempt income. Relying on the settled principle (including South Indian Bank Ltd. and coordinate decisions) that where interest free own funds exceed investments in tax free securities a presumption arises that investments were made from such funds and no disallowance under section 14A r.w. Rule 8D is warranted, the Tribunal held that the Assessing Officer's disallowance was not in accordance with law. The assessee also produced statements of investments, free reserves and interest which supported non utilisation of interest bearing funds for the investments; only a small amount of exempt dividend was shown in the profit and loss account. Applying this reasoning to the facts, the Tribunal concluded that the deletion by the CIT(A) was justified. [Paras 9]

The disallowance under section 14A read with Rule 8D is not sustainable and is deleted.

Verification of amount of exempt income - limited remand for quantification - Remand to the Assessing Officer for verification of the actual amount of exempt income earned by the assessee during the year and restriction of any disallowance to that verified amount. - HELD THAT: - Although deletion on merits was directed, the Tribunal observed a discrepancy between the Assessing Officer's figure of exempt dividend and the amount shown in the assessee's accounts. The Tribunal therefore restored the matter to the file of the AO for the limited purpose of verifying the actual exempt income for the year and directed that, if any disallowance is to be made, it must be restricted to the amount of actual exempt income as verified. The assessee was directed to cooperate in the verification. [Paras 9]

Issue remanded to the Assessing Officer for limited verification of the amount of exempt income and for restricting any disallowance to the verified amount; assessee to cooperate.

Final Conclusion: The Tribunal upheld deletion of the disallowance under section 14A read with Rule 8D but remitted the matter to the Assessing Officer for limited verification of the actual exempt income; the appeal of the revenue is partly allowed for statistical purposes.

Obligation of appellate authority to provide opportunity to show cause before enhancing assessment - admission of additional grounds of appeal and requirement of appellant's signed verification - additions must flow from reasons recorded for reopening and cannot be without nexus to recorded material

Obligation of appellate authority to provide opportunity to show cause before enhancing assessment - enhancement by Commissioner (Appeals) under Section 251(2) - Enhancement of assessed income by the CIT(A) without giving the assessee an opportunity to show cause - HELD THAT: - The Tribunal held that the CIT(A), when proposing to enhance assessed income, is statutorily required to afford the assessee a reasonable opportunity to show cause against the proposed enhancement. The appellate order was examined and found to contain no reference to any such show-cause opportunity being given. Because the requirement to provide opportunity is mandatory, the enhancement carried out by the CIT(A) is unsustainable and is set aside. The Tribunal therefore reversed the enhancement effected by the CIT(A). [Paras 12, 13]

Enhancement by the CIT(A) is reversed for failure to provide opportunity to show cause; Ground No.1 allowed.

Additions must flow from reasons recorded for reopening and cannot be without nexus to recorded material - scope of additions vis-a -vis reasons recorded for reopening - Whether the additions made were on grounds other than the reasons recorded for reopening - HELD THAT: - The Tribunal examined the contention that additions carried out were on a different ground than those recorded in the reopening reasons. It found that the additions made by the Assessing Officer related to large cash deposits and that the enhancement in quantum in the appellate proceedings was an amplification of the same underlying factual basis. Consequently, the Tribunal found no merit in the plea that additions were made on a ground other than the recorded reasons and dismissed that challenge. [Paras 14]

Ground No.2 dismissed; additions held to flow from the reasons recorded.

Admission of additional grounds of appeal and requirement of appellant's signed verification - validity of power of attorney and authority to sign additional grounds - Admissibility of additional grounds of appeal filed without the appellant's signed verification and the related power of attorney issue - HELD THAT: - Under the Tribunal Rules, additional grounds not in the memorandum must be signed and verified by the appellant. The Tribunal noted that the additional grounds were not signed by the appellant and therefore could not be admitted. Further, although a power of attorney was produced, it post-dated the company's effective strike-off and was signed by a director who had become functus officio; on that footing the Tribunal observed such authorization was ineffective. For these reasons the Tribunal declined to grant leave to admit the additional grounds and dismissed them in limine. [Paras 5]

Additional grounds dismissed in limine for want of proper appellant verification and defective authorization.

Final Conclusion: The appeal is partly allowed: the CIT(A)'s enhancement of assessed income is set aside for failure to afford opportunity to show cause; the challenge that additions were beyond recorded reasons is dismissed; the additional grounds of appeal are not admitted and are dismissed in limine. Overall result: appeal partly allowed.

Deduction for business expenditure - expenditure must be incurred for the purpose of business - commercial expediency - burden of proof to establish business nexus of expenditure - confidentiality / non-disclosure agreement cannot displace statutory requirement of particulars

Deduction for business expenditure - expenditure must be incurred for the purpose of business - commercial expediency - burden of proof to establish business nexus of expenditure - confidentiality / non-disclosure agreement cannot displace statutory requirement of particulars - Whether the claimed deduction of Rs. 25,87,143 towards Sales Promotion Expenses (purchase of gold articles gifted to customers) could be allowed in absence of details of recipients produced by the assessee - HELD THAT: - The assessee claimed deduction for purchase of gold articles stated to have been gifted to customers but refused to furnish the names and addresses of recipients citing confidentiality and oral non-disclosure agreements. The Tribunal noted that primary particulars of the recipients are necessary to establish the commercial expediency and business nexus of such gifting. In absence of any particulars, the authorities were entitled to draw an adverse inference that the jewellery could have been used for personal benefit of directors or others and therefore the requirement that expenditure be incurred for the purpose of business was not satisfied. Confidentiality claims did not eliminate the statutory/ evidentiary requirement to prove the business purpose of the expenditure. On these findings the Tribunal affirmed the addition made by the assessing officer and confirmed by the first appellate authority. [Paras 5, 6]

Addition of Rs. 25,87,143 towards Sales Promotion Expenses upheld and deduction disallowed.

Final Conclusion: The appeal is dismissed; the Tribunal affirms the disallowance of the claimed sales promotion expenditure for AY 2018-19 because the assessee failed to furnish recipient particulars needed to establish that the expenditure was incurred for business purposes.

Assessment under Section 144 read with Section 147 - revised return filed in response to notice under Section 148 not e-verified / invalid e-verification - validity and effect of an unverified return - initiation of penalty proceedings cannot be challenged in absence of a formal penalty order - infructuous appeal

Infructuous appeal - initiation of penalty proceedings cannot be challenged in absence of a formal penalty order - Appeal dismissed as infructuous where both parties agree on the taxability assessed and no formal penalty order has been passed. - HELD THAT: - The Tribunal found that both the assessee and the Revenue were ad idem regarding the taxability of the interest on land compensation and that the assessee had, in substance, offered the income (though a revised return filed in response to the Section 148 notice was not e-verified). Because the substantive quantum dispute had been settled between the parties, there was no live controversy for the Tribunal to decide in the present quantum appeal. The Court observed that mere initiation of penalty proceedings, without the passing of any formal penalty order, does not give rise to a challenge maintainable in the present appeal; the assessee remains free to contest any penalty if and when a penalty order is in fact imposed. Consequently, there was no adjudicative relief available in the quantum appeal and the appeal was therefore dismissed as infructuous. [Paras 5, 6]

Appeal dismissed in limine as infructuous; assessee may challenge any penalty at the appropriate stage once a formal penalty order is passed.

Final Conclusion: The quantum appeal is dismissed as infructuous because the parties agree on the assessed taxability for AY 2015-16; initiation of penalty proceedings without a formal penalty order cannot be challenged in this appeal, and the assessee may contest any penalty at the appropriate stage.

Disallowance under section 43B and principle of consistency in recurring issues - club membership fees - capital v. revenue character - taxability of interest on income tax refunds pending finality with set off on subsequent withdrawal - computation of deduction under section 80HHC - treatment of interest, rent and miscellaneous receipts (Explanation (baa)) - operational/turnover character test for receipts excluded under Explanation (baa) - appropriation of head office expenses and deduction under section 80O / section 80IA - date of acquisition for shares received on conversion of convertible debentures - cost/date linkage - additional depreciation under section 32(1)(iia) - assets acquired earlier but installed in relevant year; purposive interpretation - tax treaty allocation of taxing rights where income 'may be taxed' in source state (pre amendment position of section 90) - remand to Assessing Officer for fact specific verification of categorised receipts

Disallowance under section 43B and principle of consistency in recurring issues - Deletion of disallowance made by AO under clauses (b) to (f) of section 43B in respect of amounts not payable as on the balance sheet date - HELD THAT: - The Tribunal followed the coordinate bench precedents in the assessee's own case and earlier assessment years where identical disallowances were deleted. On the recurring facts and in absence of any change in law or distinguishing facts, the principle of consistency was applied and the CIT(A)'s deletion of the disallowance was sustained.

Ground rejected as raised by Revenue; deletion of the disallowance under section 43B upheld.

Club membership fees - capital v. revenue character - Allowability of club membership fees paid to promote business (whether entrance fees are capital or revenue) - HELD THAT: - Having regard to the coordinate bench decisions in the assessee's earlier years and the jurisdictional authority relied upon, the Tribunal accepted that membership fees paid by the assessee for its senior officials to promote business merited allowance. The CIT(A)'s approach to treat only entrance fees as capital and to allow other club expenditures as revenue was followed and the assessee's plea was accepted.

Club membership fees allowed (entrance fee treatment adjusted as per CIT(A)); ground allowed for assessee.

Taxability of interest on income tax refunds pending finality with set off on subsequent withdrawal - Taxation of interest received from Income tax Department during the year and adjustment if interest/refund is subsequently withdrawn - HELD THAT: - Following the Tribunal's earlier treatment in the assessee's own case, the Tribunal directed that interest on refunds granted in the year be taxed in that year but, if subsequently the refund or interest is withdrawn in later proceedings, the withdrawn amount should be reduced from the taxable interest. The approach gives immediate tax effect but preserves adjustment if the amount is later taken back.

Interest taxed in the year of receipt subject to reduction in subsequent year(s) if refund/interest is withdrawn; ground allowed with directions.

Computation of deduction under section 80HHC - treatment of interest, rent and miscellaneous receipts (Explanation (baa)) - operational/turnover character test for receipts excluded under Explanation (baa) - Whether interest, rent and various miscellaneous receipts should be reduced from eligible profit for computation of deduction under section 80HHC - HELD THAT: - The Tribunal followed the Supreme Court authority and its own earlier decisions in the assessee's case that only net interest (interest received less interest paid) and net rent are to be excluded under Explanation (baa) - i.e., apply the netting principle if interest/rent are incidental and offset by interest/rent expense. For the broad category 'miscellaneous receipts' the Tribunal found that the AO had not examined the nature of each item to determine whether they arise from operational turnover. Applying the jurisdictional High Court's test (nature of business, memorandum/articles, dominant business, and factual enquiry), the Tribunal remitted the miscellaneous receipts issue to the AO for de novo verification; if items are operational, they cannot be excluded and relief to be granted in light of ACG (netting) where appropriate.

Net interest and net rent reduction allowed (assessing only net amounts); miscellaneous receipts remanded to AO for item wise enquiry and fresh adjudication.

Adjustment of loss on export of traded goods against profit on export of manufactured goods (section 80HHC) - Whether loss on export of trading goods can be adjusted against profit on export of manufactured goods for 80HHC computation - HELD THAT: - The assessee fairly conceded the position adopted in earlier coordinated decisions and the Tribunal followed Supreme Court precedent (IPCA) and earlier Tribunal findings in the assessee's own case to hold that such losses are to be adjusted against export profits; deduction under section 80HHC is to be allowed on net export profit.

Ground dismissed for assessee; adjustment of trading loss against manufactured goods export profit upheld.

Appropriation of head office expenses and deduction under section 80O / section 80IA - Whether head office expenses may be apportioned to eligible units and reduce deductions under relevant sections - HELD THAT: - Following a long line of coordinate bench authority in the assessee's own case, the Tribunal held that allocation of head office expenses to units claiming specified deductions is not required and the CIT(A)'s direction to exclude such apportionment was sustained. Consequently the AO's allocation reducing the statutory deduction was set aside.

Head office expense apportionment disallowance set aside; deduction under section 80 O/80 IA preserved as allowed by CIT(A).

Date of acquisition for shares received on conversion of convertible debentures - cost/date linkage - Date of acquisition to be used for indexation where equity shares were received on conversion of fully convertible debentures - HELD THAT: - Relying on statutory deeming in section 49(2A) and the High Court precedent (Naveen Bhatia), the Tribunal held it is logical to treat the date of acquisition of the convertible debentures as the date of acquisition of the shares received on conversion for computation of capital gains/loss. On those facts the assessee's method of indexing from the debenture acquisition date was accepted.

Date of acquisition of debentures to be treated as date of acquisition of converted shares; ground allowed for assessee.

Additional depreciation under section 32(1)(iia) - purposive interpretation for assets acquired earlier but installed in relevant year - Allowability of additional depreciation on plant/machinery purchased earlier but installed/put to use in the relevant previous year - HELD THAT: - Following the Gujarat High Court decision in Pr. CIT v. IDMC Ltd. and the purposive/beneficial character of the provision, the Tribunal accepted that additional depreciation is available where assets were acquired earlier but installed and put to use in the relevant year; literal reading producing absurdity was rejected.

Additional depreciation under section 32(1)(iia) allowed.

Admission of additional legal grounds and treatment of royalty/interest and sales tax exemption - Admission and adjudication of additional grounds (royalty/interest under section 43B; sales tax exemption benefit; dividend from foreign company) - HELD THAT: - Additional grounds were admitted as they raised legal questions determinable on record. Following the assessee's recurring precedents, the Tribunal allowed the additional grounds concerning royalty and interest (treated in assessee's favour) and remitted the issue of sales tax exemption benefit to the AO for fresh decision after verification. The dividend from Egyptian company was held not taxable in India on the facts and treaty position prevailing for the year (pre amendment interpretation of 'may be taxed'), and the additional ground was allowed.

Royalty/interest grounds allowed; sales tax exemption remanded to AO; foreign dividend excluded from Indian tax for the year.

Remand to Assessing Officer for fact specific verification of categorised receipts - Remand of specific factual issues (miscellaneous receipts under Explanation (baa); sales tax exemption verification; PF/ESIC grace period payments) to AO - HELD THAT: - Where the Tribunal found lower authorities had not undertaken the requisite fact specific enquiries (nature of various miscellaneous receipts; verification whether sales tax benefit is capital; whether PF/ESIC payments were within statutory grace periods), it remitted those aspects to the AO for de novo consideration and directed that appropriate relief be granted if facts warrant. The remands were made to ensure application of established tests and precedents at first instance.

Issues remanded to AO for fresh adjudication and verification; outcomes to be determined on factual enquiry.

PF/ESIC payments within statutory grace period - liberal construction of section 43B - Whether belated PF/ESIC contributions paid within the statutory/grace period are disallowable under section 43B - HELD THAT: - Following coordinate bench and High Court authority favouring a liberal view where payments are made within short delays/grace periods and in bona fide circumstances, the Tribunal directed restoration to the AO to examine documentary proof of timing and to delete disallowance to the extent payments fall within permitted/grace periods.

Matter remitted to AO for verification; directed deletion of disallowance to extent payments are within applicable grace period.

Advertisement film expenditure - capital v. revenue character - Whether expenditure on production of advertisement films is capital or revenue - HELD THAT: - On facts and by following the assessee's coordinated precedents and higher court guidance, the Tribunal sustained the CIT(A)'s deletion of the AO's disallowance and treated the expenditure as allowable (or alternatively allowed depreciation) in the assessee's circumstances where precedent supported revenue treatment or short useful life.

Disallowance deleted; ground in Revenue's appeal dismissed.

Software/ERP implementation costs - revenue or capital expenditure - Allowability of professional fees for software development/ERP implementation as revenue expenditure - HELD THAT: - Relying on coordinate bench and jurisdictional High Court authority applying functional tests, the Tribunal sustained the CIT(A)'s finding that the ERP/software expenditure in the assessee's facts was revenue in nature and allowable, and dismissed the Revenue's contention that it was capital.

Expenditure treated as revenue; disallowance deleted.

Eligibility of an infrastructure rail system for deduction under section 80 IA(4) - Whether assessee's rail system qualified as an 'infrastructure facility' eligible for section 80 IA deduction - HELD THAT: - Having examined the assessee's submissions and coordinate bench precedent (including treatment of a related subsidiary), and applying the post 2002 wording of section 80 IA(4), the Tribunal found the statutory conditions satisfied (ownership, agreement with government authority, commencement after 1 4 1995) and rejected Revenue's late raised contentions going beyond the AO's case. The CIT(A)'s allowance of the deduction was upheld.

Deduction under section 80 IA in respect of the rail system allowed; Revenue's ground dismissed.

Deduction under section 80M - attribution of expenditure to dividend income - Whether a portion of head office interest/expenditure should be allocated against dividend income and reduce deduction under section 80M - HELD THAT: - Following prior consolidated Tribunal orders in the assessee's case, where the source of investment was shown to be own funds and no specific borrowings were made for dividend yielding investments, the Tribunal held there was no justification for AO's notional allocation of interest; the CIT(A)'s deletion of the estimate based disallowance was sustained.

Disallowance on account of attributable expenditure to dividend income deleted; ground dismissed for Revenue.

Final Conclusion: The cross appeal is partly allowed for statistical purposes. The assessee's appeal is partly allowed (notably: club membership fees, permissible treatment of interest/rent/netting for section 80HHC, long term capital loss indexing, additional depreciation under section 32(1)(iia), admission and allowance of certain additional grounds, and exclusion of the foreign dividend). Several fact specific items (various miscellaneous receipts under Explanation (baa), sales tax exemption, and certain PF/ESIC timing issues) were remitted to the Assessing Officer for de novo verification; the Revenue's appeal is largely dismissed but some grounds were allowed for statistical/remand purposes as recorded. The ultimate result is a split outcome with directions for further factual enquiries where indicated.

Taxability of inland haulage charges as income from operation of ships in international traffic - application of Article 9 of India-France DTAA - taxability of freight for transportation through feeder vessels as shipping income - Agency Permanent Establishment - non taxability of income characterised as I.T. support services / fee for technical services under DTAA - presumptive taxation under section 44B - charging of interest under sections 234A and 234B is mandatory - initiation of penalty proceedings premature

Taxability of inland haulage charges as income from operation of ships in international traffic - application of Article 9 of India-France DTAA - Inland haulage charges are part of income from operation of ships in international traffic and covered by Article 9 of the India-France DTAA, hence not taxable in India. - HELD THAT: - The Tribunal found the facts identical to earlier assessment years and followed the coordinate bench decisions in the assessee's own case, which treated ancillary activities connected with shipping (including inland haulage) as forming part of international shipping income. The Tribunal rejected the Department's contention that precedents based on other bilateral treaties were distinguishable, noting prior consistency in applying the reasoning and that Article 9 of the India-France DTAA is identically worded with treaties previously considered. On that basis the addition made by the Assessing Officer was set aside and the grounds allowed for parity of reasons. [Paras 6, 8]

Grounds concerning inland haulage charges allowed; amounts are not taxable in India under Article 9 of the India-France DTAA.

Taxability of freight for transportation through feeder vessels as shipping income - application of Article 9 of India-France DTAA - Freight charges for carriage through feeder vessels form part of shipping income in international traffic and are covered by Article 9 of the India-France DTAA, hence not taxable in India. - HELD THAT: - Relying on the coordinate bench precedents in the assessee's own case and on the fact that the factual matrix is identical, the Tribunal held that feeder vessel transportation is inextricably linked to international carriage and falls within Article 9 protection. No contrary material was shown to distinguish the present year from prior decisions, and for parity the grounds were allowed. [Paras 7]

Grounds on taxability of freight for feeder vessels allowed; such receipts are not taxable in India under Article 9.

Agency Permanent Establishment - The assessee does not have an Agency Permanent Establishment in India. - HELD THAT: - The Tribunal observed that this is a recurring issue repeatedly adjudicated in the assessee's favour since AY 2012 13. No material was placed to warrant departing from the coordinate bench conclusions. Following earlier consistent findings, the Tribunal held there is no Agency PE in India. [Paras 8]

Grounds relating to existence of Agency PE dismissed; no Agency PE in India.

Non taxability of income characterised as I.T. support services / fee for technical services under DTAA - The claim that income characterised as I.T. support services is not taxable in India was admitted for consideration and remanded to the Assessing Officer for de novo adjudication. - HELD THAT: - The assessee filed additional grounds and evidence asserting that the amounts offered to tax in the return are non taxable under the DTAA. The Tribunal followed its coordinate bench approach in the immediately preceding assessment year which admitted similar additional grounds and restored the issue to the AO for fresh determination. As the matter had not been examined on merits by the AO or DRP for the present year, the Tribunal admitted the additional grounds and remitted the issue to the AO for de novo consideration after granting opportunity of hearing. [Paras 9]

Grounds on I.T. support services allowed for statistical purpose and remanded to the Assessing Officer for fresh adjudication.

Presumptive taxation under section 44B - The assessee's alternate plea to tax inland haulage receipts under the presumptive regime was not accepted once the primary treaty based claim succeeded. - HELD THAT: - The assessee had advanced, without prejudice, an alternative submission to tax certain receipts at the presumptive rate. Having upheld the DTAA protection and allowed the primary grounds, the Tribunal dismissed the alternate argument as unnecessary. [Paras 6]

Alternate plea under section 44B dismissed as not required after allowing treaty based claim.

Charging of interest under sections 234A and 234B is mandatory - Challenges to levy of interest under sections 234A and 234B were dismissed; the charging of such interest is mandatory and consequential. - HELD THAT: - The Tribunal observed that the statutory charging of interest under the cited provisions is mandatory once the conditions are met; therefore the assessee's challenge to the interest levied could not be sustained. [Paras 10]

Grounds against interest under sections 234A and 234B dismissed.

Initiation of penalty proceedings premature - Challenge to initiation of penalty proceedings under section 270A at the appellate stage was dismissed as premature. - HELD THAT: - The Tribunal held that contesting initiation of penalty proceedings at this stage is premature and therefore did not entertain the challenge to initiation of penalty proceedings. [Paras 11]

Ground against initiation of penalty proceedings dismissed as premature.

Final Conclusion: The appeal is partly allowed: treaty based exclusions (inland haulage charges and feeder vessel freight) and absence of Agency PE were allowed for parity with coordinate bench precedents; the claim on I.T. support services was admitted and remanded to the Assessing Officer for de novo consideration; challenges to interest and premature challenge to penalty initiation were dismissed.

Deduction under section 54F - Interpretation of 'residential house' for section 54F - Co-ownership and ownership for section 54F - Conflict of non jurisdictional High Court decisions - rule favouring the assessee

Deduction under section 54F - Interpretation of 'residential house' for section 54F - Co-ownership and ownership for section 54F - Assessee's entitlement to deduction under section 54F where assessee held a share in a residential property that formed part of a family building comprising separate flats occupied by different family members. - HELD THAT: - The Tribunal examined whether the assessee's fractional/co ownership of one flat in a family constructed building, and the absence of exclusive ownership of other flats, rendered the claim for deduction under section 54F ineligible. The Assessing Officer and the CIT(A) had relied on the view attributed to M.J. Siwani (Karnataka High Court/Supreme Court dismissal) that owning a residential house even jointly disqualifies the assessee from exemption under section 54F. The Tribunal noted conflicting authorities, including decisions of the Tribunal and the Madras High Court which treat joint or fractional ownership as not amounting to ownership of another residential house for the purposes of section 54F. Applying the established principle that, where non jurisdictional High Courts are in conflict, an interpretation favourable to the assessee should be followed, the Tribunal found the Madras High Court decision to be supportive of the assessee's position. In the absence of any adverse decision of the jurisdictional High Court, and given there was no material to show that the assessee was the exclusive owner of the other flats, the Tribunal held the conditions of section 54F were satisfied and the deduction should be allowed. [Paras 5, 6]

Assessee entitled to deduction under section 54F; grounds of appeal allowed and addition/disallowance deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that in the factual matrix-where the assessee held fractional/co ownership of a flat in a family building and there was no material showing exclusive ownership of other flats-the claim for deduction under section 54F for AY 2016-17 is allowable, and the disallowance by the lower authorities is deleted.

Claim of depreciation on assets not registered in assessee's name - dominion and use of assets for business purposes - remand for verification of ownership and source of funds - disallowance under Section 40A(3) for non-account-payee/bearer cheques - application of liberal approach where payments are genuine and payee identified - disallowance for failure to deduct tax at source under Section 194C

Claim of depreciation on assets not registered in assessee's name - dominion and use of assets for business purposes - remand for verification of ownership and source of funds - Whether depreciation claimed on vehicles not registered in the name of the assessee-company should be allowed. - HELD THAT: - The Tribunal noted settled law that a company may claim depreciation on vehicles registered in the names of its directors if the vehicles were purchased out of the company's funds and used wholly and exclusively for the company's business. Although the assessee relied on precedents permitting such claims where the company's coffers funded acquisition and the assets appear in the company's books, the CIT(A) had recorded specific factual findings that (i) the vehicles were not shown to have been acquired out of the company's funds and (ii) the assessee had not demonstrated the relationship of the persons in whose names the vehicles were registered to the company. In view of these factual issues the Tribunal did not decide the claim on merits but directed restoration to the CIT(A) to verify whether the vehicles were acquired from the company's funds and whether the registered owners were directors; if substantiated, the CIT(A) was to allow the appeal in light of the authorities cited. [Paras 7, 8]

Remanded to the CIT(A) for verification of whether the vehicles were acquired out of the assessee company's funds and whether the registered owners are directors; if so, allow depreciation.

Disallowance under Section 40A(3) for non-account-payee/bearer cheques - application of liberal approach where payments are genuine and payee identified - Whether the addition under Section 40A(3) for payments made by bearer cheques should be sustained. - HELD THAT: - The Tribunal examined the facts that the assessee made substantial payments to the same payee during the year and that only a limited amount was paid by bearer cheques due to an inadvertent omission to mark them "account payee". There was no claim or material that any amount was withdrawn in cash, the payee deposited the bearer cheques into bank account and the genuineness and identity of the payee/transactions were not in doubt. Applying authorities that permit a liberal view where the payee is identified and the transaction is genuine, and noting the bonafide nature of the mistake, the Tribunal held that Section 40A(3) should not be invoked to disallow the amounts. [Paras 12, 13]

Addition under Section 40A(3) of Rs.6,35,000/- set aside; ground allowed.

Disallowance for failure to deduct tax at source under Section 194C - Whether disallowance for non-deduction of TDS on payments to transporters should be sustained. - HELD THAT: - The Tribunal noted that the assessee admittedly failed to deduct TDS in respect of certain payments and did not furnish PANs for some recipients. The CIT(A) had given partial relief where PANs were produced but confirmed disallowance for the balance. On the record before the Tribunal there was no error in the CIT(A)'s appreciation of facts; the assessee's failure to deduct TDS and to produce PANs for certain parties justified the disallowance confirmed by the CIT(A). [Paras 14, 15]

Ground dismissed; disallowance for non-deduction of TDS upheld subject to the limited relief already granted by the CIT(A).

Final Conclusion: The appeal is partly allowed for statistical purposes: the claim for depreciation on vehicles is remanded to the CIT(A) for factual verification of source of funds and relationship of registered owners (and allowed if substantiated); the addition under Section 40A(3) is deleted; the disallowance for non-deduction of TDS under Section 194C is upheld except for the partial relief already given.

Section 263 revisionary jurisdiction - Requirement of a recorded finding that an order is erroneous before exercise of revisionary power - Distinction between lack of inquiry and inadequate inquiry - Section 40A(3) disallowance for cash payments - Exclusion of payments for purchase of capital assets from section 40A(3) - CBDT Circular No. 34 of 1970 - interpretation of section 40A(3)

Section 263 revisionary jurisdiction - Requirement of a recorded finding that an order is erroneous before exercise of revisionary power - Distinction between lack of inquiry and inadequate inquiry - Validity of the Pr. CIT's exercise of power under section 263 in setting aside the assessment without recording a finding that the assessment order was erroneous and prejudicial to the revenue - HELD THAT: - The Tribunal held that exercise of power under section 263 requires the Commissioner to record a clear finding that the assessment order is erroneous in so far as it is prejudicial to the interests of the Revenue before directing any remand. A mere direction to the Assessing Officer to make further enquiries, without the Commissioner himself arriving at and recording the conclusion that the order is erroneous, is impermissible. The distinction between 'lack of inquiry' and 'inadequate inquiry' is material: where there is some inquiry (even if inadequate), the Commissioner cannot substitute his view merely because he would have reached a different conclusion; conversely, in cases of total absence of inquiry the order may be regarded as erroneous. The Pr. CIT remitted the matter for verification without recording that the assessment was erroneous; such remand amounted to directing fresh enquiry without satisfying the statutory condition for invoking section 263. The Tribunal relied on the principle that the Commissioner must examine records and, if necessary, conduct inquiries to satisfy himself and record a non-debatable finding of error before proceeding under section 263. [Paras 8, 16, 17]

Pr. CIT erred in remitting the matter without recording a finding that the assessment order was erroneous; exercise of power under section 263 was not validly invoked.

Section 40A(3) disallowance for cash payments - Exclusion of payments for purchase of capital assets from section 40A(3) - CBDT Circular No. 34 of 1970 - interpretation of section 40A(3) - Whether the Assessing Officer's failure to disallow the cash payments under section 40A(3) rendered the assessment erroneous and prejudicial to the revenue where payments related to purchase of capital assets - HELD THAT: - The Tribunal noted that CBDT Circular No. 34 of 1970 clarifies that section 40A(3) does not apply to payments towards the purchase price of capital assets (such as plant and machinery) not for resale. On perusal of the assessment record and depreciation chart the Tribunal found that the cash payments in issue were payments for capital assets on which depreciation was claimed. Given the Circular and the factual material on record, disallowance under section 40A(3) was not called for. The Pr. CIT, had he examined records in the proper perspective, would have discerned that the transactions fell within the exclusion and therefore the assessment was not erroneous on that ground. Consequently, there was no justification for interference under section 263 on this basis. [Paras 9, 10, 11, 13, 14]

Cash payments were for purchase of capital assets exempted from section 40A(3) as per CBDT Circular No. 34/1970; the Assessing Officer's allowance of the claim did not render the assessment order erroneous prejudicial to revenue.

Final Conclusion: The Tribunal set aside the Pr. CIT's order dated 30.03.2021 under section 263 and restored the assessment order dated 14.12.2017 passed under section 143(3); the assessee's appeal is allowed.

Penalty under section 271B for failure to comply with section 44AB - Reasonable cause for non-furnishing of audit report - Audit under state cooperative societies law not substituting statutory audit under the Income-tax Act - Confirmation of penalty in absence of explanation

Penalty under section 271B for failure to comply with section 44AB - Reasonable cause for non-furnishing of audit report - Audit under state cooperative societies law not substituting statutory audit under the Income-tax Act - Whether penalty under section 271B could be levied for failure to furnish the audit report required by section 44AB where the assessee had its accounts audited under the Kerala Co-operative Societies Act but did not furnish the statutory audit report under the Income-tax Act - HELD THAT: - The default under section 44AB was admitted by the assessee. Penalty under section 271B is attracted for failure, without reasonable cause, to furnish the audit report mandated by section 44AB; the onus was on the assessee to demonstrate reasonable cause for non-furnishing. The Tribunal noted that the assessee, a regularly audited primary agricultural credit society, offered no explanation why the statutory audit report under the Income-tax Act was not obtained and furnished despite accounts being maintained and audited under the Kerala Act. The bench held that an audit performed under the Kerala Co-operative Societies Act does not obviate the requirement to furnish the specific audit report in the form prescribed under section 44AB and the relevant rule; the plea that the state-law audit sufficed was untenable in law in light of the jurisdictional High Court's decision in Peroorkkada Service Cooperative Bank Ltd. (reproduced in the record). Given the absence of any reasonable cause or explanation, the confirmation of penalty was sustained. [Paras 3]

Penalty under section 271B confirmed as the assessee failed to furnish the statutory audit report under section 44AB and did not establish any reasonable cause for non-furnishing

Final Conclusion: The appeal and the stay petition are dismissed; the penalty under section 271B as confirmed by the lower authority is upheld for AY 2014-15.

Anticipatory bail - custodial interrogation - transaction value under section 14(1) of the Customs Act - overvaluation and duty drawback claims - release on furnishing bail bonds - cooperation with investigation

Anticipatory bail - custodial interrogation - release on furnishing bail bonds - cooperation with investigation - Application for anticipatory bail under section 438 Cr.P.C. in respect of offences alleged under the Customs Act granted subject to conditions. - HELD THAT: - The Court examined the nature of the accusations that the applicants, exporters of carpets, had overvalued certain exported consignments and claimed higher rates of duty drawback. The adjudicating authority had already found the declared value correct in respect of 14 shipping bills and had reduced the claim in relation to 12 shipping bills; the remaining question as to valuation of other bills was yet to be adjudicated. At this stage there was no material on record to indicate that the applicants had availed higher duty drawback. The applicants have appeared before the authority and their statements have been recorded. Having regard to these facts and the absence of material necessitating custodial interrogation, the Court concluded that custodial detention was not required and that anticipatory bail should be granted on appropriate terms. The Court therefore directed release on bail on furnishing bonds and imposed conditions of cooperation and reporting to the Investigating Officer/DRI, and to keep contact details updated.

Applications allowed; on arrest the applicants shall be released on bail on furnishing bonds of Rs. 50,000 each with one or two sureties in like amount and shall cooperate with the investigation and keep the Investigating Officer informed of contact details.

Transaction value under section 14(1) of the Customs Act - overvaluation and duty drawback claims - Whether the remaining shipping bills reflect correct transaction value or were overvalued has not been finally adjudicated and requires further determination. - HELD THAT: - The Court recorded the earlier administrative/adjudicatory finding that 14 shipping bills' declared values appeared to be correct under section 14(1) of the Customs Act while claims in respect of 12 shipping bills were reduced. It noted that the question whether other bills were overvalued remains undecided and that there is no present material justifying custodial interrogation for resolution of that question. Consequently, the factual and adjudicatory determination of the valuation of the remaining shipping bills was left for the appropriate authority to decide in the pending proceedings.

The question of valuation of the other shipping bills is left open for adjudication by the competent authority; it is not decided in these applications.

Final Conclusion: Anticipatory bail granted on conditions because there is no material warranting custodial interrogation; separate adjudication on valuation of certain shipping bills remains pending and is left to the authorities for determination.

Extraordinary jurisdiction under Article 226 - availability of alternate statutory remedy - relegation to alternate remedy - choosing statutory route disentitles subsequent writ - efficacious alternate forum

Extraordinary jurisdiction under Article 226 - availability of alternate statutory remedy - choosing statutory route disentitles subsequent writ - efficacious alternate forum - Whether this Court should exercise its extraordinary jurisdiction under Article 226 to entertain the writ challenging the Appellate Authority's confirmation of the confiscation order despite the availability of statutory appellate remedies and the appellant having previously elected to pursue those remedies. - HELD THAT: - The Court acknowledged the established principle that Article 226 may be exercised notwithstanding the existence of an alternate statutory remedy in appropriate cases. However, the Court found that the appellant's conduct disentitles it to such extraordinary relief: the appellant had earlier approached this Court in a writ, that petition was ultimately disposed by relegating the appellant to the statutory appellate route, and the appellant thereafter invoked those statutory remedies. Having chosen and pursued the statutory route (including a review which resulted in relegation to the alternate remedy), the appellant cannot now abandon that course and invoke Article 226 to challenge the Appellate Authority's order. The learned Single Judge correctly declined to entertain the writ on that basis. The appellant's contentions about practical difficulties, perishable nature of the goods, and alleged inefficacy of the appellate forum were considered but found insufficient to justify exercise of writ jurisdiction in the circumstances.

The writ petition was not entertained and the appeal is dismissed for want of justification to invoke extraordinary writ jurisdiction in place of the statutory appellate process.

Final Conclusion: Appeal dismissed; the High Court declined to exercise its extraordinary jurisdiction under Article 226 where the appellant had elected and pursued the statutory appellate remedy and the circumstances did not justify departing from the alternate remedy.

Eligibility of inputs and consumables for EOU exemption - consumables necessary for testing and quality assurance as part of manufacture - notification no. 52/2003-Cus giving exemption under the export oriented scheme - distinction between raw materials and consumables for exemption purposes - consistency between treatment under CENVAT credit rules and entitlement under EOU exemption - realisation of export proceeds as objective of EOU scheme

Eligibility of inputs and consumables for EOU exemption - consumables necessary for testing and quality assurance as part of manufacture - distinction between raw materials and consumables for exemption purposes - notification no. 52/2003-Cus giving exemption under the export oriented scheme - consistency between treatment under CENVAT credit rules and entitlement under EOU exemption - Whether polyethylene (PET) granules used in testing trial production of moulds manufactured by the appellant qualify as eligible 'inputs' or 'consumables' for exemption under notification no. 52/2003-Cus for the periods under challenge. - HELD THAT: - The Tribunal held that the EOU scheme and the implementing notification contemplate exemption for all types of goods required for production, expressly grouping raw materials, components, consumables, intermediates, spares and packing materials together for exemption purposes. The definition of 'consumables' in the Foreign Trade Policy is broad enough to include goods that do not become part of the final exported product but are essential to render the product marketable. Testing/trial production of custom-made moulds using polyethylene (PET) granules is intrinsic to producing an acceptable exportable product; the granules used in that test run therefore qualify as 'consumables' and fall within the omnibus enumeration of eligible inputs under the notification. The Tribunal rejected the Revenue's contention that exemption could be denied on the basis that the granules did not go into the exported goods, noting further that the Revenue had earlier accepted similar treatment of those granules for purposes of CENVAT credit in a later adjudication and that no showing was made of non-conformity with SION or of compromise of the export realisation objective of the EOU scheme.

Polyethylene (PET) granules used in testing/trial production of moulds are eligible 'consumables/inputs' for exemption under notification no. 52/2003-Cus; the impugned orders denying exemption are set aside and the appeals are allowed.

Final Conclusion: The appeals succeed: the Tribunal set aside the orders denying exemption and held that PET granules used in testing trial production of the appellant's export moulds qualify as consumables/inputs under notification no. 52/2003-Cus, entitling the appellant to the exemption for the periods in dispute.

Automatic data processing machine - HSN Explanatory Notes to Chapter 84 - Note 6(A) to Chapter 84 (essentials of ADP machines) - Note 6(D) and Note 6(E) to Chapter 84 (exclusions and functional classification) - General Rules of Interpretation (Rule 1, Rule 3(a)) - principal function test - Section Note 3 to Section XVI (composite/multi-function machines) - units of an ADP system

Automatic data processing machine - Note 6(A) to Chapter 84 (essentials of ADP machines) - HSN Explanatory Notes to Chapter 84 - Whether the Interactive Display Systems (ViewBoard) satisfy the criteria of an automatic data processing machine and are classifiable under Heading 8471. - HELD THAT: - The Authority examined the product specifications and functionality against the cumulative requirements of Note 6(A) to Chapter 84. The devices have an in-built CPU, operating system, and internal storage sufficient to store programs and data immediately necessary for execution, thereby meeting the storage requirement. They are freely programmable (pre-installed Android OS with OPS slot to install other OS/applications) and can download and execute user programs, satisfying the programmability requirement. The devices perform arithmetical computations (built-in calculator and computing capabilities) and execute processing programmes that can modify execution by logical decision during a processing run. The goods therefore fulfil all four conditions in Note 6(A) and qualify as automatic data processing machines. The HSN Explanatory Notes confirm that a complete ADP system comprises a CPU, input and output units, which here are satisfied by the inbuilt CPU, touchscreen input and LED display output. Consequently, the subject goods are ADP machines and not merely peripheral units or separate units of an ADP system. [Paras 8]

The Interactive Display Systems satisfy the conditions of Note 6(A) and qualify as automatic data processing machines for classification purposes.

Note 6(D) and Note 6(E) to Chapter 84 (exclusions and functional classification) - Section Note 3 to Section XVI (composite/multi-function machines) - principal function test - General Rules of Interpretation (Rule 3(a)) - Whether, notwithstanding qualification as ADP machines, the Interactive Display Systems must be classified as monitors under Heading 8528 by application of exclusion/functional rules. - HELD THAT: - The jurisdictional authority contended that the devices are primarily display devices and therefore excluded from Heading 8471 by Note 6(D)/(E) and Section Note 3 to Section XVI. The Authority analysed these contentions and concluded that the exclusions and functional-classification rules do not apply where the goods themselves meet the ADP definition. Note 6(D) lists separately presented monitors as excluded; here the devices are standalone ADP machines incorporating input, processing and output in the same housing. Note 6(E) concerns machines incorporating or working in conjunction with an ADP machine to perform a specific function other than data processing; it does not displace classification of a device that itself fulfills the ADP criteria. Rule 3(a) and the principal function test apply where competing headings are equally specific; however, Heading 8471 specifically and completely covers machines comprising CPU plus input/output in the same housing. The Authority therefore rejected the submission that display is the principal function so as to divert classification to Heading 8528 and held that the ADP characterization is determinative. [Paras 7, 8, 9]

The exclusions and principal-function arguments do not displace classification under Heading 8471 where the goods themselves satisfy the ADP machine criteria; classification under Heading 8528 is not appropriate.

Subheading 84714190 - classification of other automatic data processing machines - The specific subheading under which the Interactive Display Systems are classifiable within Heading 8471. - HELD THAT: - ADP machines are divided into portable machines and other ADP machines. The subject devices are not portable (no keyboard, sizes 55" to 98", wall-mounted) and thus fall under the 'other automatic data processing machines' category. Subheading 847141 covers machines comprising in the same housing at least a CPU and an input and output unit; the touchscreen (input), LED screen (output) and inbuilt CPU satisfy these elements. Having rejected classification as a portable ADP machine and having found the devices to be ADP machines comprising CPU and input/output in the same housing, the Authority identified the residual subheading for 'Other' within 847141 and directed classification under subheading 84714190. [Paras 8, 10]

The Interactive Display Systems are classifiable under subheading 84714190 as other automatic data processing machines comprising CPU and input/output in the same housing.

Final Conclusion: The Authority ruled that the Interactive Display System (ViewBoard) models described in the application meet the requirements of an automatic data processing machine and are classifiable under Heading 8471, specifically under sub heading 84714190 of the First Schedule to the Customs Tariff Act, 1975.

Classification of parts of motor vehicle lighting under Heading 8512 - Distinction between LED assemblies/modules and semiconductor LED devices for classification between Headings 8539 and 8541 - General provision for classification of parts (Section XVI / General Explanatory Note to Section XVI) - Eligibility for India-Japan Free Trade Agreement duty exemption under Notification No. 69/2011 (Sr. No. 656)

Classification of parts of motor vehicle lighting under Heading 8512 - Distinction between LED assemblies/modules and semiconductor LED devices for classification between Headings 8539 and 8541 - General provision for classification of parts (Section XVI / General Explanatory Note to Section XVI) - The correct Customs Tariff classification of the imported 'LED socket plug assembly'. - HELD THAT: - The subject goods are an assembly of LEDs with associated circuitry mounted in a fixture designed to be assembled with Lens, Holder, Body and other components to form a front fog lamp for an automobile. Heading 8512 covers electrical lighting or signalling equipment for motor vehicles and, by the General Explanatory Note to Section XVI and the section note, parts of goods of that heading are classifiable therein. The applicant confirmed the item lacks the control circuitry, caps or rectifying elements that would characterise goods falling within heading 8539 (LED modules/lamps) or heading 8541 (semiconductor LED devices). Having regard to the specialized use of the article as a part for anti-fog/automobile lighting and the general provisions classifying parts with the principal goods, the item is not classifiable under 8539 or 8541 but falls as a part of motor-vehicle lighting under heading 8512, specifically sub-heading 8512 90 00. [Paras 5, 7, 9]

The 'LED socket plug assembly' is classifiable under Heading 8512, more particularly under sub-heading 8512 90 00 as a part of motor-vehicle lighting.

Eligibility for India-Japan Free Trade Agreement duty exemption under Notification No. 69/2011 (Sr. No. 656) - Origin certificate requirement for Treaty preference - Whether the subject goods are eligible for the duty exemption under Serial No. 656 of Notification No. 69/2011 dated 29.7.2011 (India-Japan FTA) upon importation from Japan. - HELD THAT: - Serial No. 656 of Notification No. 69/2011-Cus. grants nil basic customs duty for goods falling under heading 8512 90 when imported from Japan, subject to the importer proving the goods are of Japanese origin in accordance with the notification's rules. Having held the subject goods classifiable under 8512 90, they fall within the description covered by Sr. No. 656; entitlement to the preferential rate is therefore available upon production of the valid country-of-origin certificate as required by the notification and rules. [Paras 6, 8, 9]

The subject goods are eligible for the benefit of Serial No. 656 of Notification No. 69/2011-Cus. (India-Japan FTA) upon production of the requisite Country of Origin certificate.

Final Conclusion: The Authority rules that the imported 'LED socket plug assembly' is classifiable as a part of motor-vehicle lighting under Heading 8512 (sub-heading 8512 90 00) and, being covered by that heading, is eligible for nil basic customs duty under Serial No. 656 of Notification No. 69/2011-Cus. when imported from Japan subject to production of the prescribed country-of-origin documentation.

Jurisdiction of advance ruling authority - advance ruling application - place of business / office address for jurisdiction - agreement with clearing and forwarding agent not constituting applicant's office - provision permitting withdrawal of advance ruling application before pronouncement

Jurisdiction of advance ruling authority - place of business / office address for jurisdiction - agreement with clearing and forwarding agent not constituting applicant's office - Whether the CAAR, Mumbai has jurisdiction to decide the applicant's advance ruling application - HELD THAT: - The Authority examined the CAAR-1 application, the annexed clearing and forwarding agency agreement and the IEC registration address. The agreement with a local logistics service provider (CFA) was for non-exclusive clearing, forwarding, warehousing and related logistics services and was time-limited; it did not establish that the CFA premises constituted the applicant's office or place of business. The applicant's IEC and principal address were in Gurgaon, which falls under the jurisdiction of CAAR, Delhi in terms of the CAAR Regulations, 2021. On these facts the Authority concluded that the Mumbai CAAR lacked territorial jurisdiction to entertain the application. The Authority also noted the statutory provision allowing withdrawal of an application prior to pronouncement but recorded that no withdrawal had been submitted by the applicant.

Application rejected for lack of jurisdiction; applicant directed to file before the proper jurisdictional Advance Ruling Authority (CAAR Delhi).

Final Conclusion: The CAAR, Mumbai dismissed the advance ruling application of M/s Solae Company India Private Limited for want of territorial jurisdiction, holding that the logistics service provider's premises do not establish the applicant's office in Mumbai and directing the applicant to approach the CAAR having jurisdiction (CAAR Delhi).

Classification under Chapter heading 0812 - Provisionally preserved fruit and nuts - Unsuitable for immediate consumption - Chapter note (4) to Chapter 8 - Removability of preservatives before consumption - HSN explanatory notes on provisionally preserved dried fruit and nuts

Classification under Chapter heading 0812 - Provisionally preserved fruit and nuts - Chapter note (4) to Chapter 8 - Unsuitable for immediate consumption - Provisionally preserved areca nut imported after treatment with preservatives is classifiable under sub-heading 0812 90 90 of the First Schedule to the Customs Tariff Act, 1975. - HELD THAT: - The advance ruling authority examined the nature of the subject goods and the preservation processes declared by the applicant (treatment with sulphur-dioxide gas or sodium benzoate solution) and the supporting technical opinion. Chapter 8 and its explanatory notes cover fruit and nuts which, if unsuitable for immediate consumption, may be provisionally preserved for transport or storage. Chapter note (4) specifically applies to fruit and nuts treated solely to ensure provisional preservation prior to use, provided they remain unsuitable for immediate consumption in that state. The authority found that the preserved areca nuts remain unsuitable for immediate consumption and require further processing to remove preservatives before human consumption; therefore the conditions of chapter note (4) are satisfied. Consequently, although areca nuts are otherwise mentioned under heading 0802, the provisionally preserved nuts fall more specifically under heading 0812 and, on the facts and documents before the authority, merit classification under sub heading 0812 90 90. [Paras 6, 7]

The subject goods-provisionally preserved areca nut-are classified under Chapter Heading 0812 and more specifically under sub heading 0812 90 90.

Final Conclusion: Advance ruling: provisionally preserved areca nut treated with sulphur dioxide or sodium benzoate and remaining unfit for immediate consumption is classifiable under CTH 0812 90 90 of the Customs Tariff Act, 1975.

Roasting as a process of preparation - moderate heat treatment - HSN Explanatory Notes as an authoritative guide to classification - General Rules of Interpretation - preference for the most specific description (GIR 3/2(b)) - classification under Chapter 20 as "Other roasted nuts" - exclusion from Chapter 8 where processes fall outside Chapter 8 chapter notes

Roasting as a process of preparation - HSN Explanatory Notes as an authoritative guide to classification - General Rules of Interpretation - preference for the most specific description (GIR 3/2(b)) - classification under Chapter 20 as "Other roasted nuts" - exclusion from Chapter 8 where processes fall outside Chapter 8 chapter notes - Classification of Roasted Areca Nuts (whole and cut) under the First Schedule to the Customs Tariff Act, 1975 - HELD THAT: - The Authority examined whether the roasting operations on areca/betel nuts fall within the processes permitted by Note 3 to Chapter 8 or instead amount to preparation covered by Chapter 20. In ordinary trade parlance and on the material before it, 'roasting' was held to be a severe heat treatment producing fundamental physical and chemical changes (charred appearance, altered tannin/arecoline content) and thus different from the 'moderate heat treatment' and drying/dehydration contemplated by Chapter 8. The HSN Explanatory Notes specifically list dry roasted, oil roasted and fat roasted nuts (including areca/betel nuts) within the scope of Heading 2008. Supreme Court decisions upholding classification of roasted nuts under Chapter 20 were treated as authoritative and the HSN Explanatory Notes were followed as a safe guide. Applying the General Rules of Interpretation, where goods are prima facie classifiable under more than one heading the most specific description must be preferred; roasted nuts have a specific description in Heading 2008 and therefore, on the combined weight of the HSN notes, judicial precedents and GIR, roasted areca/betel nuts are classifiable under Chapter 20 rather than Chapter 8 or Chapter 21. The Authority accordingly rejected reliance on prior AAR rulings and earlier jurisprudence that are inapplicable in light of the specific HSN treatment of roasted nuts and subsequent legislative and interpretative developments. [Paras 4, 5]

Roasted Areca Nuts (whole and cut) are classifiable under Tariff entry 2008 19 20 ("Other roasted nuts and seeds") of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: The Authority rules that the imported Roasted Areca Nuts (whole and cut) fall under Heading 2008 and specifically under subheading 2008 19 20 of Chapter 20 of the First Schedule to the Customs Tariff Act, 1975.

Classification of Interactive Flat Panel as Automatic Data Processing machine - Application of Note 6(A) to Chapter 84 - Essential/principal function test - Note 6(E) to Chapter 84 - machines performing specific functions - General Rules for Interpretation: Rule 1 and Rule 6

Classification of Interactive Flat Panel as Automatic Data Processing machine - Application of Note 6(A) to Chapter 84 - General Rules for Interpretation: Rule 1 and Rule 6 - Whether the Optoma Creative Touch 3 series Interactive Flat Panel (IFP) models are classifiable under Sub heading 84714190 as Automatic Data Processing machines or under heading 8528 as monitors. - HELD THAT: - The Authority examined the product's capabilities against the definition of an automatic data processing machine in Note 6(A) to Chapter 84, which requires (i) storage of processing programme and necessary data, (ii) being freely programmable, (iii) performing arithmetical computations specified by the user, and (iv) executing processing programmes that modify execution by logical decision. The description 'Interactive' and the admitted technical features - inbuilt CPU, input and output units, memory and embedded operating system - demonstrate that the subject goods meet the Note 6(A) criteria. The Authority applied General Rules for Interpretation, holding that classification is to be determined under GRI 1 read with Chapter/Section Notes and that Rule 6 (for composite goods) and Note 6(A) are determinative here; there was no need to invoke GRI 3(c). The Authority considered and distinguished the department's reliance on the product being primarily a display under Note 6(E) to Chapter 84, noting that where an item incorporates processing, input and output units and thereby satisfies Note 6(A), it falls within heading 8471 despite also serving display functions. The Authority gave weight to international and domestic precedents (WCO examination of similar interactive whiteboards, CESTAT New Delhi in Ingram Micro, and CAAR Mumbai rulings) which support classification of similarly constituted interactive flat panels as ADP machines under heading 8471, and found the facts and functionality of the present models align with those rulings. [Paras 9, 10, 11, 12, 13]

The Optoma Creative Touch 3 series Interactive Flat Panel (models 3652RK, 3752RK & 3862RK) are classifiable under Sub heading 84714190 as Automatic Data Processing machines.

Final Conclusion: The Authority rules that the specified Optoma Interactive Flat Panel models merit classification under Sub heading 84714190 and accordingly issues the advance ruling in favor of classification under heading 8471.

Oppression and mismanagement - Validity of Board meetings and quorum - Service of notice for board meetings - Validity of mortgage deeds and charges - Effect of settlement agreements on pending company petitions - Fraud vitiating compromises - Scope of remedies under Sections 397, 398 and 399

Validity of Board meetings and quorum - Service of notice for board meetings - Validity of mortgage deeds and charges - The impugned Board meetings (02.11.2009, 10.11.2009 and 25.10.2010) and the mortgage transactions approved therein are not rendered null and void on the basis urged by the appellant. - HELD THAT: - The Tribunal accepted the NCLT's finding that the appellant, despite being the admitted majority shareholder, failed to discharge the burden of proving absence of notice or non-compliance with the Articles of Association in respect of the contested meetings. The record showed that the appellant's nominee director based abroad had not attended meetings and that notices for subsequent meetings were sent (postal receipts were on record). Article 87(iii) requires a quorum with at least one director each from promoter and investor; the Tribunal noted the appellant did not produce sufficient material to rebut respondents' case that quorum and procedural steps were satisfied. On the material before it the Tribunal agreed with NCLT that the appellant had not established that the mortgage meetings were illegally convened or that the mortgage deeds were thereby nullified. [Paras 6, 21, 23, 24]

Challenge to the legality of the impugned Board meetings and the mortgage deeds dismissed for want of proof; meetings and related actions upheld.

Effect of settlement agreements on pending company petitions - Fraud vitiating compromises - The settlement arrangements (SPA, MoU, Escrow Agreement and related documents) between the parties operate to render the earlier proceedings largely bereft of purpose, and allegations of subsequent breach or fraud do not automatically convert a settlement breach into a matter within the scope of oppression and mismanagement under the Act. - HELD THAT: - The Tribunal recorded that parties entered into settlement agreements intending to resolve the disputes and that the respondents relied on those arrangements before the NCLT. While the appellant alleged that the respondents committed fraud by selling plots intended as security for the share-purchase funding, the Tribunal held that even if there was a breach of settlement, such a breach does not ipso facto fall within the statutory definition of 'oppression and mismanagement' under Sections 397-399. The Tribunal observed that the scope of those provisions does not extend to adjudicating factual disputes arising out of settlements or their contractual breaches in the manner asserted by the appellant. Accordingly, the plea that the settlement was vitiated by fraud did not convert the dispute into one that would warrant relief under the oppression provisions in the circumstances before the Tribunal. [Paras 14, 15, 16, 17, 25]

Settlement agreements were recognised as the parties' chosen mode of resolution; alleged breach/fraud did not, on the record, bring the grievance within Sections 397-399 for setting aside the transactions.

Oppression and mismanagement - Scope of remedies under Sections 397, 398 and 399 - The appellant failed to make out a case of oppression and mismanagement under Sections 397-399 of the Act entitling it to the reliefs sought, and the NCLT's dismissal of the company petitions was upheld. - HELD THAT: - The Tribunal noted the appellant's substantial shareholding and observed that it did not produce sufficient evidence to show that the alleged acts constituted oppression or exclusion of legitimate expectation such as would invoke the wide remedial jurisdiction under Section 402. The Tribunal also emphasised that many of the contested factual contentions either lacked documentary support or concerned contractual/settlement disputes not amenable to relief under the oppression provisions. On this basis the Tribunal agreed with the NCLT's conclusion that the appellant had not established the statutory threshold for relief. [Paras 20, 25, 26]

Petitions under Sections 397-399 dismissed for want of a made-out case; appellant's claims of oppression and mismanagement rejected.

Final Conclusion: The appeals are dismissed; the NCLT's order dismissing the company petitions is affirmed. No costs; connected interlocutory applications closed.

Proviso to Section 45(1) of PMLA - relaxation for a woman - Mens rea in offence of money laundering under Section 3 PMLA - Triple test for grant of bail (flight risk, tampering with evidence, influencing witnesses) - Broad probabilities test at bail stage - appraisal of prima facie case - Reliability and limited weight of statements under Section 50 PMLA at bail stage

Proviso to Section 45(1) of PMLA - relaxation for a woman - Article 15(3) - special provision for women - Whether the proviso to Section 45(1) PMLA applies to the applicant by virtue of her being a woman. - HELD THAT: - The Court held that the proviso to Section 45(1) of the PMLA, which carves out a relaxation for persons 'below sixteen years of age; a woman; or one who is sick or infirm', is rooted in the legislative competence under Article 15(3) and must be given a liberal, non subdivided reading. The Court rejected the respondent's attempt to create ad hoc sub categories of women based on education, occupation or social status, holding that such sub classification lacks intelligible differentia and would violate Article 14. Prior coordinate decisions treating the proviso as an exception were followed; once an accused falls within the proviso by being a woman, the twin conditions of Section 45(1) need not be applied to her. The applicant therefore falls within the proviso to Section 45(1) PMLA, although she must still satisfy the judicially recognised triple test for grant of bail. [Paras 24, 28, 30, 31, 32]

The proviso to Section 45(1) PMLA applies to the applicant as a woman and the twin conditions of Section 45(1) do not apply to her.

Mens rea in offence of money laundering under Section 3 PMLA - Broad probabilities test at bail stage - Whether, on the materials before the Court, the applicant prima facie possessed the requisite mens rea for the offence of money laundering and could be denied bail on merits. - HELD THAT: - The Court emphasised that mens rea is an essential ingredient of the offence under Section 3 PMLA and that at the bail stage the court is to examine broad probabilities rather than weigh evidence minutely. The respondent's material (transactional records and Section 50 statements) did not conclusively establish that the applicant knew funds were proceeds of crime. The applicant furnished prima facie reasonable explanations for each transaction relied upon by the prosecution (nominee/paper directorships, absence of managerial control, returns of certain amounts, explanation for personal receipts as professional fees or rent, lack of link to certain companies). The Court observed pick and choose prosecution aspects and gaps in the material, and held that knowledge imputable solely by virtue of being the wife of a principal accused or by holding fleeting directorships was not sufficient to deny bail. Hence, on broad probabilities the applicant had a good prima facie case that she did not knowingly handle proceeds of crime. [Paras 52, 53, 54, 55, 56]

Prima facie the applicant has made out a reasonable case that she did not possess the requisite mens rea for money laundering; the prosecution materials do not negate her prima facie defence on broad probabilities.

Reliability and limited weight of statements under Section 50 PMLA at bail stage - Admissibility of public reports/newspaper clippings at bail stage - Whether the allegations linking the applicant to the Trikar Group and to laundering through offshore entities establish a prima facie case against her. - HELD THAT: - The Court analysed the prosecution reliance on the Pandora Papers, a newspaper report, and Section 50 statements of various witnesses concerning the Trikar Group. It noted significant inconsistencies between statements of Indrajit Zaveri, Anuj Malik and Pranav Kumar and observed that the common thread indicated Trikar was largely driven by Mr. Sanjay Chandra. The Court declined to place heavy reliance on Section 50 statements or on newspaper material at the bail stage and held that the statements require reconciliation and confrontation at trial. There was nothing on record establishing the applicant's active control or day to day management of the offshore entities prior to 2017; the transfer of shareholding in 2017 on instructions of Mr. Sanjay Chandra did not, by itself, make her prima facie guilty of laundering during the earlier period. Accordingly, the Trikar related allegations did not, on the present material, make out a prima facie case against the applicant. [Paras 66, 67, 68, 69, 70]

Material linking the applicant to Trikar and offshore laundering is inconsistent and insufficient on broad probabilities to establish a prima facie case against her at the bail stage.

Triple test for grant of bail (flight risk, tampering with evidence, influencing witnesses) - Imposition of stringent bail conditions - Whether the applicant satisfies the triple test and whether bail should be granted subject to conditions. - HELD THAT: - The Court examined the three limbs: (i) flight risk - earlier denial of interim relief by the Supreme Court was noted but subsequent orders and the Sessions Court's view, the applicant's international travel history, deposition of passport with ED and undertaking to renounce foreign citizenship allayed flight risk concerns; (ii) tampering with evidence - documents are largely in ED custody and there was no material showing interference with evidence; (iii) influencing witnesses - WhatsApp chats did not disclose monetary or managerial instructions and could be consistent with communications permitted during jail visits; there was no direct material of witness tampering. Considering the applicant falls within the proviso to Section 45(1), the Court held she must satisfy the triple test which can be addressed by stringent conditions. Consequently, bail was allowed on furnishing bond and on specific conditions including surrender of foreign passport, renunciation of foreign citizenship within prescribed time, restrictions on travel, cooperation with investigation, and non contact with witnesses. [Paras 81, 82, 83, 84, 85]

The applicant does not, on the present material, fail the triple test; bail is granted subject to stringent conditions including personal bond, surrender/renunciation of foreign citizenship/passport, non departure, cooperation with investigation and non interference with witnesses or evidence.

Final Conclusion: The Court held that the proviso to Section 45(1) PMLA applies to the applicant as a woman; on broad probabilities the prosecution has not established requisite mens rea or a prima facie case against her in respect of the alleged laundering (including Trikar related allegations); the applicant did not satisfy the triple test concerns such as flight risk or tampering in a manner warranting continued custody; accordingly bail was allowed subject to specified stringent conditions.

Power of review under Section 128 of the Finance Act, 2019 - rectification of arithmetical/clerical mistake - 30 day period for review under SVLDRS Scheme, 2019 - concessional provision in a taxing statute to be construed in favour of the revenue in case of doubt - directory versus mandatory statutory provision - reasonableness under Article 14

Power of review under Section 128 of the Finance Act, 2019 - 30 day period for review under SVLDRS Scheme, 2019 - rectification of arithmetical/clerical mistake - directory versus mandatory statutory provision - reasonableness under Article 14 - concessional provision in a taxing statute to be construed in favour of the revenue in case of doubt - Designated Committee could, after the 30 day period specified in Section 128 of the Finance Act, 2019 and Rule 6(6) of the SVLDRS Scheme, review and modify the earlier statement to correct an arithmetical/clerical mistake where reasons were assigned and the exercise was not arbitrary. - HELD THAT: - The Court held that the SVLDRS Scheme is a one time concessional measure and, where doubt exists, concessional provisions in a taxing statute are to be construed in favour of the revenue. The absence of an expressly prescribed consequence for failing to review within 30 days indicates that the time provision is not mandatory but directory; therefore substantial compliance and later rectification are permissible where allowing review does not frustrate the object of the provision. Applying these principles, the Designated Committee's delayed review to include an omitted CENVAT credit and recompute the tax dues was undertaken to prevent loss to the public exchequer. The reasons for the delayed exercise of review were found not to be arbitrary and were saved from attack under Article 14, so the rectification and modified demand were lawful. [Paras 5, 6, 7, 8, 9]

The challenge to the Revenue's exercise of power to modify the statement after 30 days was dismissed; the Designated Committee lawfully reviewed and corrected the statement and the petition was dismissed.

Final Conclusion: The High Court dismissed the petition, upholding the Designated Committee's power to review and rectify its earlier SVLDRS statement after the 30 day period where the review corrected an arithmetical oversight, reasons were furnished and the action was not arbitrary.

Power to remand - remand to Adjudicating Authority - powers of Commissioner (Appeals) - precedential effect of MIL India Ltd - followed judgment of Associated Hotels Limited

Power to remand - remand to Adjudicating Authority - powers of Commissioner (Appeals) - precedential effect of MIL India Ltd - followed judgment of Associated Hotels Limited - Commissioner (Appeals) has the power to remand the matter to the Adjudicating Authority. - HELD THAT: - The Tribunal considered earlier decisions including the Hon'ble Supreme Court in MIL India Ltd and the Hon'ble Gujarat High Court in Associated Hotels Limited and held that those authorities establish that the Commissioner (Appeals) may remit matters to the Adjudicating Authority. The Tribunal noted its consistent view in recent decisions (including Torrent Pharmaceuticals and Adani Power) applying the said precedents and recorded that the remand by the Commissioner (Appeals) did not amount to an error of law or jurisdiction. On this basis the impugned remand order was upheld and the Revenue's challenge to the remand was rejected. [Paras 4, 5]

The Commissioner (Appeals) possessed the power to remand the matter to the Adjudicating Authority; Revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s remand to the Adjudicating Authority, following the Supreme Court and Gujarat High Court precedents, and dismissed the Revenue's appeal.

Taxability of reimbursed expenses under Custom House Agent service - interpretation and vires of Rule 5 of Service Tax (Determination of Value) Rules, 2006 - scope of business auxiliary service in relation to commission/incentive - exemption of commission agent service for the period 01.07.2003 to 08.07.2004 - admissibility of CENVAT credit for input services in relation to output service - imposition of penalties and invocation of extended period of limitation; applicability of Section 80

Taxability of reimbursed expenses under Custom House Agent service - interpretation and vires of Rule 5 of Service Tax (Determination of Value) Rules, 2006 - Reimbursed expenses incurred by the Custom House Agent on behalf of clients are not includible in the taxable value of CHA agency charges. - HELD THAT: - The Tribunal applied the Board Circular No. B43/1/97-TRU dated 06.06.1997 which distinguishes agency/attendance charges (taxable) from payments made by CHA on behalf of clients (reimbursable expenses not to be included in value). The Tribunal further relied on the Supreme Court decision in UOI v. Intercontinental Consultants and Technocrats Pvt. Ltd., which held Rule 5 of the Service Tax (Determination of Value) Rules, 2006 ultra vires Section 67; therefore Rule 5(2) could not be invoked to bring such reimbursements into taxable value. Applying these principles to the facts, the demand on reimbursable expenses was held unsustainable. [Paras 4]

Demand on reimbursable expenses recovered by the CHA set aside; such amounts are not taxable as part of CHA service.

Scope of business auxiliary service in relation to commission/incentive - exemption of commission agent service for the period 01.07.2003 to 08.07.2004 - Incentives/commission received from shipping lines/steamer agents are taxable as Business Auxiliary Service except to the extent covered by the specified exemption for commission agent services from 01.07.2003 to 08.07.2004. - HELD THAT: - The Tribunal examined the definition of business auxiliary service and concluded that commission/incentive received in connection with services provided to the shipping line/steamer agent falls within the scope of Business Auxiliary Service (including services as a commission agent). However, the Tribunal accepted that notification no.13/2003-ST (service of Commission Agent) exempts the service for the period 01.07.2003 to 08.07.2004; accordingly demands for that exempt period are unsustainable, while demands for other periods within 01-04-2003 to 31-03-2008 stand upheld subject to the exemption application. [Paras 4]

Commission/incentive liable to service tax as Business Auxiliary Service except for the period 01.07.2003 to 08.07.2004 when commission agent service was exempt.

Admissibility of CENVAT credit for input services in relation to output service - CENVAT credit on input services such as air-conditioner repairs, motor car repair, travel expenses, etc., is admissible to the appellant. - HELD THAT: - The Tribunal found that the impugned input services were used in relation to the business activity of providing CHA services and are included in the cost of the output service. Following the applicable provisions of Rule 2(l) of the Cenvat Credit Rules, 2004 and consistent judicial views treating such services as admissible input services, the Tribunal held that CENVAT credit in respect of the specified input services is allowable. [Paras 4]

Appellant entitled to CENVAT credit on the input services in question.

Imposition of penalties and invocation of extended period of limitation; applicability of Section 80 - Extended period and penalties under the Finance Act are not sustainable on the facts; penalties under Rules 76 and 78 are not imposable invoking Section 80. - HELD THAT: - The Tribunal observed that the majority of the demand was set aside on substantive grounds and noted absence of any evidence of suppression or intent to evade tax. In view of these findings and applying Section 80 of the Finance Act, 1994, the Tribunal held that penalties under the cited provisions (Rule 76 and 78) could not be imposed. The Tribunal also recorded that the extended period of limitation could not be invoked where there was no suppression or evasion established. [Paras 4, 5]

Penalties and invocation of extended limitation set aside; penalties under the specified rules not imposable.

Final Conclusion: The appeal is partly allowed: demands on reimbursed CHA expenses are set aside; commission/incentive receipts are taxable as Business Auxiliary Service except for the exempt period 01.07.2003-08.07.2004; CENVAT credit for the specified input services is allowed; and penalties/extended period invocation are not sustained.

Availment of CENVAT credit - registration of premises not a condition for CENVAT credit - reversal of CENVAT credit and payment before issuance of show cause notice - section 73(3) of the Finance Act - bar on issuance of show cause where tax paid and intimation given - section 73(4) of the Finance Act - exceptions for fraud, collusion, wilful mis-statement, suppression of facts or intent to evade

Registration of premises not a condition for CENVAT credit - availment of CENVAT credit - Whether CENVAT credit can be denied because invoices were addressed to premises not registered with the Service Tax Department. - HELD THAT: - The Tribunal, after considering precedent including the Division Bench decision in Rajender Kumar & Associatess and relevant High Court and Tribunal authorities, held that there is no statutory requirement that premises be registered with the Service Tax Department as a condition precedent for claiming CENVAT credit. Once the requirements of the relevant Cenvat Credit Rules (rule 4A of the 1994 Rules and rule 9 of the 2004 Rules) are satisfied, credit cannot be denied solely on the ground that invoices bear an address of an unregistered premises. Consequently the demand confirmed on this ground was unsustainable. [Paras 6]

Demand based on invoices addressed to unregistered premises set aside; registration of premises is not a condition for availing CENVAT credit.

Reversal of CENVAT credit and payment before issuance of show cause notice - section 73(3) of the Finance Act - bar on issuance of show cause where tax paid and intimation given - section 73(4) of the Finance Act - exceptions for fraud, collusion, wilful mis-statement, suppression of facts or intent to evade - Whether a show cause notice under section 73(1) could be validly issued despite reversal of credit and payment of service tax with intimation prior to issuance, by invoking the exceptions in section 73(4). - HELD THAT: - The factual position recorded in the show cause notice and the material on record establish that the appellant reversed the CENVAT credit and deposited the service tax (with interest) on 14 March 2013, prior to issuance of the show cause notice dated 7 July 2014, and had disclosed relevant facts in returns. Section 73(3) bars issuance of a notice where tax has been paid and due intimation furnished. Section 73(4) carves out cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade; those exceptional circumstances must be shown to exist before sub-section (3) can be excluded. The Tribunal found no suppression of facts or intent to evade, noting the appellant's disclosure in returns and its status as a public sector undertaking (where mala fide intent is not imputed). Consequently the conditions for invoking section 73(4) were not made out and the protection of section 73(3) applied, rendering the show cause notice and consequent demand unsustainable. [Paras 12, 13, 14, 15]

Show cause notice and demands relating to reversal/payment (and service received from abroad) quashed as section 73(3) applies and the exceptions in section 73(4) are not attracted.

Final Conclusion: The impugned order confirming demands on all three issues is set aside; the appeal is allowed - credit denial for unregistered premises is reversed, and demands premised on issuance of notice despite prior reversal/payment are quashed as section 73(3) applies and section 73(4) is not attracted.

Condonation of delay - limitation period for filing appeal - statutory proviso limiting power to condone delay - exclusion of Section 5 of the Limitation Act - pre-deposit as condition precedent to entertain appeal

Condonation of delay - limitation period for filing appeal - statutory proviso limiting power to condone delay - exclusion of Section 5 of the Limitation Act - Whether the Commissioner (Appeals) could condone delay beyond the one month extended period under section 85(3A) of the Finance Act for filing an appeal. - HELD THAT: - The Court held that section 85(3A) prescribes a two month period to present an appeal and contains a proviso permitting the Commissioner (Appeals) to allow presentation within a further period of one month if satisfied that the appellant was prevented by sufficient cause. That proviso circumscribes the Commissioner's discretion and limits condonation to the one month extension beyond the initial two months. Reliance on the Supreme Court decision in Singh Enterprises was accepted to the effect that the legislative scheme excludes the operation of Section 5 of the Limitation Act for extending limitation beyond the statutory extended period. On the facts, the Commissioner (Appeals) recorded receipt of the adjudicating order and the dates show the appeal was filed far beyond the two month period and the one month extension; therefore there was no power to condone the further delay and dismissal on limitation grounds was correct. [Paras 6, 7, 8, 10]

Dismissal of the appeal on ground of limitation was justified because condonation could not be granted beyond the one month extension under section 85(3A).

Pre-deposit as condition precedent to entertain appeal - Whether the Commissioner (Appeals) ought to have waived the statutory requirement of pre deposit for entertaining the appeal. - HELD THAT: - The Court applied the principle that where a statute confers a right of appeal, the Legislature may attach conditions for its exercise and such conditions operate as conditions precedent. Relying on the Supreme Court's decision in Narayan Chandra Ghosh (and subsequent reiteration), the Court observed that the requirement of pre deposit in the Finance Act operates as a mandatory condition precedent and that an appellate authority cannot entertain an appeal without compliance unless power to reduce or waive is expressly provided within the statute. Consequently the Commissioner (Appeals) did not err in refusing to waive the pre deposit requirement. [Paras 11, 12, 13, 14]

The appeal could not be entertained without fulfilling the statutory pre deposit requirement and the Commissioner (Appeals) did not err in refusing a waiver.

Final Conclusion: The Tribunal affirmed that the Commissioner (Appeals) rightly dismissed the appeal: condonation of delay could not be granted beyond the one month extension under section 85(3A), and the statutory pre deposit requirement could not be waived by the appellate authority beyond the scope permitted by statute.

Cenvat credit admissibility - use of inputs as supporting structure - prima facie entitlement to credit - remand for verification of factual use

Cenvat credit admissibility - use of inputs as supporting structure - remand for verification of factual use - Admissibility of Cenvat credit in respect of Angle, Channel, Beam, TMT Bars, HR Steel Coil, HR Steel, MS Plates and cement etc. for April 2015 to June 2017 - HELD THAT: - The Tribunal noted that earlier decisions of High Courts and Tribunals indicate that credit for such steel items used as supporting structures may be allowable and that the appellant prima facie appears entitled to Cenvat credit. However, the adjudicating authority did not examine or verify whether the inputs were actually used in the various plants as claimed. Because admissibility depends on factual verification of use, the matter cannot be finally determined on the record before the Tribunal. The Tribunal therefore set aside the impugned order and remanded the matter to the adjudicating authority with a direction to verify the actual use of the inputs in the plants and to pass a fresh decision in accordance with law. [Paras 5]

Impugned order set aside; appeal allowed by remand to the adjudicating authority for verification of actual use and fresh decision.

Final Conclusion: The appeal is allowed by setting aside the impugned order and remanding the matter to the adjudicating authority to verify the claimed use of the specified inputs in the appellant's plants and to pass a fresh adjudication for the period April 2015 to June 2017.

Valuation under Rule 7 of Central Excise Valuation Rules - assessable value for stock transfer to depot - import parity price - PLATT price report - best judgment method - ultimate selling price from depot

Valuation under Rule 7 of Central Excise Valuation Rules - assessable value for stock transfer to depot - import parity price - PLATT price report - best judgment method - ultimate selling price from depot - Whether adoption of import parity price (PLATT) for determining assessable value of goods cleared from factory to depot on stock transfer basis is permissible and whether duty can be assessed on the basis of the ultimate selling price from the depot. - HELD THAT: - The Tribunal found that at the time of clearance from factory to depot there was no prevailing depot price nor any ex-factory selling price available, so Rule 7 could not be applied in the literal sense. Where no contemporaneous price is available, the only practicable method is to adopt the best available basis for valuation. The Appellant discharged duty using the import parity price published by PLATT on the ground that domestic petchem prices are benchmarked to import parity. The Tribunal treated the adoption of PLATT's import parity price as a valid application of the best judgment method when no other price is available, relying on precedents recognising foreign journals for price indication. Conversely, the department's reliance on the ultimate selling price at the depot was rejected: Rule 7 requires valuation by reference to prices available nearest to time of removal and does not permit chasing subsequent depot sale prices to determine assessable value. Applying these principles, the Tribunal held that demand based on the ultimate selling price from the depot was unsustainable and set aside the confirmed demand. [Paras 12, 13, 14, 15, 16]

Adoption of import parity price (PLATT) for valuation was upheld and the demand confirmed on the basis of the ultimate selling price from the depot was set aside.

Final Conclusion: The appeal is allowed; the demand confirmed on the basis of the ultimate selling price from the depot is set aside and the Appellant's adoption of the PLATT import parity price for valuation when no depot or ex-factory price was available is sustained.

Valuation of excisable goods for related party transfers - transaction value applicable where goods are partly sold to independent buyers and partly transferred to an own unit - interpretation of valuation rules - availability of cenvat credit and revenue neutrality - invocation of extended period of limitation - requirement of mala fide or intent to evade duty for extended period

Valuation of excisable goods for related party transfers - transaction value applicable where goods are partly sold to independent buyers and partly transferred to an own unit - interpretation of valuation rules - Whether the transaction value at which goods are sold to independent buyers must be adopted for valuation of goods cleared to the assessee's own unit. - HELD THAT: - The Tribunal recorded that on the merits the question has been finally decided against the appellant by the Larger Bench in ISPAT INDUSTRIES, which held that where goods are partly sold to independent buyers and partly cleared to the assessee's own unit, the transaction value at which the goods are sold to independent buyers shall be taken as the transaction value for goods cleared to the related person. The present appeal does not overturn that legal conclusion; the Tribunal accepts the Larger Bench principle as determinative of the valuation issue. [Paras 4]

The valuation issue is governed by the Larger Bench principle that transaction value to independent buyers applies to clearances to the own unit; on merits the position is against the appellant.

Availability of cenvat credit and revenue neutrality - invocation of extended period of limitation - requirement of mala fide or intent to evade duty for extended period - Whether demand for differential duty for the extended period is sustainable. - HELD THAT: - The Tribunal found that the question of valuation was not free from doubt and had been referred to and decided by a Larger Bench, making the legal position crystallise only thereafter. Further, the clearances to the recipient unit were eligible for cenvat credit at the recipient, rendering the exercise revenue neutral. In these circumstances, and in the absence of any finding of mala fide or intent to evade duty by the appellant, the conditions for invoking the extended period of limitation were not satisfied. On this basis the Tribunal set aside the demand insofar as it related to the extended period. [Paras 4]

Demand for the extended period is not sustainable and is set aside.

Final Conclusion: Appeals allowed: while the valuation rule laid down by the Larger Bench governs the merits (adverse to the appellant), the demand for the extended period has been set aside because the issue was not free from doubt, was subject to a Larger Bench reference, and the clearances were revenue neutral by reason of availability of cenvat credit; no mala fide was found.

Assessable value-inclusion of ancillary charges - Separate transaction principle-rental/lease charges not part of sale consideration - Service Station Licence Fee (SSLF) not includible in assessable value - Precedential effect of Tribunal and Supreme Court decisions

Service Station Licence Fee (SSLF) not includible in assessable value - Separate transaction principle-rental/lease charges not part of sale consideration - Assessable value-inclusion of ancillary charges - Whether the SSLF recovered by the appellant from dealers is includible in the assessable value of petroleum products for levy of excise duty for the periods in dispute. - HELD THAT: - The Tribunal applied the principle that charges which are for a distinct transaction and consideration (rental for land, tanks, pumps and kiosks provided to dealers) cannot be treated as forming part of the transaction value of petroleum products. Reliance was placed on earlier Tribunal decisions in the appellant's own case and in BPCL, where SSLF or licence fees were held to be rental-like charges for separate transactions and therefore not includible in assessable value; those decisions were affirmed by the Supreme Court. Since SSLF was levied as a distinct fee under separate agreement and not from dealers who did not lease outlets, the charges lack requisite connection to the sale consideration of MS/HSD and fall outside assessable value. The Tribunal concluded the issue is no longer res integra and followed the binding precedents. [Paras 5, 6, 7]

SSLF is not includible in the assessable value; the impugned order is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The appeal is allowed: SSLF collected from dealers is held not to form part of the assessable value of petroleum products for the specified periods, the impugned demand is set aside and consequential relief shall follow.

Right to reasons - speaking order - failure to record reasons amounts to denial of justice - remand for fresh consideration - substantial question of law

Right to reasons - speaking order - failure to record reasons amounts to denial of justice - Whether the Tribunal's omission to record reasons in respect of seven out of eight questions raised in the reference applications was legally objectionable. - HELD THAT: - The Court held that reasons are an indispensable part of judicial orders and that failure to record reasons substitutes subjectivity for objectivity and amounts to denial of justice. The judgment emphasises that a litigant has a legitimate expectation of knowing why a decision is adverse to him and that reasons enable appellate review. Applying settled Supreme Court authority, the Court found the Tribunal's orders to be silent on seven of eight questions and therefore non-speaking; such non-recording of reasons prejudicially affects the parties and frustrates the appellate process. The Court reasoned that even brief reasoning would have sufficed to indicate application of mind and to permit effective appellate scrutiny. [Paras 16, 17, 18, 19, 20]

The Tribunal's omission to record reasons on the majority of questions raised rendered its orders legally infirm.

Remand for fresh consideration - substantial question of law - What remedial step should follow the Tribunal's non-speaking orders and whether the matters should be remitted for fresh consideration. - HELD THAT: - Relying on authoritative precedents, the Court applied the established remedy for non-speaking or cryptic orders: quashing the impugned orders and remanding the matters for fresh consideration. The Court directed the Tribunal to decide and dispose of the reference applications afresh on their own merits, and authorised the Tribunal, if satisfied that any proposed question is not a substantial question of law but a factual one, to deal with it in accordance with law. The Tribunal was specifically directed to pass speaking and reasoned orders after recording submissions of the respective parties. The Court expressly declined to express any view on the correctness of the substantive contentions raised before the Tribunal. [Paras 21, 22, 23]

The impugned orders of the Tribunal are set aside and the matters remanded to the Tribunal for fresh disposal with speaking and reasoned orders; the Tribunal may determine whether each proposed question is a substantial question of law or a factual issue.

Final Conclusion: The Court set aside the Tribunal's orders for failure to record reasons and remitted the reference applications to the Tribunal to be decided afresh; the Tribunal is directed to record submissions, determine whether the proposed questions are substantial questions of law, and pass speaking, reasoned orders accordingly.

Surcharge under Section 5A of the Orissa Sales Tax Act - levy of surcharge before deduction of entry tax - set-off of entry tax paid under the Orissa Entry Tax Act - interplay between tax payable under OST Act and entry tax under OET Act - remand for recomputation in light of higher court precedent

Surcharge under Section 5A of the Orissa Sales Tax Act - levy of surcharge before deduction of entry tax - interplay between tax payable under OST Act and entry tax under OET Act - The surcharge under Section 5A of the OST Act is to be levied before deducting the entry tax paid under the Orissa Entry Tax Act. - HELD THAT: - The Court held that the question is no longer res integra and is governed by the Supreme Court's decision in Commissioner of Commercial Taxes v. M/s. Bajaj Auto Ltd.. Applying that precedent, the Court concluded that Section 5A is a self-contained provision leviable on the tax payable under the OST Act, which is to be determined independently of the OET Act; consequently the surcharge must be computed prior to any deduction or set-off of entry tax paid under the OET Act. This conclusion reverses the Tribunal's approach of reducing the surcharge by the amount of entry tax paid by the dealer. [Paras 3]

Answered in favour of the Department; surcharge under Section 5A to be levied before deducting entry tax.

Set-off of entry tax paid under the Orissa Entry Tax Act - conjoint reading of Section 5 of the OST Act, Section 4 of the OET Act and Rule 18 - The Tribunal was not justified in determining the surcharge after giving set-off of the entry tax paid by the dealer. - HELD THAT: - In view of the determination that surcharge must be levied prior to deduction of entry tax (and relying on the cited Supreme Court authority), the Court answered the rival contention negatively. The Court rejected the Tribunal's methodology of reducing the surcharge by the entry tax paid, holding that the conjoint reading relied upon by the Tribunal does not permit deduction of entry tax before computation of surcharge under Section 5A. [Paras 4]

Answered in the negative; Tribunal's approach set aside and that finding upheld in favour of the Department.

Remand for recomputation in light of higher court precedent - The matter is remitted to the Assessing Officer for recomputation of demand in accordance with the Court's determination and the Supreme Court precedent. - HELD THAT: - Following the legal determinations on surcharge and set-off, the Court set aside the Tribunal's order and remitted the case to the Assessing Officer to recompute the demand applying the principle that surcharge is to be levied before deducting entry tax. The remand is for recomputation and adjustment in light of the binding authority, not for fresh adjudication of the legal questions already decided by this Court. [Paras 5]

Impugned order set aside; matter remitted to Assessing Officer for recomputation.

Final Conclusion: The Court allowed the revision, held that surcharge under Section 5A of the OST Act must be levied before deducting entry tax paid under the OET Act (following the Supreme Court precedent), set aside the Tribunal's order which gave set-off, and remitted the matter to the Assessing Officer for recomputation of demand accordingly.