TaxTMI Updates e-Newsletter
Jun 26,2023

Quashing of show-cause notice for vagueness - non-speaking order of cancellation of registration - failure to furnish particulars and supporting documents with notice - right to opportunity of hearing before cancellation of registration - restoration of registration pending fresh proceedings - liberty to initiate fresh proceedings with particularised notice

Quashing of show-cause notice for vagueness - failure to furnish particulars and supporting documents with notice - Validity of the Show-cause notice dated 24.11.2021 proposing cancellation of GST registration - HELD THAT: - The Court found that the show-cause notice merely stated that registration was allegedly obtained by "fraud, willful misstatement or suppression of facts" without providing particulars or supplying supporting documents. Following the reasoning in earlier decisions of this Court, a notice devoid of specific details and material particulars does not enable a taxpayer to meaningfully reply and is therefore unsustainable. The respondents did not dispute absence of documents or that the notice was cryptic. For these reasons the show-cause notice cannot be sustained and is liable to be quashed. [Paras 9, 10, 11, 12]

Show-cause notice dated 24.11.2021 is quashed and set aside.

Non-speaking order of cancellation of registration - right to opportunity of hearing before cancellation of registration - Validity of the impugned cancellation order dated 13.12.2021 - HELD THAT: - The cancellation order was passed without assigning reasons and in absence of a speaking order; the authority accepted that necessary documents were not supplied and that the notice was cryptic. Where the foundational show-cause notice is unsustainable and the final order lacks reasons, the cancellation cannot stand. The Court observed that cancellation resulting from such a defective notice and a non-speaking order must be set aside. [Paras 11, 12]

Order dated 13.12.2021 cancelling registration is quashed and set aside.

Restoration of registration pending fresh proceedings - Interim consequence of quashing the notice and cancellation order-whether registration should be restored - HELD THAT: - Having quashed the show-cause notice and the cancellation order, the Court directed immediate restoration of the petitioners' registration. The Court clarified that it has not examined the merits of the underlying controversy and that restoration is ordered subject to respondent authorities being free to proceed afresh in accordance with law. [Paras 12, 13]

Registration of the petitioners is directed to be restored forthwith.

Liberty to initiate fresh proceedings with particularised notice - Whether respondent authorities may issue fresh show-cause notice and proceed further - HELD THAT: - The Court granted liberty to the respondent authorities to issue a fresh notice incorporating particulars and details, provide a reasonable opportunity of hearing to the petitioners, and thereafter pass an appropriate order in accordance with law. The Court expressly left the merits unexamined and permitted fresh proceedings limited to compliance with principles of fair procedure and adequate particularisation. [Paras 13]

Liberty granted to respondents to proceed afresh with a particularised notice and reasonable opportunity of hearing.

Final Conclusion: Writ petition allowed; the impugned show-cause notice dated 24.11.2021 and cancellation order dated 13.12.2021 are quashed and set aside, registration is restored forthwith, and respondent authorities are at liberty to initiate fresh proceedings by issuing a particularised notice and affording a reasonable hearing in accordance with law.

Confiscation under the Karnataka Goods and Services Tax regime - connivance and knowledge in misuse of a registered vehicle - liberty to file affidavit for rebuttal of alleged connivance - adjudication required before release of detained/ confiscated vehicle - consideration of affidavit and passage of fresh orders within a fixed timeframe

Confiscation under the Karnataka Goods and Services Tax regime - connivance and knowledge in misuse of a registered vehicle - liberty to file affidavit for rebuttal of alleged connivance - adjudication required before release of detained/ confiscated vehicle - Petitioner granted liberty to file an affidavit before the adjudicating authority to rebut alleged connivance or knowledge and the authority directed to consider the affidavit and pass orders accordingly within specified time. - HELD THAT: - The court observed that the fifth respondent's power to consider release of the vehicle is contingent upon an adjudication on whether the registered owner had connivance in, or knowledge of, the misuse of the vehicle. In the circumstances, the court allowed the petitioner-who is the registered owner and has handed over the vehicle to a transporter-to place on record an appropriate affidavit setting out facts that would negate any connivance or knowledge. The court called upon the fifth respondent to consider that affidavit and pass suitable orders in accordance with law. The order prescribes a timeline for filing the affidavit and for the authority to decide, thereby directing fresh consideration rather than deciding the merits itself.

Liberty granted to the petitioner to file an affidavit on or before January 30, 2023; the fifth respondent to consider the same and pass appropriate orders in accordance with law within ten days thereafter.

Final Conclusion: Writ petition disposed of by granting the petitioner liberty to file an affidavit to rebut alleged connivance/knowledge and directing the adjudicating authority to consider that affidavit and pass fresh orders within the time prescribed.

Advance ruling - maintainability of application for advance ruling - burden of production of documents - personal hearing - hypothetical questions - pari materia

Advance ruling - maintainability of application for advance ruling - burden of production of documents - personal hearing - hypothetical questions - Application for advance ruling under Section 97/98 of CGST Act and APGST Act is not maintainable in the absence of supporting documents and non-participation in personal hearing. - HELD THAT: - The Authority examined the applicant's request for a ruling on the rate and treatment of GST for rail transportation services and related queries, but the applicant failed to furnish any supporting documents (such as invoices, agreements, delivery challans, e-waybills) and did not attend the personal hearing despite being given opportunity. The Authority treated the questions as hypothetical in the absence of documentary evidence and active participation, and observed that a ruling cannot be pronounced on assumptions. It noted that the provisions of CGST and APGST are pari materia and that a proper ruling requires factual material. Consequently, the application was held not maintainable and the Authority declined to pronounce the substantive ruling, indicating that the questions may be considered if a fresh application is filed with proper documents.

Application for advance ruling is not maintainable for want of requisite documents and non-appearance; substantive questions left unanswered.

Final Conclusion: The Advance Ruling Authority dismissed the application as not maintainable because the applicant failed to produce requisite documents and did not participate in the personal hearing; no substantive ruling on the GST rate, provider-specificity of the 5% rate, reimbursement without invoicing, or separate invoicing for service charges was given.

Input tax credit - Transaction value - Post-supply discount - Section 15(3)(b) - discounts given after supply and conditions for exclusion from transaction value - Section 16(2) proviso - reversal of ITC where recipient fails to pay value of supply within 180 days - Misuse of financial/ commercial credit notes and penalty under section 132(b)

Input tax credit - Transaction value - Post-supply discount - Section 15(3)(b) - discounts given after supply and conditions for exclusion from transaction value - Applicant entitled to take full credit of GST charged in supplier's tax invoice notwithstanding subsequent issuance of commercial/financial credit notes by the supplier. - HELD THAT: - The Authority examined the language of Section 15(3)(b) and found that discounts given after supply are excluded from the transaction value only where (i) the discount is established by an agreement entered into at or before the time of supply and is specifically linked to the relevant invoices, and (ii) the input tax credit attributable to the discount has been reversed by the recipient. On the facts, the supplier issued post supply financial/ commercial credit notes without GST for accounting purposes and there was no prior agreement or invoice specific linkage satisfying Section 15(3)(b). The supplier also did not reduce its outward tax liability. In the absence of the statutory conditions for excluding the discount from transaction value, the GST charged in the invoice stood and the recipient was correctly entitled to take full ITC. The Authority cautioned that financial credit notes must not be used to transfer ITC fraudulently, which would attract penalty under section 132(b). [Paras 7]

Affirmative - the applicant is entitled to take full credit of GST charged in the supplier's tax invoice.

Input tax credit - Section 16(2) proviso - reversal of ITC where recipient fails to pay value of supply within 180 days - Post-supply discount - Applicant is not required to reverse ITC proportionately on account of financial/ commercial credit notes issued by the supplier, subject to payment adjustments. - HELD THAT: - The Authority applied the proviso to Section 16(2) which mandates reversal of ITC only where the recipient fails to pay the amount towards the value of supply along with tax within the prescribed period. Here, the post supply discounts were not reflected as reductions in the supplier's outward liability and there was no failure by the recipient to pay the value of supply as reduced. Consequently, there was no statutory basis to require proportionate reversal of ITC. The Authority further relied on clarifications (as reflected in Circular No. 92/11/2019 GST and prior circulars) that secondary/post supply discounts which are not known at the time of supply do not satisfy Section 15(3)(b) and do not affect ITC availability unless the statutory conditions are met. The ruling qualified that if the recipient pays the reduced value (after adjusting the post sale discount) plus the original tax charged by the supplier, no reversal is required. [Paras 7]

Negative - the applicant is not required to reverse ITC proportionately to the extent of financial/ commercial credit notes, provided the reduced value is paid as adjusted and the supplier's tax treatment remains unchanged.

Final Conclusion: The Authority ruled that the applicant may retain full input tax credit taken on supplier invoices despite subsequent post supply financial/ commercial credit notes, and need not reverse ITC proportionately so long as the statutory conditions for exclusion under Section 15(3)(b) are not satisfied and the reduced value is appropriately paid; misuse of credit through artificial invoicing and credit notes would attract penalties.

GST levy on 'pre-packaged and labelled' commodities - definition of 'pre-packaged commodity' under the Legal Metrology Act, 2009 - applicability of Notification No. 06/2022 - GST on pre-packaged and labelled goods w.e.f. 18-07-2022 - Ministry of Finance clarification on 25 kg threshold and Legal Metrology compliance - applicability of GST to supplies on 'bill to ship to' basis and exports

GST levy on 'pre-packaged and labelled' commodities - definition of 'pre-packaged commodity' under the Legal Metrology Act, 2009 - applicability of Notification No. 06/2022 - GST on pre-packaged and labelled goods w.e.f. 18-07-2022 - Ministry of Finance clarification on 25 kg threshold and Legal Metrology compliance - GST is leviable on supply of pre-packaged and labelled rice up to 25 kgs. - HELD THAT: - The Authority examined Notification No. 06/2022 (as amending the earlier rate notification) which makes GST applicable on commodities that are 'pre-packaged and labelled' as defined by clause (1) of Section 2 of the Legal Metrology Act, 2009. The Ministry of Finance clarification dated 18-07-2022 was relied upon to the effect that, for food items such as rice, the definition applies to packages containing quantity up to 25 kg (subject to exclusions under the Legal Metrology Act and rules). The Authority accepted the applicant's factual position that the rice is packed in bags up to 25 kg and that such packaging falls within the Legal Metrology definition; consequently the supply attracts GST pursuant to the notification and its explanation.

GST applies to supply of pre-packaged and labelled rice up to 25 kgs.

Applicability of GST to supplies on 'bill to ship to' basis and exports - GST levy on 'pre-packaged and labelled' commodities - Supply of pre-packaged and labelled rice up to 25 kgs to an exporter on 'bill to ship to' basis (bill to exporter and ship to customs port) is subject to GST. - HELD THAT: - The Authority considered the transactional modality where the applicant supplies pre-packaged and labelled rice to an exporter on a 'bill to ship to' basis with shipment to customs for export. Noting the Notification and the Legal Metrology based definition, the Authority held that the character of the supply as 'pre-packaged and labelled' governs levy of GST irrespective of whether the goods are ultimately exported. The fact that the exporter effects the export does not exclude the supply from GST if the commodity meets the 'pre-packaged and labelled' criterion.

GST is applicable on such supplies to an exporter on 'bill to ship to' basis.

Applicability of GST to supplies on 'bill to ship to' basis and exports - GST levy on 'pre-packaged and labelled' commodities - Supply of pre-packaged and labelled rice up to 25 kgs to the factory/premises of an exporter (who will thereafter export the rice) is subject to GST. - HELD THAT: - Where the applicant packs rice in pre-printed/labelled bags (up to 25 kg) and supplies them to the exporter's factory for subsequent export, the Authority applied the same legal test under Notification No. 06/2022 and the Legal Metrology definition. The Authority observed that the ultimate destination or the fact of intended export does not alter the applicability of GST when the commodity qualifies as 'pre-packaged and labelled'. Therefore such supplies to the exporter's premises are taxable.

GST is applicable on supplies of pre-packaged and labelled rice up to 25 kgs made to the exporter's factory/premises.

Final Conclusion: The Advance Ruling holds that, in light of Notification No. 06/2022 and the Legal Metrology definition (as clarified by the Ministry of Finance), pre-packaged and labelled rice in packages up to 25 kg attracts GST; this applies equally to direct exports, supplies on 'bill to ship to' basis, and supplies to an exporter's premises where the exporter subsequently effects export.

Exemption for pure services under Notification No.12/2017 - Central Tax (Rate) - scope of "pure services" with reference to manpower supply - services provided by way of activity in relation to functions entrusted under Article 243G and Article 243W of the Constitution - eligibility test requiring service recipient to be Central/State/Local authority, Governmental Authority or Government Entity - value of supply under Section 15 of the CGST Act - case by case assessment of exemption based on the nature of the activity performed

Exemption for pure services under Notification No.12/2017 - Central Tax (Rate) - services provided by way of activity in relation to functions entrusted under Article 243G and Article 243W of the Constitution - eligibility test requiring service recipient to be Central/State/Local authority, Governmental Authority or Government Entity - case by case assessment of exemption based on the nature of the activity performed - Whether the manpower supply services rendered by APCOS are exempt from GST under Sr. 3 (and Sr. 3A) of Notification No.12/2017 as services in relation to functions entrusted to Panchayats (Art. 243G) or Municipalities (Art. 243W). - HELD THAT: - The Authority identified three cumulative conditions for claiming the exemption: (i) the supply must be a "pure service" (i.e., not a works contract or composite supply involving goods); (ii) the recipient must be Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity; and (iii) the service must be provided by way of any activity in relation to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. The Authority held that "pure services" in general terms include manpower supply services, and that many of the recipient entities named by the applicant qualify as State Government bodies. However, the exemption is fact sensitive and available only where the particular manpower service is provided in relation to a function entrusted under Article 243G/243W. The applicant furnished limited work orders and documentary proof; consequently the Authority declined to grant a blanket ruling of exemption for all supplies made by APCOS and limited its conclusion to the principle that only those services which are in relation to functions entrusted under Article 243G or 243W are exempt; supplies not meeting that criterion are taxable.

Only manpower services that are "pure services" supplied to the specified government recipients and which are provided by way of any activity in relation to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W are exempt under the notification; other supplies are taxable at 18% GST.

Value of supply under Section 15 of the CGST Act - inclusion in transaction value of amounts charged by supplier (remuneration, statutory contributions, welfare fund etc.) - What is the value of the supply of services rendered by APCOS for the purposes of GST valuation under Section 15 of the CGST Act? - HELD THAT: - Section 15 establishes transaction value as the price actually paid or payable where parties are unrelated and the price is sole consideration, and further specifies inclusions such as amounts the supplier is liable to pay, incidental expenses and amounts charged for anything done by the supplier in respect of the supply. The Authority examined the invoices submitted by APCOS which include remuneration, EPF, ESI and welfare fund. It found that the documentary evidence (including invoices and placement intimations) did not support the applicant's contention that only the welfare fund constituted consideration. Applying Section 15, the Authority concluded that the total amount collected and shown in the invoice constitutes the transaction value; therefore the full invoiced amount (remuneration plus statutory contributions and welfare fund as reflected in the invoice) is includible in the value of supply for levy of GST.

The value of supply is the total amount collected as shown in the invoice; GST is leviable on the entire invoiced amount.

Final Conclusion: Advance ruling: (i) Exemption under Notification No.12/2017 (and its amendment) applies only to pure services supplied to the specified government recipients when those services are provided in relation to functions entrusted to Panchayats (Art. 243G) or Municipalities (Art. 243W); other supplies remain taxable at 18%; (ii) valuation under Section 15 of the CGST Act requires inclusion of the total invoiced amount charged by APCOS, and GST is leviable on that entire amount.

Anticipatory bail - territorial jurisdiction of the court to entertain pre-arrest applications - pre-arrest bail under Section 438 CrPC - inquiry into fraudulent claim of input tax credit - Rule 96 of the CGST Rules - refund mechanism and withholding - departmental power to initiate inquiry and proceedings under Section 74 and Section 132(1)(e) of the CGST Act - obligation to cooperate with investigation as condition for protection from arrest

Anticipatory bail - territorial jurisdiction of the court to entertain pre-arrest applications - pre-arrest bail under Section 438 CrPC - Whether the District/ Sessions Court at Delhi has jurisdiction to entertain an application for pre-arrest bail filed by a resident of its territorial jurisdiction though the departmental proceedings are pending before a Commissionerate at Bhopal. - HELD THAT: - The court examined precedent including Capt. Satish Kumar Sharma and previous orders of this court and accepted the legal proposition that an application under Section 438 CrPC may be filed in the local court of the applicant where he resides and apprehends arrest arising out of accusations said to have been committed elsewhere. The court rejected the department's objection to maintainability based on territorial locus of proceedings in Bhopal, noting absence of any specific bar in Section 438 CrPC or otherwise to entertain such an application in the forum of the applicant's residence. Applying that principle to the facts, the court held it had jurisdiction to entertain the present application filed in Delhi by an accused who resides there and apprehends arrest in relation to CGST Bhopal proceedings.

The court has territorial jurisdiction to entertain the accused's pre-arrest bail application in Delhi.

Inquiry into fraudulent claim of input tax credit - Rule 96 of the CGST Rules - refund mechanism and withholding - departmental power to initiate inquiry and proceedings under Section 74 and Section 132(1)(e) of the CGST Act - obligation to cooperate with investigation as condition for protection from arrest - Whether the accused ought to be granted protection from arrest and on what conditions, having regard to the departmental allegations of fraudulent ITC claims and the stage of investigation. - HELD THAT: - The court declined to undertake detailed scrutiny of the departmental material which is the subject of investigation by CGST Bhopal, observing that merits can be examined by courts of local jurisdiction. The court noted submissions that customs had not withheld refunds under Rule 96 and the department's reliance on powers under Section 74 and Section 132(1)(e) to investigate alleged fraudulent input tax credit. Having regard to (i) the department's concession that it was not then contemplating arrest and (ii) the accused's asserted lack of connection with the firm and the fact that the accused's father had been arrested, the court considered it appropriate to grant protection from possible arrest. The protection was expressly made conditional upon the accused joining and cooperating with the investigation by the CGST Bhopal Commissionerate and attending on dates for which he is called. The court also made clear that if separate proceedings by the department are instituted by service of summons at Bhopal, the accused may approach courts in that jurisdiction for relief.

Accused granted protection from arrest subject to his joining and cooperating with the CGST Bhopal investigation and attending on summoned dates.

Final Conclusion: The application for pre-arrest bail was entertained by the Delhi court (territorial jurisdiction sustained) and the accused was granted protection from arrest, on the condition that he join and cooperate with the CGST Bhopal investigation and appear on dates for which he is summoned; the court did not decide merits of the departmental allegations which remain for investigation and appropriate courts of local jurisdiction.

Powers under Section 263 of the Income Tax Act - limitation for exercise of powers under Section 263 - reassessment versus original assessment - subject matter of reassessment - reopening of assessment - limitation to be reckoned from original Assessment Order

HELD THAT: - The Court held that where the Commissioner exercises jurisdiction under Section 263 in respect of issues that were not covered by the re-assessment proceedings, those issues relate back to the original assessment order and the limitation for invoking Section 263 must be computed from the date of that original assessment. The Court relied on the principle that re-opening an assessment and passing a reassessment order sets aside the previous assessment and starts proceedings afresh only in respect of the subject matter re-opened; it does not operate to re-open the entire assessment insofar as distinct and different subject matters are concerned. Consequently, only when the issues before the Commissioner at the time of exercising powers under Section 263 concern the subject matter of the reassessment will the limitation run from the date of the reassessment order; otherwise the relevant date remains the original assessment order. The Court applied this principle to the facts, noting that the Commissioner had invoked Section 263 in relation to matters not dealt with in reassessment, and therefore the proceedings were time-barred.

Proceedings under Section 263 were time-barred because the limitation must be reckoned from the original assessment order for the matters in question.

Final Conclusion: The appeal is dismissed; the High Court and the ITAT correctly held that the Commissioner's exercise of powers under Section 263 was barred by limitation since the issues concerned were not part of the reassessment and limitation therefore runs from the original assessment order.

Nature of expenses - Expenses incurred for replacement of membrane cells-II - revenue or capital expenditure - HELD THAT:- This Court is not inclined to interfere with the impugned judgment and order of the High Court [2015 (2) TMI 118 - GUJARAT HIGH COURT] and [2016 (9) TMI 1655 - GUJARAT HIGH COURT] treating it as revenue expense deleting the addition treating the same as capital expenditure by following the rule of consistency.

Nature of receipt under the subsidy scheme - subsidy in the form of Sales Tax Exemption as 'capital receipt' or 'revenue receipt - HELD THAT:- The special leave petitions are dismissed in the light of orders of this Court in Deputy Commissioner of Income Tax vs. Munjal Auto and Nirma Ltd. [2018 (5) TMI 1738 - SC ORDER]

The order in Munjal Auto relied upon judgment of this Court in Commissioner of Income Tax vs. M/s Chaphalkar Brothers [2017 (12) TMI 816 - SUPREME COURT].

This Court is also satisfied that the terms of the scheme in this case require the recipient of the benefit to set up a new unit or substantially expand the existing unit and utilize substantial portion of the amount retained (at least 50% of the subsidy) for the capital purposes. For these reasons, the impugned judgment does not call for interference. SLP dismissed.

Reopening of assessment u/s 147 - accommodation entries entry transactions - as decided by HC [2022 (11) TMI 1138 - DELHI HIGH COURT] in light of the information which forms the basis of the initiation of the inquiry and in view of the fact that the transactions with Mridul Securities are admitted by the Petitioners, we do not find any case for interfering in the writ proceedings - Petitioners have not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petitions are dismissed.

Pending application(s), if any, shall stand disposed of.

Charitable purpose - proviso to Section 2(15) of the Income Tax Act, 1961 - exemption under Section 10(23C)(iv) of the Income Tax Act, 1961

HELD THAT:- This Court is of the opinion that the order impugned does [2022 (1) TMI 544 - DELHI HIGH COURT] not call for interference. The Special Leave Petition is, accordingly, dismissed.

Entitlement to depreciation where asset transfer occurs before year-end - tribunal as final fact-finding authority on factual disputes - set-off of brought forward losses consequent to a demerger - meaning of 'going concern' for purposes of demerger - HC [2022 (7) TMI 399 - KARNATAKA HIGH COURT] decided issues in favour of assessee - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court.

The special leave petition is dismissed.

Writ under Article 226 - reopening assessment under Section 148 - jurisdictional transfer under Section 127(2) - Section 148A enquiry - acting without jurisdiction - transmission of PAN and relevant records - limitation under amended Section 149

Writ under Article 226 - acting without jurisdiction - reopening assessment under Section 148 - jurisdictional transfer under Section 127(2) - Section 148A enquiry - transmission of PAN and relevant records - Validity of notice dated 01.04.2022 under Section 148 issued by the Assessing Officer whose jurisdiction had been transferred earlier under Section 127(2) and maintainability of writ challenging that notice - HELD THAT: - The Court held that ordinarily writ against a show cause notice is not maintainable, but where the notice is issued without jurisdiction a writ under Article 226 is permissible (paras 16-17). The transfer order under Section 127(2) dated 15.03.2022 took effect immediately from 12.03.2022, and with effect from that date jurisdiction of respondent no.3 to assess the petitioner for the assessment year 2015-16 was extinguished (paras 20-21). Although respondent no.3 had issued a Section 148A(b) notice on 22.03.2022, Section 148A deals only with pre-notice enquiry and does not validate a subsequent Section 148 notice issued by an officer who had already been divested of jurisdiction (paras 23-24). The respondent cannot rely on failure to transfer PAN and records to justify issuing the Section 148 notice; the transfer order itself directed respondent no.3 to get PAN and records transferred and respondent no.3 cannot take advantage of his own failure to obey that directive (para 25). In these circumstances the impugned Section 148 notice dated 01.04.2022 issued by respondent no.3 was issued without jurisdiction and is liable to be quashed. The Court also observed that no prejudice is caused to Revenue because limitation for initiating proceedings in the present case is governed by the amended Section 149 (ten year period for specified cases) (para 26). [Paras 21, 23, 24, 25, 26]

The notice dated 01.04.2022 under Section 148 issued by respondent no.3 is quashed as having been issued without jurisdiction; respondent no.3 is prohibited from taking any action pursuant thereto, with liberty to respondent no.4 to initiate proceedings in accordance with law.

Final Conclusion: Writ petition allowed; impugned notice dated 01.04.2022 under Section 148 quashed for want of jurisdiction the source Assessing Officer having been divested of jurisdiction by an earlier effective transfer under Section 127(2); respondent no.4 may proceed against the petitioner in accordance with law.

Entitlement to refund - defect in return - notice under Section 139(9) of the Income tax Act - change of name and PAN linkage - correction of PAN database/name mismatch - quashing of notice and direction to process return

Defect in return - change of name and PAN linkage - correction of PAN database/name mismatch - notice under Section 139(9) of the Income tax Act - Return filed by the assessee for A.Y. 2018-19 was not defective despite a subsequent change of name; the notice issued under Section 139(9) was not valid. - HELD THAT: - The Court found the petitioner filed its return on 30 November 2018 in the name then existing (Suhani Trading & Investment Consultants P. Ltd.) quoting PAN AALCS4222N. The company's name was changed by incorporation certificate dated 11 December 2018 and a fresh PAN card reflecting the changed name (but the same PAN number) was issued on 7 January 2019. The court held that the PAN database would record the original name and thus the name used in the return was correct as filed at that time. Because the PAN number remained unchanged and the database could have resolved any perceived mismatch, there was no defect in the return. Consequently, the notice dated 23 April 2019 under Section 139(9) - premised on a name mismatch - was not a valid notice; the Assessing Officer ought to have checked the PAN database before issuing the notice. [Paras 3, 5]

Notice dated 23 April 2019 quashed; respondents directed to process the petitioner's returns as if no defect existed.

Final Conclusion: The writ petition is allowed: the notice under Section 139(9) is quashed and the respondents are directed to process the petitioner's return for A.Y. 2018-19 by 31 July 2023 as if no defect existed.

Failure to consider filed documents - missing tribunal record and presumption of filing - quashing and setting aside - remand for fresh consideration - reconsideration on receipt of compilation

Missing tribunal record and presumption of filing - failure to consider filed documents - Acceptance of the petitioner's plea that a second paperbook of 71 pages was filed before the Tribunal despite its absence from the Tribunal's record and the Tribunal's failure to address that paperbook. - HELD THAT: - The High Court noted that the petitioner's averments regarding filing and service of the 71 page paperbook were uncontradicted in the record: the respondents' affidavit did not deny the petitioner's specific assertions. Although the Tribunal's file did not contain the compilation, the Court held that absence of the document from the Tribunal's records did not conclusively establish non-filing. On the basis of the uncontroverted affidavit of the petitioner's director and the evidence of service on the departmental representative, the Court accepted the petitioner's explanation that the second paperbook had been filed and that the Tribunal did not deal with it in its order dismissing the appeal.

The Court accepted that the 71 page paperbook was filed and that the Tribunal did not consider that compilation.

Quashing and setting aside - remand for fresh consideration - reconsideration on receipt of compilation - Whether the impugned ITAT order rejecting the Miscellaneous Application should be quashed and the matter remanded for the Tribunal to consider the compilation afresh. - HELD THAT: - Having found that the petitioner's claim of filing the second paperbook was not controverted and that the Tribunal's order made no reference to that compilation, the High Court concluded that the Tribunal's summary rejection of the Miscellaneous Application without dealing with the asserted compilation required intervention. The Court therefore set aside the impugned order and directed that the petitioner refile the compilation before the Tribunal within a stipulated time; the Tribunal was to treat the refiled compilation as filed and examine whether its earlier order dismissing the appeal needed modification. The Court expressly declined to express any view on the merits of the appeal.

Impugned order quashed and matter remanded to the Tribunal for fresh consideration of the compilation; petitioner directed to file compilation within two weeks and the Tribunal to treat it as filed and reconsider its order.

Final Conclusion: The High Court quashed the ITAT order dated 18/05/2021, accepted the petitioner's uncontroverted assertion that a 71 page paperbook had been filed though not found on the Tribunal record, and remanded the matter to the Tribunal with directions to treat a refiled compilation as filed and to reconsider its earlier order in light of that compilation; no observation was made on the merits.

Amalgamation causes amalgamating entity to cease to exist - notice under Section 148 of the Income-tax Act issued to an extinguished transferor company is void and without jurisdiction - intimation of court approved scheme of amalgamation to tax authorities as compliance - participation in proceedings cannot operate as estoppel against law where entity has ceased to exist

Amalgamation causes amalgamating entity to cease to exist - notice under Section 148 of the Income-tax Act issued to an extinguished transferor company is void and without jurisdiction - participation in proceedings cannot operate as estoppel against law where entity has ceased to exist - Validity of notice dated 27.03.2021 issued under Section 148 to the erstwhile Panchdhara Agro Farms Pvt. Ltd. which had been amalgamated into the petitioner with effect from 01.04.2015. - HELD THAT: - The Court found on record that Panchdhara Agro Farms Pvt. Ltd. was merged into the petitioner with effect from 01.04.2015 by a court approved scheme and that the petitioner had intimated the assessing officer of the amalgamation. Applying the principle affirmed by the Apex Court in Maruti Suzuki and followed by this Court, an amalgamating/transferee/transferor company which has ceased to exist pursuant to an approved scheme cannot be subjected to fresh reassessment by issuing a jurisdictional notice in its name. The Court observed that issuance of a notice under Section 148 in the name of a non existent/amalgamated entity is fundamentally illegal and without jurisdiction, and that mere participation in proceedings by persons connected with the extinct entity cannot create an estoppel contrary to law. The factual position that the department had been intimated of the amalgamation and that the transferor company had ceased to exist, along with the binding precedents relied upon, led the Court to conclude that the impugned notice was invalid and required quashing. The Court noted that quashing the notice would not preclude the revenue from initiating proceedings in accordance with law where appropriate, but the particular notice issued to the extinct entity could not stand. [Paras 7, 8]

Impugned notice dated 27.03.2021 issued under Section 148 to the erstwhile Panchdhara Agro Farms Pvt. Ltd. quashed and set aside.

Intimation of court approved scheme of amalgamation to tax authorities as compliance - Whether the intimation given by the petitioner to the assessing officer regarding the court approved amalgamation sufficed to notify the department of the transferor company's extinction. - HELD THAT: - The Court recorded that the petitioner had communicated the court's order approving the amalgamation to the assessing officer (communication dated 31.03.2016) and held, following this Court's precedents, that there is no prescribed format for such intimation and that the communication in reply to the income tax notice amounted to sufficient intimation. In view of the adequate intimation and the legal principle that an amalgamating company ceases to exist, the subsequent issuance of a Section 148 notice in the name of the extinct transferor was unsustainable. [Paras 7]

The intimation given to the department regarding the court approved amalgamation was sufficient; issuance of the impugned notice despite such intimation rendered the notice liable to be quashed.

Final Conclusion: Petition allowed; the Section 148 notice dated 27.03.2021 issued to the erstwhile Panchdhara Agro Farms Pvt. Ltd. (which had ceased to exist upon court approved amalgamation with effect from 01.04.2015) is quashed and set aside, with liberty to the revenue to act in accordance with law.

Reopening of assessment beyond four years under Section 147 of the Income tax Act - proviso requiring failure to disclose fully and truly all material facts - Change of opinion is not a ground for reopening assessment - Query raised during assessment and assessee's reply constitutes disclosure considered by the Assessing Officer

Reopening of assessment beyond four years under Section 147 of the Income tax Act - proviso requiring failure to disclose fully and truly all material facts - Change of opinion is not a ground for reopening assessment - Query raised during assessment and assessee's reply constitutes disclosure considered by the Assessing Officer - Validity of the notice dated 29th March 2004 reopening assessment for Assessment Year 1998-99. - HELD THAT: - The notice was issued after the expiry of four years from the end of the relevant assessment year and therefore the proviso to Section 147 applies, permitting reopening only if income has escaped assessment by reason of failure to disclose fully and truly all material facts. The reasons to believe recorded by the Assessing Officer acknowledged that the issue was disclosed in the return and that a query had been raised during assessment proceedings to which the assessee had replied. The Assessment Order dated 16th March 2000 demonstrates that the Assessing Officer not only considered but extensively dealt with the deduction claimed under Section 80 O and recorded that supporting vouchers and bills were submitted and verified. The purported contention that bills were not produced is factually incorrect. The subsequent explanatory note of the assessee dated 27th January 2000 relating to an amendment w.e.f. AY 1998 99 merely addresses the amended law and does not constitute non disclosure. Reliance on the principle in Aroni Chemicals Limited v/s. The Dy. Commissioner of Income Tax - II confirms that where a query is raised and the assessee replies, the matter has been a subject of consideration of the Assessing Officer and mere change of the Assessing Officer's view thereafter cannot justify reopening. The record shows the impugned notice stems from a change of opinion and not from any failure of disclosure that would satisfy the proviso to Section 147. [Paras 3, 4, 7, 10, 11]

The reopening notice dated 29th March 2004 (and consequential approval under Section 151 and reassessment proceedings) is quashed as being founded on a mere change of opinion and not on failure to disclose material facts within the meaning of the proviso to Section 147.

Final Conclusion: Rule made absolute; the impugned notice dated 29th March 2004, the alleged approval under Section 151 and the reassessment proceedings in respect of Assessment Year 1998-99 are quashed.

Interest on refund - Section 244 of the Income Tax Act - applicability to refunds due for pre-1 April 1989 assessments - Section 244A of the Income Tax Act - post-1 April 1989 regime - Interest on interest - Refund of penalty and interest recovered under Section 220(2) forming part of refund under Section 240 - Section 244(1A) - interest on amounts found in excess including amounts paid as interest

Section 244 of the Income Tax Act - applicability to refunds due for pre-1 April 1989 assessments - Section 244A of the Income Tax Act - post-1 April 1989 regime - Section 244 of the Act applies to the petitioner's refund claim for A. Y. 1984-85 and not Section 244A. - HELD THAT: - The Court proceeded on the basis conceded by Revenue that, on the facts of this case, Section 244 applies. The petition concerns refunds arising out of assessment for A. Y. 1984-85 (a pre-1 April 1989 assessment), and therefore the post-1 April 1989 regime under Section 244A is not applicable to the petitioner's claim. The Court accordingly treated the matter under the provisions and principles of Section 244. [Paras 21]

Section 244 applies to the petitioner's refund claim for A. Y. 1984-85.

Interest on refund - Section 244(1A) - interest on amounts found in excess including amounts paid as interest - Refund of penalty and interest recovered under Section 220(2) forming part of refund under Section 240 - Interest on interest - Petitioner is entitled to interest under Section 244(1A) on the amount refunded which includes the interest component recovered under Section 220(2). - HELD THAT: - The Court examined Section 244(1) and Section 244(1A) and held that interest is payable on the refund that is due. Section 244(1) imposes liability to pay simple interest on the refund amount where the Department delays beyond the specified period. Section 244(1A) contemplates payment of interest where the refund is due because an amount paid in pursuance of assessment or penalty is found in appeal to be in excess. The Court agreed with the reasoning in Needle Industries (Madras), followed by Gujarat and Delhi High Courts, that the neutral term "amount" in Section 244(1A) encompasses amounts paid as interest as well as tax or penalty. Since the petitioner had paid interest under Section 220(2) in respect of penalty which was later deleted, that interest formed part of the refundable amount under Section 240 and therefore attracts interest under Section 244(1A). The impugned conclusion that payment of interest on interest is impermissible was rejected on these facts: the claim is for interest on the refunded amount (which includes interest), not a separate grant of compound interest. The Assessing Officer was directed to give effect to the refund calculation accordingly. [Paras 23, 25, 26, 27, 29]

Petitioner entitled to interest under Section 244(1A) on the refunded amount which includes interest recovered under Section 220(2); the Revenue's rejection of that claim set aside.

Final Conclusion: Writ petition allowed. The order under Section 264 dated 30-04-2004 is quashed to the extent it rejected interest on the refund of interest recovered under Section 220(2); the Assessing Officer shall, within eight weeks of upload of this judgment, give effect to the refund and interest calculation under Section 244 (including Section 244(1A) as applicable). No order as to costs.

Principles of natural justice - opportunity of personal hearing - right to be heard - remand for fresh consideration

Principles of natural justice - opportunity of personal hearing - right to be heard - Whether the impugned assessment orders could be sustained where the petitioner's request for personal hearing through video conferencing was not considered. - HELD THAT: - The Court found that the petitioner had requested personal hearing through video conferencing during the enquiry following this Court's earlier remand; that request was not considered and the impugned orders were passed. Having regard to the petitioner's contention, the admitted factual sequence of prior remands and the availability of a statutory mechanism for personal hearings, the Court concluded that denial of consideration of the request amounted to a breach of the principles of natural justice and of the petitioner's right to be heard. In view of the respondents' undertaking to afford an opportunity of hearing, the Court set aside the impugned orders and remitted the matters to the Assessing Officer for fresh consideration after hearing the petitioner.

Impugned orders dated 14.03.2023 set aside and matters remanded to the Assessing Officer for fresh consideration after affording the petitioner an opportunity of personal hearing.

Remand for fresh consideration - What remedial directions should be given upon remand. - HELD THAT: - The Court directed a specific and immediate procedure to effectuate the remand: the petitioner was ordered to appear before the Assessing Officer at the stated sitting in Chennai on 03.05.2023 and to produce all necessary documents without seeking further adjournment. The Assessing Officer was directed, on hearing the petitioner, to pass appropriate orders as early as possible. This direction implements the remand by ensuring an opportunity of hearing and prompt adjudication.

Petitioner directed to appear and produce documents before the Assessing Officer on 03.05.2023; Assessing Officer to hear the petitioner and pass appropriate orders promptly.

Final Conclusion: Writ petitions allowed: impugned orders dated 14.03.2023 quashed and matters remanded to the Assessing Officer for fresh consideration after affording the petitioner a personal hearing; petitioner directed to appear and produce documents at the specified sitting and the Assessing Officer to pass appropriate orders promptly.

Penalty under section 271(1)(c) - requirement of specificity in penalty notice - concealment of income - furnishing inaccurate particulars of income - remand for fresh consideration and hearing - precedence of jurisdictional High Court decision

Penalty under section 271(1)(c) - requirement of specificity in penalty notice - concealment of income - furnishing inaccurate particulars of income - precedence of jurisdictional High Court decision - Penalty under section 271(1)(c) is unsustainable if the penalty notice does not specify whether proceedings are for concealment of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal held that the jurisdictional High Court has expressly ruled that a notice initiating penalty proceedings under section 271(1)(c) must specify which limb of the provision is invoked and that an omnibus or non specific notice is bad in law. The Tribunal accepted the assessee's contention, in view of binding decisions of the jurisdictional High Court and the Supreme Court cited by the assessee, that a penalty imposed pursuant to a notice which fails to specify the precise charge cannot be sustained. The Tribunal therefore concluded that lack of specificity in the penalty notice vitiates the penalty proceedings and that the dictum of the jurisdictional High Court prevails over conflicting decisions of non jurisdictional courts relied upon by the Revenue. [Paras 7, 8]

Penalty under section 271(1)(c) will not be sustainable where the penalty notice is non specific and does not state whether it is for concealment of income or for furnishing inaccurate particulars of income.

Remand for fresh consideration and hearing - penalty under section 271(1)(c) - The matter is remitted to the Assessing Officer for fresh examination and opportunity of hearing in accordance with the legal principle requiring specificity in the penalty notice. - HELD THAT: - The Tribunal noted that the ground challenging the specificity of the penalty notice was raised before the Tribunal for the first time and therefore remitted the issue to the Assessing Officer. The AO is directed to examine the records afresh, apply the legal principle enunciated by the jurisdictional High Court regarding the necessity of a specific charge in the notice, and afford the assessee an opportunity of being heard before passing any order in accordance with law. [Paras 8]

Issue remitted to the Assessing Officer to examine the records, apply the stated legal principle, and afford the assessee a hearing.

Final Conclusion: Appeal allowed for statistical purposes; penalty proceedings under section 271(1)(c) found vulnerable where the notice is non specific, and the matter is remitted to the Assessing Officer for fresh consideration in accordance with the jurisdictional High Court's mandate, with opportunity to the assessee to be heard.

Penalty under section 271(1)(c) - concealment of particulars of income - furnishing inaccurate particulars of income - mere claim not sustainable in law not amounting to furnishing inaccurate particulars - debatable/legal interpretation of exemption claim under section 54/54F - discretionary exercise of penalty power

Penalty under section 271(1)(c) - concealment of particulars of income - furnishing inaccurate particulars of income - mere claim not sustainable in law not amounting to furnishing inaccurate particulars - debatable/legal interpretation of exemption claim under section 54/54F - discretionary exercise of penalty power - Whether penalty under section 271(1)(c) can be sustained where the assessee disclosed the capital gains transaction and claimed exemption under section 54 which was partly disallowed by the AO - HELD THAT: - The Tribunal found that the assessee had disclosed the capital gains transaction and the claim for exemption under section 54 (and by reference section 54F jurisprudence) was a matter of legal interpretation and therefore debatable. Relying on precedent(s) that a claim which is not sustainable in law does not ipso facto amount to furnishing inaccurate particulars, and that imposition of penalty under section 271(1)(c) is discretionary and must be exercised fairly, the Tribunal held that the AO did not demonstrate that the particulars furnished by the assessee were inaccurate or that the capital gain was concealed. The Tribunal noted that the AO himself, in the assessment order, had not made specific findings demonstrating deliberate concealment beyond asserting it without supporting particularisation. Where the disallowance arose from a disputed interpretation of the exemption provisions and the assessee had disclosed relevant transactions and figures, the circumstances did not justify the levy of penalty under section 271(1)(c). Applying these principles, the Tribunal directed deletion of the penalty. [Paras 6, 7]

Penalty imposed under section 271(1)(c) deleted and appeal allowed.

Final Conclusion: The assessee's appeal is allowed; the penalty under section 271(1)(c) imposed for AY 2013-14 is deleted, the Tribunal finding that the excess disallowance arose from a debatable interpretation of exemption provisions and that there was no concealment or furnishing of inaccurate particulars justifying penalty.

Addition under section 69C - TCS reconciliation with Form 26AS - exclusive method treatment of taxes in accounting - treatment of GST in purchase invoices (inclusive/exclusive)

Addition under section 69C - TCS reconciliation with Form 26AS - exclusive method treatment of taxes in accounting - treatment of GST in purchase invoices (inclusive/exclusive) - Whether the addition made under section 69C on account of an alleged unexplained difference between purchases shown in Form 26AS/invoices and purchases as per profit and loss account is justified where the assessee follows exclusive accounting for GST and had other purchase-related expenses not subject to TCS. - HELD THAT: - The Tribunal examined the invoices (Form 26AS) showing a total invoice amount of Rs. 1,12,10,160 and the assessee's profit and loss account showing purchases of Rs. 96,65,593, with the Assessing Officer having added the difference of Rs. 15,44,567 as unexplained under section 69C (para 6). The CIT(A) treated the invoice amount as inclusive of CGST and SGST and, by adding GST at 9% each to the assessee's pleaded net purchase figure, reached a higher figure and sustained part of the addition (para 7). The Tribunal accepted the assessee's accounting position that GST was accounted on an exclusive basis and that certain other purchase-related expenses (godown rent, late charges) of Rs. 1,95,235 were included in the profit and loss purchase figure but were not subject to TCS (para 5). Recomputing GST at 9% each on the amount actually subject to TCS (the assessee's net purchase figure) and adding the non-TCS expenses produces an amount (Rs. 1,12,10,164) which accords with the invoice total (Rs. 1,12,10,160), thereby removing the perceived discrepancy (para 8). The difference noted by the CIT(A) (about Rs. 2 lakhs) arose from not giving effect to the assessee's exclusive-tax accounting and non-TCS expenses. In view of this reconciliation, the addition under section 69C was not warranted. [Paras 6, 7, 8]

The addition under section 69C is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal held that the alleged unexplained difference between purchases as per invoice/Form 26AS and the profit and loss account was reconciled by recognising the assessee's exclusive method of accounting for GST and by including other purchase-related expenses not subject to TCS; consequently the addition under section 69C was deleted and the appeal allowed.

Revocation of CHA licence - Adherence to statutory time-limits under CHALR - Reliance on uncorroborated statements as basis for disciplinary action - Proportionality in forfeiture of security deposit - Disproportionate penalty

Adherence to statutory time-limits under CHALR - Revocation of CHA licence - Validity of the revocation of the appellant's CHA licence in view of the time-limits prescribed under the CHALR - HELD THAT: - The Tribunal held that the Regulations prescribe mandatory time-limits for completion of inquiry and action thereon. Two inquiry/investigation reports were on record: an earlier DRI report (2010) and the Assistant Commissioner's inquiry report (November 2012). If either report is treated as the triggering inquiry report, the revocation order dated 06.03.2013 was passed beyond the ninety-day period prescribed under Regulation 22(7). Non-adherence to the prescribed time-frame is fatal to the validity of the action; consequently the revocation cannot be sustained. The Tribunal observed further that the second inquiry relied principally on uncorroborated statements without independent documentary evidence implicating the appellant, and the Inquiry Officer did not sufficiently analyse whether any action or inaction of the appellant actually caused the regulatory breach. For these reasons, the revocation was found not in accordance with law and was set aside. [Paras 11, 12]

Revocation of the CHA licence set aside as beyond the statutory time-limit and not in accordance with law.

Proportionality in forfeiture of security deposit - Disproportionate penalty - Reliance on uncorroborated statements as basis for disciplinary action - Validity and quantum of forfeiture of the appellant's security deposit - HELD THAT: - The Tribunal found forfeiture of the entire security deposit to be disproportionate given absence of specific allegation directly implicating the appellant and identification of the actual wrongdoers (Mr. M. Vijay Anand and Mr. B. Mohan) who misused IECs. Having regard to the nature of the findings and the lack of direct evidence against the appellant, the Tribunal held that complete forfeiture was excessive. In exercise of its appellate powers, the Tribunal modified the forfeiture to a nominal amount, thereby balancing punitive object with proportionality. [Paras 13]

Forfeiture of entire security deposit modified; a nominal amount forfeited instead.

Final Conclusion: Appeal allowed in part: revocation of CHA licence set aside; forfeiture of security deposit reduced and modified to a nominal forfeiture.

Review as an administrative mechanism - nullification of limitation period by suo moto order of the Supreme Court - scope of appellate authority in merit review - doctrine of merger - resort to rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Customs Valuation Rules not applicable where no duty is leviable - confiscation under section 111(m) of the Customs Act, 1962

Review as an administrative mechanism - nullification of limitation period by suo moto order of the Supreme Court - Legality of first appellate authority's rejection of Revenue's appeal for want of prior review and effect of the Supreme Court's nullification of time on that process - HELD THAT: - The Tribunal upheld the conclusion of the first appellate authority that the statutory review under section 129D is an administrative exercise, distinct from appeal, with its own time-limits. The suo moto order of the Supreme Court nullifying certain limitation periods did not extend to internal administrative review time-limits which are precursors to filing an appeal. The jurisdictional Committee's contention that the Supreme Court's nullification encompassed the review period was rejected: the Court's order supervised adjudicatory and appellate forums and did not intrude into the executive's internal administrative arrangements. Consequently, the first appellate authority acted within legal bounds in rejecting the Revenue's appeal that had not complied with the review pre requisite, and the additional grounds not included in the review could not be entertained. [Paras 5, 7, 8, 9, 10]

The rejection of Revenue's appeal for non compliance with the statutory review requirement was lawful; the plea that the Supreme Court's nullification extended to the review period was declined and the Revenue's appeal dismissed.

Doctrine of merger - Effect of the doctrine of merger on the availability of original authority's proposals once the first appellate authority's order became final - HELD THAT: - The Tribunal applied the doctrine of merger to hold that orders of the original adjudicating authority merged into the judgment of the first appellate authority, and once the first appellate authority refused to admit the Revenue's appeal, the proposals discarded by the original authority (including proposals for confiscation and denial of redemption) no longer survived for challenge before the Tribunal. The Tribunal relied on the settled principle that orders passed by lower authorities merge in an appellate judgment, thereby precluding re litigation of matters not sustained by the appellate order. [Paras 9]

Proposals and findings of the original authority that were discarded do not survive for adjudication before the Tribunal once the first appellate authority's order is final.

Customs Valuation Rules not applicable where no duty is leviable - resort to rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - scope of appellate authority in merit review - confiscation under section 111(m) of the Customs Act, 1962 - Validity of the valuation exercise, including reliance on rule 9 and substituted valuation, when the imported goods attract nil customs duty and consequent legality of confiscation/redemption imposed by lower authorities - HELD THAT: - The Tribunal held that valuation under section 14 and the Customs Valuation Rules arises only where value is material to levy of customs duty; where no duty is leviable (as with the imported 'rough diamonds' here), valuation is academic and the Valuation Rules cannot be invoked to sustain adverse consequences. The appellate authority's reliance on sequential valuation methods, and in particular on rule 9, without applying the Rules in the sequence and manner required, and without credible, standable valuation justification, was found to be improper. The Tribunal emphasised that an appellate authority must exercise true merit review and not act as an external examiner validating procedural deviations; substituted value must meet the tests of the Valuation Rules and be supported by credible, transparent reasoning from valuers willing to justify their methodology. Absent such conformity and given that both declared and substituted classifications resulted in nil duty, resort to valuation provisions to impose confiscation under section 111(m) and consequential penalties was impermissible. Accordingly the impugned order was set aside, the appeals of the importer and individual appellants allowed, and liberty given to the importer to re export subject to statutory re export procedure. [Paras 23, 24, 26, 28, 29]

The valuation exercise and reliance on rule 9/substituted valuation were untenable in law where no duty was leviable; the impugned order is set aside, the appeals of the importer and individual appellants are allowed, and the importer may re export the goods in accordance with the statute.

Final Conclusion: The appeal of the Revenue is dismissed for lack of merit; the Tribunal affirms the first appellate authority's rejection of Revenue's appeal for want of prior review, applies the doctrine of merger to bar re litigation of discarded original proposals, and sets aside the impugned order on valuation and confiscation, allowing the appeals of the importer and individual appellants and permitting re export in accordance with statutory procedure.

Classification of goods under the Customs Tariff - Note 4 to Chapter 27 - "light oils and preparations" defined by 90% or more by volume distilling at 210 C - comparative testing against IS 1745:2018 specifications for petroleum hydrocarbon solvents - residuary classification under the tariff - import policy restriction - State Trading Enterprise (STE) import requirement - adequacy of laboratory test report for tariff classification

Note 4 to Chapter 27 - "light oils and preparations" defined by 90% or more by volume distilling at 210 C - comparative testing against IS 1745:2018 specifications for petroleum hydrocarbon solvents - adequacy of laboratory test report for tariff classification - Whether the impugned goods satisfied the Chapter Note 4 requirement for classification as "light oils and preparations" (and thereby as Solvent 145/205 under IS 1745:2018) based on the CRCL test report. - HELD THAT: - The Tribunal compared the CRCL test results with the IS 1745:2018 parameters for Solvent 145/205. Note 4 requires that for sub-heading 2710.12, 90% or more by volume (including losses) must distil at 210 C (ISO 3405/ASTM D86). The CRCL report recorded an IBP of 162 C and an FBP of 194 C and did not state whether 90% or more by volume distilled at 210 C; in fact the FBP of 194 C indicates complete evaporation below 210 C. The Tribunal held that the primary Note 4 condition was not verified in the report and therefore the goods do not meet the Note 4 criterion necessary for classification as "light oils and preparations" under CTH 27101239. [Paras 13, 14, 16, 18]

The goods do not satisfy Note 4 to Chapter 27 and therefore cannot be classified as Solvent 145/205 under CTH 27101239.

Classification of goods under the Customs Tariff - residuary classification under the tariff - Proper tariff classification of the goods after rejecting classification under CTH 27101239. - HELD THAT: - Having rejected classification under CTH 27101239 because Note 4's requirement was not met, the Tribunal examined the available tariff entries and concluded that the only residuary entry applicable was CTH 27101990. The Tribunal accepted the appellant's original classification under CTH 27101990 and found no material in the CRCL report to support the revenue's reclassification to 27101239. [Paras 16, 20]

The goods are rightly classifiable under CTH 27101990 (residuary entry).

Adequacy of laboratory test report for tariff classification - import policy restriction - State Trading Enterprise (STE) import requirement - Whether reliance on the CRCL test report justified reclassification and consequent import-restriction consequences (STE requirement) and confiscation. - HELD THAT: - The Department relied on the CRCL report to assert that the product met IS 1745:2018 criteria for Solvent 145/205 and hence fell under an STE-restricted import policy. The Tribunal found the CRCL report silent on the critical Note 4 requirement (90% distillation at 210 C) and noted mismatches between measured parameters and IS 1745 limits (aromatic content and boiling range). Because the decisive Note 4 condition was not established, the Tribunal held that the report did not furnish sufficient basis for the revenue's reclassification, import-policy consequence, or confiscation of goods. [Paras 8, 10, 16, 18, 20]

The CRCL report did not provide adequate evidence to support reclassification to a STE-restricted tariff item or to justify confiscation; therefore confiscation was not warranted.

Residuary classification under the tariff - remand for assessment - Whether remand by the Commissioner (Appeals) for reassessment was appropriate after the appellate authority rejected classification under CTH 27101239. - HELD THAT: - The Commissioner (Appeals) had set aside the original order and remitted the matter for proper assessment. The Tribunal observed that once classification under CTH 27101239 is rejected due to non-satisfaction of Note 4, the appropriate classification was the residuary CTH 27101990; therefore further remand for reassessment was unnecessary to reach that tariff conclusion. The Tribunal accepted the appellant's contention that, having rejected 27101239, the assessing authority should proceed to classify under the residuary entry rather than remand for fresh consideration on the same classification which lacked evidential basis. [Paras 19, 20]

Remand for reassessment was not required to determine classification; the Tribunal directed acceptance of the residuary classification under CTH 27101990 rather than further remand.

Final Conclusion: The appeal is allowed: the CRCL test report did not establish the Note 4 criterion (90% distillation at 210 C) required for classification as "light oils and preparations" and therefore the goods cannot be classed under CTH 27101239; they are properly classifiable under the residuary entry CTH 27101990, confiscation is not justified, and the appeal is allowed with disposal of the stay application.

Computation of period under General Clauses Act, 1897 - Exclusion of the first day and inclusion of the last day in limitation - Extension of time when the last day falls on a weekly holiday - Time-bar / limitation for refund claims

Computation of period under General Clauses Act, 1897 - Exclusion of the first day and inclusion of the last day in limitation - Extension of time when the last day falls on a weekly holiday - Time-bar / limitation for refund claims - Whether the appellant's refund claims were barred by the one-year limitation period - HELD THAT: - The Tribunal applied Section 9 of the General Clauses Act, 1897 to exclude the date of payment and commence the one-year period from the following day. Thus, for duties paid on 26.08.2011 and 25.08.2011 the one-year periods commenced on 27.08.2011 and 26.08.2011 respectively, ending on 27.08.2012 and 26.08.2012. Section 10 was applied where the terminal date fell on a weekly holiday (Sunday), so that filing on the next working day (Monday, 27.08.2012) was to be treated as within time. The reasoning was reinforced by reference to consistent judicial interpretation (including the approach in Skoda Auto Volkswagen India Pvt. Ltd) that the first day is excluded and the last day included, and that where the last day is a holiday the next working day suffices. Applying these principles to the facts, the first refund filed on 27.08.2012 was within one year, and the second, though the one-year period completed on a Sunday, was timely filed on the next working day and therefore within the prescribed period. [Paras 4, 5, 6]

Both refund claims were held to be within the one-year limitation; the impugned order rejecting the refunds as time-barred was set aside and the appeal allowed.

Final Conclusion: The Tribunal held that, applying Sections 9 and 10 of the General Clauses Act, 1897, the appellant's refund claims were filed within the one-year limitation period; the order-in-appeal rejecting the refunds as time-barred was set aside and the appeal allowed.

Acceptability of transaction value where relationship did not influence price - deductive value method and equivalence of TPuS (Resale Minus / Resale Price method) with Rule 7 - exclusion of Rules 4 and 5 for customised/brand-specific imports - non-application of additions under Rule 10 where no relevant financial flows exist - special valuation branch (SVB) investigations under CBIC Circular No. 5/2016 - provisional assessment and year-end adjustment of declared transaction value

Acceptability of transaction value where relationship did not influence price - Rule 3(3)(a) of the CVR, 2007 - Whether the TPuS (Transfer Pricing System and Steering Concept / Resale Minus) method yields a transaction value acceptable under Section 14 of the Customs Act read with Rule 3(3)(a) of the CVR, 2007 for imports from related parties. - HELD THAT: - The Authority found that TPuS demonstrates that the declared price is adequate to ensure recovery of all costs plus a profit representative of the exporting firm's overall profit over a representative period, satisfying the Interpretative Notes to Rule 3(3)(a). TPuS shows that after deducting the importer's SG&A, financing cost, direct taxes and targeted EBIT from the benchmark price charged to unrelated buyers, what remains represents the manufacturer's manufacturing costs and profit (expressed via CAR). On this basis, the Authority held that the TPuS method shows the relationship did not influence the price and is consistent with acceptance under Rule 3(3)(a), subject to procedural compliance by customs authorities. [Paras 4, 5]

TPuS method is consistent with and may be accepted as transaction value under Rule 3(3)(a) where it demonstrates that the relationship did not influence price.

Deductive value method and equivalence of TPuS (Resale Minus / Resale Price method) with Rule 7 - Rule 7: Deductive value - Whether TPuS is, in accounting terms, consistent with the deductive valuation prescribed by Rule 7 of the CVR, 2007. - HELD THAT: - The Authority observed that TPuS is a backward/deductive computation from the same benchmark price (aggregate price to unrelated buyers) and that the elements deducted under TPuS correspond to the deductions contemplated by Rule 7 (commissions/expenses, transport/insurance within India, duties/taxes). Although TPuS is not separately recognised in the CVR, the accounting computations align with Rule 7. Once the transaction value arrived under TPuS is substantiated by application of Rule 7, further recourse to Rule 8 is unnecessary for determining consistency. [Paras 4, 5]

TPuS method is consistent, in accounting terms, with Rule 7 (deductive value) of the CVR, 2007.

Exclusion of Rules 4 and 5 for customised/brand-specific imports - transaction value of identical or similar goods (Rules 4 & 5) - Whether Rules 4 or 5 (transaction value of identical or similar goods) are applicable to the applicant's imports after adoption of TPuS. - HELD THAT: - The Authority accepted the applicant's factual contention that the goods are customised and enjoy distinct brand value and that post-adoption of TPuS the overseas exporter will supply only to the applicant in India. On these facts, identical or similar goods for comparison would not be available, rendering Rules 4 and 5 infeasible for valuation. Consequently, resort to Rule 7 (deductive) becomes appropriate. [Paras 4]

Rules 4 and 5 are not feasible for the applicant's imports; Rule 7 is the appropriate alternative.

Non-application of additions under Rule 10 where no relevant financial flows exist - Rule 10 adjustments and CBIC Circular criteria for SVB reference - Whether additions under Rule 10 of the CVR, 2007 (royalties, proceeds accruing to seller, other payments) apply to the applicant's proposed valuation under TPuS. - HELD THAT: - The applicant stated and the Authority accepted that there are no payments such as royalties, license fees, proceeds accruing to seller, or contemplated future payments that would require additions under Rule 10. TPuS accounts for manufacturing cost, administrative and other expenses and profit within CAR and does not demonstrate financial flows attracting Rule 10 additions. Hence Rule 10 is not applicable in the instant case. [Paras 2, 4]

Rule 10 additions are not attracted to the proposed TPuS-based transaction value.

Special valuation branch (SVB) investigations under CBIC Circular No. 5/2016 - provisional assessment and year-end adjustment - Whether compliance with the procedure in CBIC Circular No. 5/2016 and provisional assessment with year-end adjustments is required for acceptance of TPuS-based valuation. - HELD THAT: - The Authority noted that CBIC Circular No. 5/2016 governs examination of related party transactions and mandates that jurisdictional Commissioners decide on SVB referral using the Annexure-A questionnaire. The ruling is given on the basis that the applicant follows the TPuS method prospectively and that assessments may be provisional at import with adjustments post financial year when actual accounting data are available; remaining duties/liabilities are to be discharged accordingly. The Authority therefore conditioned the acceptance on compliance with the Circular's procedure and customary verification/adjustment processes. [Paras 4, 5]

Acceptance of TPuS valuation is subject to compliance with CBIC Circular No. 5/2016 procedures, and provisional assessments with year-end adjustments are to be made as required.

Final Conclusion: The Authority ruled that the applicant's proposed TPuS (Resale Minus / Resale Price) method for determining transaction value of imports from related-party suppliers is consistent with Rule 3 (where relationship did not influence price) and Rule 7 (deductive value) of the CVR, 2007, that Rules 4 and 5 are infeasible for the applicant's customised branded imports, that Rule 10 additions do not apply, and that the ruling is prospective and subject to compliance with CBIC Circular No. 5/2016 including provisional assessment and year-end adjustments (applicable w.e.f. 1st May 2023).

Classification of goods - distinction between Chapter 8 and Chapter 21 - betel nut product known as Supari - HSN Explanatory Notes - General Rules of Interpretation (GRI) - Rule 1 and Rule 3(a) - preparation for Chapter 21 vs preservation/stabilisation under Chapter 8

Classification of goods - distinction between Chapter 8 and Chapter 21 - betel nut product known as Supari - preparation for Chapter 21 vs preservation/stabilisation under Chapter 8 - General Rules of Interpretation (GRI) - Rule 1 and Rule 3(a) - Classification of the two proposed imports - (i) Processed API Betel-nut product known as Supari and (ii) Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split). - HELD THAT: - The Authority examined whether the processes described by the applicant transform raw areca/ betel nuts into a 'preparation' falling under Chapter 21 (tariff item 2106 90 30) or whether they remain products of Chapter 8 (areca nuts) after treatments that amount only to preservation, stabilisation or improvement of appearance. The relevant HSN Explanatory Notes to Chapter 8 and Supplementary Note No. 2 to Chapter 21 were applied together with GRI Rule 1 and Rule 3(a). The Chapter 8 notes permit fruit and nuts to be presented whole, sliced, chopped, dried, boiled or otherwise treated for preservation or appearance and state that homogenisation alone does not qualify a product for Chapter 21. The applicant's processes (cleaning, dehusking, boiling, drying, sorting, grading, cutting in one product and certain chemical treatments aimed at elimination of foul smell/preservation in the other) were found to be processes of preservation, stabilisation or improvement of appearance that retain the essential character of the betel nut rather than constitute a new 'preparation' under Chapter 21. The technical research papers relied upon by the applicant described extraction methods for tannins/alkaloids but did not demonstrate that the specific imported goods were produced by processes that change the essential character of the nut so as to create a Chapter 21 preparation. Prior authorities recognising that even extensive physical treatment may leave an agricultural product within its original chapter were noted; the Authority concluded that the applicant had not established manufacturing or transformation of character sufficient to attract Chapter 21. Applying GRI 3(a), the more specific headings for areca/ betel nuts in Chapter 8 prevail over a general provision in Chapter 21. Accordingly, both proposed imports remain classifiable under Chapter 8: the whole/processed API supari as 0802 80 10 and the unflavoured chemically processed supari in small cut-pieces as 0802 80 90. [Paras 8, 9, 10]

Both products are classifiable under Chapter 8: Processed API Betel-nut product known as Supari as 0802 80 10; Processed Betel-nuts unflavoured chemically processed Supari in small cut-pieces (not split) as 0802 80 90.

Final Conclusion: The Advance Ruling holds that the two proposed betel nut imports do not constitute preparations under Chapter 21 but remain areca/ betel nuts under Chapter 8, and are classifiable respectively under 0802 80 10 and 0802 80 90.

Recall of advance ruling - modification of advance ruling - rectification of mistake of ruling - mistake apparent on the record - distinguishing precedent - classification of goods - authority for advance rulings - clean hands

Recall of advance ruling - authority for advance rulings - Application for recall of the advance ruling dated 08.07.2022 - HELD THAT: - The Authority considered the applicant's complaint that certain submissions and an order of the Jurisdictional Commissioner were not taken into account. The record shows the Authority had discussed and distinguished the relied Supreme Court decision and the GST Circular in the original Ruling; the alleged non-considered materials were in fact addressed. The order of the Jurisdictional Commissioner was not placed before the Authority during proceedings and is not binding on the Authority. Crucially, there is no statutory provision under the Customs Act, 1962 or the CAAR, 2021 permitting recall of a Ruling; consequently recall is not available as a remedy. [Paras 4]

The application for recall of the Ruling dated 08.07.2022 is rejected.

Modification of advance ruling - mistake apparent on the record - distinguishing precedent - classification of goods - clean hands - Application for modification of the advance ruling dated 08.07.2022 under Regulation 21 of CAAR, 2021 - HELD THAT: - The applicant contended that decisions relied upon by the Authority were not properly appreciated and that a legal mistake had occurred requiring modification. The Authority reviewed the submissions and the case-law relied upon, noting that the Supreme Court precedent central to the applicant's case was discussed and distinguished in the Ruling. The Authority applied the established principle that rectification/modification is confined to mistakes apparent on the face of the record and not to debatable points of law or fact; reliance on multiple precedents does not convert a debatable conclusion into a patent mistake. Further, the Authority found that, lacking test reports and compositional details, the goods relied upon in other decisions could not be treated as identical; doctrinal authorities caution against blind reliance on precedents where factual differences exist. The Authority also observed the applicant's selective challenge to this Ruling while not seeking to void other favourable rulings, remarking on the applicant's inconsistent conduct. [Paras 5]

The application for modification of the Ruling is rejected.

Rectification of mistake of ruling - corrigendum - Application for rectification of mistake under Regulation 22 of CAAR, 2021 - HELD THAT: - The Authority noted a separate application for rectification and indicated that a corrigendum is being issued in respect of that application. The statement records that rectification will be addressed by way of a separate corrigendum rather than by recall or modification. [Paras 3]

A corrigendum is being issued to address the rectification application.

Final Conclusion: The Authority rejected the applications for recall and for modification of the advance ruling dated 08.07.2022, holding that recall is not available and that no mistake apparent from the record warranted modification; a separate rectification application will be dealt with by issuing a corrigendum.

Assignment of trademark - proprietorship of a registered trademark - prima facie validity at the ad interim stage - notification requirement under Section 42 of the Trade Marks Act, 1999 - registration as prima facie evidence - backdating, fraud and suppression affecting transfer of intellectual property - custody of corporate assets by the liquidator during liquidation - interim injunction in trademark disputes

Assignment of trademark - prima facie validity at the ad interim stage - interim injunction in trademark disputes - Whether the interim injunction previously granted restraining Duckbill from using the marks should be sustained. - HELD THAT: - The Court examined the impugned ad interim finding that the deed of assignment dated 3rd April, 2017 established Poulami's proprietorship and therefore entitled her to an injunction. On scrutiny of the documents the Court found that the learned trial judge's prima facie conclusion as to the validity of the assignment was palpably erroneous and perverse. Given the strong prima facie material indicating irregularity in the assignment and registration, the initial basis for granting the interim injunction did not survive scrutiny. The Court therefore treated the appeal on merits and vacated its own earlier interim order of 24th January, 2023, and affirmed the trial court's refusal to grant interim relief, while directing expedition of the substantive suit.

The interim injunction granted by the Court on 24th January, 2023 is vacated; the impugned judgment refusing interim injunction is affirmed and the injunction application stands disposed of.

Notification requirement under Section 42 of the Trade Marks Act, 1999 - registration as prima facie evidence - backdating, fraud and suppression affecting transfer of intellectual property - custody of corporate assets by the liquidator during liquidation - Whether the deed of assignment dated 3rd April, 2017 and its subsequent registration are prima facie valid or whether they are tainted by backdating/fraud and are therefore ineffective against the company's liquidator. - HELD THAT: - On the material before it the Court found multiple indicia of gross irregularity: the alleged assignment, though dated 2017, was not brought to light during CIRP or liquidation, was presented for recording only on 18th January, 2022, and included marks that were not then consistent with the company's register as of 2017; two marks were registered only in 2018; only seven of fourteen marks were said to be assigned; and the purported consideration was grossly inadequate compared to the value realized in the e auction. Section 42 requires notification within a limited period for assignments not made in connection with goodwill, and registration after a five year delay cannot cure the defect. Consequently, prima facie the assignment appears backdated and non est, the Trade Marks Registry lacked power to effect that registration in the circumstances, and the liquidator remained the custodial proprietor of the marks for the purposes of the insolvency process. The Court confined these findings to prima facie observations for the purpose of the interlocutory dispute and directed the substantive suit to be expedited.

Prima facie the deed of assignment and its registration are tainted by backdating/fraud and do not divest the liquidator of the company's proprietary rights in the marks; the assignment appears non est and nullity for present interlocutory purposes.

Backdating, fraud and suppression affecting transfer of intellectual property - interim injunction in trademark disputes - Whether the interim appellate order was obtained by suppression of service and whether that affected the validity of the order. - HELD THAT: - The Court found that material facts concerning non service were suppressed before it when the interim order of 24th January, 2023 was obtained. It deplored the conduct of the advocate on record and recorded the suppression. However, since the Court had the necessary papers before it when later hearing the application to vacate and the appeal on merits, and because it reached the same result on substantive grounds, the question of suppression became redundant to the ultimate outcome. The application to set aside the interim order was allowed to the extent indicated and the Court expressed its displeasure at the suppression.

Suppression of non service is recorded and deplored; the application to set aside the interim order is allowed in consequence, but the interim order is in any event vacated on substantive grounds.

Final Conclusion: The Court vacated its interim order of 24th January, 2023 and dismissed the appeal from that interim order, affirmed the trial court's refusal to grant injunction by substituting its reasons, recorded strong prima facie findings that the deed of assignment and its registration are tainted by backdating/fraud and do not presently divest the liquidator of the trademark proprietorship, deplored suppression of non service though treated as redundant to the substantive decision, and directed expeditious disposal of the suit within two years.

Condonation of delay - computation of limitation under Section 61(2) of the IBC - exclusion of time for obtaining a certified copy under Section 12(2) of the Limitation Act - requirement of filing appeal with certified copy under NCLAT/NCLT rules - outer limit of 30 days with extension of 15 days for sufficient cause

Condonation of delay - computation of limitation under Section 61(2) of the IBC - exclusion of time for obtaining a certified copy under Section 12(2) of the Limitation Act - outer limit of 30 days with extension of 15 days for sufficient cause - Whether the delay in filing the appeal beyond thirty days could be condoned and, if so, whether the appeal filed on the 45th day was within the permissible period. - HELD THAT: - The Tribunal found that the determinative fact was that the certified true copy of the impugned order was made ready by the Registry on 02.02.2023, although the order was pronounced on 31.01.2023. Applying the principle of exclusion of time for obtaining a certified copy as envisaged by Section 12(2) of the Limitation Act, and construing the timeline under Section 61(2) of the IBC (30 days with a further extension of up to 15 days on showing sufficient cause), the period was computed from the date the certified copy was ready. Counting from 02.02.2023, the appeal filed on 19.03.2023 fell on the 45th day (30 + 15). Having considered the explanations offered by the appellant regarding internal approvals and documentary preparation, the Tribunal held that the delay of 15 days beyond the primary 30-day period was satisfactorily explained and could be condoned. The Tribunal expressly considered contrary submissions relying on decisions interpreting the obligation to apply for certified copies and the outer limit of 45 days, but concluded that exclusion of the time taken by the Registry to make the certified copy available justified condonation in the present facts. [Paras 8, 9, 10, 11, 16]

Delay of 15 days after the expiry of 30 days is condoned; IA No.378 of 2023 is allowed and the appeal is held to have been filed within the permissible period.

Final Conclusion: The application for condonation of delay is allowed; the appeal is treated as filed within the permissible period (30 days plus 15 days) and the main appeal is directed to be listed for admission.

Prior approval of Reserve Bank of India for participation of an Asset Reconstruction Company as resolution co-applicant - validity of rejection of a resolution plan under Section 31(1) for contravention of Section 30(2)(e) - supremacy of Insolvency and Bankruptcy Code over inconsistent provisions of SARFAESI Act under Section 238 - commercial wisdom of the Committee of Creditors and limited judicial interference - liquidation as last resort under the Code

Prior approval of Reserve Bank of India for participation of an Asset Reconstruction Company as resolution co-applicant - supremacy of Insolvency and Bankruptcy Code over inconsistent provisions of SARFAESI Act under Section 238 - Whether an Asset Reconstruction Company required prior RBI approval to participate as a resolution co applicant and whether the Adjudicating Authority could reject the resolution plan on the ground of absence of such approval. - HELD THAT: - The Tribunal noted that the Adjudicating Authority had rejected the resolution plan on the ground that M/s Invent Assets (an ARC) could not submit a resolution plan as co applicant without prior RBI approval under Section 10(2) of the SARFAESI Act. Relying on the view taken in the related appeal, the Tribunal observed that an ARC does not invariably require prior RBI approval to participate as a resolution co applicant under the Code so long as the activities undertaken pursuant to the plan are not prohibited by the SARFAESI Act. The Tribunal further observed that Section 238 of the Code would prevail over inconsistent provisions of the SARFAESI Act and that the Adjudicating Authority ought not to have placed decisive reliance on Section 10(2) of the SARFAESI Act to reject the plan. The Tribunal also recorded that the Committee of Creditors had approved the plan by an overwhelming majority and that there was no material irregularity under Section 30(2) of the Code warranting rejection. [Paras 1, 3]

The Tribunal concluded that the Adjudicating Authority erred in rejecting the resolution plan on the ground of lack of prior RBI approval and that the reliance on the SARFAESI provision was misplaced in light of the Code and the Committee of Creditors' approval.

Validity of rejection of a resolution plan under Section 31(1) for contravention of Section 30(2)(e) - liquidation as last resort under the Code - commercial wisdom of the Committee of Creditors and limited judicial interference - Consequences of setting aside the Adjudicating Authority's order of rejection and liquidation on the pending Company Appeal (AT) (CH) (Ins) No. 292/2021. - HELD THAT: - Having recorded that the resolution plan's rejection and the consequent order for liquidation were set aside by this Tribunal in the related appeal because the Adjudicating Authority should not have rejected the plan on the said ground, the Tribunal observed that the order of liquidation no longer subsisted. In view of that development, the present appeal became infructuous. The Tribunal emphasised the Code's principal objective of revival and that liquidation is to be a last resort, and noted the Committee of Creditors' commercial decision which did not disclose material irregularity warranting interference. [Paras 2, 4]

The appeal was dismissed as infructuous in light of the setting aside of the order of rejection and liquidation; connected interlocutory applications were closed and there was no order as to costs.

Final Conclusion: The Tribunal held that the Adjudicating Authority erred in rejecting the resolution plan by treating prior RBI approval under the SARFAESI Act as a prerequisite for an ARC's participation as co applicant, observed that the Code (Section 238) prevails over inconsistent provisions, and, since the order of liquidation was set aside in the related proceeding, dismissed the present appeal as infructuous with connected interlocutory applications closed and no order as to costs.

Operational debt - operational creditor - privity of contract - acknowledgement of debt - promissory estoppel - no contractual relationship between subcontractor and owner - owner's ability to step into subcontract - adjudicating authority's duty under Section 9

Operational debt - operational creditor - privity of contract - no contractual relationship between subcontractor and owner - adjudicating authority's duty under Section 9 - Whether the Adjudicating Authority was justified in dismissing the Section 9 application for lack of any contractual relationship and hence absence of operational debt between the appellant and the respondent. - HELD THAT: - The Tribunal held that the Adjudicating Authority correctly examined the application within the framework of the Code and the Mobilox test and found the necessary ingredients of an operational debt and an operational creditor absent. The Agreement for Civil Works and Construction expressly provided that a sub-contractor shall not have any contractual relationship with the owner and shall not be entitled to prefer claims against the owner (Clause 6.1.4). There were no direct supplies of goods or services by the appellant to the respondent, no invoices raised on the respondent and no written contract creating privity between them. Thus, the amounts claimed could not be treated as an operational debt owed by the respondent to the appellant. The Tribunal also noted that the appellant had a separate admitted claim in the CIRP of ISPL and that the respondent was commercially solvent; the Code is not intended to send a solvent principal employer into insolvency where privity and operational debt are lacking. Applying these conclusions, the Adjudicating Authority's dismissal of the Section 9 petition for want of a contractual/operational relationship was upheld. [Paras 11, 12, 13, 15, 16]

The Section 9 application was rightly dismissed for want of any contractual relationship or operational debt between the appellant and the respondent; appeal dismissed on merits.

Acknowledgement of debt - promissory estoppel - owner's ability to step into subcontract - privity of contract - Whether the letter dated 17.10.2018 from the respondent amounted to an acknowledgement or admission of debt or otherwise created an enforceable liability to constitute an operational debt. - HELD THAT: - The Tribunal found that the respondent's letter of 17.10.2018, which purportedly assured payment if IEDCL failed to do so, did not convert the respondent into a debtor liable under the Code in the absence of a contractual relationship. The Mobilox principles require documentary evidence showing that the debt is due and payable and the absence of any pre-existing dispute; a mere assurance by the owner to protect the project, in the context of an agreement clause excluding contractual relations with sub-contractors, does not create an operational debt. Reliance on promissory estoppel or a standalone letter of comfort could not establish the requisite privity or acknowledgement of debt where the contract expressly disclaims any liability of the owner to subcontractors. The Tribunal further relied on the legal position in Essar Oil Limited Vs. Hindustan Shipyard Ltd. & Ors. that payments or assurances given by a principal employer for project continuity do not, without more, create contractual liability to the subcontractor. [Paras 13, 14, 15]

The letter of 17.10.2018 did not constitute an acknowledgement or admission of an operational debt enforceable under the Code; it did not create liability of the respondent to the appellant.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's order dismissing the Section 9 petition as devoid of merit, concluding that there was no contractual relationship or operational debt between the appellant and the respondent and that the assurances relied upon did not create enforceable liability under the Code.

Non-bailable warrant - Personal liberty - Issuance of bailable warrant as intermediate step - Conditional summons directing issuance of non-bailable warrant - Cooperation with investigation - Judicial discretion in issuance of warrants

Non-bailable warrant - Conditional summons directing issuance of non-bailable warrant - Judicial discretion in issuance of warrants - Issuance of bailable warrant as intermediate step - Personal liberty - Validity of the order directing issuance of non-bailable warrants against the petitioners and whether the Court below properly exercised its discretion before resorting to issuance of NBWs. - HELD THAT: - The Court applied the established principle that non-bailable warrants are a drastic measure and should be issued only after proper scrutiny and exhaustion of less coercive measures. A conditional order directing issuance of NBWs upon non-appearance was held to be unjustified where the record showed the accused had appeared through counsel on the fixed date and sought time. The Court observed that where a summon or bailable warrant would suffice, those should be preferred and that personal liberty requires caution before issuing NBWs. The petitioners' prior non-arrest during investigation, recorded cooperation (including statements recorded), and reasonable explanation for personal non-appearance (employment-related engagements) were not considered by the Court below. In those factual circumstances the issuance of NBWs straightaway, instead of at most issuing a bailable warrant or further opportunity, amounted to an improper exercise of discretion and could not be sustained. [Paras 7, 8, 9, 10, 11]

The direction for issuance of non-bailable warrants against the petitioners is quashed and the trial Court is directed to fix another date for their appearance.

Final Conclusion: The petitions are allowed; the impugned order insofar as it directed issuance of non-bailable warrants is set aside and the Court below shall fix another date for appearance, having regard to the petitioners' cooperation with the investigation and the requirement that NBWs be resorted to only after less coercive measures are considered.

Non bailable offences and bail embargo under Section 45 of the PMLA - Twin conditions for grant of bail under Section 45 of the PMLA - Power to arrest under Section 19 of the PMLA - Reasonable grounds standard for interim judicial satisfaction on bail - Application of legal presumption under Section 24(a) and onus to rebut - Analogy to provision prescribing special bail test (Section 37 NDPS)

Non bailable offences and bail embargo under Section 45 of the PMLA - Twin conditions for grant of bail under Section 45 of the PMLA - Reasonable grounds standard for interim judicial satisfaction on bail - Grant of bail to the petitioner under Section 45 of the PMLA on specified conditions. - HELD THAT: - The Court examined Section 45 (the non bailable regime) and applied the twin condition test: (i) whether there are reasonable grounds for believing that the accused is not guilty of the offence under the PMLA, and (ii) whether the accused is not likely to commit any offence while on bail. The court emphasised that the judicial inquiry at bail stage is based on broad probabilities and not a meticulous weighing of evidence. Having noted that (a) the predicate FIR/complaint (CBCID crime No.29 of 2021) has not resulted in a charge sheet against the petitioner though registered more than 15 months earlier, (b) the petitioner had been attending and co operating with multiple investigating agencies, (c) no incriminating material was recovered from the petitioner's premises at search, (d) the petitioner had been granted bail earlier in the predicate case and complied with conditions, and (e) the petitioner is a first offender with no other complaints, the Court concluded that continued incarceration was not justified. Reliance on precedents was noted for the principle that the special statutory test under Section 45 requires a judicial evaluation of reasonable grounds on probabilities and does not impose an absolute bar to bail. On that basis the petition was allowed and bail granted subject to conditions including personal bond, sureties, weekly attendance to cooperate with investigation and surrender of passport. [Paras 13, 14, 16, 17, 18]

Petitioner enlarged on bail on execution of personal bond and sureties and subject to conditions including weekly attendance before investigating agency and surrender of passport.

Power to arrest under Section 19 of the PMLA - Application of legal presumption under Section 24(a) and onus to rebut - Whether the arrest and invocation of PMLA powers require recorded material and whether presumptions under the PMLA affect bail inquiry. - HELD THAT: - The Court reproduced and examined Section 19 (power to arrest) and noted the statutory requirement that the authorised officer must have "reason to believe" based on material in possession, to be recorded in writing. The court also considered the legal framework of presumptions under the PMLA (as discussed in precedents cited) - observing that presumptions under Section 24(a) operate once foundational facts are established and that the accused has an opportunity to rebut. While scrutinising these provisions, the Court found on facts that investigations had proceeded largely on documentary and recorded material gathered by the Enforcement Directorate and CID, but that the overall record did not justify continued detention of this petitioner pending further investigation. The Court therefore proceeded to apply Section 45's twin condition bail test rather than hold that arrest alone ousted entitlement to bail. [Paras 10, 15, 16]

Court accepted that statutory safeguards under Sections 19 and the PMLA's presumptions are relevant to the inquiry, but on the facts concluded that arrest and invocation of PMLA provisions did not preclude grant of bail to the petitioner.

Final Conclusion: Criminal petition allowed: petitioner to be released on bail on furnishing personal bond and two sureties, to cooperate with investigation by attending weekly and surrender passport; continued incarceration was held not justified on the facts and probabilities available at bail stage under the PMLA.

Export of services - reverse charge mechanism - Information Technology Software Service - Online Information and Database Access or Retrieval Services - introduction of a fresh taxable entry

Export of services - Liability to tax as "Business Auxiliary Service" on commission/remuneration received from the parent company. - HELD THAT: - The parties agreed that this issue is governed by this Court's earlier decision in favour of the respondent assessee reported at 2019(24) G.S.T.L. 547 Bom, which held that procuring orders and forwarding them to an overseas principal and receiving payment in foreign exchange constituted export of services under the Export of Services Rules, 2005. The Revenue did not show that the earlier decision was stayed. Because the matter is covered by binding decisions of this Court and the parties accept that coverage, no substantial question of law arises for adjudication on this point. [Paras 3]

No liability arises under the head "Business Auxiliary Service" as the activity is covered by export of services; no substantial question of law arises.

Information Technology Software Service - Online Information and Database Access or Retrieval Services - reverse charge mechanism - introduction of a fresh taxable entry - Classification of annual license fee paid to the overseas parent - whether taxable pre-2008 as "Online Information and Database Access or Retrieval Services" or as "Information Technology Software Service" (post-16th May 2008). - HELD THAT: - The Tribunal found as a fact that the assessee treated and discharged tax liability under the entry "Information Technology Software Service" under the reverse charge mechanism since 16th May 2008, and the Revenue accepted that classification for the post-2008 period. The Court applied the settled principle that the introduction of a fresh taxable entry from a particular date presupposes that such services were not covered by earlier entries, and noted that the Revenue did not contend that the 2008 insertion was retrospective. Given the accepted post-2008 classification and these admitted facts, the Revenue cannot contend that the same service for the pre-2008 period fell under a different entry. The original authority's reasoning was held to lack examination of the applicable taxable entry and of the overseas entity's activities, but that factual finding did not give rise to a substantial question of law because of the admitted position and the legal principle regarding introduction of new entries. [Paras 4]

No substantial question of law arises; the service is properly classified under "Information Technology Software Service" from 16th May 2008 and the Revenue cannot treat the identical service as falling under the earlier "Online Information and Database Access or Retrieval Services" entry for pre-2008 period.

Final Conclusion: The Revenue's appeal is dismissed: (i) the commission/remuneration issue is covered by this Court's prior decision treating the activity as export of services; and (ii) on classification of the annual license fee the admitted post-2008 treatment under "Information Technology Software Service" and the legal effect of introducing a fresh entry preclude the Revenue's opposite contention for the pre-2008 period.

Treatment of pre-deposit and deduction from amount payable under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 - distinction between tax dues and penalty for purposes of computing relief under the Scheme - bona fide attempt to make payment through electronic transfer and entitlement to relief despite technical failure - judicial power under Article 226 to grant relief where Scheme objective of reducing litigation is frustrated by procedural/technical impediments - application of Clause 124(2) of the Scheme towards deduction of pre-deposits

Distinction between tax dues and penalty for purposes of computing relief under the Scheme - application of Clause 124(2) of the Scheme towards deduction of pre-deposits - Whether the sum of Rs. 5,00,000/- deposited pursuant to the Tribunal's direction could be treated as pre-deposit against 'tax dues' for computing amount payable under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019. - HELD THAT: - Clause 124(2) of the Scheme requires deduction of any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit when issuing the statement indicating the amount payable. The facts show the petitioners paid Rs. 19,12,196/- towards duty and, separately, deposited Rs. 5,00,000/- pursuant to an express statement before the Tribunal and its direction; that payment was made towards penalty. The Court held that an amount deposited towards penalty cannot be treated as payment towards tax dues. Accordingly, the Rs. 5,00,000/- deposited for penalty was not to be deducted from the tax-due computation and the Designated Authority was correct in treating only the amount paid towards duty as pre-deposit for the purpose of computing the Scheme liability. [Paras 11, 15, 16]

Rs. 5,00,000/- deposited towards penalty is not deductible as pre-deposit against tax dues under the Scheme; only amounts paid towards tax/duty qualify for deduction when computing the payable amount.

Bona fide attempt to make payment through electronic transfer and entitlement to relief despite technical failure - judicial power under Article 226 to grant relief where Scheme objective of reducing litigation is frustrated by procedural/technical impediments - Whether the petitioners, having attempted to make the payment on the last date but facing a technical failure ('CPIN is expired'), are entitled to have their payment accepted and receive the benefit of the Scheme by deposit with interest. - HELD THAT: - The petitioners filed their declaration under the Scheme and were issued the statement showing a balance payable. They attempted to pay the amount on the last date extended under the Ordinance but the transfer was returned owing to 'CPIN is expired'. Applying the Scheme's object to reduce litigation and following the Court's earlier observations in L.G. Chaudhary where a bona fide attempt to pay but technical failure justified relief, the Court found the petitioners made a bona fide attempt to comply. In view of the pandemic-related procedural difficulties and the petitioners' readiness to pay, the Court exercised supervisory jurisdiction under Article 226 to direct acceptance of the payment, subject to interest for the intervening period. [Paras 18, 19, 20, 21]

The petitioners' bona fide electronic payment attempt, which failed due to technical reasons, warrants acceptance of the payment; the designated authorities are directed to accept the amount with interest and grant Scheme benefit.

Final Conclusion: Petition allowed in part. The Court upheld that the Rs. 5,00,000/- deposited towards penalty could not be treated as pre-deposit against tax dues for computation under the Scheme and, on finding a bona fide attempt to pay which failed due to a technical error, directed the respondents to accept the outstanding payment as determined in SVLDRS-3 with interest at 9% per annum from 30.06.2020; the petitioner to deposit the said amount with interest within four weeks.

Binding value of coordinate Bench precedents - taxation of State Governments and their undertakings under Articles 274 and 289 of the Constitution - distinctness of entity for levy of service tax (separate taxable person vs deemed railway company) - classification as support service of business or commerce (including "infrastructural support services") - application of Board Circular No.109/3/2009-S.T. regarding principle-to-principle arrangements

Binding value of coordinate Bench precedents - Acceptance of precedential value of earlier CESTAT decisions on the question of taxability - HELD THAT: - The Tribunal held that the precedential value of the cited CESTAT decisions is to be accepted. Relying on authoritative discussion of intra-court precedent, the Bench observed that a coordinate Bench decision binds a subsequent Bench of co-ordinate jurisdiction unless referred to a larger Bench. Consequently the earlier CESTAT orders relied upon by the appellant are to be treated as binding precedent for the purposes of the appeal. [Paras 7]

Precedents of the Tribunal cited by the appellant are accepted as binding on the present Bench.

Taxation of State Governments and their undertakings under Articles 274 and 289 of the Constitution - Whether the Union can impose service tax on income of a State or on entities in which States have an interest without fulfilling constitutional safeguards - HELD THAT: - The Tribunal examined Articles 274 and 289 and concluded that while the Union may tax trade or business of a State only to the extent Parliament provides by law, such taxation requires prior recommendation of the President where States are interested. A general taxing provision cannot be applied to States or their undertakings unless the constitutional conditions are satisfied. Applying this constitutional principle, the Tribunal observed that imposition of service tax on the appellant, which is constituted by State Governments and Indian Railways, is impermissible on this constitutional ground. [Paras 9, 10]

The levy of service tax on the income of the State/State-concerned entity without compliance with Articles 274 and 289 is constitutionally impermissible and militates against sustaining the demand.

Distinctness of entity for levy of service tax (separate taxable person vs deemed railway company) - Whether Konkan Railway Corporation Ltd. is a separate taxable entity distinct from Indian Railways for charging service tax on revenue apportionment - HELD THAT: - On construction of the constitutive and working agreements and surrounding facts (formation to facilitate construction/operation, 'deemed to be Railway Company' status, apportionment of revenue at par with zonal railways, ultimate vesting of assets in Indian Railways once costs discharged), the Tribunal concluded there was no flow of consideration from Indian Railways to KRCL as an independent service provider. The agreements and operational matrix showed KRCL functioning as part of the larger railway arrangement rather than rendering a separate taxable service. Consequently KRCL could not be characterized as an independent service-provider to Indian Railways for the purpose of imposing service tax in the facts of the case. [Paras 14, 15]

KRCL is not a separate taxable entity vis-a -vis Indian Railways for the purposes of the service tax demand; the demand is not sustainable on the ground of distinctness.

Classification as support service of business or commerce (including "infrastructural support services") - application of Board Circular No.109/3/2009-S.T. regarding principle-to-principle arrangements - Whether the amounts apportioned to KRCL constitute taxable "support services of business or commerce" or "infrastructural support services" - HELD THAT: - The Tribunal analysed the statutory description of 'support services of business or commerce' (including the explanation defining 'infrastructural support services') and found that the activities and contractual matrix between KRCL and Indian Railways did not fall within the described categories. Further, applying Board Circular No.109/3/2009-S.T., the Tribunal concluded that where arrangements operate on a principal-to-principal basis and no consideration flows as a service, such arrangements are not to be treated as taxable services. Given the factual finding that KRCL and Indian Railways were not separate service-provider and recipient in substance, the classification of the amounts as business support service was incorrect. [Paras 16, 18, 19]

The apportionments cannot be classified as taxable support/infrastructural support services; the Board circular applies and the classification in the show cause notice is unsustainable.

Confirmation of demand and its setting aside - Validity of the Commissioner's confirmation of service tax demand, interest and penalties for the extended period - HELD THAT: - In view of the antecedent findings-acceptance of CESTAT precedent, constitutional limitations on taxing State interests, lack of distinctness of KRCL as a service-provider vis-a -vis Indian Railways, and misclassification as business support service-the Tribunal held the Commissioner's confirmation of the demand (including interest and penalties) was legally unsustainable. The Tribunal declined to enter into extended-period computation and noted Indian Railways' exemption for the prior period relevant to part of the demand, concluding that the impugned order must be set aside. [Paras 20]

The Commissioner's order confirming the service tax demand with interest and penalties is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: the Tribunal accepted its prior coordinate Bench precedents, held that constitutional safeguards limit imposition of Union service tax on State interests, found KRCL not to be a separate taxable service provider vis a vis Indian Railways, applied the Board Circular on principal to principal arrangements and concluded that the Commissioner's confirmation of the service tax demand (including interest and penalties) for the periods in question is unsustainable and is set aside.

Refund of service tax - refund claim by person who has borne the tax under Section 11B(2)(e) - non-commercial organization / charitable trust - use of building for commercial or industrial purpose - primary use test for determining commerciality of construction - leviability of service tax on construction services

Refund of service tax - refund claim by person who has borne the tax under Section 11B(2)(e) - Recipient of service who has borne service tax is entitled to claim refund of service tax paid by the service provider. - HELD THAT: - The Tribunal held that where the service tax was collected separately from the appellant by the contractor and deposited to the Central Government account, the appellant - having borne the incidence of tax - was entitled to file the refund claim. The view that refund claims are not confined to service providers was supported by the statutory language of Section 11B(2)(e) and relevant case law referred to by the Tribunal. Consequently, the appellant's locus to claim refund was recognised and the lower authorities' approach of denying the claim on the ground that only the provider could claim was rejected. [Paras 5]

Refund claim filed by the service recipient who bore the tax is maintainable and the appellant was entitled to lodge the refund claim.

Non-commercial organization / charitable trust - use of building for commercial or industrial purpose - primary use test for determining commerciality of construction - leviability of service tax on construction services - The building constructed for the appellant is not a commercial or industrial construction; the appellant is a non-commercial charitable trust and the construction is for educational purposes, attracting refund of service tax. - HELD THAT: - After examining the Resolution of Government of Gujarat, registration certificates under the Societies Act and Bombay Public Trust Act, registration under Section 12AA of the Income Tax Act, and the Memorandum of Association, the Tribunal concluded that the building was used for providing medical education and that income generated was to be ploughed back for development of the hospital. Applying the primary use test and relevant precedents, the Tribunal held that mere charging of fees - even higher fees - does not convert a statutory charitable institution into a commercial entity nor render the building a commercial construction. The Tribunal also relied on administrative guidance that leviability of service tax depends upon commercial use of the structure. The lower authorities' findings that fee levels changed the character of the appellant were rejected as incorrect. [Paras 5]

The appellant is a non-commercial charitable trust and the constructed building is not commercial; service tax levied on the construction is not leviable and the refund claim is allowable.

Final Conclusion: Impugned orders rejecting the refund claims were set aside; the appeals were allowed and the appellant entitled to consequential relief, the Tribunal holding that the service recipient who bore the tax can claim refund and that the construction is non-commercial being for educational/charitable use.

Renting of Immovable Property Service - revenue sharing / licence fee based arrangements not necessarily a service relationship - predominant character test for classification of composite arrangements - Explanation 1 to Section 65(105)(zzzz) - exclusion of buildings used for accommodation including hotels - extended period of limitation - not sustainable where issue is interpretational and documents were disclosed

Renting of Immovable Property Service - revenue sharing / licence fee based arrangements not necessarily a service relationship - predominant character test for classification of composite arrangements - Explanation 1 to Section 65(105)(zzzz) - exclusion of buildings used for accommodation including hotels - Whether amounts received by the appellant under the 20.03.1984 agreement fell within taxable 'Renting of Immovable Property Service' and whether the demand including interest and penalties could be sustained - HELD THAT: - The Tribunal analysed the licence agreement as a composite revenue sharing arrangement by which the appellant granted IHCL the licence to run, conduct and operate the hotels and received licence fees computed as a percentage of annual sales. The agreement contemplated transfer of business assets, goodwill and operational control and did not resemble a conventional letting for a fixed rent. Reliance was placed on earlier Tribunal authority dealing with substantially similar facts (including Grand Royale Enterprises) and on the principle that a revenue sharing or profit sharing licence does not, without more, establish a service provider-service recipient relationship susceptible to service tax as renting of immovable property. The Tribunal further applied the exclusion in Explanation 1 to Section 65(105)(zzzz) which removes buildings used for accommodation including hotels from the ambit of the immovable property definition, reinforcing that the transaction did not predominantly amount to renting of immovable property. On these grounds the Tribunal concluded that the demand could not be sustained on merits. [Paras 23, 24, 29, 30, 32]

Demand, interest and penalties premised on classification of the licence fee as 'Renting of Immovable Property Service' set aside on merits.

Extended period of limitation - not sustainable where issue is interpretational and documents were disclosed - revenue sharing / licence fee based arrangements not necessarily a service relationship - Whether the show cause notice invoking the extended period of limitation was sustainable - HELD THAT: - The Tribunal observed that verifications had been initiated much earlier and the documents (including the agreement) had been furnished to the department; the controversy was essentially interpretational and had been the subject of pending litigation before various fora. In that factual and legal context the invocation of the extended period for assessment was found to be untenable. The Tribunal therefore held that the demand was also liable to be set aside on limitation grounds. [Paras 16, 29, 31, 32]

Proceedings founded on the extended period of limitation held unsustainable and demands set aside on limitation grounds.

Final Conclusion: The appeals are allowed: the demands for service tax, interest and penalties for the periods 01.06.2007 to 31.03.2011 and 01.04.2012 to 30.06.2012 are set aside both on merits (licence/revenue sharing character, exclusion of hotels) and on limitation; consequential relief, if any, to follow.

Business auxiliary service - double taxation - commission forming part of gross sale price - principal-to-principal / trading activity not amounting to agency

Business auxiliary service - commission forming part of gross sale price - double taxation - principal-to-principal / trading activity not amounting to agency - Whether commission received by the appellant in connection with sale and purchase of SIM cards is exigible to service tax as a business auxiliary service when the commission is included in the gross sale price and service tax had been discharged on the total price by the principal (BSNL). - HELD THAT: - The Tribunal found that the commission claimed by the appellant was included in the gross sale price of the SIM cards sold to customers and that service tax had already been discharged on the total price by BSNL. Imposition of a separate service tax on the commission would therefore amount to double taxation, which is not permissible. The Tribunal further applied the principle that where the distributor is engaged in purchase and sale of SIM cards on a principal-to-principal basis (trading activity) and is not acting as an agent of the principal, such activity does not constitute provision of taxable business auxiliary service. Relying on a consistent line of decisions of the Tribunal and the High Court (as cited in the order), the Tribunal concluded the issue is no longer res integra and that no additional service tax can be demanded on the commission. [Paras 4, 5]

Impugned order set aside and appeal allowed; no separate service tax leviable on the commission.

Final Conclusion: Appeal allowed: where commission is included in the gross sale price of SIM cards and service tax has been paid on that total price by the principal, no separate service tax can be demanded on the commission; the distributor's purchase-and-sale activity on a principal-to-principal basis does not amount to taxable business auxiliary service.

Classification of ERP implementation services - management or business consultant service - information technology software service - reverse charge mechanism - extended period of limitation under section 73 - cenvat credit - waiver of penalties under Section 80

Classification of ERP implementation services - management or business consultant service - information technology software service - Taxability of ERP implementation services prior to 16.05.2008 under the category of management or business consultant service - HELD THAT: - The Tribunal found that the Revenue itself accepted classification of the disputed ERP implementation service as falling under "information technology software service" with effect from 16.05.2008. Relying on the reasoning in the CESTAT Bangalore decision in IBM India Pvt. Ltd., the Tribunal held that implementation of ERP is specifically covered by the definition of information technology service introduced w.e.f. 16.05.2008 (including implementation, adaptation and related services), and that where a new service entry is introduced it demonstrates that the activity was not taxable under a prior entry. Consequently, the disputed ERP implementation service cannot be sustained as taxable under the head of management or business consultant service for periods prior to 16.05.2008.

Demand of service tax for the period prior to 16.05.2008 under "management or business consultant service" is not sustainable and is set aside.

Information technology software service - reverse charge mechanism - classification of ERP implementation services - Liability for service tax on ERP-related services w.e.f. 16.05.2008 and discharge of tax by the appellant - HELD THAT: - The Tribunal recorded that the appellant had discharged the service tax liability under the category of "Information Technology Software Service" for payments made after 16.05.2008, along with applicable interest. Given that the IT software service entry applies from 16.05.2008 and the appellant paid the tax and interest for the post-16.05.2008 period, the demand for that period stands maintained only to the extent already discharged by the appellant.

Service tax liability for the period w.e.f. 16.05.2008 is recognised as chargeable under "Information Technology Software Service" but the appellant's payment (with interest) is accepted; no further demand is sustained beyond amounts paid.

Extended period of limitation under section 73 - cenvat credit - waiver of penalties under Section 80 - Invokability of extended limitation and imposition of penalties for the disputed periods - HELD THAT: - The Tribunal observed that the controversy was essentially one of statutory interpretation and that no mala fide on the part of the appellant was shown. It further noted that the appellant was entitled to avail cenvat credit in respect of the service tax, rendering the issue revenue neutral to an extent. In light of these facts and the interpretational nature of the dispute the Tribunal found it appropriate to invoke the discretionary power under Section 80 of the Finance Act to remit penalties. The show cause invocation of extended period under section 73 was not sustained as a ground to uphold the penalty in the circumstances.

Penalties imposed in the impugned order are set aside; extended period/penalty claims are not sustained in the facts of this case.

Final Conclusion: The appeal is allowed in part: demands treated as taxable under management consultancy for periods prior to 16.05.2008 are set aside; liability under "Information Technology Software Service" w.e.f. 16.05.2008 is recognised but accepted to the extent paid by the appellant; penalties are remitted under Section 80 and the impugned order is modified accordingly.

Taxability of banking and other financial services - all forms of fund management - operation of bank accounts - classification of services under section 65(105)(zm) and section 65(12) (Banking and Other Financial Services) - application of proviso to Section 11B of the Central Excise Act to service tax (refund where tax paid under protest) via Section 83 of the Finance Act, 1994 - unjust enrichment as a condition for refund adjudication

Taxability of banking and other financial services - all forms of fund management - operation of bank accounts - classification of services under section 65(105)(zm) and section 65(12) (Banking and Other Financial Services) - Whether the services rendered by the appellant in relation to PPF accounts amounted to taxable 'all forms of fund management' or were limited to operation/maintenance of accounts not constituting fund management for the disputed period. - HELD THAT: - The Tribunal examined the statutory scope of BOFS as it stood during the disputed period and the specific functions performed by the appellant in relation to PPF accounts (opening accounts, receiving subscriptions, allowing withdrawals in accordance with the PPF scheme, crediting interest, maintaining KYC and account records, and closure/transfer). The PPF scheme and Public Provident Fund Act, 1968 establish that PPF monies are credited to Government accounts and invested pursuant to Government-prescribed norms; banks act as 'accounts offices' receiving subscriptions and disbursing on behalf of the Government without discretion over investment or use of funds. The Tribunal held that dictionary-based definitions and external references relied upon by the lower authority were inadequate in context, and that statutory and regulatory frameworks (including SEBI regime for portfolio managers) show fund management involves discretionary investment/portfolio management under contractual arrangements which were absent here. Consequently, there was no fund management by the appellant - the activity was operation/maintenance of PPF accounts under the scheme and not taxable as 'all forms of fund management' for the disputed period prior to and including the payment date. [Paras 8, 9, 11, 12, 15]

The Tribunal held that the appellant did not render 'fund management' services and the finding that the services were taxable as 'all forms of fund management' is unsustainable; the impugned order is set aside on this ground.

Operation of bank accounts - classification of services under section 65(105)(zm) and section 65(12) (Banking and Other Financial Services) - Whether operation/maintenance of PPF accounts fell within the expanded taxable category 'operation of bank accounts' w.e.f. 10.09.2004 and whether RBI was a 'customer' for the purposes of the pre-amendment wording. - HELD THAT: - The Tribunal noted the Finance (No.2) Act, 2004 amendments effective 10.09.2004 brought 'operation of bank accounts' within BOFS and that the pre-10.09.2004 taxable sub-clause applied to services 'to a customer'. The Tribunal observed that the Commissioner (Appeals) was inconsistent in treating the RBI both as the service-recipient for establishing taxability and as not a 'customer' for denial of exemption; the amendment substituting 'any person' for 'customer' came only w.e.f. 16.05.2008. On the facts and statutory scheme, services with respect to PPF operation were brought into the service-tax net only from 10.09.2004, and, where the recipient is not a 'customer' within the pre-amendment text, the taxability under the disputed provision does not arise for the earlier period. [Paras 7, 12, 13]

Operation of PPF accounts was brought into the service-tax net w.e.f. 10.09.2004; under the pre-amendment text services taxable only 'to a customer', and the impugned order's treatment was legally untenable.

Application of proviso to Section 11B of the Central Excise Act to service tax (refund where tax paid under protest) via Section 83 of the Finance Act, 1994 - unjust enrichment as a condition for refund adjudication - Whether the appellant, having paid service tax 'under protest' and so indicated on challans, was entitled to seek refund beyond the one-year period and what further adjudication (if any) was required. - HELD THAT: - The Tribunal relied on precedent and the statutory nexus created by section 83 of the Finance Act (making section 11B of the Central Excise Act applicable to service tax) to hold that payments made 'under protest' as indicated on payment challans entitle the payer to seek refund without the one-year limitation. However, statutory and jurisprudential principles require scrutiny for unjust enrichment before a refund is allowed. The Tribunal therefore directed remand of the refund application to the original authority for limited adjudication confined to the unjust enrichment aspect, with a mandate to decide the matter within three months and grant opportunity of personal hearing. [Paras 14, 16]

The appellant is eligible to claim refund of tax paid under protest; the refund claim is remanded to the original authority solely for determination of unjust enrichment within three months.

Final Conclusion: The impugned order of the Commissioner (Appeals) is set aside. The appeals are allowed: the Tribunal holds that the appellant did not render 'fund management' services in relation to PPF accounts for the disputed period and is entitled to seek refund of tax paid under protest; the refund application is remanded to the original authority for limited adjudication on unjust enrichment, to be decided within three months with opportunity of personal hearing.

Business Auxiliary Service - taxability of trade discounts, incentives and commissions - Authorized Service Station - verification of payments through cash and Cenvat credit - Renting of Immovable Property - credit for service tax payments already made - Penalty under Section 78 of Finance Act, 1994 - sustainability of penalty for alleged short payment - Penalty for failure to file ST-3 returns - liability for statutory late filing penalty

Renting of Immovable Property - credit for service tax payments already made - Recomputation of service tax liability on renting of immovable properties and allowance of credit for payments already made. - HELD THAT: - The Tribunal's earlier directions required the adjudicating authority to give due credit for service tax payments made by the appellant in respect of renting of immovable property rather than demand the entire amount without adjustment. In de novo adjudication the Principal Commissioner recalculated the total service tax payable for the period and took into account the GAR-7 challans produced by the appellant. The appellants accepted the recomputed shortfall. Given the conformity with the Tribunal's directions and the appellant's acceptance, there is no need for further examination.

Recomputed service tax shortfall on renting of immovable properties upheld; demand of Rs.2,37,553/- accepted by the appellant.

Authorized Service Station - verification of payments through cash and Cenvat credit - Verification and acceptance of payments (cash and Cenvat credit) towards service tax liability for authorised service station activity. - HELD THAT: - The Tribunal had directed verification of payments reflected partly in cash challans and partly by debit to the Cenvat credit account, noting that benefit should be given where payments were discharged even if ST-3 returns did not correctly reflect such debits. The Principal Commissioner, in de novo proceedings, verified GAR-7 challans and Cenvat credit usage against the appellant's records and recomputed the actual tax shortfall. The appellants have accepted the recalculated liability, so further adjudication by the Tribunal on this head is unnecessary.

Recomputed service tax shortfall on authorised service station upheld; demand of Rs.3,77,161/- accepted by the appellant.

Business Auxiliary Service - taxability of trade discounts, incentives and commissions - Business Auxiliary Service - application of CBIC Circular No.87/05/2006-ST and Tribunal precedents - Whether incentives/commissions/trade discounts received by the dealer from the manufacturer are taxable as business auxiliary services. - HELD THAT: - The Principal Commissioner treated various incentives paid by the manufacturer as consideration for promotion/marketing and taxed them as business auxiliary services. The Tribunal examined the nature of the transactions and concluded that where supplies between manufacturer and dealer are on a principal to principal basis and incentives/discounts arise under manufacturer schemes or trade discount mechanisms, they cannot be stretched into taxable business auxiliary services merely because described as incentives. The Tribunal relied on CBIC Circular No.87/05/2006 ST (clarifying the distinction between reimbursements for free services and trade discounts) and multiple coordinate bench precedents holding that dealer incentives under scheme/circulars are trade discounts and not taxable as business auxiliary services. Applying these authorities and the facts that incentives here flowed under agreed schemes and pertained to principal to principal sales, the Tribunal held the demand unsustainable.

Demand of service tax, interest and penalty adjudged on account of business auxiliary services (incentives/discounts) set aside; taxable demand of Rs.1,29,32,934/- and related penalty under Section 78 vacated.

Penalty for failure to file ST-3 returns - liability for statutory late filing penalty - Sustainability of penalty imposed for failure to file ST-3 returns in time. - HELD THAT: - While the penalty under Section 78 imposed in relation to the business auxiliary service demand was set aside along with the tax demand on that head, the Tribunal found that the separate penalty of Rs.10,000/- for failure to file ST-3 returns in time was properly imposed and remained unaffected by the quashing of the business auxiliary service demand. The Principal Commissioner had imposed that penalty on the ground of late filing, and the Tribunal upheld that finding.

Penalty of Rs.10,000/- for failure to file ST-3 returns is upheld.

Final Conclusion: The appeal is partly allowed: recomputed tax demands for renting of immovable properties and authorised service station are sustained as accepted by the appellant; the demand, interest and penalty relating to business auxiliary services (incentives/discounts) are set aside in view of the nature of the transactions, CBIC Circular No.87/05/2006 ST and consistent Tribunal precedents; the separate penalty for failure to file ST 3 returns is upheld.

Taxability of incentives/overriding commission as consideration for taxable service - valuation under Section 67 of the Finance Act, 1994 - business auxiliary service - transaction specific consideration doctrine

Taxability of incentives/overriding commission as consideration for taxable service - valuation under Section 67 of the Finance Act, 1994 - business auxiliary service - transaction specific consideration doctrine - The amounts received by the assessee as "Overriding Commission"/incentives from airlines are not taxable as consideration for "business auxiliary service" under the Finance Act. - HELD THAT: - The Tribunal held that incentives paid for achieving predetermined sales targets are not transaction specific consideration for the provision of a particular taxable service and therefore do not form part of the taxable value under Section 67. Applying the transaction specific consideration principle as explained in the cited Larger Bench decision, incentives triggered by achieving overall performance targets are general performance based payments and not consideration for any particular supply or service; consequently they cannot be included in the gross amount charged for "such" taxable services. The impugned show cause notices and adjudicating orders treating the overriding commission as taxable under business auxiliary service were therefore incorrect. The Tribunal followed the precedent of the Larger Bench and other authorities which concluded that target incentives are not leviable to service tax.

Appeals allowed; the amounts received as overriding commission/incentives are not taxable as business auxiliary service and the impugned orders are set aside.

Final Conclusion: Following the Larger Bench precedent, the Tribunal allowed the appeals and held that the "Overriding Commission"/incentives received by the appellant are not taxable as consideration for business auxiliary service for the periods in dispute; the impugned orders are set aside.

Interest on delayed refunds - Commencement of liability under Section 11BB - Date of receipt of refund application as relevant date - Consequential refund arising from appellate order - Board Circular on automatic attraction of Section 11BB - Deposit under protest not constituting relevant date for refund interest - Duty of revenue to dispose refund claims within three months

Interest on delayed refunds - Date of receipt of refund application as relevant date - Commencement of liability under Section 11BB - Consequential refund arising from appellate order - The date from which interest on the delayed sanction of a consequential refund is to be calculated under Section 11BB of the Central Excise Act, 1944. - HELD THAT: - The Tribunal held that Section 11BB triggers interest automatically where a refund sanctioned is beyond three months from the date of receipt of the refund application under Section 11B(1). The refund sought by the appellant arose as a consequential benefit of the Tribunal's Final Order dated 13.08.2018; the appellant filed the refund application on 05.10.2018 and the department failed to dispose the claim within the three-month statutory period. Reliance was placed on the Board Circular reiterating that Section 11BB is attracted automatically and need not await supervisory instructions, and on Supreme Court authority (including Ranbaxy Laboratories and Smt. Ujjam Bai) endorsing that the relevant date for reckoning interest is the expiry of three months from receipt of the application. The Tribunal rejected the appellant's contention that interest must be reckoned from the date of earlier deposit under protest or from the date of filing a revised claim; amounts paid under protest do not operate as the relevant date once the proper officer adjudicates the liability. The Tribunal also found that delay was attributable to the department's protracted correspondence and failure to point out deficiencies in the time prescribed, and thus the department cannot rely on late submission of supporting documents to avoid interest liability. Consequentially, interest is payable from the date immediately after the expiry of three months from 05/10/2018, at the rate notified under the statute. [Paras 7, 10]

Liability to pay interest under Section 11BB commences from the date of expiry of three months from the date of receipt of the refund application (i.e. from 05/10/2018); neither the date of deposit under protest nor the date of revised claim governs commencement of interest.

Final Conclusion: The impugned order is set aside. Interest on the consequential refund is to be calculated from the date immediately after the expiry of three months from the date of receipt of the refund application (05/10/2018) in terms of Section 11BB of the Central Excise Act, 1944; the appeal is disposed accordingly.

Cenvat credit admissibility - forged customs licences and validity of bills of entry - effect of customs adjudication on entitlement to credit - remand for de novo consideration

Cenvat credit admissibility - forged customs licences and validity of bills of entry - effect of customs adjudication on entitlement to credit - Whether the denial of cenvat credit on the ground that bills of entry were assessed on the basis of forged VKGUY/DEPB licences could be sustained without regard to the customs adjudication order. - HELD THAT: - The Tribunal found that the adjudicating authority denied cenvat credit principally on the allegation of mala fide and because the bills of entry were alleged to have been assessed on the basis of forged licences. The record showed that the customs department had already adjudicated the related show-cause notice and passed an order dated 28.02.2014 (in proceedings originating from SCN dated 05.11.2012), and that penalties had been dropped in the customs adjudication. The adjudicating authority deciding the cenvat claim did not consider the customs adjudication order. For this reason the Tribunal concluded that the matter required fresh consideration: the adjudicating authority must re-examine the entitlement to cenvat credit in the light of and after taking into account the customs adjudication order, and pass a de novo reasoned order. [Paras 4, 5]

Impugned order set aside and appeal allowed by way of remand to the adjudicating authority for de novo consideration after taking into account the customs adjudication order dated 28.02.2014.

Final Conclusion: The appeal is allowed by way of remand; the adjudicating authority is directed to pass a de novo order after considering the customs adjudication order dated 28.02.2014, within two months from the date of this order.

Utilisation of Cenvat credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess - area based exemption notification and exemption of Education Cess as duty of excise - issue not res integra due to binding precedents

Utilisation of Cenvat credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess - issue not res integra due to binding precedents - The appellant is entitled to utilise Cenvat credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess. - HELD THAT: - The Tribunal examined earlier decisions of this bench and of higher fora which treated Education Cess as a duty of excise and held that, where area based exemption notifications applied, credit of basic excise duty could be utilised for payment of Education Cess and Secondary & Higher Education Cess. Having considered the cited authorities and the consistent line of decisions of this Tribunal (including orders in ASR Multimetals, Mono Steel and others) which follow the Supreme Court's approach on the point, the Tribunal held that the question is no longer res integra and is settled in favour of the assessee. For these reasons the impugned order rejecting utilisation of cenvat credit was set aside and the appeal allowed. [Paras 4, 5]

Impugned order set aside and appeal allowed; appellant entitled to utilise Cenvat credit of basic excise duty for payment of Education Cess and Secondary & Higher Education Cess.

Final Conclusion: In view of settled precedents treating Education Cess as a duty of excise and permitting utilisation of basic excise duty credit for payment of Education Cess and Secondary & Higher Education Cess, the Tribunal set aside the impugned order and allowed the appeal.

Tax deduction at source - machinery provision - charging section - transfer of right to use goods deemed sale - rule-making power and delegated legislation - ultra vires challenge to delegated legislation

Tax deduction at source - machinery provision - ultra vires challenge to delegated legislation - rule-making power and delegated legislation - Validity of Rule 3A(2) of the Tripura Sales Tax Rules, 1976 prescribing deduction of tax at source at 4% on transfer of right to use goods - HELD THAT: - The Court held that Rule 3A(2) is a valid machinery provision enacted under the inclusive rule-making power conferred by Section 44. The proviso to Section 3(1) fixes the rate of tax (4%) on transfer of the right to use goods and Section 44 permits rules prescribing procedure and manner of recovery. Rule 3A(2) prescribes only the mode of recovery by requiring the person making payment to deduct tax at source and does not alter the chargeability or the person liable under the Act. The High Court erred in treating the Rule as going beyond the Act; since the rule merely provides a recovery mechanism consistent with the charging provisions, it cannot be declared ultra vires. [Paras 8, 9]

Rule 3A(2) is not ultra vires the Tripura Sales Tax Act, 1976 and is a valid machinery provision prescribing deduction at source.

Charging section - transfer of right to use goods deemed sale - tax liability of transferor - Whether the transferor of the right to use goods is liable to pay tax under Section 3(1) read with definitions in Sections 2(b) and 2(g) - HELD THAT: - The Court concluded that the proviso to Section 3(1) makes the rate of tax on transfer of the right to use goods 4% and, read with Section 2(g)(ii), such transfer is deemed a 'sale'. Section 2(b) defines 'dealer' to include a person making a sale under Section 3A. Consequently, a transferor who transfers the right to use vehicles is within the fiscal scheme and liable to tax under Section 3(1). The respondents' arguments that they were not dealers or that there was no taxable sale were rejected because the statutory definitions and charging provision expressly bring such transfers within the ambit of taxable sales. [Paras 8]

The transferor of the right to use goods is liable to pay tax under Section 3(1) read with Sections 2(b) and 2(g); absence of registration does not negate liability under the charging provision.

Final Conclusion: The appeals are allowed. The decision of the High Court declaring Rule 3A(2) ultra vires and quashing the 1992 memorandum is set aside; Rule 3A(2) is upheld as a valid machinery provision and the liability to pay tax on transfer of the right to use goods remains governed by the charging provisions of the Act.

Admissibility of electronic records under Section 65-B of the Indian Evidence Act - Mandatory nature of certificate under Section 65-B(4) - Court's power to summon authority to produce certificate - Stage for production of Section 65-B certificate - Judicial review under Article 227 for non-application of mind/perversity

Section 65-B(4) certificate requirement - Admissibility of electronic records under Section 65-B of the Indian Evidence Act - Court's power to summon authority to produce certificate - Stage for production of Section 65-B certificate - Whether the Trial Court erred in rejecting the application to call upon the Income Tax Department to provide the requisite certificate under Section 65-B for the Income Tax records filed below list Exh. 313 and in refusing to exhibit those documents. - HELD THAT: - The Court accepted that Section 65-B requires a certificate to ensure source and authenticity of electronic records and that, following Arjun Panditrao Khotkar, where a party has done everything possible to obtain the certificate but is unable to do so, the trial court must summon the person(s) referred to in Section 65-B(4) and require production of the certificate. The Trial Court's finding that the petitioner had neither sought the certificate from the department nor applied to the court for directions was erroneous because the petitioner had previously obtained summons directing the Income Tax Department to produce records, the department's officer produced photocopies without the certificate, and the petitioner thereafter filed application Exh. 453 expressly praying that the Trial Court call upon the Income Tax Department to provide the certificate. The Trial Court's rejection of Exh. 453 on the ground that the petitioner had not earlier sought the certificate demonstrated non-application of mind and was therefore perverse. The High Court quashed the impugned order and directed the Trial Court to call upon the Income Tax Department to furnish a proper certificate as required by Section 65-B within four weeks, leaving all factual/merit issues in the suit open for trial. [Paras 15, 16, 17, 18, 20]

Order dated 30 April 2022 rejecting application Exh. 453 is quashed and set aside; writ petition allowed by directing the Trial Court to call upon the Income Tax Department to provide a Section 65-B certificate in respect of documents at Exh. 313 within four weeks, with parties to bear their own costs and no finding on merits of the suit.

Final Conclusion: Writ petition allowed: the High Court quashed the Trial Court's order rejecting the petitioner's application for a Section 65-B certificate, held that the petitioner had taken requisite steps and that the Trial Court erred in non-application of mind, and directed the Trial Court to obtain the certificate from the Income Tax Department within four weeks; factual and merit issues in the suit remain open for trial.