TaxTMI Updates e-Newsletter
Jun 28,2021

Power to summon under Section 70 of the CGST Act - Definition of "Proper Officer" under Section 2(91) of the CGST Act - Assignment of functions by the Board via Circular under Section 2(91) read with Section 20 of the IGST Act - Delegation of powers by Commissioner under Section 167 of the CGST Act - Voluntary payment under Section 74(5) of the CGST Act - Concurrent or parallel inquiries and respect for judicial nature summons

Power to summon under Section 70 of the CGST Act - Definition of "Proper Officer" under Section 2(91) of the CGST Act - Respondent No.3 was a 'proper officer' entitled to issue summons under Section 70 of the CGST Act. - HELD THAT: - Section 70 confers upon the proper officer power to summon persons to give evidence or produce documents in an inquiry. Section 2(91) defines 'proper officer' in relation to any function as the Commissioner or an officer of Central Tax assigned that function by the Commissioner in the Board. The respondent No.3 was appointed as a Central Tax Officer (Superintendent rank) by Notification No.14 of 2017-CT dated 1.7.2017 and the Board, by Circular dated 5.7.2017 issued under Clause (91) of Section 2 read with Section 20 of the IGST Act, assigned the function corresponding to Section 70(1) to the Superintendent of Central Tax. On that basis the respondent No.3 qualified as a proper officer and was entitled to issue the summons under Section 70 in connection with the inquiry. [Paras 9, 13]

The summons issued by respondent No.3 under Section 70 were valid as he was a proper officer for that function.

Assignment of functions by the Board via Circular under Section 2(91) read with Section 20 of the IGST Act - Delegation of powers by Commissioner under Section 167 of the CGST Act - Assignment of functions to officers as 'proper officers' by the Board through Circular is effective and does not require a separate Notification under Section 167. - HELD THAT: - Section 167 deals with delegation of powers by the Commissioner by notification and is inapplicable to the separate power of the Board to assign functions under the definition in Section 2(91). The Board (Central Board of Indirect Taxes and Customs) exercised its authority to assign functions to officers by issuing the Circular dated 5.7.2017 under Section 2(91) read with Section 20 of the IGST Act. Therefore, there was no legal requirement that the assignment effected by the Board be repeated as a Notification under Section 167, and the submission that only a Commissioner's notification could effect such assignment was rejected. [Paras 11, 12, 14]

The Circular dated 5.7.2017 validly assigned functions to officers as proper officers and did not contravene Section 167.

Concurrent or parallel inquiries and respect for judicial nature summons - Existence of another inquiry by a different agency did not render the summons issued under Section 70 unsustainable or unenforceable. - HELD THAT: - The DRI communication and the summons under Section 70 related to overlapping but distinct aspects of the alleged incorrect double benefits; the former sought information on imports/exports while the latter was an exercise of a judicial nature power to record evidence/production of documents under the CGST Act. There was no interim stay restraining inquiry proceedings and the petitioners were required to cooperate with the summons; compliance would not cause prejudice. [Paras 3, 15, 16]

Parallel or concurrent proceedings did not invalidate the summons and the petitioners were obliged to comply.

Voluntary payment under Section 74(5) of the CGST Act - The payment of the amount under Form GST DRC 03 was not shown to be involuntary or under duress and must be dealt with in accordance with Section 74. - HELD THAT: - The petitioners made a payment via Form GST DRC 03 indicating 'voluntary' payment under Section 74(5) and annotated the reason as 'under protest'. No search or seizure under Section 67 took place, and no complaint was filed by the petitioners alleging coercion. Payments under Section 74(5) are to be notified to the proper officer and thereafter dealt with under the statutory scheme; absent proof of duress or contrary orders, the Court declined to treat the payment as involuntary. [Paras 10, 17, 18]

The challenged payment will be governed by the procedures in Section 74 and is not set aside for being involuntary.

Final Conclusion: The writ petition was dismissed. The Court upheld the validity of the Board's Circular assigning officers as proper officers for the functions in question, held respondent No.3 competent to issue summons under Section 70, rejected the challenge to parallel inquiries, and declined to set aside or treat as involuntary the payment made under Section 74(5), leaving its adjustment and adjudication to the statutory process.

Provisional attachment of property including bank account - power of the Commissioner to order provisional attachment - procedure for provisional attachment under Rule 159 - right to file objection and obtain hearing in FORM GST DRC-23 - requirement of a reasoned order on objection under Section 83 and Rule 159(5) & (6)

Provisional attachment of property including bank account - right to file objection and obtain hearing in FORM GST DRC-23 - requirement of a reasoned order on objection under Section 83 and Rule 159(5) & (6) - Validity of the petitioner's challenge to the provisional attachment of its overdraft bank account without first availing the statutory objection mechanism and the consequent directions to the Commissioner for fresh consideration. - HELD THAT: - The Court observed that the OGST Act vests the Commissioner with power to provisionally attach property, including bank accounts, and that Rule 159 prescribes the procedure for such attachment. Under Rule 159(5) a person whose property is attached may, within seven days, file an objection, after which the Commissioner must afford an opportunity of being heard and, if appropriate, pass an order in FORM GST DRC-23 releasing the property. The petitioner approached the Court without first availing the statutory remedy. In view of the availability of the specific statutory procedure, the Court directed the petitioner to file the prescribed objection before the Commissioner and required the Commissioner, upon receipt, to fix a hearing (with at least three days' notice), hear the petitioner and pass a reasoned order in terms of Section 83 of the OGST Act and Rule 159(5) & (6) of the OGST Rules within the timelines fixed by the Court. All contentions of the petitioner were left open for consideration by the Commissioner; any aggrievement against the Commissioner's order may be pursued by the petitioner by appropriate remedies in accordance with law. [Paras 3, 4, 6]

Petitioner to file objection before the Commissioner by 1st July 2021; Commissioner to fix hearing (with at least three days' notice), hear the petitioner and pass a reasoned order in terms of Section 83 and Rule 159(5) & (6) by 2nd August 2021 and communicate it by 9th August 2021; petition disposed.

Final Conclusion: Writ petition disposed by directing the petitioner to avail the statutory objection remedy and remanding the matter to the Commissioner for fresh consideration and a reasoned decision within specified timelines; petitioner's contentions preserved for consideration and further legal remedies left open.

Anticipatory bail premature / not maintainable at summons stage - power to summon under Section 70 not equivalent to power of arrest - arrest under Section 69/Section 132 only after determination of liability - inspection, search and seizure under Section 67 and compounding under Section 139 as part of scheme for determination and recovery

Anticipatory bail premature / not maintainable at summons stage - power to summon under Section 70 not equivalent to power of arrest - arrest under Section 69/Section 132 only after determination of liability - Whether the applicant is entitled to anticipatory bail at the stage when summons have been issued under the Act - HELD THAT: - The Court found that proceedings at the stage of summons issued under Section 70 are for obtaining evidence and documents and do not demonstrate an intention to arrest. The respondents gave an unequivocal undertaking that no arrest would be made unless, after receipt and evaluation of evidence and documents, satisfaction is reached that there has been suppression, mis-statement or improper availment of input tax credit warranting action in accordance with the Act. The Court noted that powers of inspection, search and seizure under Section 67 and compounding under Section 139 form part of the statutory scheme for determination and recovery, but that such powers do not equate to an immediate power to arrest at the summons stage; arrest under the statutory scheme arises only after determination of liability and in accordance with provisions such as Section 69 and Section 132. In view of the undertaking and the nature of proceedings at the summons stage, the application for anticipatory bail was held to be premature and not maintainable. [Paras 8, 10, 11, 12, 13]

Application for anticipatory bail dismissed as premature.

Final Conclusion: Given the nature of summons proceedings and the undertaking by respondent that no arrest would be effected without prior determination of liability on available evidence, the High Court dismissed the anticipatory bail application as premature.

Intimation of proposed reversal of IGST - demand in absence of a show cause notice - right to file a reply and continuation of proceedings in accordance with law

Intimation of proposed reversal of IGST - demand in absence of a show cause notice - right to file a reply and continuation of proceedings in accordance with law - Communication dated 17.08.2020 treated as an intimation of a proposal to reverse IGST and petitioner granted opportunity to reply before any further action is taken. - HELD THAT: - The petitioner challenged the impugned communication dated 17.08.2020 as constituting a demand without issuance of a show cause notice. The respondent stated that the communication is only an intimation of the IGST proposed to be reversed and a request to the petitioner to effect reversal. The Court did not adjudicate the merits of whether the communication amounts to a recoverable demand in law, but directed that the petitioner file a reply within four weeks. The matter was left open for the authority to take further proceedings thereafter in accordance with law, thereby requiring the authority to consider the petitioner's reply before exercising any coercive or final action.

Petitioner granted four weeks to file a reply; further proceedings to be taken thereafter in accordance with law; writ petition closed.

Final Conclusion: The Court declined to decide the substantive legality of the impugned communication, granted the petitioner a four week opportunity to reply, and directed that subsequent action by the authority be taken in accordance with law; the writ petition is closed.

Re-opening of assessment under Section 147 - reason to believe - reassessment - suo-motu powers of the Transfer Pricing Officer under Section 92CA(2B) - time-bar/limitation under Section 92CA(2C) - reference to the Transfer Pricing Officer under Section 92CA(1) - assessment includes reassessment - prima-facie case for reopening

Suo-motu powers of the Transfer Pricing Officer under Section 92CA(2B) - time-bar/limitation under Section 92CA(2C) - reference to the Transfer Pricing Officer under Section 92CA(1) - Validity of the Transfer Pricing Officer's proceedings dated 02.04.2013 and order dated 29.01.2014 in light of the limitation prescribed by Section 92CA(2C) and whether those proceedings were barred as suo-motu action under Section 92CA(2B). - HELD THAT: - The court held that Sub section (2B) applies only where the Transfer Pricing Officer, on suo motu notice of international transactions (because the assessee did not furnish the report under Section 92E), initiates proceedings; Sub section (2C) prescribes that such suo motu jurisdiction cannot be used to assess/reassess years whose proceedings were completed before 1 July 2012. In the present case the Assessing Officer had initiated reassessment under Section 147 and had referred specific queries to the Transfer Pricing Officer; the petitioner had earlier filed the audit report under Section 92E and a Transfer Pricing order dated 29.10.2010 had already been forwarded and incorporated in the original assessment of 25.02.2011. Thus the impugned communications and the Transfer Pricing Officer's order arose from a reference by the Assessing Officer in the course of reassessment proceedings and were not suo motu actions by the Transfer Pricing Officer under Section 92CA(2B). Consequently the temporal limitation in Section 92CA(2C) governing suo motu proceedings was not attracted and the Transfer Pricing Officer's order was not time barred on that ground. The court emphasised that Section 147 reassessment powers permit the Assessing Officer to seek such information from departmental authorities and that Sub sections (2B) and (2C) must be read together and confined to the circumstance of suo motu initiation by the Transfer Pricing Officer. [Paras 13, 14, 17, 18, 19]

The challenge to the Transfer Pricing Officer's order on the ground of time bar under Section 92CA(2C)/suo motu jurisdiction under Section 92CA(2B) is rejected and the impugned order is held not to be infirm on that basis.

Re-opening of assessment under Section 147 - reason to believe - assessment includes reassessment - prima-facie case for reopening - Whether the reassessment proceedings initiated under Section 147/notice under Section 148 and the disposal of objections dated 21.02.2014 amounted to an impermissible change of opinion or otherwise lacked a prima facie basis. - HELD THAT: - The court examined the reasons recorded for reopening, which identified apparent discrepancies in the claim of foreign withholding tax credit and the true nature of interest income and borrowings, and concluded that these amounted to a prima facie reason to believe that income chargeable to tax had escaped assessment. The court noted statutory provisions and explanations to Section 147 which permit reopening where income has been underassessed and that production of books in the original assessment does not necessarily preclude reassessment. The High Court emphasised that it is not the forum for a roving inquiry into evidence but must determine whether a prima facie case for reopening exists; on the material before it (including the stated reasons relating to withholding tax credit and netting of interest), a prima facie case was established and the Assessing Officer's action could not be set aside at this stage. The court also recorded that further adjudication on merits and evidence must take place before the Assessing Officer during reassessment. [Paras 26, 28, 29, 30]

The challenge that reassessment amounted to mere change of opinion is rejected; the reasons recorded provide a prima facie basis for reopening under Section 147 and the disposal of objections does not vitiate the reassessment process.

Final Conclusion: Both writ petitions are dismissed: the Transfer Pricing Officer's order and related proceedings are not time barred as suo motu actions under Section 92CA(2B)/(2C), and the reassessment under Section 147/148 was prima facie justified; consequently the petitions seeking to quash those proceedings are refused.

Reopening of assessment under Section 147 - Notice under Section 148 - Change of opinion - Sufficiency of reasons for reopening - Related party transactions and Form 3CD reporting - Fresh tangible material / discovery of material - Judicial review in writ petition under Article 226

Reopening of assessment under Section 147 - Notice under Section 148 - Change of opinion - Fresh tangible material / discovery of material - Related party transactions and Form 3CD reporting - Validity of the reopening notices issued under Section 148 and initiation of reassessment under Section 147 for AY 2009-10 and AY 2010-11 (whether the reasons for reopening amounted to a mere change of opinion or constituted valid new material justifying reassessment). - HELD THAT: - The Court examined the reasons furnished by the Assessing Officer and the order disposing of objections and found that the reassessment proceedings were initiated on the basis of materially new and specific aspects - namely, the related party character of transactions, alleged failure to report particulars in Form 3CD and the availability in public domain of an ITAT order providing fresh tangible material. The Assessing Officer's recorded reasons (including findings that the transactions required disclosure and that the arm's length nature had not been examined during original assessment) were held to demonstrate that the proceedings were not a mere change of opinion. Consequently, the requirements for invoking Section 147 were treated as satisfied and the reopening was held to be within the scope of the Act, enabling reassessment to proceed subject to statutory procedure and opportunities to the assessee. [Paras 5, 6, 7]

The reopening notices and initiation of reassessment under Section 147 were upheld as valid (not a mere change of opinion) and the Revenue may proceed with reassessment.

Judicial review in writ petition under Article 226 - Sufficiency of reasons for reopening - Change of opinion - Extent of High Court review in writ proceedings under Article 226 of the Constitution as to the sufficiency of reasons for reopening assessments under Section 147. - HELD THAT: - The Court reiterated that in a writ petition under Article 226 the High Court is not to conduct a roving or detailed inquiry into account intricacies or the technical sufficiency of the Assessing Officer's reasons; instead the proper limited enquiry is whether the reasons amount merely to a change of opinion. If the record discloses reasons which on their face justify reopening (as here, including newly available material and unexamined related party issues), the High Court will not substitute its own view by reassessing sufficiency of those reasons in detail - factual and technical examination is left to the reassessment proceedings. [Paras 6]

The High Court will not probe the sufficiency of reasons in depth in a writ under Article 226; it will confine itself to determining whether the reopening is a mere change of opinion.

Final Conclusion: Writ petitions dismissed; reopening under Section 147 upheld and reassessment proceedings may continue. Respondents directed to complete reassessment within four months from receipt of this order.

Evidentiary value of statements recorded under section 132(4) - retraction of statements and requirement of corroborative evidence - reliance on seized documents as incriminating material - requirement of incriminating material for exercise of jurisdiction under section 153C - corroboration and circumstantial evidence for additions based on search

Evidentiary value of statements recorded under section 132(4) - retraction of statements and requirement of corroborative evidence - Whether statements recorded under section 132(4) by employees could be relied upon against the assessee despite subsequent retraction affidavits - HELD THAT: - The Tribunal examined the statements recorded under section 132(4) from several employees and the subsequent retraction affidavits and cross-examinations. It found that the witnesses consistently stated they were not given an opportunity to read their statements at the time of recording, that they felt pressured, and they furnished retraction affidavits which were not controverted by the Revenue with independent evidence. The Tribunal applied the principle that a retracted confession or statement cannot be relied upon unless corroborated by independent and cogent evidence, citing the approach of the Bombay High Court in Uttam Chand Jain. On the facts, the Tribunal held the retraction affidavits to be credible and the original statements to lack voluntary reliability; consequently the statements recorded u/s 132(4) had no evidentiary value for making additions. [Paras 12, 13, 17, 18, 31]

Statements recorded under section 132(4) were held to be validly retracted and thus had no evidentiary value to support the additions.

Reliance on seized documents as incriminating material - corroboration and circumstantial evidence for additions based on search - Whether the torn loose sheet seized during search constituted incriminating material sufficient to sustain additions for capitation fees - HELD THAT: - The Tribunal inspected the seized torn sheet and found it to be a disjointed, 'dumb' document lacking dates, clear linkage between names and figures, or any indication that the figures represented receipt of cash as capitation fees. In the absence of reliable statutory statements (found invalid due to retraction) and without independent corroborative material such as actual cash or other circumstantial evidence connecting the entries to undisclosed receipts, the Tribunal concluded that the loose sheet could not form the basis for additions. Precedents were applied to hold that mere entries on a loose sheet, without corroboration, are insufficient to make additions. [Paras 22, 23, 31, 32, 33]

The torn seized document was not incriminating and could not sustain the additions; it lacked corroborative evidentiary value.

Requirement of incriminating material for exercise of jurisdiction under section 153C - corroboration and circumstantial evidence for additions based on search - Whether the Assessing Officer had jurisdiction under section 153C to make additions for earlier assessment years in absence of incriminating material relating to the assessee - HELD THAT: - The Tribunal noted that notices under section 153C and consequent assessments of unabated assessment years require incriminating material found as a result of the search. Given the Tribunal's findings that the only seized paper was non-incriminating and the statements were rendered unreliable by valid retractions, there was no incriminating material connecting undisclosed income to the assessee for the years under consideration. Consequently, extrapolation of additions to earlier or other assessment years was not warranted. The Tribunal also observed submissions and record (including the investigator's affidavit) indicating absence of incriminating documents relating to the assessee. [Paras 31, 32, 34, 36, 39]

In the absence of incriminating material found as a result of search, the Assessing Officer could not sustain additions for the earlier assessment years under section 153C.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the additions: statements recorded u/s 132(4) were validly retracted and lacked evidentiary value, the seized torn document was not corroborative or incriminating, and no material was found to invoke section 153C for the earlier assessment years. All appeals filed by the Revenue are dismissed.

Remission or waiver of loan and taxability as revenue receipt - distinction between capital receipt and revenue receipt on loan waiver - accrual basis of accounting and taxation of interest income - remand for factual/verification exercise in light of higher court precedent - prematurity of penalty initiation

Remission or waiver of loan and taxability as revenue receipt - distinction between capital receipt and revenue receipt on loan waiver - remand for factual/verification exercise in light of higher court precedent - Whether the sum of Rs. 99,512,500 received on account of waiver/ remission of loan is to be treated as revenue receipt or capital receipt - HELD THAT: - The Tribunal recorded the factual background of the loan arranged through GE Capital Services and payment by Tabcorp to GECSI which discharged the assessee to the extent of the standby letter of credit. The lower authorities had held the amount to be a revenue receipt on the basis that the loan proceeds were applied for business purposes (repayment of overdraft and loans and advance to sister concern) and no evidence was produced by the assessee to show that the loan was utilized for acquisition of capital assets (POS terminals). The assessee relied on the Supreme Court decision in Commissioner v. Mahindra & Mahindra Ltd. The Revenue did not oppose reconsideration in the light of that decision. The Tribunal found that the assessing officer had not specified the statutory provision under which the addition was made and that the factual matrix required examination whether the loan was utilised for capital acquisition or business purposes. Consequently, the Tribunal set aside the matter to the file of the assessing officer for fresh adjudication and directed the assessee to justify its claim and produce evidence in light of the Supreme Court authority. [Paras 7]

Issue set aside to the assessing officer for fresh adjudication in accordance with the Supreme Court decision; ground allowed to that extent and matter remanded for verification and fresh decision.

Depreciation on assets located in premises sealed by statutory action - application of precedent and coordinate bench decisions - Whether depreciation on assets lying in premises sealed by the Government due to ban on lottery is allowable - HELD THAT: - The Tribunal noted that an identical issue in the assessee's own case for earlier years had been decided in the assessee's favour by a coordinate bench which followed the jurisdictional High Court authority (CIT v. Oswal Agro Mills Ltd.). Respectfully following that coordinate-bench decision and the cited precedent, the Tribunal held that the depreciation claimed on assets in the sealed premises is allowable and directed the assessing officer to allow the depreciation for the relevant assessment years. [Paras 8, 19]

Disallowance of depreciation deleted; ground allowed and assessing officer directed to allow depreciation.

Accrual basis of accounting and taxation of interest income - recognition of interest income under mercantile/accrual system - Whether interest on inter-corporate deposits (ICDs) which has accrued but remained unpaid is includible in the assessee's income - HELD THAT: - The assessee's own financial statements and notes disclosed that accounts are maintained on the accrual basis and specifically recorded that interest on ICDs had accrued and become overdue. The auditors' report drew attention to the note disclosing outstanding ICDs and interest. The Tribunal observed that under accrual (mercantile) accounting the receipt of consideration is irrelevant to accrual; interest accrues on time basis determined by amount outstanding and applicable rate. The assessee's reliance on Accounting Standard provisions concerning uncertainty of recovery was considered, but the Tribunal found no material demonstrating lack of reasonable certainty of recovery: substantial sums had already been repaid from the advances and no evidence was produced to show inability to recover the balance. On these facts the Tribunal upheld the finding of the lower authorities that interest had accrued and was taxable in the relevant year. [Paras 11, 12, 13, 14, 20]

Addition of interest of Rs. 1,654,200 upheld; ground of appeal dismissed.

Prematurity of penalty initiation - Whether initiation of penalty proceedings under section 271(1)(c) was justified at the stage of these appeals - HELD THAT: - The Tribunal observed that initiation of penalty proceedings was premature at the present stage of adjudication. No substantive penalty adjudication had been carried out and the Tribunal declined to entertain or uphold initiation at this interlocutory stage. [Paras 15, 21]

Penalty initiation set aside as premature; ground dismissed.

Final Conclusion: Both appeals (AY 2008-09 and AY 2009-10) are partly allowed: the claim for depreciation on assets in sealed premises is allowed for both years; the additions of accrued interest on ICDs are upheld; initiation of penalty proceedings is dismissed as premature; the question of taxability of the loan-waiver amount (Rs. 99,512,500) is remitted to the assessing officer for fresh decision in light of the Supreme Court precedent, with directions to the assessee to place on record evidence regarding utilisation of the loan.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - verification of genuineness and creditworthiness of unsecured loans - applicability of provisions of section 269SS and 269T in relation to mode of receipt

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue - verification of genuineness and creditworthiness of unsecured loans - Whether the order of the Assessing Officer for A.Y. 2016-17 was erroneous and prejudicial to the revenue for want of necessary enquiries and verification regarding unsecured loans, justifying exercise of revisional jurisdiction under section 263. - HELD THAT: - The Tribunal accepted the Pr. CIT's conclusion that one of the key reasons for scrutiny selection was verification of unsecured loans and that the Assessing Officer was obliged to call for and examine requisite documentation and carry out independent verification before accepting the transactions. In respect of the loan from Sh. Bharat Harwani and the loans from Sh. Rahul Harwani and Sh. Sunil Israni, the Assessing Officer is found to have accepted photocopies of ledger confirmations without ensuring authentication, signatures, ITRs or bank statements and without conducting independent enquiries under section 133(6). The absence of such basic verification transformed the AO's acceptance into a case of no enquiry rather than merely a lack of detailed recording, thereby rendering the assessment order erroneous and prejudicial to the revenue to the extent indicated by the Pr. CIT. Consequently, the assessment order is set aside on this issue and the matter is restored to the file of the AO for fresh enquiry and verification, with opportunity of hearing to the assessee. [Paras 8, 9]

Assessment order set aside and restored to the AO for fresh verification and enquiries into the genuineness and creditworthiness of unsecured loans; revisional jurisdiction under section 263 validly invoked to this extent.

Applicability of provisions of section 269SS and 269T in relation to mode of receipt - Whether credits shown as journal entries in the account of Sh. Rahul Harwani constitute loans and advances attracting the restrictions of section 269SS. - HELD THAT: - The Tribunal examined the ledger entries relied upon by the Pr. CIT and found that certain credits represented journal entries for purchases/expenses and were not receipts by account payee cheque, draft, or electronic clearing that would constitute loans and advances under the principles relevant to section 269SS. On this factual basis the Tribunal held that the Pr. CIT's finding that the entries amounted to loans under section 269SS could not be sustained and that this part of the Pr. CIT's order must be set aside. [Paras 9]

Findings that the journal entries in the account of Sh. Rahul Harwani were loans attracting section 269SS are set aside.

Final Conclusion: The appeal is partly allowed: the Tribunal upholds the Pr. CIT's view that the AO's order is erroneous and prejudicial for lack of requisite verification of unsecured loans and restores the matter to the AO for fresh enquiry and assessment (with hearing to the assessee); however, the Tribunal sets aside the Pr. CIT's finding that the journal entries in the account of one lender constitute loans under section 269SS.

Protective addition - finality of substantive assessment - reopening of assessment under section 147/148 - condonation of delay - requirement of speaking order and notice of delay - remand for verification of factual position

Protective addition - finality of substantive assessment - Validity of sustaining a protective addition in the assessee's hands where a substantive addition on the same transaction has attained finality in the hands of the company. - HELD THAT: - The Tribunal held that where the Assessing Officer has made a substantive addition in the hands of M/s. KOC Industries Ltd. which has attained finality, the consequential protective addition made in the assessee's assessment cannot be sustained in the absence of differing facts. The Revenue conceded that the substantive addition in the company is final and accepted that, on that basis, the protective addition in the present cases is not maintainable. The assessee's contention that the cheque was cleared in the next financial year (A.Y. 2012-13) was recorded as a factual matter to be kept open for verification, but the dispositive legal principle adopted by the Tribunal is that finality of the substantive assessment removes the basis for maintaining a protective addition against the assessee, unless facts materially vary. [Paras 5, 7, 8]

Protective addition cannot be sustained in the assessee's hands where the substantive addition in the company has attained finality; appeal allowed on this ground.

Condonation of delay - requirement of speaking order and notice of delay - remand for verification of factual position - Whether the CIT(A)'s dismissal of the appeal for delay and confirmation of protective addition could be sustained, and whether the matter requires remand for proper adjudication. - HELD THAT: - The Tribunal found the impugned CIT(A) order to be vague and non-speaking: it failed to specify the exact number of days of delay, did not record that the assessee was put on notice of the delay, and did not afford a clear opportunity to explain the delay before dismissing the appeal. On merits, the Tribunal noted absence of specific reasoning to uphold the protective addition in circumstances identical to those in the allowed appeal (ITA 1152/CHD/2019). Consequently, the Tribunal set aside the CIT(A) order and restored the matter to the file of the CIT(A) with directions to (a) specify the number of days by which the appeal was late, (b) afford the assessee a specific opportunity to explain the delay, and (c) verify the factual position regarding finality and the cheque clearance before passing a fresh, speaking order in accordance with law. [Paras 12, 13]

Impugned CIT(A) order set aside and remanded for fresh consideration on both the condonation application and the factual verification; matter restored to CIT(A).

Final Conclusion: The Tribunal allowed the appeals where substantive additions in the company had attained finality and held that corresponding protective additions against the assessees could not be sustained; in one matter the CIT(A)'s order was set aside for being non-speaking on the question of delay and for failing to properly address the protective addition, and the case was remanded for verification and fresh, speaking adjudication.

Characterisation of gain as capital receipt or revenue receipt - gain on cancellation of forward/forward exchange contract - purpose test - foreign exchange acquired to discharge a capital obligation - hedging of foreign currency loan taken for import of capital asset - precedential weight of jurisdictional High Court decision

Characterisation of gain as capital receipt or revenue receipt - gain on cancellation of forward/forward exchange contract - hedging of foreign currency loan taken for import of capital asset - purpose test - foreign exchange acquired to discharge a capital obligation - precedential weight of jurisdictional High Court decision - Whether the gain on cancellation of forward exchange contract amounting to Rs. 3.22 crore is capital receipt or revenue receipt for AY 2012-13 - HELD THAT: - The Assessing Officer characterised the surplus on cancellation of the forward contract as revenue, treating the forward contract as merely a right to obtain foreign exchange at a specified rate usable for trading or profit. The assessee explained, and the ld. CIT(A) accepted, that the forward contract was entered to hedge foreign currency exposure on a loan raised specifically for importing capital machinery as part of a capital expansion plan, and that the project was later postponed leading to cancellation of the contract. The ld. CIT(A) relied on the principle in Sutlej Cotton Mills and on the jurisdictional High Court's earlier decision in the assessee's own case, which held that where foreign exchange is acquired under contract to discharge a capital obligation (e.g., borrowing for import of capital asset), any surplus on cancellation of such contract partakes the character of capital. The Tribunal examined the facts and found no dispute that the loan was intended for acquisition of plant and machinery and that the forward contract was executed to safeguard that capital transaction. Applying the purpose test and the cited precedents, the Tribunal concluded that the gain on cancellation of the forward contract is capital in nature and therefore correctly treated by the ld. CIT(A) as a capital receipt. [Paras 6, 7, 8]

The surplus on cancellation of the forward exchange contract is a capital receipt as it was incurred in furtherance of hedging a foreign currency loan raised for import of capital machinery; the order of the ld. CIT(A) is affirmed.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal affirms the ld. CIT(A)'s finding that the gain on cancellation of the forward exchange contract is capital in nature for AY 2012-13.

Disallowance under section 14A - computation under rule 8D - exempt income - remand for verification of investments

Disallowance under section 14A - computation under rule 8D - exempt income - remand for verification of investments - Whether the disallowance under section 14A and its computation under rule 8D should be sustained or requires reconsideration by the AO in view of identical reasoning in the coordinate bench decision. - HELD THAT: - The Tribunal noted that the facts and legal question raised in the present appeal are materially identical to those considered by a coordinate bench in the assessee's own case for AY 2012-13, where the coordinate bench applied rule 8D and remitted the issue to the AO to verify the nature of certain investments (including the APGPCL investment) and to exclude from rule 8D computation any investment which did not generate exempt income. Having regard to that coordinate bench decision, the Tribunal declined to finally adjudicate the disallowance for AY 2016-17 on merits and instead restored the matter to the file of the AO with a direction to decide the issue consistent with the findings and remand directions given by the coordinate bench - namely, to verify the assessee's contentions about the nature of the investments and exclude from rule 8D calculation those investments found not to generate exempt income. The Tribunal therefore followed the precedent of the coordinate bench and treated the grounds as allowed for statistical purposes. [Paras 6]

Issue remitted to the AO for verification and fresh decision in line with the coordinate bench's order; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal followed the coordinate bench's decision and restored the matter to the AO for verification and re-computation of any disallowance under section 14A applying rule 8D in accordance with that decision; the appeal is allowed for statistical purposes.

Validity of reopening assessment under section 147 - Power of Commissioner of Income Tax (Appeals) to direct reopening or reassessment of other assessment years - Assessment of income alleged to have escaped assessment - Year of taxability of interest on delayed payment of award

Validity of reopening assessment under section 147 - Power of Commissioner of Income Tax (Appeals) to direct reopening or reassessment of other assessment years - Assessment of income alleged to have escaped assessment - Reopening of assessments for A.Y. 2005-06 and A.Y. 2006-07 on the basis of the CIT(A)'s order in respect of A.Y. 2009-10 is bad in law and is quashed. - HELD THAT: - The Tribunal examined the reasons recorded for reopening under section 147 which relied upon the CIT(A)'s order in appeal for A.Y. 2009-10. The CIT(A)'s order for A.Y. 2009-10 only decided the question of the year of taxability of interest on delayed payment of the arbitration award and did not give any direction to reopen other assessment years. Precedents of the Calcutta High Court and this Tribunal establish that an appellate authority (CIT(A)) has no power to give directions to the Assessing Officer to reopen assessments in years not before it; a direction by the first appellate authority to assess in other years is beyond its jurisdiction and cannot be the basis for reassessment. The Tribunal applied the ratio in R.H. Dave , and followed subsequent Tribunal benches which held that directions by the CIT(A) to reopen other years are beyond the scope of section 251 and related appellate powers (see decisions referred to in the order). Because the recorded reasons for reopening derived from the CIT(A)'s order for a different assessment year and no independent jurisdictional foundation was shown, the reassessments were held invalid. The Tribunal therefore quashed the reopening for the two assessment years. [Paras 6, 7, 8, 9]

Reopening under section 147 is invalid and the reassessment orders for A.Y. 2005-06 and A.Y. 2006-07 are quashed; the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that the assessments for A.Y. 2005-06 and A.Y. 2006-07 were invalidly reopened on the basis of the CIT(A)'s order for A.Y. 2009-10, and quashed the reassessment proceedings.

Exemption u/s. 11 - assessment under section 144 (ex-parte) - burden of proof / requirement of documentary evidence for claiming charitable exemption - reliance on earlier year's assessment - remand for fresh adjudication and opportunity of hearing

Exemption u/s. 11 - burden of proof / requirement of documentary evidence for claiming charitable exemption - assessment under section 144 (ex-parte) - reliance on earlier year's assessment - remand for fresh adjudication and opportunity of hearing - Whether the CIT(A) was justified in directing the AO to allow the exemption claimed under section 11 for AY 2014-15 despite non-production of books, vouchers and other documentary evidence, and what relief should follow. - HELD THAT: - The assessee claimed exemption under section 11 for AY 2014-15 showing a net surplus, but failed to produce books of account, bills, vouchers or supporting documents when called upon during scrutiny. The AO completed assessment under section 144 ex parte and disallowed the exemption for want of evidence. The CIT(A) directed allowance of exemption by referring to the assessee's earlier assessment for AY 2009-10 where exemption was allowed. The Tribunal observed that allowance in an earlier year's assessment does not substitute for the documentary proof required in the year under consideration, and that in the absence of books and vouchers the AO could not ascertain whether receipts were applied to the society's aims and objects. In view of these facts and to meet the ends of justice, the Tribunal remitted the matter to the file of the AO for fresh adjudication on merits after permitting the assessee to produce documentary evidence; the AO is to examine the records, give the assessee a fair opportunity of being heard and avoid unnecessary adjournments. [Paras 7, 8]

Issue remitted to the AO for fresh decision on merits after examination of documentary evidence and after affording the assessee a reasonable opportunity of hearing; revenue's grounds treated as allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(A)'s direction to allow the exemption and remitted the matter to the AO to decide the claim for exemption under section 11 for AY 2014-15 on merits after the assessee produces documentary evidence and is afforded a proper hearing; the appeal is treated as allowed for statistical purposes.

Treatment of unexplained liabilities/payables where corresponding sales are not disputed - taxability under section 41(1) consequent to alleged cessation of liability - conversion of a capital asset into stock-in-trade and chargeability under section 45(2) - scope for raising legal/contentions at appellate stage where relevant facts are on record

Treatment of unexplained liabilities/payables where corresponding sales are not disputed - taxability under section 41(1) consequent to alleged cessation of liability - Whether the addition made by the Assessing Officer by treating sundry creditors/opening balance as accommodation entries and taxing the alleged cessation of liability was sustainable. - HELD THAT: - The Tribunal examined the material on record, noted that purchases and the corresponding sales were not disputed by the revenue, and observed that the existence of the liabilities themselves had been doubted by the Assessing Officer because several creditors either denied transactions or could not be traced. Applying the principle that if the liability is not genuine it cannot properly be taxed under the provision dealing with cessation of liability, and having regard to precedents followed by the Tribunal, the addition under the guise of cessation (or under section 41(1)) could not be sustained where the transactions were recorded and sales were not questioned. If the liability were in fact not genuine the appropriate course would have been to disallow the claim in the year it was claimed or to treat the amount as unexplained credit under the relevant provision, not to invoke taxation for cessation of a non-existent liability. On this basis the Tribunal set aside the addition confirmed by the CIT(A). [Paras 10]

Addition in respect of opening balance of sundry creditors deleted and the ground of appeal allowed.

Conversion of a capital asset into stock-in-trade and chargeability under section 45(2) - scope for raising legal/contentions at appellate stage where relevant facts are on record - Whether notional short-term capital gain under section 45(2) could be brought to tax when the asset was not disposed of in the year and was shown as investment in the balance sheet. - HELD THAT: - The Tribunal reviewed the assessment record, the subsequent sale deed and the balance-sheet entries. The property alleged to have been converted was shown as an investment in the assessee's balance sheet and was not sold in the year under consideration (sale occurred later). The Assessing Officer's application of section 45(2) - which taxes deemed transfer on conversion when stock-in-trade is subsequently sold or otherwise transferred - was not attracted where there was no transfer in the year and the asset continued to be reflected as investment. The assessee had also sought rectification under section 154 to correct the inadvertent claim. On these facts the Tribunal concluded that notional capital gain could not be added in the assessment year and allowed the ground of appeal. [Paras 15]

Addition of notional short-term capital gain under section 45(2) deleted and the ground of appeal allowed.

Final Conclusion: Both grounds of appeal are allowed: the addition relating to sundry creditors is deleted and the notional short-term capital gain under section 45(2) is disallowed; appeal allowed.

Section 68 - burden of proof - identity, genuineness and creditworthiness - addition as unexplained credit - re-opening under section 147 - banking channels as evidence of genuineness - information from Investigation Wing insufficient to discharge Revenue's onus

Section 68 - identity, genuineness and creditworthiness - burden of proof - banking channels as evidence of genuineness - information from Investigation Wing insufficient to discharge Revenue's onus - Whether the addition of Rs.33,05,950 made under section 68 in respect of unsecured loans is sustainable where the assessee produced documents to prove identity, genuineness and creditworthiness of lenders. - HELD THAT: - The Tribunal found that the assessee produced loan confirmations, ledger accounts, bank statements showing receipts and repayments through banking channels, copies of lenders' income tax returns and audited financials, and confirmation letters from the lenders; interest was paid with TDS and allowed by the AO. These materials discharged the assessee's primary onus under section 68 to establish identity, genuineness and creditworthiness. The Assessing Officer relied on information from the Investigation Wing and third party statements but did not bring independent or corroborative evidence to disprove the transactions, nor did he undertake further enquiries or summons to test the documentary record. Citing authoritative precedents, the Tribunal applied the settled principle that once the assessee satisfies the initial burden, the onus shifts to Revenue to rebut the explanation; mere suspicion, information from investigation, or uncorroborated statements are insufficient to sustain an addition. On the facts, the AO failed to point to any specific defect in the documents or to produce evidence contradicting the lenders' confirmations and bank records; accordingly the addition could not be sustained.

Addition of Rs.33,05,950 made under section 68 is deleted; the assessee's appeal is allowed.

Final Conclusion: The Tribunal held that the assessee had discharged the initial onus under section 68 by proving identity, genuineness and creditworthiness of the lenders through documentary evidence and banking records; in absence of independent contradictory evidence or meaningful enquiries by the Assessing Officer, the addition under section 68 was deleted for A.Y. 2009-10 and the appeal was allowed.

Addition on estimate basis - net profit rate for undisclosed sales - use of declaration before Central Excise authorities in income-tax proceedings - appellate discretion in fixing net profit ratio

Net profit rate for undisclosed sales - addition on estimate basis - use of declaration before Central Excise authorities in income-tax proceedings - appellate discretion in fixing net profit ratio - Whether the CIT(A) was justified in reducing the addition computed by the Assessing Officer at 7% of the undisclosed sales to 5% by applying a lower net profit rate. - HELD THAT: - The Assessing Officer, relying on information received from the Central Excise Department that undisclosed sales had been made, estimated income by adding 7% as net profit on the undisclosed turnover. The CIT(A) examined the AO's action and found no infirmity in treating the declared undisclosed sales as corresponding undeclared income, but considered the assessee's audited books showing an average net profit ratio of 2.87% for the five years preceding the relevant year and the industry range of 2.5% to 4%. In the exercise of appellate authority and in the interest of justice while protecting revenue, the CIT(A) concluded that a net profit ratio of 5% would be reasonable and directed the AO to adopt that rate. The Tribunal has considered the facts and materials relied upon by the CIT(A), agreed with the appellate appraisal of the profit rate on estimation basis, and found no infirmity in reducing the addition to 5%. [Paras 4, 5]

The CIT(A)'s reduction of the addition to 5% net profit on the undisclosed sales is affirmed.

Final Conclusion: The Revenue's appeal is dismissed; the order of the CIT(A) restricting the addition to 5% of the undisclosed sales for AY 2009-10 is upheld.

Section 263 - suo motu revision - erroneous and prejudicial order - Limited scrutiny under CASS - scope of enquiry and conversion to complete scrutiny - Requirement of material on record before exercise of revisional power - Role and evidentiary value of valuation report (reference under section 142A) - Prohibition on fishing and roving inquiries

Section 263 - suo motu revision - erroneous and prejudicial order - Requirement of material on record before exercise of revisional power - Validity of the Principal CIT's exercise of powers under section 263 in setting aside the assessment order. - HELD THAT: - The Tribunal held that the power under section 263 can be exercised only if the revisional authority is satisfied of the twin conditions that the assessing officer's order is erroneous and it is prejudicial to the interests of revenue. The revisional jurisdiction cannot be invoked merely because the Commissioner disagrees with the AO's view or desires a deeper inquiry. The Principal CIT relied upon an alleged valuation/estimation that was not part of the record available to him because the valuation report referred to under section 142A had not been received. In the absence of that valuation report or any other material on record demonstrating that the AO's order was unsustainable in law, the Principal CIT had no adequate basis to conclude that the assessment order was erroneous and prejudicial. Following binding principles that the Commissioner must establish the error before directing further inquiry, the Tribunal found the exercise of section 263 to be without lawful foundation and quashed the revisional order. [Paras 21, 22, 23, 24, 30]

Order passed by the Principal CIT under section 263 quashed for lack of material to show the AO's order was erroneous and prejudicial to revenue.

Limited scrutiny under CASS - scope of enquiry and conversion to complete scrutiny - Prohibition on fishing and roving inquiries - Role and evidentiary value of valuation report (reference under section 142A) - Whether the Assessing Officer exceeded the scope of limited scrutiny or failed to conduct required inquiries under the limited-scrutiny mandate. - HELD THAT: - The Tribunal examined the AO's order and the CASS/Board instructions (Instruction No. 20/2015 and Instruction No. 5/2016) which restrict enquiry in limited-scrutiny cases to the parameters that led to selection, and permit conversion to complete scrutiny only after forming a reasonable view supported by credible material and obtaining requisite approvals. The AO had issued questionnaires, obtained explanations and documents, accepted allotment of share application monies, and made additions where sundry creditors remained unverified; he had also referred the matter to the valuation cell under section 142A before completing assessment within statutory time. The Tribunal found the AO had in fact examined the specific issues under limited scrutiny and had acted within the limits prescribed; there was no demonstration that he embarked on impermissible roving enquiries or that conversion to complete scrutiny was required without following the prescribed procedure. Further, any contention about excess investment depended on a valuation report which was not available and therefore could not be the basis to fault the AO's conduct of limited scrutiny. [Paras 15, 16, 17, 18, 20]

Assessing Officer acted within the confines of limited scrutiny and conducted requisite enquiries; there was no valid ground to treat the assessment as suffering from lack of inquiry or as an impermissible roving inquiry.

Final Conclusion: The Tribunal allowed the appeal of the assessee, quashed the Principal CIT's order passed under section 263, and held that the revisional jurisdiction was not validly invoked because there was no material on record (notably no valuation report) to establish that the AO's assessment order for A.Y. 2014-15 was erroneous and prejudicial to the interests of revenue; the AO had examined the issues raised under limited scrutiny within the scope permitted by Board instructions.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - addition on estimate basis not constituting concealment or furnishing inaccurate particulars - requirement of proof of concealment or mala fide intent for levy of penalty

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - addition on estimate basis not constituting concealment or furnishing inaccurate particulars - requirement of proof of concealment or mala fide intent for levy of penalty - Validity of penalty imposed under section 271(1)(c) consequent to additions made on account of alleged bogus purchases - HELD THAT: - The Tribunal examined whether penalty under section 271(1)(c) could be sustained where the Assessing Officer made additions on an ad hoc/estimate basis in respect of alleged bogus purchases. The Assessing Officer had reopened assessment and added the aggregate alleged bogus purchases, thereafter initiating penalty proceedings. The Commissioner (Appeals) deleted the penalty on the view that the additions were by estimation and there was no material on record to demonstrate concealment of income or any mala fide intention. The Tribunal agreed, holding that imposition of penalty under section 271(1)(c) requires proof that the assessee concealed particulars of income or furnished inaccurate particulars with requisite culpability. Mere estimation or ad hoc additions, without cogent evidence of concealment or inaccurate particulars, do not satisfy the statutory threshold for penalty. The Tribunal noted consistent authority supporting the principle that estimate based additions do not automatically warrant penalty and found no material produced by the Revenue to rebut the Commissioner (Appeals)'s conclusion; accordingly the deletion of penalty was upheld. The same reasoning was applied mutatis mutandis to the companion appeal involving identical facts. [Paras 5, 6, 8]

Penalty under section 271(1)(c) deleted; additions made on estimate basis do not sustain penalty in absence of proof of concealment or inaccurate particulars, and the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s deletion of penalty under section 271(1)(c) because additions were made on estimate basis without proof of concealment or mala fide intention; both Revenue appeals for A.Y. 2009-10 are dismissed.

Release of seized goods pending adjudication - classification and import prohibition for stock lot of coated paper - liberty to adjudicate rights and liabilities in rem - precedential effect of Division Bench order

Release of seized goods pending adjudication - precedential effect of Division Bench order - classification and import prohibition for stock lot of coated paper - Petition for release of goods seized on the suspicion of being prohibited 'stock lot' coated paper and for direction to respondents to consider the petitioner's representation. - HELD THAT: - The Court noted that the goods were seized on a reasonable belief that the consignment comprised various sizes and GSMs of coated paper classifiable under CTH/ RITC 4810 and therefore potentially fell within the DGFT prohibition on import of 'stock lot' coated paper, while the importer had declared the goods under a different tariff description. However, the learned Single Judge observed that a Division Bench of this Court in analogous proceedings had expunged earlier findings and directed release of goods with liberty to the parties to pursue adjudication. In view of that Division Bench decision and the submissions of counsel, the Court exercised its discretion to allow the writ petition and ordered immediate release of the goods, expressly preserving the right of the parties and the authority to pursue adjudication and determination of classification and prohibition in accordance with law. [Paras 10, 11]

Writ petition allowed; respondents directed to release the goods forthwith while granting liberty to the parties to adjudicate the matter in the manner known to law.

Final Conclusion: The petition is allowed and the seized consignment is ordered to be released immediately, subject to the respondents' and petitioner's rights to proceed with adjudication on classification and applicability of the DGFT prohibition.

Export Obligation Discharge Certificate - Export Promotional Capital Goods authorization - recovery of Government dues for non-fulfilment of export obligation - realisation of bank guarantee - limited time stay for submission of certificate

Export Obligation Discharge Certificate - recovery of Government dues for non-fulfilment of export obligation - realisation of bank guarantee - Permissibility of restraining realisation of bank guarantee pending submission of Export Obligation Discharge Certificate and setting time for compliance. - HELD THAT: - The writ petition challenged the order for recovery of dues allegedly arising from non-fulfilment of export obligation under an EPCG authorization. The petitioner has a pending application before the Joint Director General of Foreign Trade for issuance of the Export Obligation Discharge Certificate (EODC). The Court observed that the impugned order relates to recovery of Government dues but the petitioner has approached the competent authority for EODC and sought time for its disposal. Balancing the parties' positions, the Court exercised its supervisory jurisdiction to grant a limited extension to enable the petitioner to prosecute the pending application and to furnish the EODC. The respondents were permitted to realise the bank guarantee if the petitioner failed to submit the EODC within the stipulated period; in that event, any return of the bank guarantee would follow the statutory procedures upon production of the certificate. [Paras 6, 7]

Thirty days granted for submission of the Export Obligation Discharge Certificate; if not submitted within thirty days from receipt of this order, respondents are at liberty to realise the bank guarantee.

Final Conclusion: Writ petition disposed by granting the petitioner thirty days to submit the Export Obligation Discharge Certificate; in default the respondents may realise the bank guarantee, and no costs were awarded.

Late fee for delayed filing of bills of entry - condonation of delay - system-related defects and waiver of penalty - transition to Goods and Services Tax and GSTIN registration difficulties - discretion to waive late fee under Notification No. 26/2017 - Circular No. 12/2017-Cus. - importer not to be penalised for system defects

Late fee for delayed filing of bills of entry - transition to Goods and Services Tax and GSTIN registration difficulties - system-related defects and waiver of penalty - discretion to waive late fee under Notification No. 26/2017 - Circular No. 12/2017-Cus. - importer not to be penalised for system defects - Whether late fee imposed for delayed filing of bills of entry during the GST transition period, when GSTIN registration was delayed due to system glitches, was justified - HELD THAT: - The appeal arises from imposition of late fee for bills of entry filed on 2.8.2017 and 3.8.2017 after GST was introduced on 1.7.2017 and registration procedures experienced technical difficulties. The Tribunal noted that the appellant had applied for GST registration on 3.7.2017 and again on 24.7.2017 because the earlier application remained pending, and that server/connectivity problems during the transition made timely compliance difficult. Notification No. 26/2017 permits waiver of late fee where sufficient reasons are shown, and CBEC Circular No. 12/2017-Cus. clarifies that importers should not be penalised for delays caused by system-related defects. Having regard to these factors and the transitional difficulties in obtaining and getting GSTIN verified for filing bills of entry, the Tribunal found the imposition of late fee not warranted and exercised the discretion to set aside the charge.

Late fee imposed for delayed filing of bills of entry set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the late fee imposed for delayed filing of bills of entry during the GST transition period on grounds of system-related difficulties and in view of Notification No. 26/2017 and CBEC Circular No. 12/2017-Cus., and granted consequential relief if any.

IGST refund on export where duty drawback was claimed - binding nature of departmental circulars - interpretation of a departmental circular vis-a -vis statute - remand for fresh disposal in accordance with judicial interpretations

IGST refund on export where duty drawback was claimed - binding nature of departmental circulars - interpretation of a departmental circular vis-a -vis statute - Denial of the appellant's IGST refund claim based solely on C.B.I.C. Circular No. 37/2018-Cus. was not sustainable and the matter was remanded for fresh disposal in accordance with judicial interpretations. - HELD THAT: - The Tribunal noted that the lower authorities rejected the IGST refund claim by relying solely on the cited C.B.I.C. circular. It relied on recent High Court decisions which construed the same circular as departmental guidance explaining duty drawback provisions, held that such circulars do not determine entitlement to IGST refund and cannot prevail over statutory provisions. In view of those authoritative interpretations, the Tribunal found the denial based exclusively on the circular to be inconsistent with the law as declared by the High Courts. Consequently, rather than adjudicating the refund on merits itself, the Tribunal set aside the impugned orders and remanded the matter to the Adjudicating Authority to decide the refund claim afresh in accordance with the judicial interpretations cited, directing that the Adjudicating Authority afford reasonable opportunity to the appellant.

Appeal allowed by way of remand to the Adjudicating Authority for fresh disposal in accordance with the law as declared by the High Courts.

Final Conclusion: The Tribunal set aside the orders denying IGST refund insofar as they rested solely on the departmental circular; the matter is remanded to the Adjudicating Authority for fresh adjudication in conformity with the judicial interpretations cited, with opportunity to the appellant.

Rejection of transaction value - re-determination of assessable value by market survey - consent to enhanced valuation binds importer - burden on revenue discharged when enhanced value voluntarily accepted - confiscation and penalty require reasons and evidence of intentional suppression

Rejection of transaction value - re-determination of assessable value by market survey - consent to enhanced valuation binds importer - burden on revenue discharged when enhanced value voluntarily accepted - Assessability of the re-determined value vis-a -vis the declared transaction value of the imported motorcycle parts. - HELD THAT: - The Tribunal recorded that the Department rejected the declared transaction value and re-determined the assessable value after applying the Valuation Rules in sequence and conducting a joint market survey in the presence of the importer and his CHA. The proprietor of the appellant gave statements accepting the result of the market survey and the enhanced value and did not retract those statements. Relying on precedent that when an importer consents to enhancement of value the enhanced figure becomes binding and relieves the Revenue of the further burden to establish incorrectness of the declared value, the Tribunal held that the re-determined value stands as accepted by the importer and cannot be disowned by him in subsequent proceedings. The Tribunal therefore upheld the re-determination of value insofar as it rests on the accepted market-survey result and the importer's unrevoked acceptance. [Paras 6, 8, 9]

The re-determined assessable value based on the market survey, which was accepted by the importer in his statements, is binding and upheld.

Confiscation and penalty require reasons and evidence of intentional suppression - Validity of confiscation, fine and penalty imposed on the appellant. - HELD THAT: - While the Tribunal found the re-determined value binding, it examined the orders of the authorities below and observed that they contained no recorded justification or supporting evidence to show intentional manipulation or suppression of value by the appellant. The adjudicating authority mechanically imposed confiscation, fine and penalty without articulating reasons or adducing material to justify such punitive action. The Tribunal held that enhancement of value ipso facto does not furnish a ground for confiscation or penalty in the absence of reasons and evidence of deliberate suppression or mens rea on the part of the importer. Consequently, the Tribunal set aside the fine and penalty and the direction for confiscation to the extent it rested on those grounds. [Paras 9, 10]

Fine, penalty and confiscation imposed by the authorities are set aside for lack of reasons and evidence justifying punitive measures; the appeal is partly allowed to that extent.

Final Conclusion: The Tribunal upheld the re-determined assessable value accepted by the importer after a joint market survey but modified the impugned order by setting aside the fine, penalty and confiscation imposed, as those punitive measures lacked recorded reasons and evidence of intentional suppression.

Maintainability of suit by a company restored from strike off - effect of restoration under Section 560(6) and (7) Companies Act, 1956 - Order XXIX Rule 1 CPC - signing and verification of pleadings by a director on behalf of a corporation - Order VI Rule 14 CPC - signing of pleadings - burden of proof under Sections 101 and 102 of the Evidence Act, 1872 - presumption as to due execution of registered document under Section 114(c) Evidence Act - proof of execution of document and necessity to examine scribe/attesting witnesses under Section 68 Evidence Act when execution is specifically denied - appellate power under Order XLI Rule 33 CPC to pass such orders as ought to have been passed by trial court

Maintainability of suit by a company restored from strike off - Order XXIX Rule 1 CPC - signing and verification of pleadings by a director on behalf of a corporation - Order VI Rule 14 CPC - signing of pleadings - effect of restoration under Section 560(6) and (7) Companies Act, 1956 - appellate power under Order XLI Rule 33 CPC to pass such orders as ought to have been passed by trial court - Whether the suit was instituted by an authorised person of the company and whether the company was in existence on the date of filing the suit - HELD THAT: - The court found that the director who signed and verified the plaint satisfied the criteria of Order XXIX Rule 1 read with Order VI Rule 14 CPC. The first appellate court's reasoning that the resolution did not bear signatures of other directors and that other directors were not examined went beyond the specific pleadings and was therefore unsustainable. The High Court held that the company's name had been revived by the order in Co.Pet. No.5/2010 and, by virtue of the deeming provision in Section 560(7), the company must be treated as having continued in existence; the appellate court rightly verified the ROC portal and the revival, and was competent under Order XLI Rule 33 CPC to act on that fact. Consequently the suit was held to be maintainable, instituted by the authorised director on behalf of the company. [Paras 30, 31, 32]

The suit was duly instituted by the authorised director and the company was in existence for the purpose of instituting the suit.

Burden of proof under Sections 101 and 102 of the Evidence Act, 1872 - presumption as to due execution of registered document under Section 114(c) Evidence Act - proof of execution of document and necessity to examine scribe/attesting witnesses under Section 68 Evidence Act when execution is specifically denied - Whether the plaintiff proved right, title and interest over the suit land on the basis of the registered sale deed (Ext.3) - HELD THAT: - The court analysed the evidentiary burden: production of the registered sale deed satisfied initial onus but, because the defendant specifically denied the sale and purchase, the plaintiff bore the burden under Sections 101/102 to prove due execution. The trial court erred in relying on the presumption of due execution and on an admission by the defendant to shift the burden. Where execution is disputed, examination of the scribe/attesting witnesses becomes necessary under Section 68; in the facts the plaintiff did not examine those witnesses nor prove possession since purchase. The High Court found no misapplication of Section 68 by the first appellate court and upheld the reversal of the trial court's finding on title. [Paras 42, 43]

The plaintiff failed to prove execution of Ext.3 and therefore failed to prove title; the appellate court's reversal on issue No.2 is upheld.

Limitation and adverse possession - framing of issues according to pleadings - Whether the suit was barred by limitation or defeated by defendant's plea of adverse possession - HELD THAT: - The first appellate court considered the pleadings and evidence on adverse possession and limitation and held that the suit was filed within the period of limitation. The High Court observed that the appellate court had rightly adverted to the pleadings and that the defendant failed to establish hostile and adverse possession sufficient to bar the suit. The belated cross objection filed by the respondent was held to be unnecessary and infructuous. [Paras 44, 45]

The suit is not barred by limitation and the plea of adverse possession was not established.

Final Conclusion: The High Court held that the suit was maintainable as instituted by an authorised director and that the company was to be treated as in existence by virtue of restoration under Section 560(7); however, the plaintiff failed to prove execution of the registered sale deed and consequently failed to establish title to the suit land, and the suit was dismissed on merits. The parties shall bear their own costs.

Right to apply under Section 241 and eligibility under Section 244 of the Companies Act, 2013 - Waiver of eligibility requirement under the proviso to Section 244 - Admission and issuance of notice without adjudicating eligibility - Requirement to decide preliminary application seeking waiver before further proceedings

Right to apply under Section 241 and eligibility under Section 244 of the Companies Act, 2013 - Admission and issuance of notice without adjudicating eligibility - Whether the National Company Law Tribunal erred in issuing notice and directing replies without first considering the petitioner's eligibility under Section 244. - HELD THAT: - The Tribunal noted that Section 244 prescribes the preconditions for a member to have the right to apply under Section 241 and that the proviso permits the Tribunal to waive those requirements on an application. In the present case the petitioner itself admitted shareholding below the 10% threshold and an application for waiver under the proviso was pending. The Appellate Tribunal observed that notices were issued by the NCLT without admitting the petition and without first determining whether the petitioner met the eligibility criteria or whether the proviso should be invoked to waive those criteria. Given that eligibility is a threshold matter under Section 244, the NCLT should have considered the pending application for waiver before proceeding to issue notice and direct parties to file replies. [Paras 19, 20]

The impugned course of issuing notices without adjudicating eligibility was held to be inappropriate and the matter was directed to be re-opened only after the preliminary question of eligibility is addressed.

Waiver of eligibility requirement under the proviso to Section 244 - Requirement to decide preliminary application seeking waiver before further proceedings - Disposition of the petitioner's pending application for waiver of the eligibility criteria under the proviso to Section 244 before further proceedings in the main petition. - HELD THAT: - The Appellate Tribunal recorded that the petitioner had filed an application (CA No.259/2021) seeking waiver of the eligibility requirements prescribed by Section 244(1). The senior counsel for the appellant did not object to the waiver application being decided first. In view of the admitted shortfall in the petitioner's shareholding and the statutory scheme which makes eligibility a condition precedent to maintain a Section 241 petition (subject to waiver by the Tribunal), the Appellate Tribunal advised that the NCLT should first dispose of the waiver application. The order thus preserves the Tribunal's power to grant or refuse the waiver while ensuring that substantive proceedings do not proceed in the absence of a threshold determination. [Paras 17, 18, 19]

The Appellate Tribunal directed that the pending application for waiver be disposed of by the NCLT before any further steps are taken in the petition; appeal disposed accordingly.

Final Conclusion: Appeal disposed of with no order as to costs; NCLT directed to first decide the petitioner's pending application for waiver of eligibility under the proviso to Section 244 before proceeding further, the question of maintainability on merits remaining open for determination thereafter.

Communication of admission order - Section 7(7) IBC communication requirement - uploading of order on tribunal website versus actual communication - reference to IBBI for alleged misconduct of IRP - obligation of an IRP who has given consent

Communication of admission order - uploading of order on tribunal website versus actual communication - reference to IBBI for alleged misconduct of IRP - obligation of an IRP who has given consent - Section 7(7) IBC communication requirement - Whether the observations in Paragraphs 24-25 of the impugned order referring the IRP to the IBBI and recording censure were justified and liable to be sustained. - HELD THAT: - The Tribunal examined the factual record showing that the admission order had been uploaded on the Tribunal website but that there was no clear evidence that the registry had in fact communicated the admission order to the IRP or other parties within the statutory period. Paragraph 13 of the admission order directed the registry to communicate the order to the petitioner, respondent and the IRP and to forward a copy to the IBBI, but the impugned order principally relied on the fact of uploading. The Bench observed that mere upload on the website does not substitute for actual communication in the circumstances where the IRP was a third party appointee in the order and had no antecedent notice of the admission; an IRP who had given consent under the rules is not under an obligation to chase the petitioner or registry to ascertain whether the admission order has been communicated. Given the absence of proof of actual communication and the communication gap shown by the e mails, the Tribunal found the adverse observations and the direction to refer the matter to the IBBI to be uncalled for. The appellant did not press the separate grievance about exclusion of days, and the appeal was confined to the challenge to the adverse observations and referral.

Paragraphs 24 and 25 of the impugned order, which recorded observations against the IRP and referred the matter to the IBBI, are set aside.

Final Conclusion: The appeal is allowed to the extent indicated and Paragraphs 24-25 of the impugned order are quashed; the remainder of the impugned order stands and no other relief is granted.

Service of demand notice in Form 3 - existence of operational debt and default - dispute on liability - completeness of application under Section 9 - admission of petition under Section 9 of the IBC - declaration of moratorium under Section 14 of the IBC - appointment of Interim Resolution Professional - duties of Interim Resolution Professional

Service of demand notice in Form 3 - Demand notice in Form 3 dated 07.02.2020 was duly served on the corporate debtor. - HELD THAT: - The Tribunal examined the address used for service against the corporate debtor's master data and relied on postal receipts and tracking report appended to the petition. The record shows delivery of the demand notice to the registered office address as per the master data, supporting effective service of the statutory notice required under the Code. [Paras 11]

Demand notice was properly served.

Dispute on liability - There was no genuine dispute raised by the corporate debtor on the existence of the operational debt. - HELD THAT: - The corporate debtor filed a reply but admitted the occurrence of default towards the operational creditor. The Tribunal therefore found that the liability qua the operational debt was not disputed in a manner to defeat the Section 9 petition. [Paras 12]

Liability was admitted; no dispute preventing admission.

Existence of operational debt and default - completeness of application under Section 9 - The petition under Section 9 was complete and established an operational debt in default exceeding the monetary threshold. - HELD THAT: - The Tribunal reviewed the service agreement, invoice, ledger, reminders, Form 3 demand notice, and bank statements. It noted the professional fees agreed, the invoice raised, TDS deduction, reminders sent, and that the claimed amount remained unpaid as on the stated date of default. On this basis the petition satisfied the statutory requirements and proved default greater than the minimum limit prescribed. [Paras 13]

Application was complete; operational debt and default were established.

Admission of petition under Section 9 of the IBC - declaration of moratorium under Section 14 of the IBC - The Tribunal admitted the Section 9 petition and declared the moratorium under Section 14 of the Code. - HELD THAT: - Having found service, absence of a viable dispute, completeness of the petition and proof of default above the statutory threshold, the Tribunal admitted the petition under Section 9. Consequent to admission, the statutory moratorium was declared and the specified prohibitions relating to suits, disposition of assets, enforcement of security, recovery of leased property and interruption of essential supplies were imposed for the period of CIRP. [Paras 14]

Petition admitted and moratorium declared.

Appointment of Interim Resolution Professional - duties of Interim Resolution Professional - An Interim Resolution Professional was appointed and directed to perform the duties mandated by the Code. - HELD THAT: - The Tribunal examined the proposed IRP's consent and credentials, recorded no adverse material against him, and appointed him subject to filing Form 2 if not already filed. The IRP was directed to take statutory steps under the Code, collate and determine claims, constitute the Committee of Creditors within the prescribed timeframe, convene its first meeting, and furnish fortnightly progress reports to the Tribunal. [Paras 15, 16]

IRP appointed and directed to perform statutory duties including constitution of CoC and filing progress reports.

Final Conclusion: The Tribunal admitted the Section 9 petition filed by the operational creditor, having found service of the demand notice, absence of a substantive dispute, completeness of the application and establishment of default above the threshold; moratorium was declared and an Interim Resolution Professional was appointed to carry out the CIRP-related duties.

Condonation of delay - Section 5 of the Limitation Act, 1963 applies to proceedings under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016 - sufficient cause and reasonableness - applicant's obligation to explain delay day wise - proceeding in rem under the Insolvency and Bankruptcy Code requires heightened circumspection in condoning delay

Section 5 of the Limitation Act, 1963 applies to proceedings under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016 - Applicability of Section 5 of the Limitation Act to applications under Section 7 and Section 9 of the IBC, 2016. - HELD THAT: - The Tribunal accepted the binding precedents of the Hon'ble Supreme Court that Section 5 of the Limitation Act, 1963 applies to proceedings under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016. Although this Tribunal had earlier taken a different view, it declined to follow that view in deference to the Supreme Court's decisions and Article 141 of the Constitution, thereby treating applications under Section 7 and Section 9 as amenable to condonation of delay under Section 5. [Paras 5]

Section 5 of the Limitation Act, 1963 applies to proceedings under Section 7 and Section 9 of the IBC, 2016, and the Tribunal will apply the settled Supreme Court law.

Condonation of delay - sufficient cause and reasonableness - applicant's obligation to explain delay day wise - proceeding in rem under the Insolvency and Bankruptcy Code requires heightened circumspection in condoning delay - Whether the delay in filing the Section 9 application should be condoned under Section 5 of the Limitation Act. - HELD THAT: - The Applicant sought condonation of delay (variously stated as 48 days in the relief and 79 days in the rejoinder). The Tribunal emphasised that an applicant seeking condonation must satisfactorily and day wise explain each day of delay and must demonstrate a reasonable and plausible cause. Reliance was placed on established authorities that require bona fides and adequate explanation; unexplained, contradictory, or implausible averments militates against exercise of discretion. The Tribunal found the explanations offered (records being at a distant depot and reliance on officials at the Chennai branch) to be neither sufficient nor bona fide, and noted the paradoxical and inconsistent stance as to the quantum of delay. Given that insolvency proceedings are in rem and affect stakeholders broadly, the Tribunal must be circumspect and found that the Applicant failed to discharge the burden to show sufficient cause and reasonableness for the delay. [Paras 6, 7, 8, 9, 10]

The application for condonation of delay is rejected for want of satisfactory explanation; the delay is not condoned.

Final Conclusion: The application under Section 5 of the Limitation Act for condonation of delay is dismissed for failure to demonstrate sufficient cause; consequently IBA/103/2020 stands closed.

Full and true disclosure - power to remit to adjudicating authority under Section 32L - Settlement Commission not an adjudicating authority - scope of settlement jurisdiction - settlement not a matter of right - scope of judicial review in writ proceedings

Full and true disclosure - power to remit to adjudicating authority under Section 32L - scope of settlement jurisdiction - Whether the Settlement Commission was justified in rejecting the application and returning the case to the adjudicating authority for lack of full and true disclosure and non-cooperation. - HELD THAT: - The Court examined Section 32E (filing requirement) and the Commission's statutory power under Section 32L to send a case back to the adjudicating authority. The Commission had found that the applicant had not made a full and true disclosure, had not produced supporting documents for major portions of income it claimed to be non-taxable, and that there was no convergence of views on tax liability and the legal questions raised (paras 5.4-5.6). The Commission concluded that the matter involved complex mixed questions of fact and law and required adjudicatory appreciation of evidence, which falls outside the Commission's role as a settlement forum. Given the statutory requirement that an applicant must demonstrate a full and true disclosure to avail settlement, the absence of truthfulness and cooperation justified summary rejection and remittal to the adjudicating authority under Section 32L. The Court held that these findings are material and determinative and that the Commission acted within its statutory competence in returning the matter for adjudication (paras 6-11). [Paras 6, 7, 8, 9, 10]

The Settlement Commission was justified in rejecting the application and remitting the case to the adjudicating authority for want of full and true disclosure and non-cooperation.

Settlement Commission not an adjudicating authority - settlement not a matter of right - scope of judicial review in writ proceedings - Whether the High Court should interfere with the Commission's exercise of discretion to refuse settlement and remit the matter to the adjudicating authority. - HELD THAT: - The Court observed that the Settlement Commission's role is to settle genuine cases based on truthful disclosures and is not to adjudicate disputed factual or legal issues requiring evidentiary appreciation. Where the Commission, upon examining the record, reaches a reasoned conclusion that the dispute involves complex mixed questions of fact and law and that the applicant has not cooperated or furnished documentary support, the Commission may decline settlement. Such a decision does not invite interference in writ jurisdiction merely because the applicant prefers settlement; settlement is an enabling provision and not a right. The Court found no infirmity in the Commission's reasoning and concluded that there was no basis for judicial interference with the impugned order (paras 11-13). [Paras 5, 10, 11, 12, 13]

The High Court will not interfere with the Commission's discretionary decision to refuse settlement and remit the matter; the writ petition is dismissed.

Final Conclusion: The impugned order of the Settlement Commission rejecting the application and remitting the matter to the adjudicating authority is confirmed; the writ petition is dismissed and no costs awarded.

Service tax on notice pay - Declared service under Section 66E(e) - Taxability of amounts paid in lieu of notice - Forbearance / toleration of breach of contract - CBEC Guidance on payments on premature termination of employment

Service tax on notice pay - Declared service under Section 66E(e) - Taxability of amounts paid in lieu of notice - CBEC Guidance on payments on premature termination of employment - Whether service tax is leviable on amounts recovered by an employer from an employee as payment in lieu of mandatory notice period (notice pay). - HELD THAT: - The Tribunal accepted the view of the Hon'ble High Court of Madras in GE T & D India Pvt. Ltd., relying on CBEC Guidance which states that amounts paid in relation to services provided by an employee to the employer in the course of employment are outside the ambit of service tax. The High Court held that where an employee pays to exit prematurely, the employer does not 'tolerate' an act of breach so as to render the transaction a declared service under Section 66E(e); rather the employer permits the sudden exit upon compensation. Notice pay received by the employer therefore does not constitute rendition of a taxable service by the employer and is not attractable to service tax under the facts and law examined. [Paras 4, 5]

No service tax is leviable on the amount recovered by the employer as notice pay; appeal dismissed following the High Court precedent.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that amounts recovered by an employer from an employee as payment in lieu of notice do not attract service tax, having regard to the High Court of Madras decision and CBEC Guidance; the demand was thereby not sustained.

Refund of unutilized input service credit - CENVAT credit of a quarter includes brought forward credit from earlier quarters - clubbing of refund claims for consecutive quarters where no separate claim filed - time limit for filing refund claim - definition of export turnover under Clause (D) of Sub Rule (1) to Rule 5 of the CENVAT Credit Rules, 2004 - rejection of refund on account of inclusion of pre period credit

CENVAT credit of a quarter includes brought forward credit from earlier quarters - rejection of refund on account of inclusion of pre period credit - Inclusion of carried forward CENVAT credit from an earlier quarter in the computation of CENVAT credit for the subsequent quarter does not disentitle the claimant to refund of unutilized input service credit. - HELD THAT: - The Tribunal accepted the appellant's contention and followed co ordinate decisions of the Mumbai Bench which hold that, for the purposes of refund, the CENVAT credit of any particular quarter includes the amount of brought forward credit from earlier quarters. The Adjudicating Authority's basis for rejecting a part of the claim - namely that credit taken for periods before October 2016 could not be included while arriving at total CENVAT credit for October-December 2016 - was held to be untenable in view of that principle. The Revenue did not contest the merits of the claim otherwise. In these circumstances the Tribunal concluded that the rejection of the refund on that ground was improper and set aside the impugned order.

The rejection of the refund on the ground that carried forward CENVAT credit (from before October 2016) was included in the October-December 2016 quarter is set aside and the appellant's refund claim is held to be in order.

Clubbing of refund claims for consecutive quarters where no separate claim filed - time limit for filing refund claim - definition of export turnover under Clause (D) of Sub Rule (1) to Rule 5 of the CENVAT Credit Rules, 2004 - A single refund claim filed covering two consecutive quarters will not be rejected merely because separate quarterly claims were not filed, so long as the refund is within the overall time limit and the statutory conditions are satisfied. - HELD THAT: - Relying on a co ordinate Bench decision, the Tribunal noted that the restriction in the relevant notification aims to avoid multiple claims in particular quarters but does not mandate rejection where a combined claim for two quarters is filed after six months, provided the claim falls within the overall statutory time limit. The appellant explained that there was no inward remittance in July-September 2016 and hence no FIRCs for that quarter; consequently the CENVAT credit for that quarter was clubbed with the subsequent quarter's claim. Given that the claim was within the permissible period and no contrary decision was shown, the Tribunal found no ground to sustain rejection on this basis.

The clubbing of the quarter July-September 2016 with October-December 2016 for the refund claim is permissible and does not invalidate the refund where the claim meets the overall time limit and conditions.

Final Conclusion: The appeal is allowed; the impugned appellate orders are set aside and the appellant's refund claim for the relevant quarters is held to be in order with consequential reliefs, if any, as per law.

Exemption from service tax for SEZ units under Section 26(1)(e) of the SEZ Act - overriding effect of Section 51 of the SEZ Act - prescription of conditions by rules under the SEZ Act - applicability of limitation period in Notification No.12/2013 ST - refund of service tax paid under reverse charge mechanism - inapplicability of notifications issued under Section 93 of the Finance Act to SEZ exemptions

Exemption from service tax for SEZ units under Section 26(1)(e) of the SEZ Act - overriding effect of Section 51 of the SEZ Act - applicability of limitation period in Notification No.12/2013 ST - refund of service tax paid under reverse charge mechanism - Whether the refund claim filed by the SEZ unit is barred by the one year limitation prescribed in Notification No.12/2013 ST and whether that limitation can defeat the exemption available under the SEZ Act. - HELD THAT: - The Tribunal held that exemption under Section 26(1)(e) of the SEZ Act is a special statutory entitlement for SEZ units and that the terms and conditions for such exemption are to be prescribed by rules made under the SEZ Act. The word 'prescribed' in Section 26(2) must be read as prescription by rules under the SEZ Act (and not by notifications issued under the general power in the Finance Act). Section 51 of the SEZ Act gives the SEZ legislation overriding effect over other laws.Consequently, the time limit in Notification No.12/2013 ST (issued under the general power in the Finance Act) cannot be applied to deny a statutory exemption to an SEZ unit where the conditions under the SEZ Act and SEZ Rules are satisfied. The Tribunal applied the ratio of the decision in M/s. GMR Aerospace Engineering Ltd. and the consistent view of prior Tribunal orders including M/s. DLF Assets Pvt. Ltd. and M/s. ATC Tyres Pvt. Ltd. to conclude that rejection of the refund solely on the ground of time bar under the impugned notification is not sustainable. The Tribunal noted there was no dispute that the services were used for authorised operations and that SEZ Act/Rules conditions were met; therefore the departmental reliance on the notification's one year limitation to deny refund was contrary to the SEZ Act's scheme. [Paras 6]

Rejection of the refund as time barred under Notification No.12/2013 ST set aside; refund claim to be allowed as the limitation in the notification cannot defeat the SEZ Act entitlement.

Final Conclusion: Impugned orders rejecting the refund on the ground of limitation are set aside and the appeals are allowed; consequential reliefs, if any, to follow.

Cenvat credit on supplementary invoices - stock transfer between sister units - Rule 9(1)(b) of the Cenvat Credit Rules, 2004 - revenue neutrality and denial of credit - penalty for suppression where differential duty paid

Cenvat credit on supplementary invoices - stock transfer between sister units - Rule 9(1)(b) of the Cenvat Credit Rules, 2004 - revenue neutrality and denial of credit - Whether Cenvat credit availed by the appellant on supplementary invoices issued for payment of differential duty on stock transfers from the principal manufacturer to its sister unit can be denied under Rule 9(1)(b). - HELD THAT: - The Tribunal found that the supplier had discharged differential duty after revision of assessable value and issued supplementary invoices to the appellant in respect of stock transfers to the sister unit. Rule 9(1)(b) applies to cases involving sale where suppression or misstatement is involved; in the present case the movement was a stock transfer and not a sale. The Court treated the exercise as revenue neutral and relied on precedent of the Karnataka High Court in Karnataka Soaps & Detergents Ltd. v. CCE to hold that Cenvat credit could not be denied on such supplementary invoices. Applying these principles to the facts, the Tribunal concluded that denial of credit was not justified and set aside the impugned orders. [Paras 5, 6, 7]

Cenvat credit availed on the supplementary invoices for differential duty paid on stock transfer to the sister unit is allowable; the disallowance is set aside.

Penalty for suppression where differential duty paid - revenue neutrality and denial of credit - Whether penalty could be sustained where the differential duty was paid and the transaction was a stock transfer, not an attempt to suppress facts. - HELD THAT: - The Tribunal observed that the differential duty had been paid after departmental query and that the transaction constituted a stock transfer rather than a sale involving suppression. Given that the department ultimately received the differential duty and the exercise was revenue neutral, the circumstances did not warrant sustaining a penalty. The Tribunal noted earlier appellate treatment where penalty was set aside and, on the present facts, found imposition of penalty unwarranted. [Paras 6, 7]

Penalty imposed in relation to the disallowed credit is not sustainable and is set aside.

Final Conclusion: The appeal is allowed: the impugned disallowance of Cenvat credit on supplementary invoices issued for differential duty in respect of stock transfers to a sister unit is set aside and the related penalty is quashed, with consequential reliefs, the Tribunal treating the exercise as revenue neutral.

Exhaustion of statutory alternative remedy - dispensing with appellate remedy only in exceptional circumstances - jurisdictional error remediable by quash and remand - appellate authority empowered to correct erroneous application of law - High Court's judicial review limited to procedure and illegality, not re adjudication of merits - application of amended law to prior assessment years - input tax credit - remand for fresh adjudication

Exhaustion of statutory alternative remedy - dispensing with appellate remedy only in exceptional circumstances - High Court's judicial review limited to procedure and illegality, not re adjudication of merits - Whether the writ petition could be entertained without first availing the statutory appeal remedies under the TNVAT Act in respect of the assessment year 2013-14. - HELD THAT: - The Court held that exhausting the appeal remedy provided by the statute is the general rule and dispensing with it is an exception to be exercised sparingly. The appellate framework under the TNVAT Act (Sections 51, 58, 59 and 60) contemplates specific procedures and confers broad powers on appellate authorities to confirm, modify, annul, set aside and remit assessments. Constitutional courts must respect the institutional role of those authorities and should not routinely usurp their function by entertaining writs in place of appeals. Only in cases of imminent and irreparable injury, violation of fundamental rights, total absence of jurisdiction, grave procedural illegality or other exceptional circumstances should the appellate remedy be waived. The High Court's jurisdiction under Article 226 is to scrutinise legality and procedural regularity, not to re adjudicate disputed questions of mixed fact and law that require examination of original records; hence, writ petitions should ordinarily be deferred pending statutory appeal so that factual and technical issues are determined by the designated fact finding fora. [Paras 10, 11, 14, 20, 21]

The writ petition cannot be entertained as a substitute for the statutory appeal; the petitioner must avail the appellate remedy unless exceptional circumstances are shown, which were not found to exist in this case.

Application of amended law to prior assessment years - input tax credit - appellate authority empowered to correct erroneous application of law - jurisdictional error remediable by quash and remand - remand for fresh adjudication - Whether the Assessing Officer's purported application of the post amendment provision of Section 19 of the TNVAT Act to the assessment year 2013-14 justified dispensing with the appellate remedy and immediate quashing or exoneration. - HELD THAT: - The Court noted the petitioner alleged that the Assessing Officer applied the post amendment provision of Section 19 (relating to input tax credit) to an assessment year antecedent to the amendment, amounting to non application of mind or jurisdictional error. The Court observed that even where an original order applies an incorrect provision, the appellate authorities possess power to examine and correct such errors after affording opportunity to the parties. Jurisdictional errors are ordinarily technical and rectifiable; they should lead to quashing and remand for fresh adjudication rather than to exoneration of liability. Allowing exoneration on such a ground would defeat the statutory scheme. Therefore, the appropriate course is to require the respondent to proceed to pass the final assessment in accordance with law (applying the correct pre amendment provisions where applicable) and permit the petitioner to pursue statutory appeals thereafter. [Paras 13, 16, 17, 19, 20]

The allegation of erroneous application of the amended provision did not justify bypassing the appellate forum; the matter is to be finally assessed afresh by the authorities in accordance with law and procedure, and the petitioner remains free to appeal against any final order.

Final Conclusion: Writ petition disposed with direction to the respondent to proceed with final assessment for 2013-14 on merits and in accordance with law (affording opportunity to the assessee) preferably within twelve weeks; appellate remedies under the TNVAT Act are to be availed by the petitioner thereafter, the High Court refusing to waive the statutory appeal in the absence of exceptional circumstances.

Reopening of assessment - rectification under Section 84 of the TNVAT Act - principles of natural justice - duty to decide representation expeditiously

Duty to decide representation expeditiously - reopening of assessment - rectification under Section 84 of the TNVAT Act - Respondent directed to dispose of the petitioner's representation dated 26.12.2020 on merits and in accordance with law within a stipulated time-frame. - HELD THAT: - The Court noted that the petitioner had submitted a representation seeking reopening/rectification of the assessment and that the respondent, as a statutory authority, is expected to act under Section 84 of the TNVAT Act. Observing that the representation had not been considered despite repeated approaches, the Court exercised supervisory jurisdiction to direct the respondent to examine and decide the representation on merits. The Court did not adjudicate the underlying merits of the assessment or the factual disputes raised by the petitioner; it imposed a requirement of expeditious disposal and legal compliance by the authority. [Paras 6, 8]

Representation dated 26.12.2020 to be disposed of on merits and in accordance with law within 12 weeks from receipt of the order.

Principles of natural justice - reopening of assessment - rectification under Section 84 of the TNVAT Act - Whether the earlier assessment/order would be re-examined on the basis of the petitioner's submissions and documents was left open and directed to be considered afresh by the respondent under Section 84. - HELD THAT: - The Court recorded the petitioner's contention that revised returns and supporting records had been filed and that the assessment was confirmed without proper consideration, resulting in an alleged breach of principles of natural justice. Rather than deciding these contentions, the Court remitted them to the respondent for fresh consideration under the statutory power to reopen/rectify assessments, directing verification of records and lawful decision-making. Thus, substantive issues concerning the correctness of the assessment and the existence of interstate turnover or declaration forms were not finally adjudicated but entrusted to the respondent for fresh determination. [Paras 3, 6, 8]

Substantive complaints regarding the assessment remitted to the respondent for fresh consideration and decision under Section 84 of the TNVAT Act.

Final Conclusion: Writ petition disposed by directing the respondent to consider and decide the petitioner's representation dated 26.12.2020 on merits and in accordance with law within 12 weeks; merits of the earlier assessment were not finally adjudicated and are remitted to the respondent for fresh consideration under Section 84 of the TNVAT Act.