TaxTMI Updates e-Newsletter
Jun 26,2024

Violation of principles of natural justice - service of notice at communicated address - duty to intimate change of address - adjudication under Section 73(9) of the CGST/KSGST Act, 2017 - maintainability of writ under Article 226

Violation of principles of natural justice - service of notice at communicated address - duty to intimate change of address - adjudication under Section 73(9) of the CGST/KSGST Act, 2017 - Whether Ext. P3 order passed under Section 73(9) is vitiated for non service of notice when notices were sent to the assessee's shop address which was closed and not updated with the Department - HELD THAT: - The Court found that the assessee bears the responsibility to furnish and update the address for communications to the tax department. Notices issued to the address on record cannot be treated as invalid merely because the shop was closed and the assessee did not receive them. In such circumstances the State Tax Officer is entitled to complete adjudication by sending notices to the communicated address. The petitioner's non intimation of change of address precludes a complaint of breach of the principles of natural justice and does not warrant interference with Ext. P3.

Petition dismissed; Ext. P3 not set aside on ground of non service of notice.

Final Conclusion: Writ petition under Article 226 dismissed; petitioner's grievance of non service is untenable where notices were sent to the address on record and no update of address was furnished, without prejudice to other remedies in law.

Stay of recovery proceedings on compliance with pre-deposit conditions for appeal - quashing of attachment in view of entitlement under appeal provisions - benefit of notification permitting disposal of time-barred appeals subject to deposit conditions - statutory right to challenge determination under Section 73

Stay of recovery proceedings on compliance with pre-deposit conditions for appeal - quashing of attachment in view of entitlement under appeal provisions - benefit of notification permitting disposal of time-barred appeals subject to deposit conditions - Whether the order of attachment under Form GST DRC-13 dated 8th August 2023 could be continued despite the petitioner having complied with the deposit conditions for regularising the appeal under the notification and Section 107 of the Act, and whether the attachment should be quashed and the appeal decided on merits. - HELD THAT: - The petitioner filed an appeal against an order under Section 73 for the tax period July 2017 to March 2018 and had made the statutory pre-deposit. A subsequent notification permitted disposal on merits of time-barred appeals filed by a specified date if the conditions in paragraph 3 were complied with. A Coordinate Bench had directed the appellate authority to grant the benefit of that notification. The petitioner deposited the additional amount required under the notification (as evidenced in the Electronic Cash Ledger) and communicated the payment to the Assistant Commissioner. Notwithstanding these facts and the earlier direction to apply the notification, the respondents maintained the attachment effected by Form GST DRC-13 and continued recovery proceedings. The court held that once the conditions for regularisation under the notification and the pre-deposit requirements under Section 107(6) are complied with, the statutory scheme contemplates that recovery of the balance amount cannot continue because the appeal enjoys the protective effect (as embodied in Section 107(7) and the notification). Therefore continuance of the attachment was impermissible. The court quashed the attachment and directed that the appellate authority hear and dispose of the appeal on merits within a specified timeframe. [Paras 7, 8]

Attachment dated 8th August 2023 quashed; appellate authority directed to hear and dispose of the appeal on merits preferably within six weeks from communication of this order.

Final Conclusion: Writ petition allowed: the attachment under Form GST DRC-13 is quashed and the appellate authority is directed to consider and dispose of the regularised appeal on merits within the stipulated period.

Assessment against deceased person - Validity of assessment proceedings after death - Legal heirs' liability and initiation of fresh proceedings - Setting aside assessment order

Assessment against deceased person - Validity of assessment proceedings after death - Legal heirs' liability and initiation of fresh proceedings - Impugned assessment orders issued after the date of death of the assessee are unsustainable and therefore liable to be set aside. - HELD THAT: - The petitioner produced the death certificate recording the date of death as 08.05.2021. The show cause notice and the impugned assessment orders were issued subsequent to that date. On that factual foundation the Court held that proceedings and assessment orders addressed to a deceased person cannot be sustained. The Court set aside the impugned orders while expressly leaving open to the respondent the right to initiate proceedings against the legal heirs of the deceased, thereby preserving the tax authority's ability to proceed against the competent parties. [Paras 4, 5]

Impugned assessment orders dated 19.09.2023 set aside; respondent permitted to initiate proceedings against the legal heirs.

Final Conclusion: Writ petitions allowed by setting aside the impugned assessment orders issued after the assessee's death; respondent may initiate fresh proceedings against the legal heirs. No costs.

Entitlement to Input Tax Credit and recipient's burden to verify supplier's registration and tax payment under Section 16(2)(c) of the CGST Act - Validity (vires) of Section 16(2)(c) of the CGST Act - Liability of recipient for supplier's non-payment or cancellation of supplier's registration - Adinterim stay on coercive action during pendency of challenge to statutory provision

Entitlement to Input Tax Credit and recipient's burden to verify supplier's registration and tax payment under Section 16(2)(c) of the CGST Act - Validity (vires) of Section 16(2)(c) of the CGST Act - Challenge to the vires of Section 16(2)(c) of the CGST Act insofar as it imposes obligations on the purchaser to establish the supplier's registration and payment of tax for entitlement to Input Tax Credit. - HELD THAT: - The petitions raise a constitutional challenge to Section 16(2)(c) of the CGST Act on the ground that it imposes a dual burden on the purchaser: (a) to satisfy that the supplier is registered under the GST law and (b) to satisfy that the supplier has in fact paid the tax on supplies so as to entitle the purchaser to claim Input Tax Credit. The Court has entertained the challenge and issued rule returnable on 10.07.2024, thereby directing that the vires plea shall be adjudicated on notice. No adjudication on the merits of the constitutional challenge or on the correctness of the submissions has been made at this stage.

Challenge to vires taken on file and rule issued returnable; merits left to be decided on the return day.

Adinterim stay on coercive action during pendency of challenge to statutory provision - Liability of recipient for supplier's non-payment or cancellation of supplier's registration - Whether coercive action may be taken by revenue authorities against the petitioners during the pendency of the petitions challenging Section 16(2)(c). - HELD THAT: - On the petitioners' submission that demands are being raised against purchasers for tax allegedly unpaid by suppliers and that such demands arise in the context of cancellation of supplier registration, the Court granted adinterim relief. The order restrains the respondents from taking coercive steps while the petitions are pending, thereby preserving the petitioners' position until the rule is finally heard. This interim relief is granted without deciding the underlying liability issue and is limited to restraining coercive measures during the pendency of these proceedings. [Paras 4]

Respondents restrained from taking coercive steps against the petitioners during the pendency of the petitions.

Final Conclusion: Rule issued on the challenge to the vires of Section 16(2)(c) of the CGST Act returnable on 10.07.2024; adinterim protection granted restraining coercive action by revenue authorities during the pendency of the petitions, to be heard with Special Civil Application No. 15188 of 2020 and allied matters.

Condonation of delay - limitation in filing statutory appeal - remand for fresh disposal on merits - interest of justice - statutory appeal as alternative remedy to writ

Condonation of delay - limitation in filing statutory appeal - interest of justice - remand for fresh disposal on merits - Appellate order rejecting the appeal as time barred was set aside and the matter remanded for fresh consideration on merits. - HELD THAT: - The appellate authority had rejected the appeal as having been presented beyond the condonable period, the 30 day period having expired on 08.12.2023 and the appeal being filed on 28.12.2023. The court observed that the delay beyond the condonable period was only 20 days and that the interest of justice required that the petitioner's appeal be considered on its merits. Consequently, the appellate order dated 01.03.2024 was set aside and the matter remanded to the appellate authority with a direction to receive and dispose of the appeal on merits if re presented within the stipulated time, without going into the question of limitation. [Paras 4, 5]

Appellate order set aside; matter remanded to appellate authority to receive and decide the appeal on merits if re presented within 10 days, without considering limitation.

Statutory appeal as alternative remedy to writ - remand for fresh disposal on merits - Writ petition challenging the original order was closed in view of the remand of the statutory appeal. - HELD THAT: - The petitioner had pursued a statutory appeal which the court has directed to be reopened and decided on merits. In view of remanding the appellate matter for fresh disposal, the court declined to entertain the writ petition further and closed W.P.No.13411 of 2024. Ancillary miscellaneous petitions were also closed. The court recorded no order as to costs. [Paras 5]

Writ petition closed in view of remand; connected miscellaneous petitions closed; no costs.

Final Conclusion: The appellate order rejecting the appeal as time barred is set aside and the matter remanded; the petitioner may re present the appeal within 10 days for disposal on merits without reference to limitation, and the writ petition is closed in view of the remand.

Seigniorage fee and mining lease under GST - adjudication kept in abeyance pending decision of Nine Judge Constitution Bench - no recovery of GST on royalty pending decision - opportunity to submit objections/representations to show cause notices - submission of reply within four weeks - contentions left open for appropriate remedies post-decision

Opportunity to submit objections/representations to show cause notices - submission of reply within four weeks - Petitioner permitted to submit reply/objections to the intimation challenging GST liability in respect of seigniorage fee and mining lease within a specified time. - HELD THAT: - Relying on the Division Bench directions in A. Venkatachalam v. Assistant Commissioner (ST), the High Court allowed the petitioner a period of four weeks from receipt of a copy of this order to submit his reply/objections to the intimation contesting GST liability on seigniorage fee and mining lease. The Court applied the same procedural direction insofar as the present petition challenges the intimation and required the petitioner to furnish his objections/representations within the stipulated period so that the authority may proceed in accordance with law. [Paras 4, 5]

Petitioner permitted to submit his reply/objections within four weeks; writ petition disposed on those terms.

Adjudication kept in abeyance pending decision of Nine Judge Constitution Bench - no recovery of GST on royalty pending decision - contentions left open for appropriate remedies post-decision - Adjudicatory proceedings on the GST liability are to be conducted but any orders of adjudication are to be kept in abeyance and no recovery of GST on royalty shall be effected until the Nine Judge Constitution Bench decides the issue. - HELD THAT: - Following the Division Bench directions, the Court directed that upon receipt of the petitioner's objections/representations the authority concerned may proceed with adjudication on merits after affording a reasonable opportunity of being heard. However, the Court ordered that the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench determines the nature of royalty, and expressly held that there shall be no recovery of GST on royalty until that decision. All contentions are left open for the petitioner to pursue appropriate proceedings, including appeals, after the outcome of the Constitution Bench decision. [Paras 4, 5]

Adjudication may proceed on merits but orders shall remain in abeyance; no recovery of GST on royalty until the Nine Judge Constitution Bench decides; contentions preserved.

Final Conclusion: Writ petition disposed on the same terms as the Division Bench directions: petitioner granted four weeks to file objections; adjudication may be carried out but any orders are to be kept in abeyance and no recovery of GST on royalty to be made until the Nine Judge Constitution Bench decides the issue; all contentions left open for appropriate proceedings thereafter.

Revocation of cancellation of GST registration - Filing of belated GST returns with tax, interest and fee - Restriction on utilization of Input Tax Credit pending scrutiny - Conditional restoration of registration upon compliance - Filing of returns for period subsequent to cancellation declaring correct value of supplies - Directions to modify GSTN portal to enable filing

Revocation of cancellation of GST registration - Conditional restoration of registration upon compliance - Revocation of the cancellation of the petitioners' GST registrations subject to specified conditions. - HELD THAT: - The High Court, following the conditional approach adopted in Suguna Cutpiece, declined to adjudicate the petitions on merits and instead directed that the cancelled registrations be restored only upon satisfaction of enumerated conditions. The court made clear that restoration is not automatic but contingent upon compliance with the directions requiring filing of returns, payment of tax, interest and prescribed fee, and other supervisory steps set out in the order. The restoration is therefore conditional and subject to verification and compliance by the petitioners and appropriate departmental scrutiny.

Registrations to be revived forthwith on compliance with the conditions directed by the Court.

Filing of belated GST returns with tax, interest and fee - Petitioners directed to file returns for the period prior to cancellation together with tax, interest and the fee for belated filing within forty five days from receipt of the order. - HELD THAT: - Relying on the court's power to condition relief, the petitioners were ordered to file all outstanding returns for the period before cancellation and to pay the corresponding tax liability along with interest and the fee prescribed for belated filings. The timeline for compliance was fixed at forty five days from receipt of the order to regularise statutory defaults that led to cancellation.

Petitioners must file prior-period returns and pay tax, interest and belated filing fee within 45 days.

Restriction on utilization of Input Tax Credit pending scrutiny - Unutilized Input Tax Credit shall not be adjusted against tax, interest or fees and shall remain unusable until scrutinised and approved by the competent departmental officer. - HELD THAT: - The court prohibited adjustment of tax, interest, fine or fee from any unutilized Input Tax Credit available to the petitioners. Any unutilized ITC must first be subjected to departmental scrutiny and approval before it may be utilized for meeting future tax liabilities, thereby ensuring that claimed credits are verified prior to utilisation in the context of revival of registration.

ITC cannot be used to pay outstanding liabilities until scrutinised and approved by the department.

Filing of returns for period subsequent to cancellation declaring correct value of supplies - Petitioners were directed to file GST returns for the period subsequent to cancellation declaring the correct value of supplies and pay the tax accordingly. - HELD THAT: - In addition to rectifying antecedent defaults, the court required the petitioners to regularise compliance for the post-cancellation period by filing returns reflecting correct values of supplies and discharging the resultant tax liability. This obligation formed part of the conditional framework for revival of registration.

Petitioners to file returns and pay GST for post-cancellation period declaring correct supply values.

Directions to modify GSTN portal to enable filing - Respondents directed to instruct GST Network to modify the GST Web portal to allow the petitioners to file returns and make payments, and to complete the required changes within thirty days of receipt of the order. - HELD THAT: - Recognising practical impediments to compliance, the court ordered the respondents to take steps through GST Network, New Delhi, to alter the portal architecture to permit the petitioners to file returns and pay tax, penalty and fees. A compliance timeline of thirty days from receipt of the order was fixed for implementing these technical changes, facilitating the petitioners' ability to obey the court's directions.

Respondents to ensure GSTN portal is enabled for the petitioners' filings and payments within 30 days.

Restriction on utilization of Input Tax Credit pending scrutiny - Conditional restoration of registration upon compliance - Any Input Tax Credit earned subsequently shall be allowed to be utilised only after departmental scrutiny and approval, and only approved ITC may be used for future tax liabilities after revival. - HELD THAT: - The court extended the verification requirement to any ITC earned after the cancellation period, stipulating that utilisation of such credits for discharge of future liabilities is permissible only after scrutiny and approval by the respondents or other competent authority. This ensures continued supervisory control over ITC claims both for past and subsequent periods as a precondition for lawful utilisation post-revival.

Post-cancellation ITC usable only after departmental scrutiny and approval; only approved ITC may be applied to future liabilities.

Final Conclusion: Writ petitions disposed by directing conditional revival of GST registrations on compliance with specified directions: filing prior and post-cancellation returns, payment of tax, interest and belated filing fee, prohibition on utilising ITC until departmental scrutiny and approval, and directions to respondents to enable portal facilitation; restoration to follow upon fulfilment of these conditions.

Breach of principles of natural justice - confirmation of tax proposal for non-response to show cause notice - availment of Input Tax Credit due to misclassification in GSTR-3B - opportunity of personal hearing before fresh assessment - remand for fresh consideration subject to deposit condition

Breach of principles of natural justice - confirmation of tax proposal for non-response to show cause notice - availment of Input Tax Credit due to misclassification in GSTR-3B - Impugned order confirming tax proposal was set aside on grounds of breach of natural justice and because the confirmation resulted from non-response to the show cause notice in respect of alleged wrongful availment of ITC. - HELD THAT: - The Court observed that the tax proposal related to alleged wrongful availment of Input Tax Credit arising from amounts being specified in the reverse charge mechanism column instead of the appropriate ITC column in GSTR-3B returns. The impugned order was founded on the fact that the petitioner neither replied to the show cause notice nor attended the offered personal hearing; nevertheless, the interests of justice required that the petitioner be afforded an opportunity to contest the demand on merits. For these reasons the Court found the impugned orders to be vitiated by an absence of adequate opportunity and set them aside to enable fresh consideration. [Paras 4]

Impugned orders dated 31.10.2023 set aside and matter remitted to respondents for fresh consideration after affording the petitioner an opportunity to reply and be heard.

Remand for fresh consideration subject to deposit condition - opportunity of personal hearing before fresh assessment - Matter remanded to the respondents on condition that the petitioner remit 10% of the disputed tax demand for each assessment period within two weeks and furnish a reply; respondents to provide hearing and pass fresh assessment orders within three months thereafter. - HELD THAT: - As a condition for granting relief, the petitioner undertook to deposit 10% of the disputed tax demand in respect of each assessment period. The Court directed that, within two weeks of receipt of the order, the petitioner must remit the stipulated deposit and may submit a reply to the show cause notice. Upon satisfaction that the deposit has been made and receipt of the petitioner's reply, the respondents are to afford a reasonable opportunity, including a personal hearing, and thereafter pass fresh assessment orders within three months from receipt of the reply. The order therefore preserves the respondents' ability to adjudicate the merits while placing the petitioner on terms to ensure compliance. [Paras 5]

Remand granted subject to payment of 10% of disputed tax demand within two weeks, submission of reply, provision of personal hearing and issuance of fresh assessment orders within three months.

Final Conclusion: Writ petitions allowed in part: impugned orders set aside and matter remanded for fresh consideration after the petitioner deposits 10% of the disputed tax demand for each assessment period within two weeks and is afforded an opportunity, including personal hearing; fresh assessment orders to be passed within three months of receipt of the petitioner's reply; no costs.

Principles of natural justice - opportunity of being heard - reasoned order - rejection of reply to show cause notice - remand for fresh consideration

Principles of natural justice - reasoned order - rejection of reply to show cause notice - Exts. P10 and P11 were passed in violation of the principles of natural justice by not recording reasons for rejecting the petitioner's replies. - HELD THAT: - The Court found that the authority had issued show cause notices, received replies from the petitioner and noted submissions that tax had been paid and other contentions, but in Exts. P10 and P11 the authority merely stated that the petitioner's replies were not acceptable without recording why. Where a show cause notice elicits a reply, the authority must record reasons when it rejects that reply; absence of such reasons renders the order contrary to the principles of natural justice. On this basis Exts. P10 and P11 were set aside. [Paras 5]

Exts. P10 and P11 set aside for failure to record reasons rejecting the petitioner's reply.

Opportunity of being heard - remand for fresh consideration - The matters in Exts. P10 and P11 were remanded for reconsideration with a fresh hearing and fresh orders. - HELD THAT: - Having set aside the impugned orders for want of reasons, the Court directed the authority to re-examine the matters after providing the petitioner a further opportunity of personal hearing. A specific date was fixed for appearance and the authority was directed to pass fresh orders within a stipulated period, thereby remitting the controversy for de novo consideration rather than finally adjudicating on the merits. [Paras 6]

Matter remitted to the 1st respondent for fresh hearing and decision within one month; petitioner to appear on the fixed date.

Final Conclusion: Impugned orders Exts. P10 and P11 set aside for breach of natural justice; matter remanded for fresh consideration after hearing and fresh orders to be passed within one month.

Principles of natural justice - assessment based on GSTR-3B/GSTR-2A mismatch - opportunity of personal hearing - remand with terms - remittance as condition for relief - Section 74 of applicable GST enactments - limitation

Principles of natural justice - opportunity of personal hearing - assessment based on GSTR-3B/GSTR-2A mismatch - Validity of the impugned assessment order in view of alleged non-communication of the show cause notice and denial of opportunity of hearing - HELD THAT: - The Court found that the tax proposals arose from mismatches between the petitioner's GSTR-3B returns and the auto-populated GSTR-2A, and that the impugned order was passed after the petitioner failed to reply to the show cause notice or attend a personal hearing. Noting the petitioner's contention of non-receipt of the notice and the resultant deprivation of a reasonable opportunity, the Court held that in the interests of justice the assessment order should be set aside and the petitioner afforded an opportunity to contest the demand on merits. The Court exercised its supervisory jurisdiction to remit the matter for fresh consideration, subject to placing the petitioner on terms to ensure orderly prosecution of the proceedings.

Impugned order dated 05.01.2024 set aside; matter remitted for fresh assessment with directions to provide the petitioner a reasonable opportunity, including a personal hearing.

Remand with terms - remittance as condition for relief - Section 74 of applicable GST enactments - limitation - Terms and scope of remand and preservation of contestable contentions including limitation - HELD THAT: - The Court conditioned the relief of remand on the petitioner's payment of 10% of the disputed tax demand within two weeks and permitted the petitioner to submit a reply to the show cause notice within the same period. Upon satisfaction of receipt of the 10% remittance, the respondent was directed to grant a reasonable opportunity, including personal hearing, and to pass a fresh assessment order within three months from receipt of the petitioner's reply. The Court expressly left all contentions open to the petitioner on merits, including the plea of limitation, and did not adjudicate those issues on merits, instead directing fresh consideration in the remitted proceedings.

Remand ordered on terms: petitioner to remit 10% of disputed demand and file reply; fresh assessment to be conducted within three months after compliance; all substantive defenses, including limitation, left open for determination by the authority.

Final Conclusion: Writ petition allowed by setting aside the order dated 05.01.2024 and remitting the matter for fresh adjudication on the stated terms (10% remittance within two weeks, opportunity to file reply and personal hearing, fresh order within three months); substantive defenses including limitation remain open for decision by the authority.

Principles of natural justice - opportunity of hearing - reliance on mismatch between GSTR-1 and GSTR-3B - remand for fresh consideration on condition of interim deposit - personal hearing - inapplicability of Rule 88C of the Central Goods and Services Tax Rules, 2017 to periods prior to 07.01.2022

Principles of natural justice - opportunity of hearing - Denial of reasonable opportunity to the petitioner was found to have occurred and vitiated the impugned order. - HELD THAT: - The court found that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend personal hearing. In view of that failure, and the petitioner's assertion that she was unable to respond due to personal difficulties, the impugned order dated 17.10.2023 was set aside on the ground that the principles of natural justice were not satisfied. The court held that the petitioner must be afforded a reasonable opportunity, including a personal hearing, to contest the tax demand on merits. [Paras 1, 4, 5]

Impugned order set aside for breach of natural justice and the petitioner to be given a reasonable opportunity including personal hearing.

Reliance on mismatch between GSTR-1 and GSTR-3B - remand for fresh consideration on condition of interim deposit - personal hearing - inapplicability of Rule 88C of the Central Goods and Services Tax Rules, 2017 to periods prior to 07.01.2022 - The matter was remanded for fresh consideration on terms; the assessment based solely on a GSTR-1/GSTR-3B mismatch required adjudication on merits after giving opportunity to the petitioner. - HELD THAT: - On perusal of the impugned order the court observed that the confirmed tax proposal related entirely to a mismatch between GSTR-1 and GSTR-3B and that confirmation resulted from non-response by the petitioner. Rather than deciding the substantive correctness of the tax proposal or the statutory contention regarding Rule 88C, the court remitted the matter for reconsideration on merits. Remand was ordered on specified terms: the petitioner was directed to remit 10% of the disputed tax demand within two weeks and permitted to submit a reply to the show cause notice within that period; upon satisfaction of receipt of the 10% amount the respondent must provide a reasonable opportunity of hearing, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. [Paras 3, 4, 5]

Matter remanded for fresh consideration on the petitioner depositing 10% of the disputed tax demand and being afforded a reasonable opportunity including personal hearing; fresh order to be passed within three months of receipt of reply.

Final Conclusion: Writ petition disposed of by setting aside the impugned order for breach of natural justice and remitting the matter for fresh consideration on the petitioner depositing 10% of the disputed tax demand, filing a reply within two weeks and being afforded a reasonable opportunity including personal hearing, with a fresh decision to follow within three months.

Denial of personal hearing - opportunity to be heard - remand for reconsideration on condition of deposit - obligation to monitor GST portal - consequence of non-response to show cause notice

Denial of personal hearing - opportunity to be heard - consequence of non-response to show cause notice - Impugned order recorded no personal hearing and the petitioner was denied an effective opportunity to be heard, warranting setting aside of the order. - HELD THAT: - The Court examined the impugned order and the communicative steps preceding it. Although notices and hearing notices were said to have been uploaded on the GST portal, the order itself shows blanks in the personal hearing date fields. The Court held that, while a registered person is under an obligation to monitor the GST portal, the petitioner's explanation for non-participation was not satisfactory. Crucially, the tax proposal had been confirmed solely because the petitioner did not reply to the show cause notice or participate in proceedings. In the interest of justice the Court concluded that the petitioner must be afforded an opportunity to contest the demand on merits. [Paras 5]

Impugned order set aside for denial of effective opportunity to be heard and petitioner to be afforded an opportunity to contest the demand.

Remand for reconsideration on condition of deposit - obligation to monitor GST portal - Matter remanded for fresh consideration on condition that the petitioner deposits 10% of the disputed tax demand and is permitted to file a reply and seek a personal hearing. - HELD THAT: - The Court directed conditional remand as the appropriate remedy: the petitioner agreed to remit 10% of the disputed tax demand. The petitioner must remit that amount within two weeks of receipt of this order and may, within the same period, submit a reply to the show cause notice with supporting documents. Upon receipt of the reply and verification of the 10% deposit, the respondent must provide a reasonable opportunity including a personal hearing and thereafter pass a fresh order within three months from receipt of the petitioner's reply. These procedural directions balance the registrant's duty to monitor the GST portal with the need to afford a meaningful hearing before confirming tax proposals. [Paras 6]

Matter remanded for reconsideration on the stated conditions; respondent to afford personal hearing and pass fresh order within three months of receiving the petitioner's reply.

Final Conclusion: The writ petition is disposed of by setting aside the order dated 20.11.2023 and remanding the matter for fresh adjudication on the petitioner complying with the conditional deposit and procedural directions; no order as to costs.

Setting aside and remand for fresh consideration - opportunity of personal hearing - service of notice by electronic upload on portal - confirmation of tax demand on account of mismatch between GSTR-3B and auto-populated GSTR-2A - conditional interim relief by deposit of a percentage of disputed demand - lifting of bank attachment consequent to setting aside of assessment

Setting aside and remand for fresh consideration - service of notice by electronic upload on portal - confirmation of tax demand on account of mismatch between GSTR-3B and auto-populated GSTR-2A - opportunity of personal hearing - conditional interim relief by deposit of a percentage of disputed demand - lifting of bank attachment consequent to setting aside of assessment - Impugned assessment order dated 17.11.2023 set aside and matter remanded for fresh consideration on terms - HELD THAT: - The tax proposal related to a mismatch between the petitioner's GSTR-3B returns and the auto-populated GSTR-2A and the assessment was confirmed because the petitioner did not reply to the show cause notice. Although the recovery notice was served subsequent to the assessment order, the court concluded that in the interest of justice the petitioner should be given an opportunity to contest the demand on merits. Accordingly, the assessment order is set aside and remanded subject to the petitioner remitting 10% of the disputed tax demand within two weeks of receipt of the order and being permitted to submit a reply to the show cause notice within that period. Upon receipt of the reply and on being satisfied that the 10% payment was made, the first respondent must provide a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. As a consequence of setting aside the assessment, the bank attachment is released.

Assessment order dated 17.11.2023 set aside; matter remanded for fresh consideration on the stated conditions; bank attachment raised.

Final Conclusion: Writ petitions allowed in part: impugned assessment order set aside and remanded for fresh adjudication on the petitioner making the stipulated deposit and filing a reply within two weeks; bank attachment released; petitions disposed of on these terms without costs.

Imposition of interest on belated GST payment - Mandatory personal hearing under Section 75(4) - Statutory obligation versus assessing officer's discretion to levy interest - Benefit of reduced interest during COVID-19 under administrative circular - Remand for fresh consideration subject to conditions

Imposition of interest on belated GST payment - Statutory obligation versus assessing officer's discretion to levy interest - Orders imposing interest were liable to interference in the facts of these petitions. - HELD THAT: - The Court noted that the impugned orders related solely to interest and that the petitioner had, thereafter, filed returns and paid the requisite taxes and had also made part-payment towards the interest demanded. The respondents contended that interest and its rate are statutorily prescribed as a corollary to belated payment and that the assessing officer had no discretion. The Court observed the statutory prescription of interest did not preclude relief where procedural requirements and relevant administrative concessions applied and interference was warranted in the circumstances of this case. [Paras 5]

Orders imposing interest were set aside subject to the conditions specified by the Court.

Mandatory personal hearing under Section 75(4) - Benefit of reduced interest during COVID-19 under administrative circular - A personal hearing is mandatory where requested or where an adverse order is proposed, and the petitioner was entitled to have the impact of the COVID-19 circular considered. - HELD THAT: - The Court referred to sub section 4 of Section 75 of the applicable GST enactments to record that a personal hearing is mandatory if requested or if an adverse order is contemplated. The Court also noted Circular No.13/2020 TNGST which afforded taxpayers relief by way of reduced interest rates during specified months of the pandemic; these factors were material and ought to be considered by the authority before issuing a fresh order. [Paras 5]

The petitioner must be afforded a reasonable opportunity, including a personal hearing, and the applicability of the COVID 19 circular must be considered by the authority.

Remand for fresh consideration subject to conditions - The matter was remanded to the first respondent for fresh consideration on condition of specified remittances, and garnishee orders were stayed subject to the same condition. - HELD THAT: - Balancing the statutory prescription of interest and the petitioner's factual claims of hardship and partial payments, the Court exercised its supervisory jurisdiction to set aside the impugned orders on conditions. The petitioner was directed to remit an additional specified sum within a stipulated period; upon receipt of the aggregate sum (including amounts already paid), the first respondent was directed to provide a hearing and pass fresh orders within three months. The Court also ordered that, subject to receipt of the aggregate sum, the garnishee orders would be set aside. [Paras 6]

Proceedings remitted to the first respondent for fresh decision after receipt of the aggregate remittance; garnishee orders set aside upon compliance.

Final Conclusion: Writ petitions allowed in part: impugned interest orders were set aside and remitted for fresh consideration after conditional remittance by the petitioner; the petitioner to be afforded a personal hearing and the authority to pass fresh orders within three months; garnishee orders stayed subject to the same condition.

Reasoned order - Show cause notice - Confirmatory demand exceeding show cause notice - Setting aside and remand for fresh proceedings in accordance with law

Reasoned order - Show cause notice - Confirmatory demand exceeding show cause notice - Impugned order is unsustainable because it contains no reasons and confirms a tax demand exceeding the amount specified in the show cause notice. - HELD THAT: - The Court examined the impugned order and the show cause notice and found that the order contained no stated reasons. The tax demand confirmed by the impugned order is materially higher than the demand mentioned in the show cause notice, a discrepancy noted by the petitioner and accepted on scrutiny. In absence of reasons and having regard to the excess confirmed demand vis - vis the show cause notice, the impugned order cannot be sustained. [Paras 4]

Impugned order dated 10.10.2023 set aside for being unreasoned and for confirming a demand in excess of the show cause notice.

Setting aside and remand for fresh proceedings in accordance with law - Whether respondent may be permitted to initiate fresh proceedings after setting aside the impugned order. - HELD THAT: - Having set aside the impugned order on the ground of absence of reasons and excess demand, the Court left it open to the respondent to initiate fresh proceedings. The occasion for remand is for the authority to reconsider the matter and proceed in conformity with applicable legal requirements, providing reasons and ensuring that any confirmed demand is not beyond the scope of the show cause notice or, if it is, that appropriate procedure is followed. [Paras 5]

Respondent permitted to initiate fresh proceedings in accordance with law; writ petition allowed on these terms.

Final Conclusion: Writ petition allowed; impugned order of 10.10.2023 set aside for being unreasoned and confirming a demand exceeding the show cause notice, with liberty to the respondent to proceed afresh in accordance with law.

Offence under Section 276B of the Income Tax Act - Reasonable cause defence under Section 278AA of the Income Tax Act - Failure to pay tax deducted at source - Quashing of criminal prosecution under inherent powers of High Court under Section 482 Cr.P.C.

Offence under Section 276B of the Income Tax Act - Reasonable cause defence under Section 278AA of the Income Tax Act - Quashing of criminal prosecution under inherent powers of High Court under Section 482 Cr.P.C. - Whether the criminal proceedings for alleged failure to remit TDS under Section 276B should be quashed on the ground that the assessee had a reasonable cause for belated payment. - HELD THAT: - The Court examined the scope of its inherent powers under Section 482 Cr.P.C. and the interplay between Section 276B and the non-obstante provision in Section 278AA. Section 278AA relieves a person from punishment under Section 276B if he proves a reasonable cause for the failure. The court noted authorities which explain that the burden is on the accused to show reasonable cause and that "reasonable cause" is a lighter standard than that required in penalty proceedings. On the facts, the petitioner-educational institution deducted TDS but remitted it belatedly and paid interest under Section 201(1)(a). The institution explained the delay as caused by an abnormal delay in receipt of fee reimbursement from the State Government, supported by documentary material showing dates of receipt and prompt remittance thereafter. The Commissioner proceeded to prosecute despite this material; the Court found that the authorities had ignored the material placed by the petitioners and that the explanation amounted to a reasonable cause within the meaning of Section 278AA. Given that the statutory safeguard (reasonable cause) applied and the tax together with interest had been paid, continuation of criminal prosecution constituted an abuse of process warranting exercise of Section 482 powers to quash the complaints. [Paras 15, 20, 23, 24, 25]

Proceedings in C.C. Nos. 31, 32 and 33 of 2018 for alleged offence under Section 276B are quashed as the petitioners established reasonable cause for belated remittance and paid the tax with interest.

Final Conclusion: The petitions are allowed; criminal prosecutions in C.C. Nos. 31, 32 and 33 of 2018 are quashed under the High Court's inherent jurisdiction as the petitioners established reasonable cause for delayed TDS remittance and have paid the tax with interest.

Characterisation of payments as royalty - application of Section 9(1)(vi) of the Income-tax Act (royalty) - deduction of tax at source under section 195 of the Income-tax Act - Double Taxation Avoidance Agreement (DTAA) supremacy in tax characterization - EULA / distribution agreement interpretation - use or right to use copyright - Engineering Analysis Centre of Excellence precedent

Characterisation of payments as royalty - application of Section 9(1)(vi) of the Income-tax Act (royalty) - Double Taxation Avoidance Agreement (DTAA) supremacy in tax characterization - EULA / distribution agreement interpretation - deduction of tax at source under section 195 of the Income-tax Act - Engineering Analysis Centre of Excellence precedent - Payments made by the assessee to non-resident suppliers for purchase of computer software are not taxable in India as 'royalty' under Section 9(1)(vi) and do not attract obligation to deduct tax at source under section 195. - HELD THAT: - The Tribunal's finding that the software purchases fell within the DTAA and did not constitute royalty was upheld as consistent with the Supreme Court's authoritative decision in Engineering Analysis Centre of Excellence. That decision held that distribution agreements/EULAs which do not create any interest or right in distributors/end-users amounting to the use of or right to use copyright do not give rise to royalty liable to tax in India; consequently the domestic provisions (Section 9(1)(vi) together with its explanations) do not apply where the DTAA is more beneficial. As the transactions in the present appeals are factually similar and a DTAA applies with the relevant foreign suppliers, there is no obligation on the payors to deduct tax at source under section 195, and the Revenue's challenge does not raise a substantial question of law. [Paras 12, 14]

Appeals dismissed as not raising any question of law; no costs.

Final Conclusion: The High Court dismissed the Revenue's appeals, concluding that payments for the computer software in the facts of these cases are not royalties taxable in India and that the payors were not obliged to deduct tax at source, in view of the DTAA and the Supreme Court precedent.

Validity of appeal filed u/s 260A - Bogus LTCG - whether any substantial question of law has arisen for consideration? - Substantial question of law - appellate jurisdiction under Section 260A - binding nature of coordinate bench decisions - admission of fresh evidence in appellate proceedings - reliance on regulatory adjudication in income-tax assessment - application of precedent to tax assessments arising from share trading

Binding nature of coordinate bench decisions - application of precedent to tax assessments arising from share trading - Tribunal's affirmation of CIT(A)'s finding and reliance on coordinate-bench decisions was sustainable and did not give rise to a substantial question of law. - HELD THAT: - The Tribunal upheld the CIT(A)'s factual examination of the trading in Sulabh Engineers & Services Ltd. and the conclusion that the claimed long term capital gain was a bogus claim. The Tribunal's conclusion was supported by prior judicial decisions, including the decision of this Court in Swati Bajaj, and the High Court finds no error in the Tribunal adopting those precedents to dismiss the grounds raised by the assessee. Under Section 260A, the High Court's role is limited to determining whether a substantial question of law arises; having considered the orders of the Assessing Officer, CIT(A) and Tribunal, the Court concluded there is no such question warranting interference with the Tribunal's decision. [Paras 5, 8]

Tribunal justified in upholding the CIT(A); no substantial question of law arises from that challenge.

Application of precedent to tax assessments arising from share trading - substantial question of law - Assessee's contention that the facts differ from Swati Bajaj and that Swati Bajaj is inapplicable was not accepted as raising a substantial question of law. - HELD THAT: - The Court considered the submission that Swati Bajaj concerned off market transactions and therefore could not be applied to the present facts. After review, the Court held that the factual differences argued by the assessee did not convert the matter into a substantial question of law for adjudication under Section 260A. The High Court emphasised that it cannot re open or re appreciate factual findings made by the Tribunal in an appeal under Section 260A where no substantial legal question is shown to arise. [Paras 6, 8]

Differences urged with Swati Bajaj do not give rise to a substantial question of law; contention rejected.

Reliance on regulatory adjudication in income-tax proceedings - admission of fresh evidence in appellate proceedings - The SEBI adjudication relied upon by the assessee and the belated documents obtained under RTI do not improve the assessee's case and cannot be considered in this Section 260A appeal. - HELD THAT: - The Court observed that the SEBI order did not examine the specific transaction of the assessee in the shares of Sulabh Engineers & Services Ltd., and therefore reliance on that order is misplaced. Further, applications by the assessee for documents under the Right to Information, tendered after the relevant proceedings, cannot be used to convert the High Court's jurisdiction under Section 260A into a forum for re appreciation of facts. The Court declined to permit re examination of factual aspects in this appellate jurisdiction. [Paras 6, 7]

SEBI order and newly procured documents are irrelevant for the purpose of this Section 260A appeal and cannot be permitted to reopen factual findings.

Final Conclusion: The appeal is dismissed for want of any substantial question of law; the Tribunal's order affirming the CIT(A) stands, and the stay application is also dismissed.

Block assessment - assessment under Section 153A - search and seizure under Section 132 - incriminating material - relation of incriminating material to specific assessment year - abate pending assessments - reopening completed assessments under Sections 147/148 - jurisdiction to assess six years

Assessment under Section 153A - incriminating material - relation of incriminating material to specific assessment year - abate pending assessments - reopening completed assessments under Sections 147/148 - Permissibility of reopening and making additions for assessment years 2002-03 to 2007-08 under Section 153A where no incriminating material relating to those years was found during the search. - HELD THAT: - The Court applied the principle that Section 153A is triggered by a valid search under Section 132 and confers jurisdiction to make block assessments for six years only insofar as incriminating material unearthed in the search relates to the particular assessment year sought to be reopened. Relying on the reasoning in Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell Pvt. Ltd., the Court observed that while the AO assumes jurisdiction for the six-year block and pending assessments abate, completed/unabated assessments can be reopened under Section 153A for a particular year only if incriminating material relating to that year is found during the search; otherwise the correct remedy for the Revenue is reassessment under Sections 147/148 subject to their conditions. Applying that test to the facts, the Court noted it was not in dispute that the materials seized on 21.08.2007 related solely to the assessment year 2008-09 (previous year 2007-08) and that there was no incriminating material pertaining to the assessment years 2002-03 to 2007-08. Consequently, the Appellate Tribunal's reversal of the First Appellate Authority and its sustaining of additions for the years 2002-03 to 2007-08 could not be sustained as a matter of law. [Paras 12, 13]

Findings of the Appellate Tribunal sustaining additions for assessment years 2002-03 to 2007-08 under Section 153A are set aside as there was no incriminating material relating to those years; completed assessments could not be reopened under Section 153A in the absence of such material.

Final Conclusion: The orders of the Appellate Tribunal are set aside to the extent impugned; the substantial questions of law are answered in favour of the assessees for assessment years 2002-03 to 2007-08 and against the Revenue, and the appeals are disposed accordingly.

Pre-payment of sales tax at discounted value treated as capital receipt - benefits under DEPB/Focus Market Licences represent hypothetical income and are not assessable until goods are actually imported - income accrues only when an enforceable right arises (insurance claim not accrued while unaccepted)

Pre-payment of sales tax at discounted value treated as capital receipt - Amount saved by the assessee on pre-payment of sales tax at a discounted value is a capital receipt and not taxable as revenue receipt. - HELD THAT: - The Court held that the question is covered by the decision of the Supreme Court in Commissioner of Income Tax Vs. Balkrishna Industries Ltd. and the Division Bench decision of this Court in CIT Vs. Sulzer India Ltd. . Applying the principle affirmed by those authorities, the saving achieved by pre-paying a lump-sum tax obligation cannot be treated as a revenue receipt under Section 41 but is to be treated as a capital receipt. The facts of the present case were found not to differ from those decisions, and therefore the addition of the saved amount to the assessee's income was rejected.

Addition of the amount saved on pre-paid sales tax as assessee's income is rejected; the amount is a capital receipt.

Benefits under DEPB/Focus Market Licences represent hypothetical income and are not assessable until goods are actually imported - Benefits under DEPB/Focus Market Licences are not taxable as income until the goods are actually imported and the benefit materialises. - HELD THAT: - The Court found the second question to be covered by the Supreme Court's decision in Commissioner of Income Tax Vs. Excel Industries Ltd. . That decision holds that entitlement to advance licences or duty entitlement passbooks does not create a corresponding enforceable asset or income until the goods are imported and the Customs authorities pass on the benefit; such entitlement is at best hypothetical and may or may not materialise, and hence its notional money value cannot be treated as the assessee's income.

Benefits claimed under DEPB/Focus Market Licences are not assessable as income prior to importation and realisation.

Income accrues only when an enforceable right arises (insurance claim not accrued while unaccepted) - Insurance claim amounts are not taxable as income until an enforceable right to payment accrues; a mere claim lodged but not accepted by the insurer does not give rise to taxable income. - HELD THAT: - Relying on the decision of the Delhi High Court in Commissioner of Income Tax Vs. Leisure Wear Exports Ltd. (the Special Leave petition against which was dismissed), the Court accepted that mere lodgement of a claim with an insurer, without acceptance or assurance of payment, does not create an enforceable right. Income is said to accrue when a person acquires an enforceable right to receive it; mere contingent or unaccepted claims therefore cannot be taxed as income.

Amounts relating to the insurance claim are not assessable as income in the absence of an enforceable right to payment.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal's order allowing the assessee's appeal is affirmed. The assessee's cross-objection is disposed of as not requiring separate adjudication.

Article 226 of the Constitution - discretionary jurisdiction - locus standi - non-joinder of necessary parties - third-party standing in tax proceedings

Locus standi - third-party standing in tax proceedings - non-joinder of necessary parties - discretionary jurisdiction - Petition dismissed for want of locus and for non-joinder; Court declines to exercise discretionary jurisdiction under Article 226. - HELD THAT: - The petitioner is a rank third-party who has no demonstrated interest in the assessment or investigation concerning M/s S.R.S. Mining. The averments do not show how the petitioner is connected to the subject-matter of the assessment or investigation. The writ seeks discretionary relief under Article 226 and, in the absence of any established interest and without joining the assessee or its partners as parties, the court exercises its discretion to refuse relief. The respondent's contention that the petitioner lacks locus and has omitted necessary parties is accepted and is determinative of the petitioner's entitlement to relief. [Paras 5, 6]

Writ petition dismissed; discretionary jurisdiction under Article 226 declined for want of locus and non-joinder.

Final Conclusion: W.P. No.13443 of 2024 dismissed; the High Court declined to exercise its discretionary jurisdiction under Article 226 because the petitioner, a third party, lacked any demonstrable interest in the tax assessment or investigation and had not joined the assessee or its partners as parties.

Condonation of delay - sufficient cause - exercise of discretion in condoning delay - dismissal of appeal in limine for delay - interim protection against recovery pending disposal of appeal

Condonation of delay - sufficient cause - exercise of discretion in condoning delay - Whether the application for condonation of delay in filing the appeal disclosed sufficient cause and whether the appellate order dismissing the appeal in limine on that ground was justified. - HELD THAT: - The petitioner explained the delay as arising from enquiries to obtain a full-fledged interest statement from the government auditor, obtaining clarifications regarding interest earned from other cooperative banks, and then instructing counsel to file the appeal; the application sought condonation of a short period of delay. The High Court found that these explanations constituted a sufficient reason and that the second respondent took an unduly technical view in dismissing the condonation application and thereby rejecting the appeal at the threshold. The court therefore set aside the impugned order dismissing the condonation application and directed that the appeal be considered on merits expeditiously, observing that the matter should be disposed of within a limited timeframe.

Impugned order dismissing the condonation application and appeal set aside; the appeal to be considered on merits within three months.

Interim protection against recovery pending disposal of appeal - Whether recovery proceedings pursuant to the assessment order should be stayed until the appeal is disposed of. - HELD THAT: - The High Court granted interim protection by directing that until final orders are passed on the appeal, no recovery steps pursuant to the assessment order shall be taken against the petitioner. This relief was granted to preserve the petitioner's position pending reconsideration of the appeal on merits.

No recovery steps to be taken pursuant to the assessment order until the appeal is decided.

Final Conclusion: The High Court set aside the appellate order dismissing the condonation application and directed the appellate authority to decide the appeal on merits within three months; meanwhile, recovery under the assessment order is stayed until disposal of the appeal.

Telescoping benefit of surrendered income - addition as unexplained cash credit under section 68 - substantial question of law under Section 260A - final fact finding authority of the Tribunal - perverse finding of fact - double counting of income

Substantial question of law under Section 260A - final fact finding authority of the Tribunal - perverse finding of fact - Whether the case involves a substantial question of law permitting an appeal under Section 260A - HELD THAT: - The High Court examined the ITAT's order and the material placed before it and found that the Tribunal had conducted a detailed fact finding exercise and reached conclusions based on evidence, documents and precedents. The Court noted that the department did not point to any demonstrable perversity in the Tribunal's factual findings nor produce additional material to show the findings were unsupportable. Reliance was placed on established principles that an appeal under Section 260A lies only where a substantial question of law arises and that the High Court will not ordinarily disturb concurrent factual findings of the Tribunal unless shown to be perverse. Applying these principles to the record, the Court concluded that the appellant's challenge was essentially factual and did not raise a debatable or unsettled question of law that would materially affect the parties' rights if decided either way. [Paras 18, 19, 29, 30]

No substantial question of law arises; appeal under Section 260A is not maintainable on the questions raised.

Telescoping benefit of surrendered income - addition as unexplained cash credit under section 68 - double counting of income - Whether the ITAT was justified in allowing telescoping of surrendered income against subsequent bank deposits and deleting the addition under section 68 - HELD THAT: - The Court reproduced and considered the Tribunal's findings (paras 55-58 of the ITAT order) that the assessee had surrendered unaccounted income, that hundis seized during survey established the existence of short term advances, that recoveries (principal and interest) were recorded in the books and subsequently deposited in the bank, and that there was a direct nexus between the hundi recoveries and the bank deposits. The Tribunal applied settled authorities recognising that concealed/unaccounted income may constitute a fund from which subsequent receipts or applications can reasonably be attributed and allowed telescoping rather than double taxation. The High Court found that the ITAT confronted rival contentions, evaluated documents and rulings, and the department failed to demonstrate that those factual findings were unsupported or perverse. Consequently the Tribunal's deletion of the addition under section 68 was held to be a factual conclusion correctly reached on the record. [Paras 15, 16, 20]

ITAT's allowance of telescoping and deletion of the addition under section 68 is upheld as a reasoned factual conclusion; no interference warranted.

Final Conclusion: The appeal is dismissed: the High Court finds no substantial question of law under Section 260A, and upholds the ITAT's factual conclusion allowing telescoping of surrendered income and deleting the addition under section 68, there being no shown perversity in the Tribunal's findings.

Exemption under section 10(38) - inadvertent mistake in return - intimation under section 143(1) - exercise of discretion under section 119(2)(b) - remand for verification - substance over form / substantive justice over technical lapses

Exemption under section 10(38) - inadvertent mistake in return - intimation under section 143(1) - exercise of discretion under section 119(2)(b) - remand for verification - Whether the deduction/exemption claimed (long term capital gain from sale of equity oriented mutual fund) which was omitted from the correct column of the return due to inadvertence and was treated as taxable by CPC in intimation under section 143(1), could be disallowed by the first appellate authority on the ground that the assessee did not file a revised return or seek relief under section 119(2)(b). - HELD THAT: - Tribunal found that the assessee had mistakenly reported the exempt capital gain in an incorrect column of the return and that the CPC processed the return and issued an intimation under section 143(1) making an adjustment treating that amount as business income. The Tribunal held that where law mandates an exemption, an inadvertent reporting error should not compel taxation of income which is otherwise not chargeable to tax. The first appellate authority erred in dismissing the claim on a strictly technical premise that the assessee ought to have filed a revised return or sought condonation under section 119(2)(b). Rather than decide the exemption on merits, the Tribunal set aside the order of the CIT(A) and remitted the matter to the Assessing Officer for verification of the claim. The Assessing Officer is directed to examine whether the capital gain is exempt under law and, if so, to allow the claim.

Order of the CIT(A) is set aside; assessment restored to the file of the Assessing Officer for verification of the exemption claim and for allowing the claim if the capital gain is found to be exempt under law.

Final Conclusion: Appeal allowed for statistical purposes; impugned order of the CIT(A) set aside and the assessment restored to the file of the Assessing Officer for verification of the assessee's claim of exemption under section 10(38) and for consequential action if the exemption is established.

Book profit - minimum alternate tax - agricultural income - capital asset - rectification proceedings - error apparent on the face of the record - limited scrutiny - opportunity of being heard

Book profit - minimum alternate tax - agricultural income - capital asset - Whether profit on sale of agricultural land is includible in book profit for computing tax under MAT. - HELD THAT: - The Tribunal found on the material before it and following earlier ITAT Benches that profit arising on the sale of agricultural land is agricultural income and not exigible to tax as capital gain; such income is not a capital asset within the scope of Section 2(14) and is not chargeable under the regular provisions. The Tribunal held that Chapter XII B does not operate to extend the scope of 'total income' so as to bring otherwise exempt agricultural receipts into book profit for computation of MAT. Reliance on prior decisions was applied to conclude that the profit on sale of agricultural land should be excluded from computation of book profit for the purposes of Section 115JB. [Paras 14]

Profit on sale of agricultural land excluded from book profit for computation of tax under MAT; ground allowed.

Rectification proceedings - error apparent on the face of the record - limited scrutiny - opportunity of being heard - natural justice - Other grounds raised by the assessee including validity of the rectification, scope of section 154, alleged ex parte procedure and breach of natural justice were not adjudicated by the Tribunal. - HELD THAT: - The Tribunal recorded that the Ld. CIT(A) had dismissed the appeal for non compliance with directions to produce documents and had decided the matter on merits in the assessee's absence. The Bench considered remitting the matter but observed there was no dispute that the agricultural profit was exempt and, on that limited question, decided in favour of the assessee. The Tribunal expressly stated that the other grounds were not adjudicated at this stage, thereby leaving those contentions untouched for further consideration if necessary. [Paras 13, 15]

Other grounds not adjudicated; left undetermined at this stage.

Final Conclusion: The appeal is partly allowed: the inclusion of profit on sale of agricultural land in book profit for MAT purposes is set aside; other grounds raised by the assessee remain unadjudicated at this stage.

Disallowance under Section 14A and computation under Rule 8D - Inclusion of disallowance under Section 14A while computing book profit under Section 115JB - Treatment of self CENVAT credit for computation of book profit under Section 115JB - Addition under Section 68 for unexplained cash

Disallowance under Section 14A and computation under Rule 8D - Deletion of disallowance made under Section 14A read with Rule 8D in respect of dividend income - HELD THAT: - The Tribunal found that the Assessing Officer mechanically applied Rule 8D without establishing that investments had been made from borrowed funds or that expenditure was attributable to earning exempt dividend. The CIT(A) had examined bank statements and records and recorded that investments were made from the assessee's own funds (no overdraft on dates of investment), thereby negating the basis for interest disallowance under Rule 8D(2)(ii). The Tribunal followed its earlier decisions in the assessee's own case for earlier assessment years and relevant precedents holding that in absence of recording of satisfaction and verification as required, Rule 8D cannot be mechanically applied; accordingly the disallowance under Section 14A/Rule 8D was deleted. [Paras 11]

Disallowance under Section 14A read with Rule 8D in respect of dividend income deleted in favour of the assessee.

Inclusion of disallowance under Section 14A while computing book profit under Section 115JB - Whether disallowance under Section 14A should be included in book profit computation under Section 115JB - HELD THAT: - The Tribunal held that the issue of disallowance under Section 14A for the purpose of computing book profit under Section 115JB is covered by the finding that no disallowance under Section 14A is maintainable on the facts. Relying on the Tribunal's earlier decisions and a High Court authority, the Tribunal directed that no Section 14A disallowance be incorporated in computation of book profit, and instructed the Assessing Officer to restrict any adjustment to the limited amounts adjudicated (i.e., only those amounts confirmed after verification). [Paras 12]

No disallowance under Section 14A is to be made while computing book profit under Section 115JB; ground allowed for the assessee.

Treatment of self CENVAT credit for computation of book profit under Section 115JB - Whether self CENVAT credit inclusion in book profit under Section 115JB is permissible - HELD THAT: - Relying on the Tribunal's prior rulings in the assessee's own case for earlier years, the Tribunal held that self CENVAT credit could not be treated as part of book profit for the purpose of Section 115JB. The Tribunal therefore set aside the inclusion of the self CENVAT credit amount in book profit. [Paras 13]

Inclusion of self CENVAT credit in book profit under Section 115JB deleted; ground decided in favour of the assessee.

Addition under Section 68 for unexplained cash - Validity of addition under Section 68 in respect of cash seized during search - HELD THAT: - The Assessing Officer made an addition under Section 68 on account of cash seized. The CIT(A) examined the assessee's cash book and supporting entries, noting an opening cash balance, receipts from customers and bank deposits which reconciled to the closing cash shown in the cash book on the date of search. On that basis the CIT(A) concluded that the assessee had explained the nature and source of the impugned cash balance. The Tribunal accepted these findings and deleted the addition under Section 68. [Paras 16]

Addition under Section 68 in respect of seized cash deleted; revenue's ground dismissed.

Final Conclusion: The appeals of the assessee are allowed insofar as disallowance under Section 14A/Rule 8D, inclusion of any Section 14A disallowance in book profit under Section 115JB, and inclusion of self CENVAT credit in book profit are deleted; the addition under Section 68 for seized cash is also deleted. The revenue's appeal is dismissed.

Capital receipt versus revenue receipt - interest on fixed deposits pertaining to prior period to commencement of business - adjustment of capital receipt against pre-operative expenses - amortisation of pre-operative expenses under Section 35D - precedential value of co ordinate Bench decision

Capital receipt versus revenue receipt - interest on fixed deposits pertaining to prior period to commencement of business - adjustment of capital receipt against pre-operative expenses - amortisation of pre-operative expenses under Section 35D - precedential value of co ordinate Bench decision - Whether interest earned on fixed deposits during the years in question, made in periods prior to commencement of business, is a capital receipt to be adjusted against pre operative expenses or assessable as income from other sources - HELD THAT: - The Tribunal accepted the Assessing Officer's finding that the assessee's business had not commenced in the relevant years and applied the Tribunal's earlier decision in the assessee's own case for earlier assessment years. The interest earned on fixed deposits made in prior years was held to pertain to the pre commencement period and therefore to be treated as a capital receipt. The Revenue's objection about absence of a specific nexus between borrowed funds and particular investments was held not determinative, since the nexus is examinable in the year of initial investment whereas the present receipts arise from earlier investments continuing into the assessment years. Consistently with the prior co ordinate Bench ruling, the capital receipt (interest) is to be adjusted against pre operative expenses, and only any residual pre operative expenditure is to be amortised as per the provisions relating to amortisation of pre operative expenses under Section 35D. The Tribunal thus upheld the CIT(A)'s treatment and rejected the Revenue's submission that the interest should be assessed under the head "Income from other sources." [Paras 8, 9, 10]

Interest on fixed deposits pertaining to period prior to commencement of business is a capital receipt to be adjusted against pre operative expenses; Revenue's appeals for AYs 2016-17 and 2017-18 are dismissed.

Final Conclusion: Both Revenue appeals for AY 2016-17 and AY 2017-18 were dismissed; the Tribunal held that interest on fixed deposits relating to periods prior to commencement of business is a capital receipt to be adjusted against pre operative expenses, with residual pre operative expenditure to be amortised under Section 35D.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - application of section 11(1) charitable purpose and 85% utilisation - admissibility and effect of statement under section 132(4) - presumptive taxation under section 44AD

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - admissibility and effect of statement under section 132(4) - Whether penalty under section 271(1)(c) could be sustained for alleged concealment where additional income was admitted in a statement recorded under section 132(4) but there was no incriminating material showing concealment - HELD THAT: - The Tribunal examined whether the admission recorded in the Managing Trustee's statement under section 132(4) furnished incriminating material sufficient to treat the disclosure as concealment or furnishing of inaccurate particulars. It noted that the Assessing Officer did not dispute the gross collections and there was no incriminating material found during search to demonstrate that the assessee had concealed receipts. The Tribunal relied on the principle that mere readiness to accept facts during a search or to avoid litigation, or an admission recorded in a statement, does not automatically translate into deliberate concealment where the books and returns disclose the receipts and the authorities do not point to independent incriminating material. Applying that principle to the facts, the Tribunal found the additional income admitted in the statement did not, by itself, establish concealment in the absence of any other incriminating material or dispute as to gross receipts. Consequently, the CIT(A)'s conclusion that there was no deliberate concealment was upheld. [Paras 3, 7]

Penalty under section 271(1)(c) could not be sustained on the basis of the statement under section 132(4) alone in the absence of incriminating material; the CIT(A)'s cancellation of penalty is upheld.

Application of section 11(1) charitable purpose and 85% utilisation - presumptive taxation under section 44AD - Whether the Trust complied with section 11(1) and whether offering business receipts under section 44AD affected the penalty/concealment analysis - HELD THAT: - The Tribunal reviewed the computation and payments made by the Trust, including the provision created to meet the 85% utilisation requirement under section 11(1). It noted that although a provision of a portion of the claimed expenditure was reversed in a subsequent year, the Trust had actually incurred expenditure and, even if the unapplied provision were excluded, the Trust still satisfied the 85% utilisation threshold (as accepted by the Assessing Officer). With respect to business receipts from cash-collection services, the Tribunal observed that the assessee had disclosed gross receipts and had elected to offer such income under the presumptive scheme of section 44AD; there was no restriction on making that election and the AO did not dispute the gross collections. As a result, the Tribunal found that the matters relating to compliance with section 11(1) and the presumptive taxation election did not furnish a basis for penalty for concealment. [Paras 7]

The Trust was held to have complied with section 11(1)'s utilisation requirement and the election to offer business receipts under section 44AD did not support a finding of concealment; these conclusions support dismissal of the penalty.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s cancellation of the penalty under section 271(1)(c) for A.Y. 2015-16, finding no deliberate concealment in the absence of incriminating material and that the Trust complied with section 11(1) while permissibly offering business receipts under section 44AD.

Treatment of donations received for acquisition of capital assets - capital receipts versus taxable income - corpus contributions and specific-purpose donations - applicability of Section 56(1) to donations - deeming of voluntary contributions under Section 2(24)(iia) - Explanation 10 to section 43 and reduction of asset cost for depreciation - precedential application of coordinate bench decisions

Treatment of donations received for acquisition of capital assets - capital receipts versus taxable income - corpus contributions and specific-purpose donations - applicability of Section 56(1) to donations - deeming of voluntary contributions under Section 2(24)(iia) - Explanation 10 to section 43 and reduction of asset cost for depreciation - precedential application of coordinate bench decisions - Whether donations of Rs. 1,15,00,000 received with specific directions for acquisition of assets are capital receipts not chargeable to tax for A.Y. 2014-15, and whether provisions such as Section 56(1) / Section 2(24)(iia) or denial of exemption under section 11 change that characterization. - HELD THAT: - The Tribunal examined the facts that the donations were given for specific capital purposes (corpus and purchase of testing/research equipment), that the assessee treated them as subsidy/capital receipts in its books and reduced the cost of assets for computing depreciation. The Tribunal found the Coordinate Bench's reasoning on identical facts (A.Y. 2015-16 to 2017-18) applicable: donations given for a specific purpose of purchasing assets constitute capital receipts and are not taxable. For Section 56(1) to apply, the amount must qualify as an income; where the donation is a specifically directed subsidy/capital contribution it does not amount to income in the sense required by Section 56(1). Likewise, the deeming in Section 2(24)(iia) and provisions applicable to registered charitable institutions under sections 11-13 do not alter the character of such specifically directed donations when treated as capital receipts in the hands of the recipient; the Tribunal held Section 2(24)(iia) inapplicable in the present factual matrix. The Tribunal also accepted that Explanation 10 to section 43 permits reducing the cost of assets by such specific contributions for depreciation purposes, a treatment accepted by coordinate decisions. Relying on these determinations and on the Coordinate Bench decision, the Tribunal rejected the Revenue's contention that mere filing of return as a business entity or tax-audit classification changes the inherent character of the donation, and held that the additions made by the AO and sustained by the CIT(A) were unsustainable. [Paras 12, 13, 14, 15, 16]

Addition of donations of Rs. 1,15,00,000 is deleted; donations held to be capital receipts not taxable for A.Y. 2014-15 and AO directed to delete the addition (and follow Explanation 10 to section 43 treatment).

Final Conclusion: Appeal allowed. The Tribunal set aside the CIT(A) order for A.Y. 2014-15, holding the specifically directed donations to be capital receipts not chargeable to tax and directing the Assessing Officer to delete the addition.

Long term capital gains exemption under section 10(38) - cash credit treated as unexplained income under section 68 - application of section 115BBE - human probability test in tax adjudication - sham/bogus/accommodation entries in share transactions - reliance on third party investigative/SEBI material and principles of natural justice

Long term capital gains exemption under section 10(38) - human probability test in tax adjudication - sham/bogus/accommodation entries in share transactions - Exemption claimed under section 10(38) for long term capital gain on sale of shares was not allowable. - HELD THAT: - The Tribunal accepted the revenue finding that the purchase was effected in physical form by cash and subsequently converted to electronic mode, the payments were not through normal banking channels, the assessee was not a regular investor, and no satisfactory proof of source for the purchase was furnished. Applying the test of human probabilities and having regard to concurrent adverse findings of fact and the precedents relied upon by the revenue, the Tribunal held that the transactions were of the nature of accommodation/sham entries and therefore the claim of exemption under section 10(38) could not be permitted. [Paras 11, 12]

Claim of exemption under section 10(38) rejected and not allowed.

Cash credit treated as unexplained income under section 68 - application of section 115BBE - Sale proceeds were treated as unexplained cash credit under section 68 and taxed accordingly with applicability of section 115BBE. - HELD THAT: - The Assessing Officer treated the sale proceeds as unexplained cash credit under section 68 on the basis that the capital gain claim was not genuine. The AO made additions and applied section 115BBE; the CIT(A) confirmed those additions. The Tribunal, on the material and concurrent factual findings recorded below regarding the nature of the transactions and absence of verifiable source, found no reason to interfere with the additions and the tax treatment upheld by the lower authorities. [Paras 4, 12]

Addition under section 68 upheld and section 115BBE treatment maintained.

Reliance on third party investigative/SEBI material and principles of natural justice - The plea that reliance on departmental/third party investigation material (SEBI report etc.) without furnishing it to the assessee violated principles of natural justice was not accepted. - HELD THAT: - Although the assessee contended that additions were based on third party documents not provided for rebuttal, the Tribunal noted the concurrent findings of fact and the investigative material and precedents relied upon by the revenue; it found the lower authorities' reliance on such material and their factual conclusions sustainable and declined to find a breach warranting interference. [Paras 11, 12]

Contention of violation of natural justice by non furnishing of third party documents did not merit deletion of the addition.

Final Conclusion: On the facts and concurrent findings recorded by the revenue authorities-purchase in physical form by cash, absence of verifiable source, and adoption of the human probability test-the Tribunal declined to interfere with the AO and CIT(A) and dismissed the assessee's appeal for A.Y. 2014 15.

Benami property - benami transaction - proceeds of benami property - transaction induced by non traceable or fictitious persons - layering and cash deposit as indicia of benami funds - confirmation of provisional attachment - show cause notice under section 24(1) of the Act

Benami property - proceeds of benami property - confirmation of provisional attachment - Whether the funds standing to the credit of M/s Danodia Investments & Finance Ltd. constituted benami property/proceeds of benami property and warranted confirmation of provisional attachment - HELD THAT: - The Tribunal found on the material produced during search and post search enquiries that substantial funds were introduced into M/s Danodia Investments & Finance Ltd. by issuance of shares on paper at a high premium and thereafter by layering and cash deposits from numerous entities which were non existent or not traceable. The court accepted the departmental fund trail establishing that the funds so introduced were used to advance loans/advances to group entities and beneficiaries and therefore constituted proceeds of benami property within the meaning of the Act. The Tribunal held that subsequent disbursement of funds by way of loans through banking channels did not cure the benami character of the underlying injected funds and that the Adjudicating Authority erred in declining to confirm attachment by focusing on the mode of onward transfer rather than the origin of funds. On these findings the Tribunal set aside the impugned order and confirmed the provisional attachment. [Paras 33, 39, 46, 47]

Provisional attachment confirmed as the funds in M/s Danodia Investments & Finance Ltd. were proceeds of benami property and the attachment was rightly liable to be upheld.

Layering and cash deposit as indicia of benami funds - transaction induced by non traceable or fictitious persons - Whether the Adjudicating Authority erred in treating repayment/transfer through bank channels and subsequent loan transactions as negating benami character of the funds - HELD THAT: - The Tribunal held that the Adjudicating Authority wrongly confined its analysis to the fact that loans/advances were shown and that transfers occurred through bank accounts, without satisfactorily examining the origin of the funds. The record demonstrated issuance of bogus share capital and funds pumped in through cash deposits and layering by 79 entities, many non existent or untraceable, and the Authority's reliance on subsequent bank transfers amounted to impermissible focus on form over substance. The Tribunal found the impugned order to be based on surmises and conjectures and concluded that the Authority had ignored relevant material pointing to benami inducement. [Paras 36, 37, 38, 41]

Adjudicating Authority's conclusion that banked transfers and repayments negated benami character is rejected as erroneous; the origin of funds controls.

Benami transaction - transaction induced by non traceable or fictitious persons - Whether the case falls within the amended definition of benami transaction as covering transactions where the person providing consideration is not traceable or is fictitious - HELD THAT: - The Tribunal applied the amended definition of benami transaction (as inserted w.e.f. 01.11.2016) focusing on transactions where the person providing consideration is not traceable or is fictitious. The impugned facts - funds injected through numerous entities which on inquiry proved nonexistent, non filers or lacking creditworthiness, and issuance of shares on paper at high premium - satisfied the statutory description of a transaction induced by non traceable or fictitious providers of consideration. The Tribunal held that invocation of clause (D) was appropriate and that mere reliance on subsequent monetary flows could not negate applicability of the provision. [Paras 43, 45]

Clause (D) of the definition of benami transaction applies; the transaction falls within the amended definition and justifies attachment.

Final Conclusion: The impugned order of the Adjudicating Authority is set aside; the Tribunal confirms the provisional attachment on the view that funds introduced into M/s Danodia Investments & Finance Ltd. were proceeds of benami transactions (including transactions effected by non traceable or fictitious entities) and that the Authority erred in treating subsequent banked transfers and loan repayments as dispositive. The appeal is allowed and provisional attachment is confirmed.

Classification of imported goods as Zinc Dross versus Unwrought/Unrefined Zinc - maintainability of a fresh ground in subsequent appellate proceedings - rejection of transaction value and validity of valuation re-determination - reliability and import of chemical test reports in classification and valuation - applicability of import restrictions under the Foreign Trade Policy where classification differs

Maintainability of a fresh ground in subsequent appellate proceedings - classification of imported goods as Zinc Dross versus Unwrought/Unrefined Zinc - Whether the Revenue could raise for the first time in appeal that the imported goods were Zinc Dross and thereby subject to FTP restrictions, notwithstanding the lower authority's assessment being confined to valuation. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that the re-assessment undertaken by the lower authority related solely to valuation and that the Revenue had not raised the question of classification as Zinc Dross before the Commissioner (Appeals). Because the department did not press that classification point in the earlier Review Order before the Commissioner (Appeals), the Revenue was precluded from advancing it afresh in subsequent appellate proceedings. The point was therefore held to be beyond the scope of the assessment order and not maintainable in the Revenue's appeal. The Court noted that procedurally a fresh ground that was not canvassed in earlier proceedings cannot be opened in later appellate stages where it amounts to raising a new case. [Paras 5, 11]

Revenue barred from raising classification-as-dross contention in the subsequent appeal; such ground is not maintainable.

Reliability and import of chemical test reports in classification and valuation - classification of imported goods as Zinc Dross versus Unwrought/Unrefined Zinc - Whether the chemical test reports supported classification of the imported consignments as Zinc Dross. - HELD THAT: - The Tribunal examined the CRCL test results reproduced in the record and the comparative authority discussing when material constitutes dross. The test reports showed zinc percentages higher than declared but, except for one Bill of Entry, remained below the levels and factual indicia relied upon to classify the goods as Zinc Dross. The Tribunal observed that the CRCL itself did not categorically state the goods were Zinc Dross but recorded that the material 'appears' to be dross type in some reports. Applying earlier tribunal decisions cited by the Commissioner (Appeals), which hold that materials with high metallic zinc content are not dross, the Tribunal found the test results did not furnish sustainable evidence to support the Revenue's contention of classification as Zinc Dross. [Paras 9, 10]

Chemical test reports do not sustain classification of the consignments as Zinc Dross; the test results do not support the Revenue's contention.

Rejection of transaction value and validity of valuation re-determination - valuation based on test reports and LME/NIDB data - Whether the Assessing Officer was justified in rejecting the declared transaction value and re-determining assessable value on the basis of test reports and external price data. - HELD THAT: - The Commissioner (Appeals) held that the Assessing Officer's rejection of transaction value lacked sustainable basis because there was nothing on record to show the price paid by the importer was not the sole consideration or that buyer and seller were related. The lower authority's order re-determined value by applying pro-rata adjustments using external NIDB/LME data but did not disclose the purity and basis for such pro-rata calculation; the goods were neither high-grade zinc ingots nor at purity levels that would justify adopting ingot prices. The Tribunal agreed that the re-assessment proceeded purely on valuation grounds without adequate reasoning or disclosure and that the Commissioner (Appeals) correctly set aside the reassessment on those grounds. [Paras 5, 11]

Re-assessment by rejecting transaction value and re-fixing value on NIDB/LME pro-rata basis was unsustainable; Commissioner (Appeals) rightly upheld declared transaction value.

Final Conclusion: The Revenue's appeal is dismissed; the order of the Commissioner (Appeals) upholding the assessment as finalized on valuation grounds is affirmed and the Revenue is precluded from raising a fresh classification-as-dross contention at this appellate stage.

Abatement of appeal on adjudication as insolvent or corporate insolvency resolution - Operation of Rule 22 of the CESTAT (Procedure) Rules, 1982 - Effect of NCLT approval of resolution plan on pending statutory appeals - Tribunal becoming functus officio upon approval of resolution plan - Merger of impugned orders in the NCLT order approving the resolution plan

Abatement of appeal on adjudication as insolvent or corporate insolvency resolution - Operation of Rule 22 of the CESTAT (Procedure) Rules, 1982 - Effect of NCLT approval of resolution plan on pending statutory appeals - Tribunal becoming functus officio upon approval of resolution plan - Appeal abates and CESTAT becomes functus officio upon appointment of IRP/approval of resolution plan by NCLT under IBC, 2016, unless successor-in-interest applies for continuance under Rule 22 within prescribed time. - HELD THAT: - The Tribunal held that once the Corporate Insolvency Resolution Process was initiated and the NCLT approved the resolution plan, Rule 22 of the CESTAT (Procedure) Rules, 1982 applies and the appeal filed before CESTAT abates unless an application for continuance is made by the successor-in-interest or other legal representative within the period prescribed by the Rule. The Tribunal relied on its consistent precedents and reasoning that the approval of a resolution plan by the NCLT renders the NCLT order binding and, from that date, the Tribunal becomes functus officio in respect of the appeal; the impugned orders stand merged in the NCLT order approving the resolution plan. The Tribunal noted the practice in prior decisions that the successor-in-interest appointed by the NCLT must move for continuance, and in the absence of such an application the appeal cannot continue before CESTAT. The conclusion follows statutory limits on the Tribunal's powers and the binding effect of NCLT's approval of resolution plans under the IBC regime. [Paras 6, 7, 8, 13]

Appeal abates with effect from the date of approval of the resolution plan by the NCLT and CESTAT is functus officio; the miscellaneous application does not survive.

Final Conclusion: The appeal is held to have abated consequent to the NCLT's approval of the resolution plan and is therefore dismissed as abated under Rule 22 of the CESTAT (Procedure) Rules, 1982; CESTAT has become functus officio in respect of the appeal.

Power to call for information, inspect books and conduct inquiries under Section 206 - Pre-conditions under Section 206(1) and (3) - Requirement of satisfaction and recording under Section 206(4) - Prima facie nexus between information called for and business carried on for fraudulent or unlawful purpose - Application of mind and jurisdictional validity of statutory inquiry orders

Pre-conditions under Section 206(1) and (3) - Requirement of satisfaction and recording under Section 206(4) - Prima facie nexus between information called for and business carried on for fraudulent or unlawful purpose - Application of mind and jurisdictional validity of statutory inquiry orders - Validity of the order issued under Section 206(4) where Sections 206(1) and (3) procedures were not complied with and where the impugned order does not record requisite satisfaction or specify allegations linking the information sought to fraudulent or unlawful business. - HELD THAT: - The Court held that Section 206(1) contemplates that the Registrar must form an opinion after scrutiny of documents or information that further information or documents are necessary; Section 206(3) requires a further opinion if information furnished is inadequate or an unsatisfactory state of affairs exists; and Section 206(4) permits action only when the Registrar is satisfied on the basis of available or furnished information or a representation that the company's business is being carried on fraudulently or unlawfully or not in compliance with the Act. The impugned order contains no indication that the Registrar had scrutinised any documents or formed the opinions mandated by sub sections (1) and (3), nor does it record any satisfaction or identify the specific complaints, parts of the business alleged to be fraudulent or non compliant, or the grievances of investors. An order under Section 206(4) must at least make out a prima facie case linking the information called for to the statutory grounds; absence of such linkage and of any recorded basis of satisfaction shows lack of jurisdiction and want of application of mind. Consequently initiation of proceedings under Section 206(4) without satisfying the jurisdictional preconditions (or without recording satisfaction and particulars where Section 206(4) is relied upon independently) is unsustainable. [Paras 10, 11, 12, 15, 16]

Impugned order under Section 206(4) is invalid for failure to comply with the preconditions of Section 206(1)-(3) and for not recording the satisfaction or specifying allegations and the requisite prima facie linkage; the order is without jurisdiction.

Application of mind and jurisdictional validity of statutory inquiry orders - Power to call for information, inspect books and conduct inquiries under Section 206 - Validity of initiating proceedings against the petitioner on the basis of the material relied upon (email referring to a different entity and newspaper report concerning a former employee). - HELD THAT: - The Court found that the impugned proceedings were initiated on the basis of an email which referred to a different entity than the petitioner and on a newspaper report relating to offences allegedly committed by a former employee (against whom the petitioner had already initiated criminal proceedings and reported to the RBI). Reliance on such material, without any proper application of mind or enquiry to establish nexus to the petitioner's business, demonstrates that the Registrar did not exercise the statutory power in a legally sustainable manner. Proceedings founded on misconceived basis or media reports, without recorded reasoned satisfaction linking the concerns to the company's conduct, are manifestly flawed. [Paras 13, 14]

Impugned order is ex facie bad in law as it was based on a misconceived foundation (an email about a different entity and a newspaper report about a former employee) and lacks application of mind.

Final Conclusion: Rule made absolute; impugned order dated 4th October 2018 passed under Section 206(4) of the Companies Act, 2013 is quashed for want of jurisdiction and failure to record or satisfy the statutory preconditions; petition disposed.

Time-limit for completion of pre-packaged insolvency resolution process - obligation to file application for termination where no resolution plan is approved - inapplicability of Section 12 to pre-packaged insolvency resolution process - duties and conduct of the resolution professional under PPIRP - termination of pre-packaged insolvency resolution process and release of corporate debtor

Time-limit for completion of pre-packaged insolvency resolution process - obligation to file application for termination where no resolution plan is approved - Application for extension of the PPIRP period by 60 days is rejected. - HELD THAT: - Section 54D prescribes a statutory period of 120 days for completion of the PPIRP and, under Section 54D(3), mandates that where no resolution plan is approved within the period specified in subsection (2), the resolution professional shall, on the day after expiry of such time period, file an application for termination of the PPIRP. The Tribunal held that, having regard to the plain language of Section 54D and the obligations it imposes, an application seeking extension of the PPIRP beyond the statutory 120 days is contrary to the statutory scheme where no resolution plan has been approved within the prescribed period. The RP did not follow the statutory mandate to file for termination but instead sought an extension; that course was held impermissible in the circumstances of this case. [Paras 9, 10]

The application for extension of the PPIRP is rejected.

Inapplicability of Section 12 to pre-packaged insolvency resolution process - application of provisions to Chapter III-A mutatis mutandis - Provisions of Section 12 of the IBC do not apply to PPIRP by way of mutatis mutandis application under Section 54P. - HELD THAT: - The RP relied upon Section 12 of the Code as enabling extension in PPIRP matters. The Tribunal examined Section 54P, which specifies which provisions of Chapters II, III, VI and VII apply mutatis mutandis to PPIRP and the necessary substitutions. From the scheme and express list in Section 54P, the Tribunal concluded that Section 12 is not one of the provisions made applicable to Chapter III-A and therefore Section 12 cannot be invoked to extend time limits in PPIRP proceedings. Consequently the RP's reliance on Section 12 was rejected. [Paras 9]

Section 12 is not applicable to PPIRP; it cannot be invoked to extend the statutory PPIRP period.

Duties and conduct of the resolution professional under PPIRP - termination of pre-packaged insolvency resolution process and release of corporate debtor - PPIRP is terminated and the corporate debtor is released; the RP is found to have failed in mandated duties and is directed to be reported to regulatory bodies. - HELD THAT: - The Tribunal recorded that no resolution plan had been approved within the statutory period and that the RP did not comply with the directions under Sections 54D and 54K to file for termination when a plan was not approved. The Tribunal further observed that the RP had misled the Tribunal and had not discharged duties mandated under the Code. In consequence, the Tribunal ordered termination of the PPIRP initiated by the admission order dated 04.01.2024, released the corporate debtor from the rigour of the Code, and directed the Registry to forward a copy of the order to the IBBI and the RP's insolvency professional agency for appropriate action regarding the RP's conduct. [Paras 9, 10, 11]

PPIRP terminated; corporate debtor released; registry to send order to IBBI and the RP's IPA for action.

Final Conclusion: The application for extension of the PPIRP period is rejected; no resolution plan having been approved within the statutory period, the Tribunal terminated the PPIRP initiated on 04.01.2024, released the corporate debtor from the rigour of the Code, and directed that the RP's conduct be reported to the IBBI and his professional agency for appropriate action.

Non-speaking order - remand for de-novo adjudication - principles of natural justice - service tax on renting of immovable property - Cenvat credit inadmissibility for input services used in construction of immovable property - interim Supreme Court directions regarding deposit of 50% and furnishing of solvent surety

Non-speaking order - principles of natural justice - Validity of the impugned adjudication order in view of procedural infirmities and failure to consider available documents and evidence - HELD THAT: - The Tribunal reviewed the impugned order and the material on record and found that the Original Authority adjudicated without properly considering submissions and documentary material available from the investigation, failed to reconcile balance-sheet figures with ST-3 returns and proceeded despite interim replies and evidentiary material. The Tribunal recorded that the adjudicating authority treated the appellant's requests for non-RUDs and other documents as dilatory but did not undertake necessary verification or analysis of the figures and documents that existed at the time of investigation and adjudication. On this basis the Tribunal concluded that the impugned order is non-speaking and contrary to the requirements of natural justice because the appellant's documentary case was not considered on its merits. [Paras 4]

Impugned order is set aside as a non-speaking order and cannot be sustained.

Remand for de-novo adjudication - service tax on renting of immovable property - Cenvat credit inadmissibility for input services used in construction of immovable property - interim Supreme Court directions regarding deposit of 50% and furnishing of solvent surety - Scope of further proceedings required and specific matters to be reconsidered by the Original Authority - HELD THAT: - The Tribunal directed that the matter be remitted to the Original Authority for fresh consideration and de-novo adjudication. The Tribunal identified that the Original Authority must reconsider each annexure and the demand calculations by properly analysing the balance sheet, ST-3 returns and other documentary evidence available from the investigation. The Tribunal noted that amounts claimed as rent from two major clients (M/s Future Value Retail Ltd. and M/s Cinemax India Ltd.) fall within the ambit of the Supreme Court proceedings which had imposed interim obligations (deposit of 50% and furnishing of solvent surety) and that compliance with those orders should be verified; if those obligations were complied with, the demand insofar as relates to those clients may be affected. The Tribunal also recorded the departmental circular position that Cenvat credit on input services used for construction of commercial building is not admissible but did not finally adjudicate the correctness of the credit demand; instead the Tribunal remitted the issue for fresh adjudication in light of documents and reconciliation. [Paras 4, 5]

Matter remitted to the Original Authority for reconsideration and de-novo adjudication on all contested demands (each annexure), verification of compliance with the Supreme Court interim directions concerning the two major clients, and re-examination of Cenvat-credit claims in the light of available records.

Final Conclusion: Appeals allowed by setting aside the impugned non-speaking order; the matter is remitted to the Original Authority for fresh, de-novo adjudication and verification of the specific factual and documentary aspects (including compliance with Supreme Court interim directions and the Cenvat-credit issue) for the tax period June, 2009 to September, 2013.

Works Contract Service - Construction of Complex Service - Commercial or Industrial Construction Service - Classification of composite contracts - Show cause notice scope - Abatement and Cenvat credit eligibility - Valuation of taxable services - Limitation and extended period - Bonafide belief and absence of suppression

Works Contract Service - Construction of Complex Service - Commercial or Industrial Construction Service - Classification of composite contracts - Show cause notice scope - Abatement and Cenvat credit eligibility - The services rendered by the appellant are composite works contracts and liable as Works Contract Service, not as Construction of Complex Service or Commercial or Industrial Construction Service; demand confirmed under the latter categories is unsustainable. - HELD THAT: - The Tribunal found on the material (VAT audit report, VAT payment, agreements with developer and sub-contractors) that the appellant's construction activities involved transfer of property in goods and were composite in nature. Relying on the ratio in Larsen & Toubro and the Tribunal's decision in Real Value Promoters, it was held that Construction of Complex Service and Commercial or Industrial Construction Service apply only to pure service contracts (services simpliciter) and not to composite contracts involving transfer of property in goods. Consequently, for composite/indivisible construction contracts the taxable category from 1-6-2007 onwards is Works Contract Service. The show cause notice and adjudication had proceeded on CICS/CCS categories; the Tribunal held that confirming demand under those categories for composite contracts is impermissible as it goes beyond the scope of the show cause notice and contrary to the statutory and judicial scheme distinguishing pure service contracts from works contracts. On these grounds the demand confirmed under Construction of Complex Service/Commercial or Industrial Construction Service was held unsustainable and the impugned order was set aside. [Paras 9, 10, 11, 12]

Demand confirmed under Construction of Complex Service or Commercial or Industrial Construction Service set aside; services held to be Works Contract Service and not taxable under CICS/CCS for the periods in dispute.

Limitation and extended period - Bonafide belief and absence of suppression - Extended period of limitation cannot be invoked; the demand is also not sustainable on limitation grounds. - HELD THAT: - The Tribunal examined the conduct of the appellant and the nature of the controversy, concluding that the issue was one of legal interpretation of the Works Contract Service and related composition rules. The appellant had filed periodic ST-3 returns disclosing the transactions and had no mala fide suppression or willful misstatement; earlier judicial decisions were favourable to the appellant's position. On these facts, the Tribunal held that invocation of the extended limitation period was not justified and that the charge of suppression did not survive. [Paras 13]

Extended period not invokable; demand time-barred on limitation grounds.

Final Conclusion: Impugned adjudication is set aside; appeal allowed and demand confirmed by the adjudicating authority is quashed both on classification grounds (services are Works Contract Service, not CICS/CCS) and on limitation grounds, with consequential reliefs as per law.

Manufacture under Section 2(f) of the Central Excise Act - Chapter Note 9 to Chapter 27 - deeming fiction treating treatment to render lubricating oils marketable as manufacture - classification of waste oil versus lubricating oil under Chapter 27 - limitation and exclusion of period of judicial stay under Section 11A(1) explanation - eligibility for SSI exemption and computation of aggregate value of clearances

Manufacture under Section 2(f) of the Central Excise Act - Chapter Note 9 to Chapter 27 - deeming fiction treating treatment to render lubricating oils marketable as manufacture - classification of waste oil versus lubricating oil under Chapter 27 - Whether reprocessing of waste/used oil into reprocessed base oil or lubricating oil amounts to 'manufacture'. - HELD THAT: - The Tribunal analysed the statutory definitions of 'waste oil' and 'lubricating oil' under Chapter 27 and the inclusive definition of 'manufacture' in Section 2(f) read with Chapter Note 9 (Note 9/4). Note 9 applies only to lubricating oils and lubricating preparations of heading 2710 1980 and creates a deeming fiction that specified processes to render lubricating oil marketable shall amount to manufacture. Waste oil, however, is classified separately and is defined as oils no longer fit for use as a primary product. Having considered judicial precedent (including Servo-Med and Mineral Oil Corporation), the CBEC Circular No.1024/12/2016-CX and the material facts showing recovery of base oils by vacuum distillation and downstream treatments, the Tribunal concluded that mere reprocessing of waste oil into a usable base oil does not effect the requisite transformation into a new and distinct commodity such as to constitute 'manufacture' under Section 2(f) read with Note 9. Note 9 is not attracted to processes on waste oil unless the specific processes listed in the note are carried out on goods already classifiable as lubricating oil; accordingly the demand on the basis that reprocessing per se amounts to manufacture was negatived. [Paras 6, 7, 8]

Reprocessing of waste/used oil into reprocessed base oil does not amount to manufacture; demand on that ground set aside.

Limitation and exclusion of period of judicial stay under Section 11A(1) explanation - Whether the departmental demand for the period covered by the High Court stay was barred by limitation or excluded under the Explanation to Section 11A(1). - HELD THAT: - The Tribunal noted that the High Court had granted an interim stay effective from 23.02.2001 which was vacated subsequent to the Tribunal's order dated 28.10.2009. The Commissioner contended that issuance of show-cause notices during the period of stay was precluded and that the period of stay should be excluded for limitation purposes under the Explanation to Section 11A(1). Applying the Explanation and the factual timeline of the stay and its vacation, the Tribunal held that notices issued after the vacation, excluding the period of the interim stay for computation of limitation, are sustainable. [Paras 3, 4, 8]

Period of interim stay is excluded for limitation; notices issued after vacation of stay are not barred.

Eligibility for SSI exemption and computation of aggregate value of clearances - inclusion of value of non-excisable reprocessed oils in aggregate clearances - Whether the appellant is entitled to SSI exemption for 2010-11 by excluding values of reprocessed oils (not held to be manufacture) from aggregate clearances. - HELD THAT: - The Commissioner (Appeals) had included the value of the appellant's clearances of reprocessed oils while computing the aggregate value of clearances for 2010-11 on the premise that the processes amounted to manufacture. Having held that reprocessing does not amount to manufacture, the Tribunal concluded that those clearances cannot be treated as production of excisable goods for purposes of the SSI threshold under Notification No.8/2003-CE. Consequently, the appellant is eligible for SSI exemption for the relevant period. [Paras 8]

Appellant entitled to SSI exemption; value of non-excisable reprocessed oils not includible in aggregate clearances.

Verification of duty paid on reprocessed oils cleared as lubricants - Whether duties were in fact discharged on those reprocessed oils which were cleared and described/packed and sold as 'lubricants'. - HELD THAT: - Although the Tribunal found that reprocessing per se does not constitute manufacture, it recorded the appellant's admission (in submissions) that certain output - described as reprocessed base oil heavy - was blended with additives, packed in barrels and smaller packs and sold as lubricants and that duty had been paid, but noted absence of record evidence to substantiate discharge of duty. The Tribunal therefore did not adjudicate this factual question on the merits but remanded the matter to the original authority for limited verification of whether duty was actually discharged on reprocessed oils cleared as 'lubricants'. [Paras 8, 9]

Remanded for limited purpose of verifying whether duty was discharged on reprocessed oils cleared as 'lubricants'.

Final Conclusion: The Tribunal held that reprocessing of waste/used oil into reprocessed base oil does not amount to 'manufacture' under Section 2(f) read with Chapter Note 9 to Chapter 27, upheld departmental notices issued after exclusion of the interim stay period for limitation, allowed the appellant's claim to SSI exemption for 2010-11, and remanded for limited verification whether duty was discharged on those reprocessed oils actually cleared as 'lubricants'.

Maintainability of complaint under Section 138 of the Negotiable Instruments Act - Authority of corporate representative to institute criminal complaint / power of attorney - Retrospective ratification of antecedent acts - Presumption of innocence and appellate restraint in appeals against acquittal - Re-appreciation of evidence by appellate court

Authority of corporate representative to institute criminal complaint / power of attorney - Retrospective ratification of antecedent acts - Maintainability of complaint under Section 138 of the Negotiable Instruments Act - Whether the complaints filed on behalf of the complainant-federation by its Branch Manager were competent and maintainable in view of absence of an empowering instrument on the date of filing. - HELD THAT: - The complaints were filed in January 1995 by the Branch Manager. The power of attorney relied upon was executed only on 28.06.1995 and contained no clause retrospectively ratifying prior actions. The federation did not prove its corporate character or otherwise establish that the Branch Manager was authorised at the time of filing. A complaint under Section 138 must be instituted in the name of the payee or holder and, where represented, by an authorised person empowered by resolution, power of attorney or a sworn affidavit. Because no contemporaneous or retrospective authority was shown, the Branch Manager was not competent to institute the complaints. Consequently the acquittal entered by the Appellate Court was rightly sustained. [Paras 7, 8, 11]

Complaints held not maintainable for want of authority in the Branch Manager; acquittal upheld.

Presumption of innocence and appellate restraint in appeals against acquittal - Re-appreciation of evidence by appellate court - Whether interference with the order of acquittal was warranted on re-appreciation of evidence by this Court. - HELD THAT: - While an appellate court has power to review and re-appreciate evidence, that power is exercised with the recognition that an acquittal carries a reinforced presumption of innocence. If two reasonable conclusions are possible, the view favouring the accused should prevail. No perversity was shown in the impugned judgment of acquittal and the appellant failed to demonstrate good and sufficient grounds to overturn it. [Paras 9, 10, 11]

No interference with the acquittal; appellate restraint applied and acquittal maintained.

Final Conclusion: Appeals dismissed; impugned judgment of acquittal upheld as the complaints were instituted without requisite authority and there existed no permissible basis to disturb the order of acquittal.