TaxTMI Updates e-Newsletter
Jun 21,2023

Interim stay of adjudication order - Granting interim relief amounting to final relief - Vires challenge to statutory provisions - Conditioned interim stay subject to security - Profiteering computation - Statutory provision presumed valid unless struck down

Granting interim relief amounting to final relief - Statutory provision presumed valid unless struck down - Whether an interim injunction staying the operation of the impugned anti profiteering provisions should be granted - HELD THAT: - The learned Single Bench correctly observed that granting the broad interim relief sought (staying the impugned provisions) would effectively grant the final relief sought in the writ petition. The court reiterated the settled legal position that a statutory provision is deemed valid unless it is struck down; accordingly, a stay of the statutory provisions itself could not be granted at the interim stage because that would amount to deciding the substantive vires challenge. The appellants' merits contentions regarding the computation of profiteering require determination after filing of affidavit in opposition and are not a basis to grant a general interim stay of the statutory scheme (paras 1, 4). [Paras 1, 4]

Interim injunction staying the impugned statutory provisions refused on the ground that such relief would amount to granting the final relief.

Interim stay of adjudication order - Conditioned interim stay subject to security - Profiteering computation - Whether the adjudication order dated 30th September, 2022 should be stayed pending disposal of the writ petition and on what terms - HELD THAT: - Although the court declined a broad stay of the statutory provisions, it found that the appellants had no alternate remedy against the impugned adjudication order and had challenged the vires of the statutory provision. Balancing these factors, the court granted an interim stay of the adjudication order dated 30th September, 2022, but only on the condition that the appellants deposit a specified sum with the Registrar General within a fixed period. The deposited amount is to be placed in an interest bearing account and shall remain until disposal of the writ petition, to abide by further orders (paras 5-6). [Paras 5, 6]

Interim stay of the adjudication order granted conditionally upon deposit of the specified security within eight weeks; deposited amount to be kept in an interest bearing account until disposal of the writ.

Final Conclusion: The appeal was disposed of by refusing a broad stay of the impugned statutory provisions (as amounting to final relief) while allowing a conditional interim stay of the adjudication order dated 30th September, 2022 upon deposit of the directed security; appeal disposed without costs.

Input Tax Credit reversal - show cause notice - natural justice / opportunity to be heard - comparison of GSTR 3B and GSTR 2B - assessment under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 - tabulation of particulars and supporting documents

Comparison of GSTR 3B and GSTR 2B - show cause notice - natural justice / opportunity to be heard - Assessing Officer's reliance on a GSTR 3B vs GSTR 2B comparison to determine ITC reversal without having made that determination concrete in the show cause notice was procedurally improper. - HELD THAT: - The court found that the impugned assessment proceeds, from paragraph 5 onwards, to crystallise the amount to be reversed by comparing ITC claimed under GSTR 3B with GSTR 2B. Such crystallisation of the determination ought to have been foreshadowed in the show cause notice so that the petitioner had a fair and specific opportunity to respond and supply supporting particulars in the prescribed tabulated form. Prior communications were held to be general calls for particulars and did not communicate the specific determination adopted by the Assessing Officer; therefore the petitioner was not afforded the requisite opportunity to meet the case framed by the assessing authority. The court treated this deficiency as a breach of the requirement to give a party adequate notice of the case against it and an opportunity to be heard before finalising assessment. [Paras 5, 7, 8, 9]

The assessment was procedurally defective because the decisive comparison and resulting determination were not put to the petitioner in the show cause notice, depriving the petitioner of a fair opportunity to respond.

Assessment under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 - tabulation of particulars and supporting documents - remand for fresh consideration - Remedial course to be adopted in view of the procedural defect - setting aside the assessment and remanding the matter for fresh consideration with directions for personal hearing and timeline. - HELD THAT: - In the interests of substantial justice the court set aside the impugned assessment order dated 17.03.2023 and directed that it shall be treated as a show cause notice. The petitioner was ordered to appear with all supporting details and documents on the fixed date for personal hearing. The court accommodated the petitioner's request for a specific hearing date and restricted any further adjournment; it made clear that failure to appear with materials would result in withdrawal of the benefit. After personal hearing and receipt of materials, the Assessing Officer was directed to pass a fresh order within six weeks from the date of personal hearing, in accordance with law. The remand is for fresh consideration and adjudication after affording the petitioner the opportunity to produce particulars in the required tabulated form and supporting documents. [Paras 10, 11, 12]

Impugned assessment set aside and treated as a show cause notice; matter remitted for fresh consideration after personal hearing on the specified date and with a direction to pass an order within six weeks thereafter.

Final Conclusion: The assessment order dated 17.03.2023 was set aside for procedural infirmity (failure to specify the AO's GSTR 3B vs GSTR 2B determination in the show cause notice), the order is to be treated as a show cause notice, the petitioner to appear with supporting documents on the fixed date, and the Assessing Officer to pass a fresh order within six weeks of the personal hearing.

Provisional attachment under the Gujarat Goods and Services Tax Act, 2017 - pre-deposit requirement on filing appeal before the Appellate Authority - recovery effected pursuant to tax adjudication pending availability of appellate remedy - interaction of Sections 73(9), 78 and 107 of the Gujarat Goods and Services Tax Act, 2017 - availability of refund direction from the Appellate Authority as exclusive remedy

Provisional attachment under the Gujarat Goods and Services Tax Act, 2017 - pre-deposit requirement on filing appeal before the Appellate Authority - interaction of Sections 73(9), 78 and 107 of the Gujarat Goods and Services Tax Act, 2017 - availability of refund direction from the Appellate Authority as exclusive remedy - Whether the petitioner is entitled to a direct refund of amounts recovered under provisional attachment after adjudication when an appeal (with condonation application) is pending before the Appellate Authority and the pre-deposit requirement under the Act is applicable - HELD THAT: - The Court noted that adjudication was completed and an order in FORM GST DRC-07 directed payment. The appeal was filed after the three-month period and a separate application for condonation of delay is pending before the Appellate Authority. Meanwhile, on completion of three months, provisional attachment proceedings were invoked and recovery from the petitioner's bank account was effected. The petitioner's contention that respondents should be directed to refund the balance because the pre-deposit on appeal is only 10% was rejected as misconceived. The court observed that, in view of the statutory scheme embodied in Sections 73(9), 78 and 107 of the Gujarat GST Act, 2017, once recovery has been lawfully effected under the Act and rules, the appropriate forum to seek refund is the Appellate Authority; if the appeal succeeds, the Appellate Authority may direct refund. The High Court declined to entertain a collateral claim for refund in writ proceedings when an efficacious statutory appellate remedy is available and pending.

Petition dismissed; petitioner not entitled in writ proceedings to direct refund of amounts recovered by provisional attachment and must seek appropriate relief before the Appellate Authority.

Final Conclusion: Writ petition dismissed. The High Court held that recovery effected under provisional attachment pursuant to the adjudication cannot be challenged in these proceedings for refund while the statutory appellate remedy (including condonation application) is pending; any direction for refund, if justified, must be sought and granted by the Appellate Authority in the appeal.

Requirement of issuance of a detailed show cause notice under Section 73(1) of the JGST Act - necessity of a detailed adjudication order under Section 73(9) of the JGST Act - summary adjudication by Form GST DRC 07 cannot substitute for detailed adjudication - Form GST DRC 01 as a summary notice cannot fulfil the requirements of a show cause notice under Rule 142 and Section 73(1) - duty of appellate authority to decide appeals on merits

Requirement of issuance of a detailed show cause notice under Section 73(1) of the JGST Act - Form GST DRC 01 as a summary notice cannot fulfil the requirements of a show cause notice under Rule 142 and Section 73(1) - summary adjudication by Form GST DRC 07 cannot substitute for detailed adjudication - necessity of a detailed adjudication order under Section 73(9) of the JGST Act - Validity of the summary order in Form GST DRC 07 dated 19.01.2019 imposing tax, interest and penalty in absence of a detailed show cause notice and a detailed adjudication order - HELD THAT: - The Court found as admitted by the respondents that no detailed show cause notice in terms of Section 73(1) and no detailed adjudication order in terms of Section 73(9) of the JGST Act had been served or was on record. Rule 142 requires that the statutory Form GST DRC 01 (a summary) be accompanied by a detailed show cause notice as contemplated by Section 73(1). The Form GST DRC 01 produced by the respondents did not specify the foundational allegations or afford an opportunity to rebut in the manner required, and its belated production raised doubts as to service. In the absence of the mandatory show cause notice and the detailed adjudication order, the Form GST DRC 07, being a summary order, cannot by itself render the assessee liable to pay tax, interest or penalty. The Court therefore concluded that the impugned summary order is legally unsustainable. (See paras. 5-8, 10.) [Paras 5, 6, 7, 8, 10]

The summary order in Form GST DRC 07 dated 19.01.2019 is quashed and set aside for want of the mandatory show cause notice and detailed adjudication order.

Duty of appellate authority to decide appeals on merits - Validity of the appellate order dated 03.09.2022 dismissing the appeal without adjudication on the merits of the grounds challenging absence of show cause and adjudication order - HELD THAT: - The appellate authority dismissed the appeal on procedural grounds-non appearance at hearings and non production of documents-without addressing the substantive grounds on record that the summary DRC 07 was issued without the statutory show cause or adjudication order. The Court observed that the appeal ought to have been decided on merits, including consideration of the contention that DRC 07 was issued contrary to Sections 73(1) and 73(9) and the Rules. Having found the substantive infirmity in the proceedings before the adjudicating authority, the appellate order could not stand. (See para. 9-10.) [Paras 9, 10]

The appellate order dated 03.09.2022 is quashed and set aside for failure to decide the appeal on merits.

Consequential recovery action invalid where impugned demand is unsustainable - Validity of the recovery notice dated 19.01.2021 issued under Section 79 based on the impugned summary order - HELD THAT: - Because the underlying summary adjudication in Form DRC 07 was quashed for non compliance with mandatory statutory requirements, the consequential recovery notice founded on that order could not subsist. The Court therefore set aside the recovery notice as also being premised on an unsustainable demand. The respondents were, however, left free to initiate fresh proceedings compliant with the statute and rules. (See paras. 8, 10.) [Paras 8, 10]

The recovery notice dated 19.01.2021 is quashed and set aside; the department may issue a fresh show cause notice and proceed in accordance with law.

Final Conclusion: The writ petition is allowed: the summary order in Form GST DRC 07 dated 19.01.2019, the appellate order dated 03.09.2022 and the recovery notice dated 19.01.2021 are quashed and set aside. The department may, if so advised, issue fresh proceedings strictly in accordance with the JGST Act and Rules.

Cancellation of GST registration - restoration and re-consideration of registration - opportunity to file reply and personal hearing - rejection of appeal on limitation grounds without adjudication on merits - requirement of a reasoned and speaking order - remand for fresh consideration - setting aside of attachment/recovery made without fresh adjudication

Cancellation of GST registration - opportunity to file reply and personal hearing - requirement of a reasoned and speaking order - Validity of the order cancelling the petitioner's GST registration and requirement for fresh consideration - HELD THAT: - The Court found that the Assistant Commissioner cancelled the petitioner's registration effective from March 1, 2018 by relying solely on non-submission of reply to the show cause notice without considering the petitioner's stated grievances, including a request to file returns with payment by instalments and reasons for non-filing. The judgment relied on precedent to hold that the assessing authority must examine whether the registration could be restored and must give the petitioner an opportunity to file a reply and be heard. Consequently the cancellation order was set aside and the matter remitted to the assessing authority for fresh consideration on merits with an opportunity for filing reply and personal hearing, and for issuing a reasoned and speaking order within the stipulated period. [Paras 10, 12, 13, 15, 16]

The cancellation order dated November 16, 2021 is set aside and the Assistant Commissioner is directed to reconsider the matter afresh, after permitting filing of reply and personal hearing, and to pass a reasoned and speaking order within six weeks.

Rejection of appeal on limitation grounds without adjudication on merits - remand for fresh consideration - setting aside of recovery/attachment - Validity of appellate authority's rejection of the petitioner's appeal as time-barred and consequences for prior recovery - HELD THAT: - The Appellate Authority dismissed the appeal solely on the ground of delay (fifteen days) and failure to file the appeal online, without addressing the substantive grievances concerning cancellation and the petitioner's attempts to seek time/installments. The High Court held that the appellate order could not stand where the merits and reliefs that might arise on fresh consideration were not examined. The Court therefore set aside the appellate order dated January 27, 2023, directed fresh consideration by the original authority, and also set aside the attachment/recovery notice issued to the bank pending the fresh adjudication. [Paras 9, 11, 12, 15, 16]

The appellate order rejecting the appeal is set aside; the matter is remitted for fresh consideration and the attachment/recovery dated October 14, 2022 is set aside.

Final Conclusion: Both the cancellation order dated November 16, 2021 and the appellate order dated January 27, 2023 are set aside; the Assistant Commissioner is directed to permit the petitioner to file a reply, afford personal hearing and pass a reasoned speaking order on merits within six weeks, and the attachment/recovery is set aside in the meantime.

Appealable order - statutory remedy by way of appeal - condonation of delay in filing appeal - violation of principles of natural justice - adjustment of pre-deposit from electronic cash ledger recovery - lifting of attachment upon filing of appeal

Appealable order - statutory remedy by way of appeal - condonation of delay in filing appeal - Liberty to file a statutory appeal against an order passed under Section 74 of the WBGST Act was to be granted and the appeal to be entertained notwithstanding the delay. - HELD THAT: - The writ court declined to interfere with the order passed under Section 74, noting the availability of a statutory appeal and that the writ petition was filed beyond the period of limitation and beyond the condonable period. Having regard to the peculiar facts and the fact that amounts had already been recovered from the electronic cash ledger, the High Court exercised its discretion to grant the appellant liberty to file the statutory appeal. The Court directed that if the statutory appeal is filed within 15 days from receipt of the server copy of the order, it shall be entertained without being rejected on the ground of limitation. The appellant was also permitted to canvass all grounds previously raised in the writ petition before the appellate authority. [Paras 4, 7, 9]

Appellant permitted to file statutory appeal within 15 days and such appeal shall be entertained despite delay; appellant may urge all grounds earlier raised.

Adjustment of pre-deposit from electronic cash ledger recovery - lifting of attachment upon filing of appeal - Direction for adjustment of pre-deposit from amounts already recovered and conditional lifting of bank account attachment upon filing of the statutory appeal. - HELD THAT: - The Court noted that certain sums had been recovered by the department from the appellant's electronic cash ledger. It directed that the pre-deposit required for filing the statutory appeal shall be adjusted from the amount already recovered from the appellant by recovery from the electronic cash ledger. The balance of the amounts recovered shall abide by the orders that may be passed by the appellate authority. Further, the Court ordered that if the statutory appeal is filed within the period stipulated, the attachment of the appellant's bank account shall be lifted. [Paras 7, 8]

Pre-deposit to be adjusted from electronic cash ledger recovery; balance to abide by appellate orders; bank account attachment to be lifted if appeal filed within stipulated time.

Violation of principles of natural justice - statutory remedy by way of appeal - Merits of the challenge to the order under Section 74 (including the contention of violation of principles of natural justice and alleged defects in the show cause notice) were not decided on merits and were left to the first appellate authority for consideration. - HELD THAT: - Although the writ petition alleged that the show cause notice was uploaded on a different portal, lacked particulars and that initiation of proceedings was not in accordance with law, the High Court did not adjudicate these contentions on merits. Instead, having allowed the appellant to file the statutory appeal and to urge all grounds raised in the writ petition, the Court effectively remitted the controversy on merits to the first appellate authority for fresh consideration in the appeal. [Paras 3, 4, 9]

Merits (including alleged violation of natural justice and defects in notice) remitted to the first appellate authority for fresh consideration in the statutory appeal.

Final Conclusion: The High Court declined to entertain the writ on merits but granted the appellant limited relief: liberty to file a statutory appeal within 15 days which shall be entertained notwithstanding delay; pre-deposit to be adjusted from amounts already recovered from the electronic cash ledger; balance to abide by the appellate authority's orders; and the attachment of the appellant's bank account to be lifted if the appeal is filed within the stipulated period. Merits of the challenge were left to the appellate authority.

Confiscation of vehicle under the Karnataka Goods and Services Tax Act, 2007 - rectification under Section 161 of the Karnataka Goods and Services Tax Act, 2007 - connivance with the transporter - consideration of rectification application notwithstanding typographical errors - obligation to file affidavit and participate in enquiry

Rectification under Section 161 of the Karnataka Goods and Services Tax Act, 2007 - consideration of rectification application notwithstanding typographical errors - Rectification application dated 18.11.2022 filed by the petitioner is to be adjudicated despite typographical errors in mentioning the vehicle number in some parts of the application. - HELD THAT: - The Court found that the rectification application, though containing errors in mentioning the vehicle number in certain parts, nonetheless correctly identifies the vehicle in paragraph-3 and thus merits consideration. The Court directed the third respondent to adjudicate the rectification application simultaneously, expressly permitting consideration of the application notwithstanding the typographical inaccuracies. The Court emphasised that it did not decide the merits of the rectification but required the competent authority to decide the application on its merits after due process.

The third respondent is directed to adjudicate the petitioner's rectification application dated 18.11.2022 notwithstanding typographical errors in the vehicle number.

Confiscation of vehicle under the Karnataka Goods and Services Tax Act, 2007 - connivance with the transporter - obligation to file affidavit and participate in enquiry - The third respondent must decide the question of whether the petitioner was in connivance with the transporter and the petitioner must file affidavit and participate in the enquiry to enable that decision. - HELD THAT: - The Court held that for complete adjudication the authority must consider the question of connivance because restoration of the vehicle depends on whether the owner was complicit with the transporter. The petitioner bears the onus of placing material to demonstrate lack of connivance and therefore was directed to file an affidavit containing necessary details. The Court further recorded that where liberty has been granted previously, mere bald affidavits without personal participation impeded effective enquiry; accordingly the petitioner was required to appear and participate in the enquiry so that the third respondent can make an effective and considered decision after providing reasonable opportunity.

The third respondent shall decide on connivance, the petitioner must file an affidavit with necessary details and participate in the enquiry.

Obligation to file affidavit and participate in enquiry - The petitioner is directed to appear before the third respondent on 01.03.2023 to participate in the enquiry prior to adjudication on the rectification and connivance issues. - HELD THAT: - Given the Court's insistence on effective enquiry and meaningful participation, it directed the petitioner to present himself (or a duly authorised representative) without further notice on the specified date so that the third respondent may proceed with enquiry and adjudication. The Court explicitly refrained from commenting on the merits of the petitioner's contentions and limited its direction to procedural steps necessary for adjudication in accordance with law.

The petitioner shall appear before the third respondent on 01.03.2023 to participate in the enquiry.

Final Conclusion: Writ petition disposed of by directing the third respondent to adjudicate the petitioner's rectification application dated 18.11.2022 notwithstanding typographical errors, to decide the question of connivance after the petitioner files an affidavit and participates in enquiry, and by directing the petitioner to appear before the third respondent on 01.03.2023; the Court made no comment on the merits.

Pure agent - Rule 33 of CGST Rules, 2017 - Value of supply - Authorization requirement under Rule 33 - Invoice indication requirement under Rule 33 - Additional supply requirement under Rule 33 - AICTE (NEEM) Regulations, 2017 - Advance ruling maintainability under Section 95 of the CGST Act

Pure agent - Rule 33 of CGST Rules, 2017 - Value of supply - Authorization requirement under Rule 33 - Invoice indication requirement under Rule 33 - Additional supply requirement under Rule 33 - AICTE (NEEM) Regulations, 2017 - Whether the reimbursement received by the appellant from NEEM Trainer for stipend and related expenses qualifies to be excluded from the value of supply as amounts received in the capacity of a pure agent under Rule 33 of the CGST Rules, 2017. - HELD THAT: - The Authority analysed Rule 33's conditions and the explanatory clauses and applied them to the contractual scheme between the NEEM Facilitator (appellant), the NEEM Trainer (industry partner) and NEEM Trainees. The Authority examined three core conditions in Rule 33: (i) authorization by the recipient to the supplier to make payment to a third party at the time of payment; (ii) separate indication of the reimbursed amount in the supplier's invoice; and (iii) that supplies procured by the pure agent are additional to services supplied by him on his own account. The Authority found no clear contractual authorization by the Trainer making the appellant a pure agent at the time of payment; invoices produced showed GST being charged on the gross billed amount including stipend rather than separately indicating a reimbursed amount; and the deployment of trainees was the dominant supply with stipend and allied charges being ancillary and not an additional, separate supply. The Authority also applied the explanatory tests (no title or interest, no use for own benefit, and receipt of only actual amount) and concluded that the appellant, being obliged by NEEM Regulations to source, register and pay trainees and facing regulatory consequences for non-performance, held the services effectively on its own account. On these findings the Authority concluded that the appellant did not satisfy the conditions of Rule 33 and therefore the reimbursements could not be excluded from the value of supply. [Paras 6]

Appellant does not qualify as a pure agent under Rule 33; reimbursement of stipend and related expenses must be included in the value of supply for GST purposes.

Advance ruling maintainability under Section 95 of the CGST Act - AICTE (NEEM) Regulations, 2017 - Whether the AAR was justified in refraining from answering the applicant's question on the ground that specimen contracts were unsigned or expired, and whether the application was maintainable. - HELD THAT: - The Authority considered the AAR's preliminary view that the specimen LG contract was unsigned and expired and that, under Section 95, applications must pertain to supplies being undertaken or proposed. The Appellate Authority found the Interplex specimen agreement to be a sufficient representative contract and held that the application was maintainable and answerable on merits. While the AAR had expressed doubts about the LG specimen, the Appellate Authority proceeded to decide the substantive question on the basis of the Interplex agreement and the NEEM regulatory framework, examining Rule 33 and the contractual relationship rather than leaving the question unanswered on purely technical grounds. [Paras 6]

The application was maintainable and capable of determination on merits; the AAR's initial reluctance based on unsigned/expired specimen did not preclude adjudication and the matter was appropriately decided on merits.

Final Conclusion: On the merits the Appellate Authority upholds the MAH AAR order with modifications and rejects the appellant's claim that reimbursements for stipend and related expenses are excludible as payments made in the capacity of a pure agent under Rule 33; the reimbursements must be included in the value of supply for GST purposes, and the application was otherwise maintainable and answerable on merits.

Deletion of addition on account of alleged bogus loss in penny stock - sham/pre arranged transaction through penny script/paper company - exemption under Section 10(38) claimed for long term capital gains - transactions executed through recognised stock exchanges via authorised brokers - investigation report and subsequent SEBI order received after the transactions - question of fact versus substantial question of law - disallowance based on conjecture and surmise

Deletion of addition on account of alleged bogus loss in penny stock - sham/pre arranged transaction through penny script/paper company - transactions executed through recognised stock exchanges via authorised brokers - investigation report and subsequent SEBI order received after the transactions - disallowance based on conjecture and surmise - question of fact versus substantial question of law - Validity of the Tribunal's deletion of the addition made by the Assessing Officer in respect of alleged bogus loss in transactions in shares of M/s. VAS Infrastructure Ltd., and whether the matter raises a substantial question of law permitting interference under Section 260A. - HELD THAT: - The Tribunal found that the assessee was regularly dealing in share trading and that the purchases and sales of the shares in question were executed through recognised stock exchanges (NSE/BSE) via authorised brokers, with payments routed through bank accounts, demat/DP account details available, and STT reflected in contract notes. The SEBI order and investigation wing report relied upon by the Revenue post dated the transactions and did not declare the script to have been blacklisted or the earlier transactions void for the relevant period. On these findings the Tribunal concluded that the Assessing Officer's disallowance rested on conjecture and surmise rather than on demonstrable illegality or sham, and therefore deleted the addition. The High Court observed that the Tribunal's conclusion involved assessment of facts and appreciation of evidence; it constitutes a question of fact and not a substantial question of law warranting interference under Section 260A. Absent any demonstrated legal error in the Tribunal's approach, the appellate jurisdiction was not attracted. [Paras 5, 6, 7]

The Tribunal's factual conclusion deleting the addition was upheld as being a question of fact; no substantial question of law is made out and the tax appeal is rejected at the admission stage.

Final Conclusion: The High Court declined to interfere with the Tribunal's order deleting the addition in respect of alleged bogus loss in penny stock transactions for AY 2012 13, holding the matter to be factual and not raising any substantial question of law; the tax appeal was dismissed at the admission stage.

Revisional jurisdiction under Section 263 of the Income Tax Act - erroneous in so far as prejudicial to the interest of the revenue - scope of inquiry by the Assessing Officer and limits of supervisory interference - requirement of demonstrable error and prejudice to revenue before exercise of revisionary power - natural justice in revisional proceedings

Revisional jurisdiction under Section 263 of the Income Tax Act - scope of inquiry by the Assessing Officer and limits of supervisory interference - erroneous in so far as prejudicial to the interest of the revenue - Validity of the revisional action under Section 263 to set aside the assessment on the ground that the Assessing Officer allegedly failed to properly verify Long Term Capital Gains from share transactions. - HELD THAT: - The Tribunal held that Section 263 confers wide supervisory powers but such powers cannot be exercised merely because the Revisional Commissioner considers that a more extensive inquiry should have been made. The AO had raised specific queries regarding the LTCG, and the assessee furnished external evidence including proof of acquisition, share certificates, contract notes, demat account statements and broker-mediated transactions on the stock exchange. In the absence of any adverse material or prima facie demonstration of fallacy in the AO's conclusion, the AO's conclusion was a plausible view that did not amount to a perverse or wholly untenable order. Minor perceived inadequacies in the extent or manner of inquiry do not, by themselves, render an assessment order erroneous and prejudicial to revenue so as to justify exercise of revisionary power. The Revisional Commissioner had not pointed to any specific error in the AO's application of mind or any material contradicting the documents on record, and therefore the foundation for invoking Section 263 was missing. [Paras 8]

Revisional action setting aside the assessment on the ground of alleged inadequate verification of LTCG was not justified; the assessment under Section 143(3) is restored.

Natural justice in revisional proceedings - requirement of demonstrable error and prejudice to revenue before exercise of revisionary power - Whether the revisional proceedings complied with principles of natural justice and whether the Revisional Commissioner conducted any minimal inquiry or afforded opportunity with respect to alleged introduction of capital and receipt of gift. - HELD THAT: - The Tribunal observed that the show cause notice and the revisional order did not demonstrate that the Revisional Commissioner made any minimal independent inquiry into the veracity of the introduction of capital or the gift, nor did he point to any specific contrary material. The assessee had, in response to AO's queries, produced ledger entries and explanations showing that the capital introduction primarily comprised LTCG and that the gift was from a brother and exempt under the relevant provisions. The Revisional Commissioner neither elicited any additional material nor established prima facie error to justify reopening. Mere non-fulfilment of the Revisional Commissioner's expectations, without demonstration of error or prejudice, cannot be a substitute for the requisite showing needed to exercise Section 263 powers. [Paras 8]

Revisional action was unsustainable for lack of adequate inquiry and failure to demonstrate error or prejudice; the assessment order is reinstated.

Final Conclusion: The Tribunal allowed the appeal, set aside and cancelled the revisional order passed under Section 263, and restored the assessment order under Section 143(3) for AY 2014-15, holding that the Revisional Commissioner had not demonstrated any specific error or prejudice to revenue warranting interference.

Reopening of assessment u/s 147 - Time limit for notice - Scope of new provision section 148A - mandatory procedure of Section 148A followed or not? - TOLA - as per HC [2022 (9) TMI 883 - DELHI HIGH COURT] since the time period for issuance of reassessment notice for assessment year 2013-14 stood extended until 30th June, 2021 and the income alleged to have escaped assessment is beyond Rs.50 lakhs, the first proviso of Section 149 (as amended by the Finance Act, 2021) is not attracted in the facts of this case and even without the benefit of Instruction No.01/2022 the impugned notice is within limitation- HELD THAT:- Having gone through the impugned judgment and order passed by the High Court, no interference of this Court is called for.

SLP dismissed.

Taxability of subsidy passed on to a third party - treatment of alleged off-set/IP credits as taxable receipts - deductibility of payments characterised as electricity charges to a non-board supplier - ownership test for plant and machinery for income-tax purposes - public policy (Explanation 1 to section 37) and its application to commercial arrangements - HC [2022 (6) TMI 1125 - MADRAS HIGH COURT] confirmed ITAT decisions that the Miliev grant benefit was not taxable in the assessee's hands, no off-set credits were shown to have been received by the assessee and payments to Wescare were deductible electricity/consumption charges are upheld on the record.

HELD THAT:- No case for interference is made out under Article 136 of the Constitution of India. SLP dismissed.

Exemption u/s 11 - scope and amplitude of the definition “charitable purpose” - correct interpretation of the proviso to Section 2(15) “charitable purpose” - HELD THAT:- The impugned order does not call for interference, having regard to the law declared by this Court in the case of “Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority” [2022 (10) TMI 948 - SUPREME COURT]. The special leave petition is accordingly dismissed.

All pending applications are disposed of.

Notice under Section 148A(b) of the Income Tax Act - Quashing of order for non-consideration of objections - Remand for fresh adjudication after considering objections - Extension/exclusion of timeline for disposal to prevent prejudice to Revenue - Preservation of parties' rights and defences including under Section 149 - Service by e-mail and validity of physical response

Notice under Section 148A(b) of the Income Tax Act - Quashing of order for non-consideration of objections - Remand for fresh adjudication after considering objections - Service by e-mail and validity of physical response - Impugned order dated 29/07/2022 set aside because the Assessing Officer did not consider the objections/response filed by the petitioner on 31/05/2022; matter remitted to the Assessing Officer for fresh decision after considering that response. - HELD THAT: - The Court found on the record that a notice under Section 148A(b) was served by e-mail and that the petitioner filed a response on 31/05/2022 which was placed on record and acknowledged by the department. The Assessing Officer's order dated 29/07/2022 proceeded on the basis that no objections had been filed, thereby failing to consider the petitioner's filed objections. In the peculiar facts of the case the Court declined to decide the broader question whether objections to an electronically served notice must themselves be filed electronically or whether specific stipulation to that effect in the notice is required. Instead, in the interest of justice the Court quashed the impugned order and notices issued pursuant thereto and directed the Assessing Officer to consider afresh the petitioner's objections/response dated 31/05/2022 and to make a fresh order in accordance with law on merits. All contentions and defences of the parties, including those available under Section 149, were kept open for consideration by the Assessing Officer. [Paras 6, 9, 10]

Impugned order dated 29/07/2022 and consequential notices set aside; matter remitted to the Assessing Officer to decide afresh after considering the petitioner's objections/response of 31/05/2022, with all legal rights preserved.

Extension/exclusion of timeline for disposal to prevent prejudice to Revenue - Timeframe for disposal of the matter is to be excluded or proportionately extended from the date of the impugned order so as to prevent prejudice to the Revenue. - HELD THAT: - Respondent sought clarification that the statutory or prescribed timeline for disposing of the notices should be extended to account for the period between the impugned order and the present so that the Revenue is not unduly prejudiced. The Court granted that clarification and ordered that the period from the date of the impugned order (29/07/2022) until the date of the Court's order shall stand excluded or, alternatively, the timeline shall be proportionately extended to accommodate that period. [Paras 8]

Period from 29/07/2022 to date excluded or timeline proportionately extended for disposal so as to avoid prejudice to the Revenue.

Final Conclusion: The writ petition is allowed in part: the order dated 29/07/2022 and consequential notices are quashed and set aside; the Assessing Officer is directed to consider the petitioner's objections/response dated 31/05/2022 and to pass a fresh order in accordance with law; the timeline for disposal is excluded or proportionately extended to protect the Revenue; no costs.

Depreciation on revalued assets - actual cost for depreciation - succession proviso to Section 32 - aggregate depreciation apportionment - consideration by issuance of shares as cost

Depreciation on revalued assets - written down value - Assessee entitled to claim depreciation in AY 2009-10 on the revalued/actual cost of assets taken over from the predecessor firm, and not restricted to the WDV as computed by the assessing officer. - HELD THAT: - The Court accepted the ITAT's conclusion that once the assets belonged solely to the successor company in AY 2009-10, the successor was entitled to claim depreciation on the actual cost of those assets. The proviso to Section 32 applied only to the previous year in which succession occurred (AY 2008-09) to limit the aggregate deduction between predecessor and successor; it did not continue to operate in subsequent years when the assets were owned only by the successor. Accordingly, the assessing officer's disallowance of depreciation claimed on the revalued cost for AY 2009-10 was not sustainable and the ITAT's allowance was correct. [Paras 6, 7, 8]

Depreciation claim for AY 2009-10 on the revalued/actual cost upheld.

Succession proviso to Section 32 - aggregate depreciation apportionment - Proviso to Section 32 restricting aggregate depreciation of predecessor and successor applies to the previous year in which succession takes place and requires apportionment between predecessor and successor for that year only. - HELD THAT: - The Court explained that the proviso to Section 32 prevents aggregate depreciation (allowable to predecessor and successor in a succession) from exceeding the deduction that would have been allowable had succession not occurred, and mandates apportionment between predecessor and successor in proportion to days of use in that previous year. This rule was applicable to AY 2008-09 (the year of succession) but not to later years when the asset belongs solely to the successor, who may claim depreciation on actual cost. [Paras 6, 7, 8]

Proviso applies to the year of succession (2008-09) for apportionment; it does not restrict successor's depreciation in subsequent years.

Actual cost for depreciation - consideration by issuance of shares as cost - Consideration given by the successor to the predecessor in the form of shares (and not cash) constitutes the actual cost to the successor for the purpose of claiming depreciation. - HELD THAT: - The Court agreed with the ITAT that 'actual cost' includes the consideration paid by the assessee to acquire the assets from the predecessor even where payment was made by issuance of shares rather than cash. Section 43(1)'s definition of 'actual cost' and Rule 5's limitation that aggregate depreciation shall not exceed actual cost support the view that the cost to the successor is the amount paid/consideration given in the transfer, and thus the successor may claim depreciation on that basis in subsequent years. [Paras 6, 8, 9]

Issuance of shares as consideration constitutes actual cost for depreciation purposes; successor entitled to claim depreciation on that cost.

Final Conclusion: The High Court dismissed the appeal, holding that the ITAT correctly allowed depreciation to the successor company on the revalued/actual cost of assets acquired from the firm; the proviso to Section 32 constrained aggregate depreciation only in the year of succession (AY 2008-09) and issuance of shares as consideration constituted actual cost for depreciation in subsequent years (AY 2009-10).

Principles of natural justice - reassessment under Section 148A(d) of the Income Tax Act, 1961 - show cause notice under Section 148A(b) - opportunity of personal hearing - remand for fresh consideration - duty to furnish relevant information to the assessee

Principles of natural justice - opportunity of personal hearing - show cause notice under Section 148A(b) - Whether the order passed under Section 148A(d) was vitiated by violation of principles of natural justice for failure to grant personal hearing and for relying on allegations not contained in the show cause notice. - HELD THAT: - The Court examined the show cause notice issued under Section 148A(b) and the assessee's electronic response dated 29.03.2022 with enclosures. The order under Section 148A(d) referred to transactions involving two companies which were not mentioned in the show cause notice served on the assessee. The Assessing Officer did not fix a hearing on 29.03.2022 and treated the date as a deadline for e-response, but nonetheless recorded that the assessee failed to produce supporting documents despite enclosures being filed. These deficiencies - introduction of new allegations in the adjudicatory order, absence of a personal hearing, and an incorrect finding about non-filing of documents - amounted to breach of the principles of natural justice. In view of these procedural infirmities, the Court held that the matter could not be adjudicated without affording the assessee an opportunity to meet the additional allegations and to be heard. [Paras 6, 7, 8, 9]

The order under Section 148A(d) was set aside for want of compliance with principles of natural justice and remitted to the Assessing Officer for fresh consideration after providing requisite information and hearing.

Remand for fresh consideration - duty to furnish relevant information to the assessee - What directions should be given on remand to cure the identified procedural defects and enable fresh adjudication on merits? - HELD THAT: - The Court directed that the order under Section 148A(d) be quashed and the matter remitted to the Assessing Officer. On remand the Assessing Officer must furnish to the assessee all relevant information concerning the two companies and any other material in which the assessee has been implicated. The assessee must be granted 15 days to submit a short additional response to the furnished information. Thereafter the Assessing Officer is to provide an opportunity of personal hearing and pass a fresh order strictly on merits and in accordance with law. These directions are procedural and intended to ensure that the adjudication proceeds after fair disclosure and hearing. [Paras 8, 9]

Matter remanded with directions to supply relevant information, grant 15 days for additional response, afford personal hearing and pass fresh order on merits.

Final Conclusion: Appeal allowed; the writ petition allowed. The order dated 6th April, 2022 passed under Section 148A(d) is set aside and the matter is remanded to the Assessing Officer with directions to furnish the relevant information concerning the companies implicated, grant 15 days for an additional response, afford a personal hearing and thereafter pass a fresh order on merits and in accordance with law.

Validity of notice under Section 148 of the Income tax Act when addressed to a non existent entity - order under Section 148A(d) determining fit case for reopening - effect of dissolution of a partnership on assessment proceedings against the erstwhile firm - relevance of concealment in justifying reopening - requirement of correct taxpayer identity/PAN for issuance and enforcement of assessment notices

Validity of notice under Section 148 of the Income tax Act when addressed to a non existent entity - order under Section 148A(d) determining fit case for reopening - effect of dissolution of a partnership on assessment proceedings against the erstwhile firm - Impugned order under Section 148A(d) and notice under Section 148 dated 31.03.2023 issued to the erstwhile partnership firm (non extant entity) are unsustainable and liable to be set aside. - HELD THAT: - The Court examined the sequence of notices addressed to the erstwhile partnership firm and the petitioner's evidence that the partnership stood dissolved and that the business had been carried on by the petitioner as sole proprietor under a different PAN. The notices and the order were issued in the name of the dissolved partnership (non extant entity). The Court held that an order and notice addressed to a non existent entity cannot be enforced. Having considered the petitioner's additional affidavit and supporting documents (returns, accounts, invoices and ledgers), the Court found no basis to sustain issuance of the impugned order and notice as issued. Consequently, the order under Section 148A(d) and the notice under Section 148 dated 31.03.2023 were set aside, while the revenue remains at liberty to proceed in accordance with law. [Paras 6, 7]

Impugned order under Section 148A(d) and notice under Section 148 dated 31.03.2023 set aside as they were issued against a non extant entity; respondents free to take steps in accordance with law.

Relevance of concealment in justifying reopening - requirement of correct taxpayer identity/PAN for issuance and enforcement of assessment notices - Court found absence of deliberate concealment of income by the petitioner and accepted that the transactions were disclosed in the books of the proprietorship concern. - HELD THAT: - The petitioner filed additional affidavit and produced returns filed under the proprietor's PAN, balance sheets, profit & loss accounts, tax audit report, import invoices and ledgers showing declaration of the transactions. On the materials placed before it, the Court observed that if the petitioner had intended to defraud the revenue he would not have declared the imports in the books of the proprietor. In view of these materials, the Court concluded that the case did not demonstrate deliberate concealment that would justify sustaining the impugned reopening as framed. [Paras 3, 4, 6]

No finding of deliberate concealment; petitioner's disclosures and filings indicate that the imports were recorded and returns were filed under the proprietor's PAN.

Final Conclusion: Writ petition allowed; the order under Section 148A(d) and the notice under Section 148 dated 31.03.2023 (addressed to the dissolved partnership) are quashed and set aside; liberty granted to the revenue to proceed afresh in accordance with law.

Rectification under section 154 - mistake apparent from record - debatable question of law - set-off of MAT credit - inclusion of surcharge and education cess in tax for MAT credit

Set-off of MAT credit - inclusion of surcharge and education cess in tax for MAT credit - Whether the MAT credit claimed should include surcharge and education cess - HELD THAT: - The Tribunal considered the assessee's contention that MAT liability (and hence MAT credit) must be computed inclusive of surcharge and education cess, relying on coordinate-bench decisions. The Appellate Tribunal noted that this is a debatable legal question on the proper composition of tax for purposes of MAT credit. The Tribunal accepted the view recorded by the Commissioner (Appeals) that the controversy concerns the substantive correctness of tax computation and is not an apparent clerical error susceptible to summary rectification under section 154. Having found no infirmity in the reasoning of the CIT(A) on this point, the Tribunal upheld the conclusion rejecting the claim to include surcharge and education cess in MAT credit. [Paras 5, 6]

Claim to include surcharge and education cess within MAT credit rejected as the matter is debatable and not amenable to rectification under section 154.

Rectification under section 154 - mistake apparent from record - debatable question of law - Whether the Assessing Officer could rectify the impugned order under section 154 in respect of the MAT-credit computation - HELD THAT: - The Tribunal examined the facts that the assessee's grievance stemmed from processing under section 143(1) and that the assessee had not preferred an appeal against the 143(1) intimation. The CIT(A) recorded that the reasons recited in the section 154 order related to processing adjustments and that, absent a mistake apparent on the record, a disputed legal question cannot be settled by exercise of the summary rectification power. The Tribunal found no error in that approach and agreed that a debatable issue cannot be resolved by invoking section 154 in place of the appellate remedy applicable to the underlying 143(1) order. [Paras 5, 6]

Rectification under section 154 was not permissible because the claim raised a debatable question of law arising from the 143(1) intimation and there was no mistake apparent on the record.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the CIT(A)'s finding that the inclusion of surcharge and education cess for MAT credit raises a debatable question arising from the section 143(1) intimation and cannot be remedied by section 154 in the absence of a mistake apparent on the record.

Deduction under section 80IB(8A) - royalty income and research activity nexus - miscellaneous income characterised as business income - amalgamation and assessment in name of non existent entity - approval by prescribed authority for research company

Amalgamation and assessment in name of non existent entity - Validity of assessment order passed in the name of M/s. Bioseed Research India Ltd. after its amalgamation with DCM Shriram Ltd. - HELD THAT: - The Tribunal found on the record that the High Court sanctioned amalgamation w.e.f. 01.04.2013 and that the assessee had informed the Assessing Officer of the amalgamation. The assessment proceedings proceeded with participation by the representative of DCM Shriram Ltd., and the assessment order itself recorded the name of the earlier company followed by the parenthetical note "since amalgamated with DCM Shriram Limited". On these facts the Tribunal held that the assessment was not passed in the name of a non existent entity and that the mere mention of both names did not cause prejudice; earlier authorities relied upon by the assessee were held distinguishable. Consequently, the cross objection alleging invalidity of the assessment was dismissed. [Paras 9, 10, 11]

Cross Objection No. 116/Del/2022 dismissed; assessment order held valid despite reference to the pre amalgamation name.

Deduction under section 80IB(8A) - royalty income and research activity nexus - approval by prescribed authority for research company - Whether the Assessing Officer was justified in disallowing deduction under section 80IB(8A) in respect of royalty income from hybrid cotton seeds on the ground that the assessee did not directly develop the seeds. - HELD THAT: - The Tribunal accepted the reasoning of the CIT(A) that the assessee had submitted detailed material of research activities, production details of hybrid seeds and royalty break ups, and that the assessee held approval from the prescribed authority as a research company with periodic reporting. The CIT(A) noted contractual provisions showing the company developed hybrids and only used Monsanto technology for incorporation of a Bt gene, and that trade consideration paid for use of that technology was distinct from the royalty receipts on which deduction was claimed. Absent any material by the AO proving absence of research activity by the assessee in relation to hybrid cotton seeds, the Tribunal found no infirmity in the appellate conclusion deleting the disallowance and held there was no reason to interfere. [Paras 12, 14, 15]

Ground No.1 of the Revenue dismissed; deduction under section 80IB(8A) allowed in respect of the royalty income as held by CIT(A).

Miscellaneous income characterised as business income - deduction under section 80IB(8A) - Whether miscellaneous receipts (claimed as business income related to research) are ineligible for deduction under section 80IB(8A). - HELD THAT: - The CIT(A) examined the component items of the miscellaneous receipts and found that contributions from ICRISAT and training recoveries related to research activities and formed part of business income; only sale of scrap was not research related. The Tribunal upheld this factual conclusion, directing the AO to restrict the disallowance only to the non research item and to treat the balance as income derived from research activities eligible for the deduction. The factual scrutiny and characterisation by the appellate authority were not shown to be erroneous. [Paras 16, 18, 19]

Ground No.2 of the Revenue dismissed; miscellaneous receipts largely treated as business income related to research and eligible for deduction under section 80IB(8A), except the small scrap sale amount.

Final Conclusion: The cross objection alleging invalid assessment in the name of a non existent entity is dismissed. On the merits, both departmental grounds disallowing deduction under section 80IB(8A) - in respect of royalty income from hybrid cotton seeds and miscellaneous receipts - were reversed in favour of the assessee; the AO is to give effect to the appellate findings (with the limited exception of the scrap sale).

Transfer of rights in respect of land under a collaboration agreement - taxation of compensation for compulsory acquisition of land - treatment of compensation where transferee has been granted rights to receive enhanced compensation - offer to tax by transferee precludes double taxation in transferor's hands - deduction of interest under section 57 of the Income-tax Act

Transfer of rights in respect of land under a collaboration agreement - treatment of compensation where transferee has been granted rights to receive enhanced compensation - offer to tax by transferee precludes double taxation in transferor's hands - Deletion of the addition of enhanced compensation made by the Assessing Officer in the hands of the assessee was upheld. - HELD THAT: - The Tribunal agreed with the appellate authority's finding that the assessee had irrevocably transferred its entire rights in the impugned land to Orris Infrastructure Pvt. Ltd. (OIPL) by collaboration agreements dated 25.10.2007 and 26.10.2010, which expressly included the right to receive additional/enhanced compensation from HUDA. The Assessing Officer did not dispute the existence of those agreements. The CIT(A) found and recorded that the enhanced compensation received by the assessee was transferred to OIPL in accordance with the collaboration agreement and that OIPL had offered that compensation to tax as income from operations for FY 2014-15 relevant to AY 2015-16. Having found that the same income was taxed in the hands of the transferee and that interest on the compensation was subjected to the deduction under section 57 by OIPL, the Tribunal held that the income could not be subjected to tax again in the hands of the assessee. The Tribunal found no perversity or reason to interfere with the CIT(A)'s conclusion and therefore dismissed the Revenue's ground of appeal. [Paras 5, 6]

The addition in the hands of the assessee was deleted and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal upholds the CIT(A)'s finding that the assessee had transferred its rights in the land (including the right to enhanced compensation) to OIPL and that the compensation having been offered to tax by OIPL for the relevant period cannot be taxed again in the hands of the assessee; the Revenue's appeal is dismissed.

Transfer pricing adjustment - comparability analysis - Transactional Net Margin Method (TNMM) - Operating Profit/Operating Cost as Profit Level Indicator - exclusion of comparables - interest on outstanding receivables - judicial consistency

Comparability analysis - exclusion of comparables - transfer pricing adjustment - Larsen & Toubro Infotech Ltd. is not a comparable for benchmarking the assessee's software development services transactions - HELD THAT: - The Tribunal examined the Annual Report and other material showing that Larsen & Toubro Infotech Ltd. undertakes diversified activities, owns proprietary products and marketing intangibles, and benefits from group brand and intellectual property. These functional and business profile differences from the assessee, which is a captive provider of software development services to AEs, justify exclusion. Prior decisions treating L&T Infotech as non-comparable were noted and followed. [Paras 10, 11]

Excluded as comparable

Comparability analysis - Transactional Net Margin Method (TNMM) - Operating Profit/Operating Cost as Profit Level Indicator - judicial consistency - Infobeans Technologies Ltd. is a comparable to the assessee for benchmarking the software development services transaction - HELD THAT: - On review of the Annual Report and auditor's note, the Tribunal found Infobeans to be primarily a software services provider with no indication of material other activities or physical stock, indicating prima facie functional similarity to the assessee. Although some benches have excluded the company in earlier cases, other decisions have accepted it as comparable; on the material before it the Tribunal held Infobeans to be functionally similar and thus a valid comparable for TNMM benchmarking. [Paras 14, 16]

Accepted as comparable

Comparability analysis - exclusion of comparables - Cybercom Datamatics Information Solutions Ltd. is not a comparable to the assessee - HELD THAT: - The Tribunal noted that Cybercom Datamatics, besides software services, performs consultancy, advisory, technical and surveyor-type information services and that segmental information was not available to isolate software development activity. Prior Tribunal decisions excluding the company for similar reasons were followed and, for consistency, the Tribunal directed exclusion of Cybercom as a comparable. [Paras 20]

Excluded as comparable (ground partly allowed)

Interest on outstanding receivables - judicial consistency - Adjustment on account of interest on outstanding receivables from AEs is deleted - HELD THAT: - The TPO had computed and proposed an interest adjustment for receivables outstanding beyond prescribed credit period and DRP had upheld it. The Tribunal, however, followed its earlier coordinated-bench decisions in the assessee's own cases (and the cited High Court authority) which had deleted similar interest adjustments, and therefore deleted the addition for the year under appeal. [Paras 23]

Addition deleted in favour of the assessee (ground allowed)

Final Conclusion: Appeal partly allowed: certain comparables (Larsen & Toubro Infotech Ltd. and Cybercom Datamatics) excluded, Infobeans Technologies retained as a comparable; interest addition on outstanding receivables deleted; overall result reduces the transfer pricing adjustment upheld below.

Admission of additional evidence under Rule 46A - delayed deposit of employees' contribution to provident fund treated as income - disallowance under section 14A read with Rule 8D and requirement of recording satisfaction before invoking Rule 8D - deduction under section 80IB and application of section 80IB(10) in relation to related party sales - characterisation of receipt as capital receipt (compensation for sterilisation/impairment of profit making apparatus) versus taxable capital gains

Admission of additional evidence under Rule 46A - Validity of CIT(A)'s admission of additional evidence called for after remand reports - HELD THAT: - The Tribunal held that CIT(A) followed the procedure of calling two remand reports from the AO before admitting additional evidence and placed reliance on the Delhi High Court authority invoked by CIT(A). Revenue did not point to any procedural lapse or other fallacy in CIT(A)'s finding. In absence of any demonstrated non compliance with the prescribed procedure, the Tribunal found no reason to interfere with CIT(A)'s exercise of discretion to admit the additional evidence and dismissed the Revenue ground challenging admission. [Paras 13]

Revenue's challenge to the admission of additional evidence dismissed.

Delayed deposit of employees' contribution to provident fund treated as income - Whether delayed deposit of employees' provident fund contribution is assessable as income in the hands of the assessee - HELD THAT: - The assessee's delayed deposit of employees' contribution was treated as income by the AO. The assessee accepted that the matter is covered by the Apex Court decision in Checkmate Services Pvt. Ltd. & others (cited before the Tribunal) which is adverse to the assessee's position. The Revenue did not contest this concession. In view of the binding Supreme Court authority acknowledged by the assessee, the Tribunal upheld the AO's action and set aside the CIT(A) deletion. [Paras 16, 18]

AO's addition on account of delayed PF deposit upheld; CIT(A)'s deletion set aside.

Disallowance under section 14A read with Rule 8D and requirement of recording satisfaction before invoking Rule 8D - scope of suo moto disallowance made by assessee - Extent of disallowance under section 14A where AO applied Rule 8D without recording adequate satisfaction and assessee had made a suo moto disallowance - HELD THAT: - The AO computed disallowance under Rule 8D and disallowed an amount substantially larger than the assessee's suo moto disallowance. CIT(A) found that AO had not recorded the requisite satisfaction under section 14A(2) before invoking Rule 8D and noted that the assessee's suo moto disallowance was not shown to be defective. The Tribunal agreed that, where Revenue has not followed the procedure mandated by section 14A(2) r.w. Rule 8D, it cannot proceed to make an ad hoc additional disallowance over and above the amount disallowed suo moto by the assessee. Accordingly the AO was directed to restrict the disallowance to the assessee's suo moto figure. [Paras 20, 21, 24]

Disallowance under section 14A restricted to the suo moto disallowance made by the assessee.

Characterisation of receipt as capital receipt (compensation for sterilisation/impairment of profit making apparatus) versus taxable capital gains - inapplicability of deeming under section 55(2)(a) where cost is indeterminate and receipt represents bundle of rights/liquidated damages - Whether compensation received on termination of joint venture arrangements is taxable as short term capital gains or is a capital receipt not chargeable to tax - HELD THAT: - The Tribunal upheld CIT(A)'s detailed conclusion that the payment represented compensation for impairment/sterilisation of the assessee's prospective profit making apparatus and was not a taxable capital gain. The CIT(A) analysed the contractual background, applied the principle that transactions involving a bundle of rights cannot be dissected to treat parts as taxable transfers, and relied on precedents distinguishing compensation for loss of source of income and liquidated damages as capital receipts. Revenue did not point to any error in CIT(A)'s factual or legal conclusions. On that basis the Tribunal declined to interfere and directed deletion of the addition. [Paras 26, 27, 32]

Addition treated as short term capital gains deleted; receipt held to be a capital receipt not chargeable as capital gains.

Deduction under section 80IB and application of section 80IB(10) in relation to related party sales - Validity of AO's reduction of section 80IB deduction by invoking section 80IB(10) on the basis of alleged close nexus/transfer of profit to related party - HELD THAT: - The AO reduced the assessee's claimed deduction under section 80IB by invoking section 80IB(10), reasoning that sales to a related concern and inter unit relationships undermined the claim. CIT(A) after remand and consideration of audited unit books, remand reports and invoices found AO's action was based on suspicion and not on material demonstrating foundational facts required to invoke section 80IB(10). CIT(A) observed separate audited accounts for the Jammu unit, lower profit rates for that unit and that sales to the related party were at lower prices than to unrelated parties; earlier scrutiny assessments had allowed similar claims. Revenue did not point to any fallacy in CIT(A)'s findings. The Tribunal concurred and refused to interfere with CIT(A)'s allowance of the deduction. [Paras 34, 35, 38]

AO's reduction of section 80IB deduction set aside; CIT(A)'s allowance of the claim sustained.

Final Conclusion: For A.Y. 2008-09 the Revenue appeal is partly allowed (delayed PF deposit addition upheld; other contested additions and disallowances under sections 14A and 80IB and the capital receipt issue decided in assessee's favour); for A.Y. 2014-15 the Revenue appeal is dismissed; the assessee's cross objection for A.Y. 2008-09 is allowed.

Claim of exemption under section 11(1)(d) - corpus donation - earmarked funds - intention of donor / specific direction by donor - treatment of earmarked receipt as corpus (capital receipt) - addition on excess cash deposits - reconciliation of cash receipts and deposits - grounds not pressed

Claim of exemption under section 11(1)(d) - corpus donation - earmarked funds - intention of donor / specific direction by donor - treatment of earmarked receipt as corpus (capital receipt) - Whether receipts of Rs. 51,38,851 shown as earmarked funds qualify as corpus donations entitled to exemption under section 11(1)(d). - HELD THAT: - Tribunal held that the Assessing Officer's requirement that the trust deed must itself define corpus donations was untenable. The nature and character of a donation is to be determined by the intention and directions of the donor, which may be evidenced by donor receipts, letters or resolutions. The assessee produced donor-wise, date-wise receipts and evidence showing donations were for specific purposes (new building, room, school namkaran, campus), and these earmarked sums therefore constitute capital receipts forming part of corpus. Reliance on authorities to the same effect was noted. On these facts and legal principles the AO's treatment of the earmarked receipts as general revenue donations was rejected and the exemption under section 11(1)(d) was allowed. [Paras 11, 12, 13, 14]

Ground No.1 allowed; Rs. 51,38,851 treated as corpus donations eligible for exemption under section 11(1)(d).

Addition on excess cash deposits - reconciliation of cash receipts and deposits - partial deletion of addition - Whether excess cash deposits of Rs. 3,80,657 in the school's bank account are taxable income and if so to what extent. - HELD THAT: - The AO had made an addition on the basis that total cash deposits exceeded reported cash fees. The assessee furnished audited books and a reconciliation before the Tribunal narrowing the difference; the Tribunal observed that full reconciliation after many years was difficult but accepted the reconciliation to the extent shown. Balancing the need to finalise a decade old matter and the reconciliation produced, the Tribunal sustained part of the addition and deleted the remainder. The assessment was therefore reduced in accordance with the reconciliation produced by the assessee. [Paras 16, 17, 18, 19]

Ground No.3 partly allowed; addition reduced and sustained to the extent of Rs. 95,146, balance of the alleged excess deposit deleted.

Grounds not pressed - Disposition of grounds specifically not pressed by the assessee (Grounds Nos.2 and 4). - HELD THAT: - The assessee informed the Bench that Grounds Nos.2 and 4 would not be pressed. The Tribunal accordingly dismissed those grounds as not pressed. [Paras 3]

Grounds Nos.2 and 4 dismissed as not pressed.

Final Conclusion: Appeal partly allowed: exemption under section 11(1)(d) upheld for earmarked receipts of Rs. 51,38,851 as corpus donations; addition for excess cash deposit partly sustained at Rs. 95,146 with the remainder deleted; Grounds Nos.2 and 4 dismissed as not pressed.

Summary order. Civil Appeal dismissed for being filed with an inordinate delay of 1247 days; pending applications, if any, disposed of.

Summary order. Appeals dismissed; delay condoned; pending applications, if any, disposed of; no order as to costs.

Amendment of shipping bills under Section 149 of the Customs Act, 1962 - conversion of shipping bills from one export incentive scheme to another - Board Circular No. 36/2010 on amendment of shipping bills - right to opportunity of hearing before adverse administrative order

Right to opportunity of hearing before adverse administrative order - amendment of shipping bills under Section 149 of the Customs Act, 1962 - Board Circular No. 36/2010 on amendment of shipping bills - Whether the order refusing permission to amend shipping bills could be sustained when it was passed without affording the petitioner an opportunity of being heard. - HELD THAT: - The Court found that Ext. P18 does not indicate that the petitioner was afforded an opportunity to state its case before the order refusing amendment was passed. Given the nature of the decision - refusal of an application to correct entries in shipping bills - it was appropriate that the competent authority consider the petitioner's application after hearing the petitioner and having regard to the legal framework for amendment under Section 149 of the Act and the Board's Circular No. 36/2010. The absence of a hearing rendered the order vulnerable to quashing. The Court did not express any view on the merits of the petitioner's entitlement to amendment and left the factual and legal adjudication on the merits to the competent authority on fresh consideration.

Ext. P18 is quashed for want of hearing and the matter is remitted to the competent authority to decide afresh after affording the petitioner an opportunity of being heard and having regard to Section 149 of the Act and Circular No. 36/2010.

Final Conclusion: The order refusing amendment of the shipping bills is set aside for failure to afford an opportunity of hearing; the matter is remitted to the competent authority to decide afresh in accordance with law (including Section 149 of the Customs Act, 1962 and Board Circular No. 36/2010) within two months, with no expression of opinion on the merits.

Unjust enrichment - sanction of refund under Notification No.102/2007-Cus. as amended - Chartered Accountant certificate in accordance with Board circular - statutory auditor's certificate and correlation certificate as documentary evidence - documentary proof of non-passing of duty element (balance sheet, invoices, TR-6 challans, VAT/CST returns)

Unjust enrichment - Chartered Accountant certificate in accordance with Board circular - sanction of refund under Notification No.102/2007-Cus. as amended - Whether the refund sanctioned to the respondent was vitiated by unjust enrichment or infirmity in the Chartered Accountant certificate and documentary proof. - HELD THAT: - The Tribunal upheld the findings of the authorities below that the original authority had specifically considered the question of unjust enrichment (as discussed in para-12 of the Order-In-Original) and recorded that the respondent had furnished a Chartered Accountant's correlation certificate and a statutory auditor's certificate together with copies of balance sheet, invoices, TR-6 challans, VAT/CST returns and a self-declaration. The departmental contention that the Chartered Accountant's certificate did not expressly state verification of underlying documents was negatived by the fact that the original authority found the Chartered Accountant's certificate to be in accordance with the Board circular and relied upon the other documentary material filed by the respondent. On this basis the Tribunal found no merit in the department's challenge to the sanction of refund on the ground of unjust enrichment or insufficiency of the CA certificate. [Paras 4, 6]

Impugned order upholding the sanction of refund sustained; departmental appeal dismissed.

Final Conclusion: The Tribunal dismissed the departmental appeal and sustained the order sanctioning the refund, holding that the authorities had properly considered unjust enrichment and that the Chartered Accountant's certificate and accompanying documentary evidence complied with the applicable Board circular and supported sanction of the refund.

Quasi-judicial nature of the Central Government's determination under Section 9A of the Customs Tariff Act - requirement to record reasons when rejecting the designated authority's recommendation for continuation of anti-dumping duty - application of the principles of natural justice before the Central Government forms an opinion not to impose anti-dumping duty - remand for fresh consideration where reasons and natural justice are absent

Quasi-judicial nature of the Central Government's determination under Section 9A of the Customs Tariff Act - application of the principles of natural justice before the Central Government forms an opinion not to impose anti-dumping duty - requirement to record reasons when rejecting the designated authority's recommendation for continuation of anti-dumping duty - Whether the Central Government's decision not to accept the designated authority's recommendation to continue anti-dumping duty is quasi-judicial in nature and requires recording of reasons and compliance with principles of natural justice. - HELD THAT: - The Tribunal held that the Central Government's function in taking a decision on the designated authority's final findings is quasi-judicial in nature and not a mere legislative act of rule-making. While rules are framed legislatively, the determination in an individual case under the statutory scheme involves application of factual and legal criteria and affects competing interests of domestic industry and foreign exporters/importers. Consequently, when the Central Government forms a view not to accept a positive recommendation made by the designated authority, it must record reasons for that conclusion and afford procedural fairness. The Tribunal relied on earlier bench conclusions that even if the decision were regarded as conditional legislation, it would fall within the third category of conditional legislation requiring examination of relevant factors and adherence to principles of natural justice. In absence of recorded reasons and compliance with natural justice, the impugned decision cannot be sustained. [Paras 24, 25, 26, 30]

The Central Government's decision not to accept the designated authority's recommendation is quasi-judicial in character and must be accompanied by recorded reasons and observance of natural justice; failure to do so vitiates the decision.

Remand for fresh consideration where reasons and natural justice are absent - Whether the office memorandum dated 4-1-2022 conveying the Central Government's decision not to impose continuation of anti-dumping duty is sustainable in the absence of reasons and compliance with natural justice, and what relief should follow. - HELD THAT: - The Tribunal found that the office memorandum merely records the Central Government's decision not to accept the designated authority's recommendation without furnishing reasons or affording the domestic industry an opportunity to respond to any tentative prima facie view. Given the statutory framework which requires the Central Government to examine relevant factors and the Tribunal's conclusion that principles of natural justice and reasoned reasons are required, the memorandum was held to be legally infirm. The appropriate relief is to set aside the memorandum and remit the matter to the Central Government to reconsider the recommendation of the designated authority in light of the requirement to record reasons and to afford necessary opportunity for representation as part of a fresh decision-making process. [Paras 30, 31]

The office memorandum dated 4-1-2022 is set aside and the matter is remitted to the Central Government for fresh consideration of the designated authority's recommendation after recording reasons and complying with principles of natural justice.

Maintainability of appeal under Section 9C of the Customs Tariff Act - Whether the appeal against the Central Government's decision conveyed by the office memorandum is maintainable before the Tribunal under Section 9C of the Customs Tariff Act. - HELD THAT: - The Tribunal noted its earlier reasoning in a recent decision that an appeal is maintainable against the Central Government's decision not to impose anti-dumping duty as communicated in the office memorandum. That precedent was applied to hold the present appeal competent for adjudication under Section 9C. [Paras 23]

The appeal is maintainable under Section 9C and may be heard against the Central Government's office memorandum refusing to accept the designated authority's recommendation.

Final Conclusion: The office memorandum dated 4-1-2022, by which the Central Government conveyed its decision not to continue anti-dumping duty despite the designated authority's positive recommendation, is set aside for want of recorded reasons and non-compliance with principles of natural justice; the matter is remitted to the Central Government for fresh consideration in accordance with the observations made, and the appeal is allowed to that extent.

Failure to consider written submissions / order passed without application of mind - remand for fresh consideration and passing of a speaking order - requirement of a valid Country of Origin Certificate for claiming preferential exemption - claimant's burden to establish compliance with prescribed conditions for exemption - admissibility of exemption benefit and recovery of customs duty where conditions are not complied with under section 28(4) and section 28(8) of the Customs Act, 1962 - principles of natural justice in adjudication

Failure to consider written submissions / order passed without application of mind - remand for fresh consideration and passing of a speaking order - principles of natural justice in adjudication - Impugned adjudication order set aside because the adjudicating authority passed the order without taking into account the written submissions filed by the appellant-company and treated a partner's reply as the company's reply. - HELD THAT: - The Tribunal found on the record that M/s Marvel Silver had filed a detailed written reply which the Principal Commissioner did not record or consider; instead the adjudicator relied on the reply of the partner and proceeded to determine duty and penalties. The order therefore proceeded without proper application of mind and did not take into account material written submissions of the appellant-company. In view of this failure, and having regard to the requirements of fair adjudication and natural justice, the Tribunal concluded that the impugned order could not stand and required reconsideration by the adjudicating authority with attention to the company's written submissions. [Paras 4, 5]

Impugned order set aside; appeals allowed and matter remitted to the adjudicating authority to reconsider all issues after taking into account the written submissions filed by the appellant-company and to pass a speaking order.

Requirement of a valid Country of Origin Certificate for claiming preferential exemption - claimant's burden to establish compliance with prescribed conditions for exemption - admissibility of exemption benefit and recovery of customs duty where conditions are not complied with under section 28(4) and section 28(8) of the Customs Act, 1962 - Merits of denial of preferential exemption were not finally adjudicated by the Tribunal and are remanded for fresh consideration by the adjudicating authority. - HELD THAT: - The adjudicating authority's determination questioned the validity and coverage of the presented Country of Origin Certificate (COC) vis-a -vis the goods declared in the bills of entry and proceeded to assess duty and penalties on that basis. The Tribunal did not decide the substance of those determinations on merits; instead it observed that the show cause and adjudication involved contested factual and documentary issues (including claimed discrepancies between B/Es and the COC and the requirement to establish origin) which must be reassessed after the adjudicator considers the company's written reply. Consequently, the Tribunal remitted the matter for reconsideration of admissibility of exemption, duty recovery and any consequential penalties in the light of all submissions and applicable law. [Paras 4]

Issue of entitlement to exemption, validity/coverage of COC, and consequent recovery/penalties remanded to the adjudicating authority for fresh consideration and adjudication on merits.

Final Conclusion: The Tribunal set aside the impugned adjudication order because it was passed without considering the appellant-company's written submissions, allowed the appeals and remitted the matter to the adjudicating authority to reconsider all issues (including entitlement to preferential exemption, validity of the Country of Origin Certificate and any duty/penalty consequences) and to pass a speaking order in accordance with law.

Classification under Heading 85.01 as electrical generators - composite machines - principal function rule (Note 3 to Section XVI) - exclusion of electrical machinery from 'parts and accessories' (Note 2(f) to Section XVII) - General Rules of Interpretation - Rule 1, Rule 2(b) and Rule 3 - HSN Explanatory Notes as an interpretative aid

Classification under Heading 85.01 as electrical generators - composite machines - principal function rule (Note 3 to Section XVI) - exclusion of electrical machinery from 'parts and accessories' (Note 2(f) to Section XVII) - General Rules of Interpretation - Rule 1, Rule 2(b) and Rule 3 - HSN Explanatory Notes as an interpretative aid - The Fuel Cell System proposed for import is classifiable under CTH 85.01 and specifically under CTH 8501 33 20, and not as parts of motor vehicles under CTH 87.08. - HELD THAT: - The Fuel Cell System comprises seven interrelated components which jointly generate and distribute electrical power for Fuel Cell Electric Vehicles. Applying the General Rules of Interpretation, classification proceeds from the terms of the headings and relevant section/ chapter notes; where composite machines are involved Note 3 to Section XVI directs classification according to the component performing the principal function. Five of the seven components are directed to electricity generation while the remaining two principally regulate or distribute that electricity; accordingly the principal function of the assembled system is generation of electricity. HSN Explanatory Notes treat machines producing electrical power from various energy sources as electrical generators falling under Heading 85.01, and the Fuel Cell System, designed to produce electricity from hydrogen, falls within that description. Further, Note 2(f) to Section XVII excludes electrical machinery and equipment of Chapter 85 from being treated as 'parts and accessories' for Chapter 87; therefore the Fuel Cell System cannot be classified as motor-vehicle parts under Heading 87.08. Applying these principles to the factual disclosures (including the stated output), the Fuel Cell System is properly classifiable under Heading 85.01 and, on the information provided, under tariff item 8501 33 20. [Paras 4, 5]

Fuel Cell System is classifiable as an electrical generator under CTH 85.01 and, on the disclosed particulars, under CTH 8501 33 20; it is not a 'part' of motor vehicles under CTH 87.08.

Final Conclusion: Advance Ruling: the Fuel Cell System proposed to be imported by the applicant is to be classified under CTH 85.01 and, in light of the particulars disclosed, under CTH 8501 33 20; it does not qualify as parts or accessories of motor vehicles under Heading 87.08.

Initiation of insolvency process under Section 9 of the IBC - Existence of a genuine dispute - Notice of dispute or record of dispute in an information utility - Adjudicating authority's power to reject under Section 9(5)(2)(d) - Applicability of the Mobilox test (plausible contention, not merits) - Compliance with demand and time-barred claim

Existence of a genuine dispute - Applicability of the Mobilox test (plausible contention, not merits) - Compliance with demand and time-barred claim - Adjudicating authority's power to reject under Section 9(5)(2)(d) - Whether the adjudicating authority rightly dismissed the Section 9 application on the ground that the claim was disputed and the demand had been complied with or was time-barred, and whether the NCLAT erred in setting aside that decision. - HELD THAT: - The Court applied the principle in Mobilox that at the admissibility stage the adjudicating authority must be satisfied only that a plausible dispute exists and not decide the merits. A notice of dispute or a record in an information utility which brings the existence of a dispute to the operational creditor's attention disentitles the application. On the facts the appellants had prepaid the principal portion and specifically challenged the balance claimed by the respondent (which included a claim for interest), and the claim was also held to be time-barred. These facts constituted a real and not a spurious dispute such that the adjudicating authority was justified in rejecting the Section 9 application. The NCLAT erred in setting aside the adjudicating authority's determination and directing initiation of the insolvency process to proceed.

The adjudicating authority's dismissal of the Section 9 application was upheld; NCLAT's contrary order was set aside and the appeal allowed.

Final Conclusion: Appeal allowed. The NCLAT order directing initiation of the insolvency process was set aside; the adjudicating authority's dismissal of the Section 9 application was restored. The respondent remains free to pursue the disputed claim in accordance with law.

Application under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Requirement of 90% creditor concurrence/consent for initiation under Section 12A - Scope of appellate interference with tribunal/decision denying invocation of Section 12A

Application under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Requirement of 90% creditor concurrence/consent for Section 12A - Whether the appellant could invoke Section 12A of the Insolvency and Bankruptcy Code, 2016 without the concurrence/consent of 90% of the creditors. - HELD THAT: - The Court held that invocation of Section 12A is contingent upon the requisite concurrence/consent of 90% of the creditors. In the absence of such concurrence/consent the appellant cannot invoke Section 12A. Applying this legal requirement to the facts before it, the Court found no reason to interfere with the impugned judgment which had denied relief in the absence of the required creditor support. The Court expressly refrained from examining or commenting on other issues that may arise for consideration.

Appeal dismissed on the ground that Section 12A could not be invoked without the requisite 90% creditor concurrence.

Final Conclusion: The appeal is dismissed for failure to establish the required 90% creditor concurrence for invocation of Section 12A of the Insolvency and Bankruptcy Code, 2016; other issues were not examined.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - prohibition on institution or continuation of suits or proceedings against the corporate debtor - declaration of moratorium on admission of application under Section 7/9/10 - consequences of failure to receive or approve a resolution plan and liquidation under Section 33

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - prohibition on institution or continuation of suits or proceedings against the corporate debtor - declaration of moratorium on admission of application under Section 9 - Whether the commercial appeal filed during an operative moratorium could be registered and proceeded with - HELD THAT: - The Tribunal admitted a Section 9 application and by its order dated 20.04.2021 declared a moratorium in terms of Section 13 and Section 14 of the IBC. Section 14(1)(a) prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor while the moratorium is in force. The insolvency resolution process did not produce a resolution plan and the consequences envisaged by the proviso to Section 14 and Section 33 had taken effect such that the moratorium remained operative on the date the instant appeal was filed (24.11.2021). In these circumstances the Court held that the appeal could not have been registered or proceeded with while the moratorium was in place, and the parties were required to await the outcome of the proceedings before the NCLT, Chennai in IBA No. 483/2020. The Registry was therefore directed to return the papers with liberty to the appellant to re-present the matter before the appropriate forum in accordance with law. [Paras 6, 7, 8, 9, 10]

Appeal could not be registered during the operative moratorium; papers to be returned with liberty to re-present after compliance with law.

Final Conclusion: The appeal is disposed of by ordering the Registry to return the papers because the moratorium declared on admission of the Section 9 application precluded registration or continuation of the proceedings; liberty granted to the appellant to re-present the matter in accordance with law.

Withdrawal of writ petition - Limited liberty to approach appropriate forum - Doctrine of stare decisis - Precedential effect of Three-Judge Bench decision in Vijay Madanlal Choudhary - Challenge to constitutional validity of provisions of the PMLA - Availability of alternative efficacious remedies

Withdrawal of writ petition - Limited liberty to approach appropriate forum - Petitioners permitted to withdraw writ petitions with limited liberty to initiate proceedings in appropriate fora in respect of a specified part of the relief sought. - HELD THAT: - The petitioners, through learned senior counsel, sought unconditional withdrawal of the writ petitions insofar as the prayers in the respective paragraphs were concerned, but sought leave to approach appropriate courts in respect of the first part of prayer clause (b) (challenge to jurisdiction of the ECIR). The Court permitted unconditional withdrawal of the writ petitions except insofar as the petitioners sought to quash the ECIR; the Court clarified that any future proceeding filed in respect of that limited relief shall be considered by the concerned court on its own merits and in accordance with law. The order of withdrawal was recorded and the petitions were dismissed as withdrawn subject to the limited liberty granted. [Paras 3, 9]

Writ petitions dismissed as withdrawn, while petitioners are granted limited liberty to approach appropriate fora on the specified limited prayer which, if filed, shall be adjudicated on merits.

Doctrine of stare decisis - Precedential effect of Three-Judge Bench decision in Vijay Madanlal Choudhary - Availability of alternative efficacious remedies - Challenge to constitutional validity of provisions of the PMLA - Court refused to permit re agitation in Article 32 petitions of issues already decided by the Three Judge Bench in Vijay Madanlal Choudhary and emphasised that such challenges ordinarily must not bypass alternative remedies. - HELD THAT: - The Court noted a recent trend of filing writ petitions under Article 32 again challenging the constitutional validity of Sections 50, 63 and other provisions of the PMLA despite the Three Judge Bench upholding those provisions. Relying on the principle of stare decisis and the precedential effect of Vijay Madanlal Choudhary, the Court observed that petitioners may not be permitted to reagitate issues already authoritatively decided. The Court reproduced earlier observations emphasising that a Two Member Bench is bound by the Three Member Bench decision and that a review or reference to a larger Bench does not destroy the precedential effect unless and until that larger Bench decides otherwise. The Court expressed disapproval of the practice of bypassing alternative efficacious remedies by approaching this Court repeatedly on settled questions. [Paras 5, 6, 7, 8]

Petitioners shall not be permitted to re litigate issues authoritatively decided by the Three Judge Bench; the Court recorded its expectation that the trend of refiling such Article 32 petitions will cease.

Final Conclusion: The writ petitions are dismissed as withdrawn; limited liberty is granted to the petitioners to institute proceedings in appropriate fora in respect of the specified part of the relief, which, if filed, shall be decided on merits, and the Court emphasises that issues authoritatively decided by the Three Judge Bench in Vijay Madanlal Choudhary should not be re agitated before this Court thereby bypassing alternative remedies.

Coram non judice - constitution of Bench under Section 6 of the PMLA - single-Member Bench jurisdiction - preliminary summary hearing under Section 17(4) of the PMLA - bias and forum convenience - opportunity to file objections to rejoinder - administrative convenience in convening hearings

Coram non judice - constitution of Bench under Section 6 of the PMLA - single-Member Bench jurisdiction - Validity of proceedings before the Adjudicating Authority when the Authority is functioning with only the Chairperson as a single-Member Bench. - HELD THAT: - The Court considered two possible interpretations of Section 6 of the PMLA. While sub section (2) envisages an Adjudicating Authority consisting of a Chairperson and two other Members, sub section (5)(b) empowers the Chairperson to constitute a Bench with one or two Members. Further, sub section (7) contemplates that if at any stage the Chairperson or a Member considers a matter should be heard by a Bench of two Members, the matter may be referred for such constitution. Read together, the provisions permit the Chairperson to constitute and act as a single Member Bench and to refer matters to a larger Bench when a case is sufficiently complex. The Adjudicating Authority's hearing of the application under Section 17 by the Chairperson sitting singly was therefore not vitiated on the ground of coram non judice. [Paras 29, 30, 41, 42, 43]

Proceedings before the Chairperson acting as a single Member Bench are valid; no jurisdictional error of coram non judice has been made out.

Preliminary summary hearing under Section 17(4) of the PMLA - bias and forum convenience - administrative convenience in convening hearings - Whether fixation of the first hearing at premises identified as the ED office and the speed of proceedings established bias or vitiated the adjudication. - HELD THAT: - The Court noted that the application under Section 17(4) is a preliminary/summary stage concerning retention or continuation of freezing seized records or property. The records in dispute were admittedly in the custody of the ED and the CGO Complex houses multiple Central Government offices; the hearing in a government office on the same floor as the ED was therefore attributable to administrative convenience and security concerns. The petitioners participated through counsel and did not promptly object to venue at the relevant time. In the absence of any other substantial indicia of bias, the mere selection of the ED office as venue or the endeavour to expedite the proceeding did not vitiate the hearing. [Paras 35, 36, 37, 38, 47]

No bias or vitiation of proceedings is established by the choice of venue or by the Adjudicating Authority seeking to expedite the preliminary Section 17 hearing.

Opportunity to file objections to rejoinder - preliminary summary hearing under Section 17(4) of the PMLA - Whether the Adjudicating Authority's purported reliance on a rejoinder filed by the ED without granting opportunity to the petitioners amounted to denial of fair hearing. - HELD THAT: - The Chairperson had at one stage indicated the rejoinder would not be relied upon; the petitioners' counsel had communicated acceptance of that position and requested listing for later hearing. Subsequently, the Authority initially noted it would not rely on the rejoinder but then treated it as relevant. The Court held that the petitioners cannot belatedly resile from the position they earlier accepted and that no valid prejudice was shown. Nevertheless, to allay apprehensions and ensure fairness, the Court directed that the Adjudicating Authority shall not rely on the rejoinder unless adequate opportunity is given to the petitioners to file written objections and be heard before any reliance is placed on it. [Paras 16, 39, 40, 48, 49]

No established denial of hearing, but the Authority is directed not to rely on the rejoinder unless the petitioners are afforded adequate opportunity to file objections and be heard.

Preliminary summary hearing under Section 17(4) of the PMLA - dilatory tactics - Appropriateness of entertaining the writ petition at the interlocutory stage and characterisation of petitioners' conduct. - HELD THAT: - The Court observed that Section 17(4) proceedings are summary in nature and stressed the legislative object and urgency underlying the PMLA scheme. Noting repeated adjournments sought by the petitioners and parallel attempts to stall the adjudicatory process by recourse to various remedies, the Court declined to entertain the writ petition at this stage. However, recognizing the petitioners' apprehensions, the Court directed that a further opportunity of hearing be afforded before the Authority closes hearing on the interim applications. [Paras 45, 46, 47, 48, 49]

Writ petition not entertainable at this stage; petitioners appear to have pursued dilatory tactics, but they must be given a further hearing before the Adjudicating Authority passes final orders on interim applications.

Final Conclusion: Writ petition dismissed at this stage. The High Court held that the Chairperson validly acted as a single Member Bench; selection of venue and expedition of the preliminary Section 17 hearing did not establish bias; the Adjudicating Authority shall afford the petitioners an opportunity to file objections and be heard before relying on the ED's rejoinder and thereafter pass appropriate orders on the pending interim applications.

Saving on repeal and continuance of proceedings - jurisdiction of Commissioner to adjudicate post-repeal - continuity of tax liabilities despite repeal - availability of statutory appeal under Section 35B of the Central Excise Act, 1944 - preclusion of writ remedy by existence of alternative statutory remedy

Saving on repeal and continuance of proceedings - jurisdiction of Commissioner to adjudicate post-repeal - continuity of tax liabilities despite repeal - Whether the Commissioner had jurisdiction to pass the adjudication order challenged in the writ petition despite omission of Chapter V of the Finance Act, 1994 by the CGST Act, 2017 - HELD THAT: - The Court held that Section 174(2) of the Central Goods and Services Tax Act, 2017 saves the previous operation of the amended or repealed Acts and preserves rights, liabilities and the machinery for enforcement. In particular Section 174(2)(e) permits investigation, assessment, adjudication and other legal proceedings to be instituted, continued or enforced and the levy or imposition of taxes, penalties and other consequences as if the Acts had not been amended or repealed. Consequently, the omission of Chapter V of the Finance Act, 1994 did not divest the Commissioner of competence to pass the impugned adjudication order nor did it extinguish the Revenue's power to initiate or continue proceedings in respect of liabilities arising under the repealed regime. Reliance on interim orders in other High Courts was held not to affect the determinative position adopted by several High Courts which rejected the appellants' contention. The appellants' submission that proceedings could only be initiated before 01.07.2017 was rejected as contrary to the express saving in Section 174(2)(e). [Paras 2, 5, 6, 7, 11]

The writ petition was not maintainable on the ground that the Commissioner lacked jurisdiction; the Commissioner validly passed the adjudication order notwithstanding the repeal/omission.

Availability of statutory appeal under Section 35B of the Central Excise Act, 1944 - preclusion of writ remedy by existence of alternative statutory remedy - Whether the appellants should be relegated to the statutory remedy of appeal against the adjudication order - HELD THAT: - The Court observed that an appeal lies to the Tribunal under Section 35B of the Central Excise Act, 1944 against orders passed by the Commissioner. Since the impugned order is an appealable order, the appellants must pursue the statutory appellate remedy. The Court declined to adjudicate other contentions of the appellants and granted liberty to raise those contentions before the appellate forum. The time spent in these proceedings before the High Court was ordered to be excluded for the purpose of any application for condonation of delay in preferring the statutory appeal. [Paras 2, 12, 13]

The appeal is dismissed with liberty to the appellants to prefer the statutory appeal under Section 35B; time spent before this Court shall be excluded while considering any condonation application.

Final Conclusion: The Special Appeal is dismissed. The Commissioner had jurisdiction to pass the adjudication order despite the omission of Chapter V of the Finance Act, 1994, by reason of the savings in Section 174(2) of the CGST Act, 2017; the appellants are directed to pursue the statutory appeal under Section 35B of the Central Excise Act, 1944, with time spent before the High Court excluded for condonation purposes.

Liability under Rule 6(3) of Cenvat Credit Rules, 2004 - reversal of Cenvat credit with interest treated as if no credit availed - benefit of exemption notification after reversal of credit - principle in Chandrapur Magnet Wires regarding modvat/cenvat reversal

Liability under Rule 6(3) of Cenvat Credit Rules, 2004 - reversal of Cenvat credit with interest treated as if no credit availed - Demand of 8%/6%/5% of the value of exempted services under Rule 6(3) where Cenvat credit attributable to exempted service has been repaid along with interest. - HELD THAT: - The Tribunal held that where the assessee has admittedly reversed/paid back the entire Cenvat credit availed in relation to exempted services together with interest, the position becomes the same as if no credit had been availed. Applying the principle in Chandrapur Magnet Wires (modvat/cenvat reversal treated as non-availment), the Tribunal noted consistent decisions of Courts and the Tribunal that, after such reversal with interest, a fresh demand under Rule 6(3) for payment of 8%/6%/5% of the value of exempted services is not sustainable. The Revenue's reliance on an earlier High Court decision was found distinguishable in light of subsequent authorities and the admitted complete reversal by the respondent. Having regard to these determinations, the Tribunal concluded that the requirement to pay the percentage under Rule 6(3) could not be sustained on the facts where full reversal with interest had been made.

Demand under Rule 6(3) for payment of 8%/6%/5% of value of exempted services is not sustainable once the Cenvat credit attributable to exempted services has been repaid along with interest.

Final Conclusion: The impugned order upholding the respondent's position is affirmed; the Revenue's appeal is dismissed as the demand under Rule 6(3) cannot be sustained after complete reversal of Cenvat credit with interest.

Exemption under Notification No. 8/2005 ST - production of goods on behalf of the client - job work - semi finished goods - manufacture within the meaning of the Central Excise Act - Business Auxiliary Service

Exemption under Notification No. 8/2005 ST - semi finished goods - production of goods on behalf of the client - Processing of packed or semi finished goods by a job worker falls within the scope of Notification No.8/2005 ST for exemption. - HELD THAT: - The notification exempts production of goods on behalf of the client where such goods are produced using raw materials or semi finished goods supplied by the client. The Explanation to the notification expressly includes working upon raw materials or semi finished goods so as to complete part or whole of production, provided such production does not amount to 'manufacture' under the Central Excise Act. Therefore, the requirement is not limited to raw materials alone; packed or semi finished goods supplied to the job worker for processing fall within the class of goods eligible for the exemption. The Tribunal so holds on the facts that packed goods supplied for sterilization are semi finished and hence satisfy the notification's material requirement. [Paras 4]

Benefit of Notification No.8/2005 ST is available where the job worker processes semi finished/packed goods supplied by the client.

Production of goods on behalf of the client - manufacture within the meaning of the Central Excise Act - job work - Exemption under Notification No.8/2005 ST is not excluded merely because no further manufacturing by the client is required after the job worker's process, provided the process completes part or whole of production and does not amount to manufacture. - HELD THAT: - The Explanation defines 'production of goods' to include working upon raw or semi finished goods to complete part or whole of production, subject to the condition that such production does not amount to 'manufacture'. Consequently, if the job worker's processing completes the product (partly or wholly) and no further manufacture by the client is necessary, the condition that goods be 'returned back to the said client for use in or in relation to manufacture of any other goods' does not operate to deny the exemption. The Tribunal rejects the Revenue's contention that the notification mandates further use in manufacture by the client in all cases. [Paras 5]

The exemption is available even where the processed goods need not be further used in the client's manufacture, so long as the processing completes part or whole production and does not amount to manufacture.

Business Auxiliary Service - exemption under Notification No. 8/2005 ST - A Board clarification addressing taxability of production/processing does not negate or override the specific eligibility conditions of Notification No.8/2005 ST; reliance on that clarification cannot be used to deny the exemption in this case. - HELD THAT: - The Board letter quoted deals with the question of taxability of the taxable entry (production or processing) under Business Auxiliary Service. It does not interpret or alter the specific conditions of Notification No.8/2005 ST that determine exemption eligibility. Therefore, the clarification cannot be invoked to deny the benefit of the notification where the statutory conditions (use of raw materials or semi finished goods supplied by the client and non manufacture) are satisfied. The Tribunal accordingly holds the Board clarification is not of assistance to the Revenue for denying exemption on the facts of this case. [Paras 6]

The Board clarification on taxability does not affect entitlement to Notification No.8/2005 ST where the notification's conditions are met.

Final Conclusion: The Tribunal allowed the appeal, set aside the demand and held that sterilization of packed/semi finished goods supplied by the client qualifies for exemption under Notification No.8/2005 ST; further use in the client's manufacturing is not a prerequisite where the processing completes part or whole of production and the Board clarification relied upon by Revenue does not avail to deny the exemption.

Refund of service tax under Notification No.41/2007-ST - availment of CENVAT credit - verification of objections recorded in appellate order - opportunity to be heard before adjudication - remand for fresh verification

Refund of service tax under Notification No.41/2007-ST - availment of CENVAT credit - verification of objections recorded in appellate order - opportunity to be heard before adjudication - remand for fresh verification - Remand to the adjudicating authority to verify the objections recorded in para 3 of the impugned order, including whether the assessee availed CENVAT credit while claiming refund, after affording the assessee a reasonable opportunity to be heard. - HELD THAT: - The Tribunal found that although the original adjudicating authority had scrutinised the refund claims, it did not record a specific finding on the material objection noted by the Commissioner(Appeals) in para 3 of the impugned order, particularly whether the assessee had availed CENVAT credit in relation to the refunded service tax. In absence of that specific determination, the Tribunal held that the matter requires verification by the adjudicating authority. Consequently the impugned order was set aside and the matter remitted for fresh verification of the stated objections; the adjudicating authority is to afford the appellant a reasonable opportunity to respond before passing a fresh decision. [Paras 5]

Appeals allowed by way of remand to the adjudicating authority to verify the objections in para 3 of the impugned order, including the question of CENVAT credit, after giving the appellant a reasonable opportunity of hearing.

Final Conclusion: The appeals are allowed by way of remand; the adjudicating authority is directed to verify the objections noted in para 3 of the impugned order (including whether CENVAT credit was availed) and pass fresh orders after affording the appellant a reasonable opportunity to be heard.

Sabka Vishwas (Legacy Dispute Resolution) Scheme settlement - maintainability of appeal after partial withdrawal - jurisdiction to hear appeals under the Customs Act - transfer of appeal to the High Court - restoration/remittance of a transferred case

Sabka Vishwas (Legacy Dispute Resolution) Scheme settlement - maintainability of appeal after partial withdrawal - Application by the appellant to withdraw only the excise component of the appeal under the SVLDR Scheme was allowed; liberty reserved to the respondent to raise maintainability of the surviving customs component. - HELD THAT: - The Court permitted the appellant to withdraw its Civil Appeal insofar as it related to the excise component pursuant to the appellant's election under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Court rejected the submission that the Union could preclude withdrawal on the ground that the remaining customs component might become unmaintainable, holding that such objection could be taken when the surviving customs appeal is heard. Consequently, the appeal was treated as withdrawn only in respect of the excise dispute while preserving the respondent's right to contest maintainability of the remaining part. [Paras 4, 5]

Withdrawal of the excise component allowed; liberty to the respondent to question maintainability of the surviving customs component.

Jurisdiction to hear appeals under the Customs Act - transfer of appeal to the High Court - Civil Appeal filed by the assessee against the CESTAT's customs-related findings did not fall within the scope of Section 130E(b) of the Customs Act and was ordered to be transferred to the High Court of Judicature at Bombay. - HELD THAT: - The Court examined the scope of appellate jurisdiction under Section 130E(b) of the Customs Act and concluded that the assessee's appeal in relation to the customs component did not fall within that provision's ambit before this Court. In view of the limited jurisdiction under Section 130E(b) and the nature of the surviving customs dispute, the proper course was to transfer Civil Appeal No. 2869 of 2007 to the High Court of Judicature at Bombay for disposal. [Paras 6, 8]

Civil Appeal No. 2869 of 2007 transferred to the High Court of Judicature at Bombay.

Restoration/remittance of a transferred case - transfer of appeal to the High Court - Transferred Case (Department's appeal before the High Court) was restored to the file of the High Court of Judicature at Bombay for disposal. - HELD THAT: - The Department's appeal, which had been moved to this Court as a Transferred Case in view of the pendency of the assessee's appeal, was remitted because the assessee's Civil Appeal is being transferred back to the High Court. The Court directed that the Transferred Case (Tax Appeal No. 4 of 2006) be restored to the High Court of Judicature at Bombay to enable consolidated disposal. [Paras 7, 8]

The Transferred Case (Tax Appeal No. 4 of 2006) is restored to the High Court of Judicature at Bombay.

Transfer of appeal to the High Court - Direction to the High Court to dispose of the transferred and restored appeals expeditiously, preferably within six months. - HELD THAT: - Having regard to the vintage of the proceedings (appeals originating in 2006 and 2007), the Supreme Court requested the High Court to give priority to the adjudication of the transferred and restored matters and directed that they be disposed of expeditiously and preferably within six months from production of a certified copy of this order before the High Court. Administrative steps were directed to be taken by the Registrar (Judicial) of the High Court after obtaining directions from the Chief Justice of that Court. [Paras 9, 10]

High Court requested to dispose of the matters expeditiously and preferably within six months; administrative steps to be taken by the High Court Registrar.

Final Conclusion: The Supreme Court allowed the appellant's withdrawal of the excise component under the SVLDR Scheme while preserving the respondent's right to challenge maintainability, ordered transfer of the surviving customs appeal to the High Court of Judicature at Bombay, restored the Department's transferred appeal to that High Court, and requested expeditious disposal of both matters.

Definition of 'motor spirit' in supplementary note (a) to Chapter 27 - admixture with any other substance (exclusion of hydrocarbon oils) - classification of petroleum products under Chapter 27 of the CETA - internal application of chapter notes in tariff interpretation - appellate interference with CESTAT findings

Definition of 'motor spirit' in supplementary note (a) to Chapter 27 - admixture with any other substance (exclusion of hydrocarbon oils) - classification of petroleum products under Chapter 27 of the CETA - Whether the respondent's mixed fuel oil (MFO) was properly classifiable as 'motor spirit' under the Chapter 27 tariff entries or as 'other' under the competing tariff entry. - HELD THAT: - The court extracted the three cumulative requirements of the supplementary note (a): (a) the product must be a hydrocarbon oil excluding crude mineral oil; (b) it must have flash point below 25 C; and (c) it must be suitable, by itself or in admixture with any other substance, for use as fuel in spark ignition engines. The word 'other' in the phrase 'in admixture with any other substance' is significant and excludes admixture with hydrocarbon oils. The Chemical Examiner's report in the present case showed that the sample was mixed with motor gasoline (a hydrocarbon oil). Consequently the requisite condition - suitability shown by admixture with a substance other than hydrocarbon oil - was not satisfied. Applying the chapter notes as an internal guide to tariff entries in Chapter 27, the court agreed with CESTAT's conclusion that the product did not meet the definition of 'motor spirit' for classification under the contested motor-spirit sub-heading, and that the Revenue had not produced material to substantiate classification under that entry. [Paras 10, 11, 12, 14]

The product was not classifiable as 'motor spirit' under the contested Chapter 27 entry because the sample was admixed with motor gasoline (a hydrocarbon oil), and thus the CESTAT's classification in favour of the respondent was upheld.

Appellate interference with CESTAT findings - Whether this Court should interfere with CESTAT's findings on classification. - HELD THAT: - The court noted that CESTAT, as the final judicial authority under the relevant regime, had examined the Chemical Examiner's report and recorded findings on admixture and suitability. Absent material demonstrating perversity or reasoning completely contrary to the facts, this Court would not re-determine factual findings or disturb the appellate tribunal's conclusion. Applying that principle to the present record, there was no basis shown to displace CESTAT's decision. [Paras 6, 12, 15]

No interference with CESTAT's factual and legal conclusions was warranted; the Revenue's appeals were dismissed.

Final Conclusion: The appeals are dismissed. The Court upheld CESTAT's finding that the MFO did not satisfy the supplementary note (a) definition of 'motor spirit' because the sample was admixed with motor gasoline (a hydrocarbon oil), and there was no basis to disturb the appellate tribunal's decision.

Summary order. Special leave petition under Article 136 dismissed; in a related matter the appeal was dismissed for delay and on merits. Delay condoned in Diary No. 25009 of 2022; all pending applications disposed of.

Remission of duty under Rule 21 - recovery of duty under Section 11A - time of payment of duty at removal - deeming fiction as to molasses - absence of presumption of clandestine removal - burden of alleging and proving removal without payment - application of precedent in Balrampur Chini Mills Ltd.

Recovery of duty under Section 11A - absence of presumption of clandestine removal - burden of alleging and proving removal without payment - Whether duty could be recovered under Section 11A in the absence of any allegation or finding that molasses were clandestinely removed without payment of duty. - HELD THAT: - The Court held that Section 11A empowers recovery where duty has not been levied or paid but such recovery presupposes an allegation and proof that excisable goods were removed without payment. In the present record no show cause notice contained any allegation of clandestine removal nor did any impugned order record such a finding. There is no statutory presumption that goods not found on premises have been clandestinely removed; the burden to allege and establish removal in contravention of Rule 8(4) rests on the department. Consequently, demands founded on Section 11A cannot be sustained where there is neither allegation nor proof of removal without payment. [Paras 19, 21]

Duty could not be recovered under Section 11A in these cases in the absence of any allegation or establishment of clandestine removal; the impugned demands on that basis were set aside.

Remission of duty under Rule 21 - time of payment of duty at removal - deeming fiction as to molasses - application of precedent in Balrampur Chini Mills Ltd. - Whether the rejection of remission applications under Rule 21 was sustainable where the authorities relied on dip measurements over a short span and treated such measurements as conclusive despite the petitioners' reliance on longer period measurements and established circulars permitting remission up to certain limits. - HELD THAT: - The Court observed that remission under Rule 21 is available where loss is shown to be by natural causes and that duty on molasses is payable at the time of removal (Rule 8), with a statutory deeming fiction applicable to molasses. The authorities rejected remission principally because measurement records showed a large loss occurring within a short period; the Court found this approach erroneous because dip measurements taken periodically by State Excise may not accurately reflect total loss until tanks are emptied and because the petitioners' claim related to loss over the larger assessment period. Moreover, the impugned rejection was contrary to this Court's decision in Balrampur Chini Mills Ltd., which requires a plain interpretation permitting remission where loss is within prescribed limits and no evidence of clandestine removal is shown. Accordingly, the orders rejecting remission were held to be unsustainable. [Paras 5, 20, 22]

The rejection of remission applications was contrary to law and to the precedent in Balrampur Chini Mills Ltd.; the impugned orders rejecting remission were set aside.

Absence of presumption of clandestine removal - burden of alleging and proving removal without payment - Whether a presumption of clandestine removal arises merely because goods are not found on the premises. - HELD THAT: - The Court rejected the respondents' submission that absence of goods on the premises gives rise to a presumption of clandestine removal. It reiterated that neither the Act nor the Rules provide such a presumption and that the department must specifically allege and prove removal in contravention of Rule 8(4) before invoking recovery or penalties. Thus, mere non availability of goods does not shift the onus onto the manufacturer or operate as a substitute for positive allegations and evidence. [Paras 21]

No presumption of clandestine removal arises from goods not being found on premises; the burden to allege and prove such removal lies on the department.

Final Conclusion: The writ petitions were allowed: the impugned orders rejecting remission applications and demanding duty were set aside because they contained no allegation or finding of clandestine removal and were contrary to the applicable legal principle and the Court's precedent in Balrampur Chini Mills Ltd.; no order as to costs.

Principles of natural justice - Remand for verification of documentary evidence - Opportunity of personal hearing in ex parte orders - Verification of prior discharge under SVLDR scheme to avoid double demand

Principles of natural justice - Opportunity of personal hearing in ex parte orders - Whether the Appeals must be remanded because the Appellant was not given an effective personal hearing before ex parte orders were passed. - HELD THAT: - The Tribunal found on the record that the Appellant's factory was closed during the period of labour unrest and, as a result, the Appellant could not receive or avail personal hearing communications. Both lower authorities had passed ex parte orders. The Appellant has annexed documentary material and contended that these documents and oral submissions were not considered by the Adjudicating or Lower Appellate Authority. In these circumstances the Tribunal concluded that the Principles of natural justice require that the Appellant be given an opportunity to make oral and written submissions and to produce documentary evidence before a final order is passed. Both parties accepted that remand was appropriate.

Appeals remanded to the Adjudicating Authority with directions to afford the Appellant an opportunity of personal hearing and to consider oral and documentary submissions afresh.

Remand for verification of documentary evidence - Verification of prior discharge under SVLDR scheme to avoid double demand - Whether the Adjudicating Authority should verify the Appellant's documentary evidence, including a prior SVLDRS discharge, and examine the contention of potential double demand arising from an earlier shortfall. - HELD THAT: - The Tribunal recorded that the Appellant produced documents evidencing payment of duty for certain clearances and a previously issued SVLDRS-4 discharge certificate in relation to an earlier alleged shortage. The Appellant disputed that the earlier-shortage quantity should now be treated again as clandestine removals, which would give rise to double demand. Given that these documents require verification and factual scrutiny, the Tribunal directed remand so that the Adjudicating Authority may verify the documents, examine whether the earlier liability was in fact discharged under the SVLDR scheme, and decide the matter on merits after following due process.

Matter remanded for verification of documentary evidence (including SVLDRS discharge) and fresh adjudication to ascertain whether any double demand arises.

Final Conclusion: The Appeals are remanded to the Adjudicating Authority for fresh consideration in accordance with the Principles of natural justice; the Adjudicating Authority is directed to afford personal hearing, verify the Appellant's documentary evidence (including prior SVLDRS discharge), address the contention of double demand, and pass a considered order within four months from communication of this order.

Rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - requirement of notice and personal hearing before passing an order - setting aside of an order for failure to comply with principles of natural justice - inadmissibility of imposing payment as a pre-condition for considering a rectification petition - direction to decide rectification petitions within a specified period after hearing

Rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - requirement of notice and personal hearing before passing an order - Whether the document dated 04.05.2023 was a valid order disposing the rectification petition and whether it could be passed without issuing notice and affording personal hearing to the petitioner. - HELD THAT: - The Court held that the document styled as a 'notice' dated 04.05.2023 was in substance an order disposing of the additional rectification petition filed by the petitioner under Section 84 of the Act. As it was an order, the authority was required to issue notice to the petitioner and afford an opportunity of hearing before passing it. The authority failed to issue notice and to hear the petitioner prior to disposing the petition. The officer's acknowledgement of this procedural lapse was recorded during the hearing. For these reasons the impugned document could not stand. [Paras 1, 2]

The document dated 04.05.2023, being an order, was invalid insofar as it was passed without issuing notice and affording personal hearing.

Inadmissibility of imposing payment as a pre-condition for considering a rectification petition - setting aside of an order for failure to comply with principles of natural justice - Whether the officer could require prior discharge of the tax liability as a pre-condition to considering the rectification petition. - HELD THAT: - The impugned notice/order called upon the dealers to discharge specified tax liabilities with interest as a pre-condition to the officer considering the rectification petition concerning liability for sizing contracts. The High Court treated this requirement as part of the impugned order which was set aside for the procedural infirmity noted above. By setting aside the document, the Court removed the pre-condition and directed that the petitions be heard on merits after providing the petitioner an opportunity to be heard. [Paras 3]

The requirement of prior payment as a pre-condition to consider the rectification petition formed part of the impugned order and has been set aside.

Direction to decide rectification petitions within a specified period after hearing - rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - What remedial directions should be given following setting aside of the impugned document. - HELD THAT: - The Court permitted the petitioner to appear for personal hearing before the authority on the fixed date for both the rectification petition dated 16.03.2023 and the additional rectification petition dated 12.04.2023, without awaiting any further notice. The authority was directed to hear the petitioner, consider materials filed in support of the petitions and pass a reasoned order within six weeks from the personal hearing, in accordance with law. The direction remedially restores the petition process and mandates adjudication within the stipulated timeframe. [Paras 4]

The petitioner is permitted personal hearing on the specified date and the authority must decide the rectification petitions within six weeks from that hearing.

Final Conclusion: The Court set aside the impugned document dated 04.05.2023 as it was in substance an order disposing rectification petitions under Section 84 passed without notice or hearing and which improperly imposed prior payment as a pre-condition; the petitioner is granted personal hearing and the authority is directed to decide the rectification petitions within six weeks of that hearing.

Representative writ petition by association - locus standi of association to file representative writ - identical cause of action across multiple assessees - mandamus against statutory assessment procedure - tax deduction at source - applicability under Section 13(1) - statutory exclusion of proprietorships, partnership firms and HUF from TDS liability - binding effect of administrative clarification

Representative writ petition by association - locus standi of association to file representative writ - identical cause of action across multiple assessees - Maintainability of the writ petition filed by the association on behalf of 1087 members. - HELD THAT: - The Court found the petition maintainable because the 1087 members espouse an identical cause of action founded on a common clarification and their legal position is uniform. The association is a registered society and the uniformity of the legal controversy justifies a single representative petition rather than 1087 separate petitions. The Court declined to examine or determine, as questions of fact, the precise legal status of each member (proprietorship, partnership or HUF), leaving such factual determinations to the appropriate authorities when necessary. [Paras 10, 15, 16]

Writ petition held maintainable as a representative petition for the 1087 identically placed members.

Mandamus against statutory assessment procedure - tax deduction at source - applicability under Section 13(1) - statutory exclusion of proprietorships, partnership firms and HUF from TDS liability - Whether the Court should grant an omnibus mandamus forbidding the respondents from assessing or recovering sums under Section 13 of the 2006 Act. - HELD THAT: - The Court held that it would not grant the sweeping mandamus sought. Section 13(1) casts the duty to deduct tax on specified categories of payers (as identified in the explanation), and the absence of that duty on proprietorships, partnership firms and HUFs is a statutory exclusion. Assessment and recovery must be carried out in accordance with the statute and the appropriate authorities; individual assessees who receive notices must respond and establish their status before the assessing authority. The Court therefore refused to issue a blanket direction preventing assessments under Section 13. [Paras 17, 18, 19]

Prayer for an omnibus mandamus was denied; assessments must proceed under the statute and individual members must establish their status before authorities.

Binding effect of administrative clarification - tax deduction at source - applicability under Section 13(1) - Whether the departmental clarification issued by the Principal Commissioner is binding on the respondents or determinative of the legal position under Section 13(1). - HELD THAT: - The Court observed that while there may be no express statutory power enabling issuance of such a clarification, the question did not require resolution because the clarification merely restated the statutory provisions. Section 13(1) and its explanation are self explanatory as to who bears the responsibility of deduction. Accordingly, the absence of statutory sanction for the clarification did not alter the legal position as derived from the statute itself. [Paras 20, 21]

Clarification not treated as determinative; the statutory text of Section 13(1) governs the position.

Identical cause of action across multiple assessees - statutory exclusion of proprietorships, partnership firms and HUF from TDS liability - Relief and directions as to procedural steps for members who have received notices. - HELD THAT: - The Court disposed of the petition by permitting those members who received notices to file replies before the assessing authority establishing that they are proprietorship concerns, partnership firms or HUFs. If members establish their status falling within the statutory exclusion in the explanation to Section 13(1), they would be protected from deduction obligations. Members are also free to raise other tenable objections, including limitation, before the authority. [Paras 22]

Assessees in receipt of notices may reply and establish their status; if established, they will be protected by the statutory exclusion; other objections may also be advanced before the authority.

Final Conclusion: The writ petition was held maintainable as a representative action for the 1087 identically placed members; however, the Court refused to grant a blanket mandamus prohibiting assessments under Section 13(1), observed that the departmental clarification merely repeats the statutory position, and directed members who received notices to reply and establish their status before the assessing authority, leaving other objections open for consideration.

Judicial review of administrative fact-finding - remand for fresh inquiry - interference with regulatory fact-finding - lack of evidence to justify further investigation - bribery allegations in procurement of brokerage

Remand for fresh inquiry - interference with regulatory fact-finding - lack of evidence to justify further investigation - Validity of the Tribunal's order setting aside IRDA's decision and directing a fresh inquiry into allegations of bribery in procurement of brokerage - HELD THAT: - The Tribunal's remand order was examined against the materials placed before the Court. The Court found that the IRDA, as the fact-finding authority, had concluded there was no proof brought by the complainant to substantiate the allegations. The documents and emails relied upon by the complainant did not, on the material before the Court, amount to cogent evidence of bribery or illegal gratification by the appellant to obtain the brokerage contract. The Tribunal had wrongly observed that documentary evidence supported the complaint; the Supreme Court did not find any such decisive document in the record. Given the IRDA's finding of lack of evidence and the absence of material sufficient to trigger a detailed investigation, the Court held that there was no useful purpose in subjecting the appellant and its contract to another round of inquiry. Accordingly, interference with the regulator's fact-finding was unwarranted. [Paras 10, 11, 12]

The Tribunal's order directing a fresh inquiry is set aside and the IRDA order dated 9th January 2018, recording lack of evidence, is sustained; the appeals are allowed.

Final Conclusion: The Supreme Court set aside the Securities Appellate Tribunal's remand and upheld the IRDA's finding of no proof to substantiate the bribery allegations, thereby dismissing the need for a fresh inquiry and allowing the appeals.

Entitlement to bail of long term undertrials - application of Supreme Court Legal Aid Committee directions for release of undertrials - minimum sentence threshold for enhanced bail protection under NDPS - admissibility of disclosure under Section 67 of the NDPS Act - embargo on bail under Section 37 of the NDPS Act and its exception

Admissibility of disclosure under Section 67 of the NDPS Act - The disclosure statement of the applicant recorded under Section 67 of the NDPS Act is not admissible in evidence. - HELD THAT: - The Court examined the legal status of the applicant's disclosure made under Section 67 and applied the binding precedents dealing with admissibility of such statements. Having considered the authorities cited and the findings recorded, the Court concluded that the disclosure statement relied upon by the prosecution cannot be admitted in evidence against the applicant. This finding was treated as a determinative conclusion on the evidentiary question of admissibility of the Section 67 statement. [Paras 15]

The disclosure made by the applicant under Section 67 of the NDPS Act is held inadmissible.

Entitlement to bail of long term undertrials - application of Supreme Court Legal Aid Committee directions for release of undertrials - minimum sentence threshold for enhanced bail protection under NDPS - embargo on bail under Section 37 of the NDPS Act and its exception - Whether the applicant, having been in custody for more than five years for offences under the NDPS Act punishable with minimum ten years' imprisonment, is entitled to be released on bail under the Supreme Court's directions. - HELD THAT: - The Court noted the date of arrest and that the applicant has been detained for more than seven years. It identified that the offences charged attract a minimum sentence of ten years and minimum fine of Rs. 1 lakh, thereby bringing the case within the class addressed by the Supreme Court in the Supreme Court Legal Aid Committee judgment. Applying the directions reproduced from that precedent, and having regard to coordinate decisions of this Court following the same principle, the Court held that the applicant satisfies the temporal and categorical thresholds for release on bail under those directions. Although the prosecution relied upon the embargo under Section 37 of the NDPS Act and various authorities emphasizing its stringent approach to bail, the Court applied the special release regime for long term undertrials as set out in the Supreme Court order and conditioned the grant of bail on the terms specified therein and additional supervisory conditions directed by the Court. [Paras 13, 14, 17, 18, 19]

The applicant is entitled to be released on bail subject to the terms and conditions and directions laid down in the Supreme Court Legal Aid Committee judgment and the additional conditions directed by this Court.

Final Conclusion: Bail application allowed: the applicant - having been in custody for more than five years for offences attracting minimum ten years' imprisonment under the NDPS Act - is released on bail on furnishing the bail bond and sureties and upon compliance with the conditions and supervisory directions specified by the Court; nothing herein affects the merits of the pending trial.