TaxTMI Updates e-Newsletter
Jun 28,2024

Voluntary payment versus payment under coercion during search/inspection - requirement of acknowledgement in Form GST DRC-04 for acceptance of payment - obligation to inform payment in Form GST DRC-03 and issue of GST DRC-04 under Rule 142(2) of the CGST Rules - investigatory directions and adjudication through show-cause notice - challenge to validity/authorization of search (INS-01) to be raised in adjudication

Voluntary payment versus payment under coercion during search/inspection - requirement of acknowledgement in Form GST DRC-04 for acceptance of payment - obligation to inform payment in Form GST DRC-03 and issue of GST DRC-04 under Rule 142(2) of the CGST Rules - Whether the payment made by the appellants during the course of search was voluntary and whether the department was obliged to issue GST DRC-04 acknowledging the payment - HELD THAT: - The Court held that a payment made during the course of a search, before completion of the search proceedings, is not to be treated as voluntary. The CBIC instructions of 25th May, 2022 and the statutory framework require that a person who makes a payment must inform the proper officer in Form GST DRC-03 and the proper officer shall issue an acknowledgement in Form GST DRC-04. In the present case there was no prior ascertainment of liability, no intimation of non-payment/short payment, and no GST DRC-04 was issued. The chronology in the search records and the bank challan shows the deposit occurred during the search and well before the search was recorded as concluded, indicating the payment was not voluntary. Reliance on authorities distinguishing factual matrices was noted, but the Court applied the principle that payments during ongoing search proceedings, without statutory acknowledgement, cannot be retained by the department as voluntary receipts. [Paras 19, 20, 21, 24, 25]

The payment made during the search was not voluntary, no GST DRC-04 acknowledgement was issued, and the amount paid must be returned to the appellants.

Challenge to validity/authorization of search (INS-01) to be raised in adjudication - investigatory directions and adjudication through show-cause notice - Whether the validity of the search and the question of proper authorization in INS-01 are to be adjudicated in the writ proceedings or in the adjudicatory process following issuance of show-cause notice - HELD THAT: - The Court declined to adjudicate disputed questions of fact regarding the validity of the search and authenticity/signature on INS-01 in writ proceedings based on affidavits filed at the reply stage. Those factual and evidentiary matters were directed to be contested and examined in the adjudication of the show-cause notice. The Court directed the CGST authorities to issue a show-cause notice, grant opportunity of personal hearing and adjudicate the matter, permitting the appellants to raise all factual and legal grounds including challenge to the search authorization. [Paras 6, 7, 8, 22, 26]

Questions on the validity of the search/INS-01 and related factual disputes are not to be decided in the writ; they shall be raised and adjudicated in response to the show-cause notice to be issued by the authorities.

Final Conclusion: The appeal is allowed. The High Court set aside the writ court's order and directed return of the sum of Rs. 30,00,000/- to the appellants, ordered issuance and adjudication of a show-cause notice with opportunity of personal hearing within specified time frames, and permitted the appellants to raise claims for interest and to challenge the validity of the search during the adjudication.

Natural justice - opportunity to be heard - personal hearing - remand for fresh consideration - condition of interim compliance - show cause notice - GSTR 3B and GSTR 2A mismatch

Natural justice - opportunity to be heard - show cause notice - Impugned order set aside on ground that the petitioner was not afforded a reasonable opportunity to contest the tax demand. - HELD THAT: - The court examined the order which confirmed a tax proposal arising from an alleged mismatch between the petitioner's GSTR 3B return and the auto-populated GSTR 2A. Although the respondent relied on intimation, show cause notice and a personal hearing notice, the petitioner asserted unawareness of proceedings because communications were uploaded to the portal and not otherwise brought to his notice. Having regard to the petitioner's assertion that he could not participate in the proceedings and the requirements of natural justice, the interest of justice required setting aside the impugned order and affording the petitioner an opportunity to contest the demand on merits.

Impugned order dated 12.12.2023 set aside on the ground of denial of reasonable opportunity to be heard.

Remand for fresh consideration - personal hearing - condition of interim compliance - GSTR 3B and GSTR 2A mismatch - Matter remanded to the assessing authority for fresh adjudication on merits subject to conditions. - HELD THAT: - The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand and sought opportunity to demonstrate that only eligible Input Tax Credit was availed (including compliance with Circular No.183). The court directed that on receipt of the petitioner's reply and satisfaction about receipt of the 10% payment, the respondent shall provide a reasonable opportunity including a personal hearing and thereafter pass a fresh order within three months from receipt of the reply. The remand is therefore for fresh consideration on merits, contingent upon the stated interim compliance by the petitioner.

Matter remanded for fresh consideration; petitioner to remit 10% of disputed demand within two weeks and to be allowed to file reply and be afforded a personal hearing, with a fresh order to follow within three months.

Final Conclusion: The writ petition is disposed of by setting aside the impugned order dated 12.12.2023 and remanding the matter for fresh adjudication on the petitioner making the stipulated interim payment and being afforded a reasonable opportunity of hearing; no order as to costs.

Opportunity of personal hearing - service of notice by electronic portal versus RPAD - remand for fresh adjudication on condition of interim deposit - liability under Section 74 of the GST enactments

Service of notice by electronic portal versus RPAD - opportunity of personal hearing - Whether the petitioner was denied a reasonable opportunity to contest the tax proposal by reason of communications being uploaded on the GST portal - HELD THAT: - The court examined the impugned order and the communication history recorded therein and found that a personal hearing notice dated 10.03.2023 and a reminder dated 29.05.2023 were sent to the petitioner by RPAD, with the reminder having been received on 01.06.2023. On that basis, the petitioner's explanation that it was unaware of proceedings because notices were only uploaded on the GST portal was not accepted. Nonetheless, the court noted that the tax proposal had been confirmed without the petitioner having been heard on the merits. Applying the principle that an adjudicatory order should not be confirmed without affording a meaningful opportunity to be heard, the court held that the interest of justice required that the petitioner be afforded such opportunity by way of fresh consideration. [Paras 6]

Petitioner's plea of non-receipt on account of portal-only uploads rejected; however, because the tax proposal was confirmed without hearing, the matter is remanded for fresh opportunity to be heard.

Remand for fresh adjudication on condition of interim deposit - liability under Section 74 of the GST enactments - Whether the impugned order should be set aside and the matter remitted for fresh adjudication and on what terms - HELD THAT: - The court set aside the impugned order dated 30.10.2023 but did so on specific terms to balance expedition and final adjudication. The petitioner, on instructions, agreed to remit 15% of the disputed tax demand as a condition for remand. The court directed that the petitioner must remit that 15% within fifteen days from receipt of a copy of the order and file a reply to the show cause notice within the same period. Upon receipt of the petitioner's reply and verification that the 15% amount has been received, the first respondent is to provide a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the reply. The court thereby provided a conditional remand while recognising that the original confirmation had imposed liability under Section 74 of the applicable GST enactments without affording the petitioner a hearing. [Paras 6, 7]

Impugned order set aside and matter remitted for fresh adjudication; remand conditioned upon petitioner remitting 15% of the disputed tax demand within fifteen days and filing a reply, after which the authority shall grant hearing and pass a fresh order within three months.

Final Conclusion: The writ petition is allowed in part: the impugned order dated 30.10.2023 is set aside and the matter remitted for fresh adjudication on the terms that the petitioner remit 15% of the disputed tax demand within fifteen days and file a reply; on compliance, the authority shall afford a personal hearing and pass a fresh order within three months. No costs.

Quashing and remand for fresh adjudication - Pre-deposit as condition for grant of relief - Exercise of discretionary relief despite laches - Opportunity of personal hearing before fresh order - Treatment of an impugned order as addendum to show cause notice

Quashing and remand for fresh adjudication - Pre-deposit as condition for grant of relief - Opportunity of personal hearing before fresh order - Treatment of an impugned order as addendum to show cause notice - Impugned assessment order quashed and matter remitted for fresh adjudication on merits subject to conditions - HELD THAT: - The Court, noting that the petitioner is a small dealer and is willing to make a part payment, exercised its discretionary power to set aside the impugned order dated 21.09.2023 and remit the matter to the respondent for fresh decision on merits and in accordance with law. The petitioner had not replied to certain earlier notices and the respondent criticised delay and non-participation; nonetheless, the Court granted relief on condition that the petitioner file replies to the show cause notices that preceded the impugned order, deposit 30% of the disputed tax within 30 days from receipt of this order from its Electronic Cash Register, and be afforded personal hearing before fresh orders are passed. The Court directed that the remand proceeding be concluded within two months from receipt of a copy of this order. The impugned order is to be treated as an addendum to the preceding show cause notice and the petitioner must be heard before finalizing the fresh adjudication. [Paras 10, 11]

Impugned order quashed; matter remitted for fresh adjudication within two months subject to petitioner filing replies to earlier notices, depositing 30% of disputed tax within 30 days, and being afforded personal hearing; impugned order to be treated as addendum to the show cause notice.

Final Conclusion: Writ petition disposed by quashing the impugned assessment order and remitting the matter for fresh adjudication on merits within two months, subject to the conditions of filing replies to the earlier notices, depositing 30% of the disputed tax within 30 days, and hearing of the petitioner; no costs.

Refund of accumulated input tax credit - refund eligibility under Rule 89(4) of the CGST Rules - exhaustion of alternate remedy - condonation of delay for filing appeal - stay of recovery pending appellate remedy - jurisdiction of the GST Tribunal

Exhaustion of alternate remedy - jurisdiction of the GST Tribunal - condonation of delay for filing appeal - Petition dismissed to the extent that alternative remedy before the Tribunal must be availed and delay in filing such appeal is condoned if the appeal is filed within four weeks. - HELD THAT: - The Tribunal has now been constituted and the appropriate remedy against the departmental orders rejecting part of the refund is an appeal before the Tribunal. The High Court therefore directed the petitioner to exhaust the alternate statutory remedy by filing an appeal before the Tribunal. Recognising the institutional change since the petition was filed, the Court ordered that any delay in filing the appeal shall be deemed condoned provided the appeal is instituted within four weeks from the date of the order disposing the petition. This direction follows from the principle that specialised statutory tribunals are the proper forum for adjudicating challenges to departmental orders where such an appeal remedy is available. [Paras 3, 4]

Petitioner to file appeal before the Tribunal and delay, if any, to be condoned if appeal is filed within four weeks.

Refund of accumulated input tax credit - stay of recovery pending appellate remedy - Interim protection granted restraining recovery of the disputed refund amount until the appeal before the Tribunal is heard. - HELD THAT: - Although the departmental orders disallowed a portion of the refund, the Assistant Commissioner had earlier sanctioned the refund which had been granted to the petitioner. In light of the pendency of the appellate remedy now to be pursued before the Tribunal, the Court directed that no steps shall be taken to recover the impugned amount under the order dated 8th August 2019 until the appeal is heard. The restraint is an interim protective measure to preserve the status quo while the statutory appellate process is exhausted. [Paras 5]

Recovery of the disputed amount is stayed until the appeal before the Tribunal is heard.

Final Conclusion: Writ petition disposed with directive to file appeal before the GST Tribunal (delay condoned if filed within four weeks) and an interim stay on recovery of the disputed refund amount until the appeal is heard.

Extension of time to file statutory appeal - writ relief in aid of statutory remedy - impleading respondent suo motu - direction to decide appeal on merits

Extension of time to file statutory appeal - writ relief in aid of statutory remedy - Liberty to file a statutory appeal out of time was granted instead of entertaining the writ petition filed after the expiry of the statutory period. - HELD THAT: - The writ petition was instituted long after the period for filing an appeal under Section 107 of the TNGST Act, 2017 had expired. The Court declined to adjudicate the merits of the impugned assessment order and, exercising its supervisory jurisdiction, disposed of the writ by granting the petitioner leave to file the statutory appeal within 30 days from receipt of a copy of the order. The Court thereby provided equitable relief permitting initiation of the prescribed statutory remedy despite the delay, without pronouncing on the substantive correctness of the assessment. [Paras 3, 4]

Petitioner granted liberty to file the statutory appeal within 30 days from receipt of the order; writ petition disposed instead of entertaining a time-barred challenge.

Impleading respondent suo motu - The Deputy Commissioner (GST-Appeal), Madurai and Tirunelveli was impleaded suo motu as a respondent to enable adjudication of the appeal. - HELD THAT: - Recognising that the appellate authority was not a party to the writ proceedings but would be the competent forum to decide the statutory appeal, the Court impleaded the Deputy Commissioner (GST-Appeal), Madurai and Tirunelveli, suo motu as the second respondent. This step was taken to ensure that the appellate authority would receive the appeal and be bound to consider it in accordance with law. [Paras 5]

Deputy Commissioner (GST-Appeal), Madurai and Tirunelveli, impleaded suo motu as second respondent.

Direction to decide appeal on merits - The appellate authority was directed to consider and decide the appeal on merits and in accordance with law within a specified time-frame if filed pursuant to the order. - HELD THAT: - The Court directed that if the appeal was filed within 30 days from receipt of this order, the second respondent shall consider and dispose of the appeal on merits and in accordance with law as expeditiously as possible, preferably within three months thereafter. The writ court did not decide the substantive issues of the assessment but mandated an expeditious adjudication by the competent appellate forum. [Paras 4, 6]

If filed within the prescribed 30 days, the appeal must be considered and disposed of on merits preferably within three months.

Final Conclusion: Writ petition disposed by granting the petitioner liberty to file the statutory appeal for assessment year 2022-23 within 30 days; the Deputy Commissioner (GST-Appeal), Madurai and Tirunelveli, impleaded and directed to decide the appeal on merits and in accordance with law, preferably within three months.

Maintainability of writ petition in presence of alternative statutory remedy - availability of statutory appellate remedy - liberty to prefer statutory appeal under Section 107 of TNGST Act, 2017 - challenge to assessment order arising from discrepancy between auto populated GSTR 2A credit and returns filed in Form GSTR 3B

Maintainability of writ petition in presence of alternative statutory remedy - availability of statutory appellate remedy - liberty to prefer statutory appeal under Section 107 of TNGST Act, 2017 - Writ petition dismissed for want of merits and on account of existence of an alternate statutory remedy, with liberty granted to file appeal under Section 107 of the TNGST Act, 2017 within a limited time. - HELD THAT: - The Court recorded that the petitioner challenges an assessment order dated 26.04.2024 concerning assessment year 2018-19 which arose from discrepancies between Input Tax Credit reflected in auto populated Form GSTR 2A and the returns filed by the petitioner in Form GSTR 3B. The respondent asserted, and the Court accepted, that the petitioner has an alternative statutory remedy by way of appeal before the Appellate Officer/Deputy Commissioner (ST) (Appeals), Trichy. Observing that there is no merit in the writ petition and that an efficacious alternate remedy exists, the Court dismissed the petition while granting the petitioner liberty to file the statutory appeal under Section 107 of the TNGST Act, 2017 within 30 days of the order. The Court further directed that, in the event no such appeal is filed within the stipulated time, the respondent remains at liberty to proceed in accordance with law. [Paras 4, 5, 6]

Writ petition dismissed; petitioner granted liberty to file appeal under Section 107 of TNGST Act, 2017 within 30 days; respondent permitted to proceed if no appeal is filed.

Final Conclusion: The High Court dismissed the writ petition for lack of merit and because an alternate statutory remedy exists, while permitting the petitioner to prefer a statutory appeal under Section 107 of the TNGST Act, 2017 within 30 days; if no appeal is filed, the respondent may proceed in accordance with law.

Natural justice - right to be heard / opportunity to contest on merits - personal hearing - setting aside administrative order for non reply - remand for fresh adjudication - verification of bank debit as security for revenue - appropriation to abide by outcome of remanded proceedings

Natural justice - right to be heard / opportunity to contest on merits - setting aside administrative order for non reply - Validity of the impugned assessment order where the order was confirmed solely because the petitioner did not reply to the show cause notice. - HELD THAT: - The Court found that the assessment order dated 18.12.2023 was confirmed only on the ground that the petitioner did not reply to the show cause notice. In light of the petitioner's assertion that the notices were uploaded on the portal but not otherwise communicated and that the petitioner was therefore unaware of the proceedings, principles of natural justice required that the petitioner be given an opportunity to contest the tax demand on merits. Consequently, the impugned order was held to be unsustainable and set aside to afford the petitioner that opportunity. [Paras 4]

Impugned order dated 18.12.2023 set aside for non compliance with the right to be heard and to permit the petitioner to contest the demand on merits.

Personal hearing - remand for fresh adjudication - verification of bank debit as security for revenue - appropriation to abide by outcome of remanded proceedings - Procedure to be followed on remand including verification of alleged bank debit, timeline for filing reply, and requirement of personal hearing before fresh order is passed. - HELD THAT: - The Court directed that the petitioner be permitted to file a reply to the show cause notice within two weeks from receipt of a copy of the order. Upon receipt of that reply, the respondent must afford a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. The Court recorded that the petitioner placed on record evidence of a debit of Rs. 8,35,000 on 19.06.2024 and directed verification of that debit; to the extent the amount has been appropriated from the petitioner's bank account, that appropriation shall abide by the outcome of the remanded proceedings, thereby securing the revenue interest during remand. [Paras 4, 5]

Matter remanded for fresh consideration; petitioner to file reply within two weeks; respondent to provide personal hearing and pass fresh order within three months; verification of the debited sum ordered and appropriation to abide by the outcome.

Final Conclusion: Writ petition allowed in part: the assessment order of 18.12.2023 is set aside for breach of natural justice and the matter is remanded for fresh adjudication after verification of the bank debit; timelines for filing reply and for passing a fresh order, and requirement of a personal hearing have been directed; the appropriated sum shall abide by the result of the remanded proceedings.

Violation of principles of natural justice - Failure to communicate show cause notice - Opportunity of personal hearing - Remand on terms and conditions - Payment as condition for grant of remedy

Violation of principles of natural justice - Failure to communicate show cause notice - Opportunity of personal hearing - Whether the impugned assessment order suffers from breach of principles of natural justice for non-communication of the show cause notice and denial of opportunity of personal hearing. - HELD THAT: - The Court found that the assessment was confirmed because the petitioner did not respond to the show cause notice or participate in personal hearings. The petitioner, however, asserted that the notices were uploaded on the GST portal and were not brought to his notice otherwise, and that his tax consultant had not informed him. In view of the petitioner's assertion that he was unaware of the proceedings and therefore could not participate, the interest of justice required that he be afforded an opportunity to be heard. The Court concluded that the impugned order must be set aside to enable the petitioner to submit a reply and be heard afresh, subject to appropriate terms. [Paras 6]

Impugned order set aside for breach of principles of natural justice and petitioner granted an opportunity to reply to the show cause notice and to avail personal hearing.

Remand on terms and conditions - Payment as condition for grant of remedy - Terms on which the matter is remitted for fresh consideration and the petitioner's consent to remit part of the disputed demand. - HELD THAT: - The petitioner, on instructions, agreed to remit 10% of the disputed tax demand as a condition for remand. The Court imposed that condition, directing the petitioner to remit 10% within two weeks from receipt of the order and permitting submission of a reply within the same period. Upon receipt of the reply and satisfaction that the 10% payment was made, the respondent was directed to provide a reasonable opportunity including a personal hearing and to pass a fresh order within three months from receipt of the reply. The Court thereby exercised its remedial power to quash the order but remand the matter for fresh adjudication on the stated terms. [Paras 7]

Matter remitted for fresh adjudication on terms that the petitioner remit 10% of the disputed demand within two weeks, submit a reply, and be afforded personal hearing; respondent to pass fresh order within three months of receipt of the reply.

Final Conclusion: The assessment order dated 30.12.2023 is set aside for breach of natural justice; matter remitted for fresh consideration on the petitioner's payment of 10% of the disputed tax demand within two weeks, submission of a reply and receipt of a personal hearing, and a fresh order to be passed within three months thereafter; writ petition disposed of on these terms with no order as to costs.

Principles of natural justice - Rectification under Section 161 of TNGST Act, 2017 - Quashing of administrative order for lack of hearing - Remand for fresh hearing and decision on merits

Principles of natural justice - Quashing of administrative order for lack of hearing - Impugned order dated 26.03.2024 passed under Section 161 of TNGST Act, 2017 was set aside for violation of the principles of natural justice. - HELD THAT: - The court found that although the impugned order was reasoned, it had been passed without affording the petitioner an opportunity of hearing. The absence of hearing amounted to a breach of the principles of natural justice applicable to proceedings under the TNGST Act, 2017. In consequence, the impugned order could not stand and was quashed. [Paras 4, 5, 7]

Impugned order dated 26.03.2024 quashed for having been passed without hearing the petitioner.

Rectification under Section 161 of TNGST Act, 2017 - Remand for fresh hearing and decision on merits - Rectification application remitted to the respondent for fresh consideration after hearing the petitioner and disposal on merits within a specified time. - HELD THAT: - Having quashed the impugned order for procedural infirmity, the court directed that the matter be handed back to the respondent to decide the rectification application on merits. The respondent is required to afford the petitioner an opportunity of hearing and to pass fresh orders after such hearing. The court fixed a time-bound direction for disposal to ensure expeditious adjudication. [Paras 7, 8]

Matter remitted to the respondent to hear the petitioner and decide the rectification application on merits within three months from receipt of this order.

Final Conclusion: The writ petition is allowed: the impugned order dated 26.03.2024 is quashed for noncompliance with the principles of natural justice and the matter is remitted to the respondent to decide the rectification application under Section 161 of the TNGST Act, 2017 after hearing the petitioner within three months; writ petition disposed of with no costs.

Quashing of assessment order for lack of opportunity to be heard - remand for fresh adjudication - deposit condition for filing reply - stay of further recovery where amount already recovered - treatment of impugned order as addendum to the show cause notice - assessment under Section 73 of TNGST Act, 2017

Quashing of assessment order for lack of opportunity to be heard - assessment under Section 73 of TNGST Act, 2017 - Impugned assessment order dated 23.06.2023 set aside for being passed without affording the petitioner an opportunity to reply to the show cause notice. - HELD THAT: - The Court found that the impugned order of assessment under Section 73 was passed against the petitioner without giving an opportunity to file a reply to the show cause notice. For want of adherence to the audi alteram partem principle, the order could not stand and was therefore quashed. The matter was remitted to the respondent for fresh consideration on merits after affording the petitioner an opportunity of hearing. The Court directed that the impugned order shall be treated as an addendum to the show cause notice that preceded it and that the respondent shall pass fresh orders in accordance with law. [Paras 6, 8]

Impugned order dated 23.06.2023 quashed and matter remitted for fresh adjudication with the impugned order treated as addendum to the show cause notice.

Remand for fresh adjudication - deposit condition for filing reply - stay of further recovery where amount already recovered - Conditions and directions governing the remand: petitioner permitted to file reply subject to deposit, suspension of further recovery if amount already recovered, and time frame for fresh orders. - HELD THAT: - On remand the Court placed a condition that the petitioner may file a reply to the show cause notice provided the petitioner deposits 10% of the disputed tax within 30 days from receipt of a copy of the order. The Court further recorded that if the respondent has already recovered the sum of Rs. 22,83,579/-, there shall be no further recovery pending the fresh adjudication. The respondent was directed to pass fresh orders on merits and in accordance with law preferably within three months, ensuring that the petitioner is heard before such order is passed. [Paras 7, 8]

Petitioner allowed to file reply on deposit of 10% of disputed tax within 30 days; no further recovery if the specified sum has already been recovered; respondent to pass fresh orders preferably within three months after hearing the petitioner.

Final Conclusion: The assessment order dated 23.06.2023 for AY 2018-19 is quashed for failure to afford the petitioner a hearing and the matter is remitted to the respondent for reconsideration; the petitioner may file a reply on deposit of 10% of the disputed tax within 30 days, no further recovery shall be made if the specified sum has already been recovered, and the respondent shall pass fresh orders preferably within three months after hearing the petitioner.

Mismatch between GSTR-3B and auto-populated GSTR-2A - Section 16(4) of GST - personal hearing - remand for fresh consideration - provisional deposit condition - lifting of bank attachment and restraint on garnishee proceedings

Mismatch between GSTR-3B and auto-populated GSTR-2A - Section 16(4) of GST - Validity of confirming tax demand on grounds referred to in the impugned order where the show cause notice principally alleged mismatch between GSTR-3B and auto-populated GSTR-2A and did not specifically refer to Section 16(4). - HELD THAT: - The Court observed that the show cause notice founded the tax proposal on a mismatch between the petitioner's GSTR-3B returns and the auto-populated GSTR-2A. The impugned order additionally referred to Section 16(4) of the GST enactments. The Court held that mere reference to Section 16(4) in the order, in addition to the mismatch pleaded in the notice, did not by itself warrant interference with the assessment. However, the Court also noted that the tax proposals in respect of the defects were confirmed solely because objections were not received from the taxpayer, and that the petitioner had attempted to file replies and upload documents. In that factual setting, the Court found it just to permit determination on merits rather than sustain confirmation based only on non-receipt of objections.

Reference to Section 16(4) alongside the mismatch did not alone vitiate the order, but confirmation of tax solely for non-receipt of objections required reconsideration on merits.

Personal hearing - remand for fresh consideration - provisional deposit condition - lifting of bank attachment and restraint on garnishee proceedings - Relief and procedure on remand including deposit condition, opportunity to reply, personal hearing, fresh decision timeline, and interim relief on bank attachment/garnishee proceedings. - HELD THAT: - The Court set aside the impugned assessment order and remanded the matter to the first respondent for fresh consideration on merits. The remand was conditioned on the petitioner remitting 10% of the disputed tax demand within three weeks of receipt of the order copy; the petitioner was permitted to submit a reply within that period. Upon verification of the deposit, the assessing authority was directed to afford a reasonable opportunity, including a personal hearing, and to pass a fresh order within three months from receipt of the petitioner's reply. Because the assessment was set aside subject to the stated condition, the Court ordered that the bank attachment be lifted and restrained the respondents from initiating or proceeding with garnishee proceedings. The Court also imposed no order as to costs.

Impugned order set aside; matter remanded for fresh adjudication on conditions of 10% deposit, opportunity to reply and personal hearing, fresh order within three months, bank attachment lifted and garnishee proceedings restrained.

Final Conclusion: The assessment order dated 30.01.2024 is set aside and the matter is remanded for fresh consideration on merits; the petitioner must remit 10% of the disputed tax within three weeks, may file a reply and be granted a personal hearing, the authority to pass a fresh order within three months of the reply, and meanwhile the bank attachment is lifted and garnishee proceedings are restrained.

Availability of alternative statutory remedy and maintainability of writ - limitation under Section 107 of the TNGST Act, 2017 - absence of procedural violation in assessment proceedings

Availability of alternative statutory remedy and maintainability of writ - absence of procedural violation in assessment proceedings - limitation under Section 107 of the TNGST Act, 2017 - Challenge to the assessment order disposed of by writ petition and direction to pursue statutory appeal - HELD THAT: - The Court noted that the impugned assessment order dated 30.04.2024 was preceded by statutory notices (DRC-01A dated 14.12.2023 and DRC-01 dated 29.01.2024), the petitioner had replied and was issued personal hearing notices, and no procedural violation in the assessment process was pointed out. The writ petition was therefore not appropriate for substantive adjudication in view of the availability of an alternate statutory remedy. The petition was filed within the limitation period applicable under Section 107 of the TNGST Act, 2017 and, exercising supervisory jurisdiction, the Court found no merit in entertaining the challenge by writ. In consequence, the Court disposed of the petition by directing the petitioner to avail the statutory appeal remedy within a limited time, subject to compliance with other requirements of Section 107 of the TNGST Act, 2017. [Paras 2, 3, 4]

Writ petition dismissed; petitioner directed to file statutory appeal within 30 days from receipt of this order, subject to compliance with Section 107 of the TNGST Act, 2017.

Final Conclusion: The writ petition challenging the assessment order for Assessment Year 2018-19 was dismissed for lack of merit and on the ground that an alternate statutory remedy was available; the petitioner was directed to file the statutory appeal within 30 days, subject to compliance with Section 107 of the TNGST Act, 2017.

Quashing of impugned order - opportunity to file reply to show cause notice - deposit as condition for grant of interim relief - treatment of order as addendum to show cause notice - fresh adjudication on merits within a stipulated time

Quashing of impugned order - treatment of order as addendum to show cause notice - The impugned order dated 22.12.2023 was set aside and directed to be treated as an addendum to the earlier show cause notice in DRC 01 dated 27.09.2023. - HELD THAT: - The Court found merit in the petitioner's contention that he had failed to notice earlier notices and personal hearing dates and granted relief by setting aside the impugned order. The quashing is not declaratory of entitlement on merits but procedural: the impugned order of confirmation is annulled and ordered to be treated as an addendum to the original show cause notice, thereby restoring the matter to the stage of adjudication under DRC 01 dated 27.09.2023. [Paras 8, 9]

Impugned order dated 22.12.2023 quashed and directed to be treated as addendum to DRC 01 dated 27.09.2023.

Opportunity to file reply to show cause notice - deposit as condition for grant of interim relief - fresh adjudication on merits within a stipulated time - Liberty was granted to the petitioner to file a reply to the show cause notice subject to deposit of 10% of the disputed tax from the Electronic Cash Register within 30 days, and the respondent was directed to pass fresh orders on merits preferably within three months. - HELD THAT: - Balancing the petitioner's plea of inadvertence and the respondent's contention of non-participation, the Court conditioned relief on a partial deposit to secure compliance and fair adjudication. Upon deposit of 10% of the disputed tax within 30 days from receipt of this order, the petitioner is permitted to file a clean reply to DRC 01 dated 27.09.2023. The respondent is then directed to consider the reply and pass fresh orders on merits and in accordance with law, preferably within three months, ensuring expeditious final adjudication. [Paras 6, 8, 9]

Petitioner permitted to file reply on deposit of 10% of disputed tax within 30 days; respondent to decide afresh on merits preferably within three months.

Final Conclusion: Writ petition disposed by quashing the impugned order dated 22.12.2023, treating it as an addendum to the show cause notice dated 27.09.2023; petitioner may file a reply on depositing 10% of the disputed tax within 30 days, and the respondent shall decide the matter afresh on merits preferably within three months.

Refund of accumulated input tax credit for zero-rated supplies under section 54 - limitation for filing refund claims and Explanation 2 time-bar rule - exclusion of COVID period for computation of limitation under Notification No. 13/2022-Central Tax - availability of extended filing dates where notification was subsequently issued - quashing of administrative orders in consequence of entitlement to statutory benefit

Exclusion of COVID period for computation of limitation under Notification No. 13/2022-Central Tax - limitation for filing refund claims and Explanation 2 time-bar rule - refund of accumulated input tax credit for zero-rated supplies under section 54 - Benefit of Notification No.13/2022-Central Tax excluding the period 01.03.2020 to 28.02.2022 applies to the petitioner's refund claim for April 2018 to January, 2019 - HELD THAT: - The Court noted that the petitioner filed a refund claim for unutilised input tax credit arising from zero-rated exports for the period April 2018 to January, 2019 and that earlier orders rejected the claim as time barred under the two year limitation in Explanation 2 to section 54. The parties agreed that Notification No.13/2022, which excludes the period 01.03.2020 to 28.02.2022 from computation of limitation, is applicable to the petitioner's claim. The Court observed that the notification was not in existence at the time the impugned orders were passed and therefore the benefit had not been allowed earlier. In view of the consensus and the notification's operation to extend the effective filing dates for the relevant months, the Court directed that the petitioner be granted the benefit of the notification and the extended filing period thereby made available for the refund application for April 2018 to January, 2019. [Paras 11, 14]

Petitioner entitled to the benefit of Notification No.13/2022-Central Tax for the period April 2018 to January, 2019 and the extended filing dates consequent thereto.

Quashing of administrative orders in consequence of entitlement to statutory benefit - Impugned orders rejecting the refund claim are set aside in consequence of granting the benefit of the notification - HELD THAT: - Having held that the petitioner is entitled to the benefit of Notification No.13/2022 and the resultant extended filing dates, the Court found that the earlier rejection and appellate orders were rendered without allowing that statutory benefit. Therefore, the Court quashed and set aside the appellate order dated 13/20.10.2021 and the order dated 05.05.2021 of the Assistant Commissioner and remitted the matter to the respondents for grant of relief consistent with the notification. [Paras 15, 16]

Impugned orders dated 13/20.10.2021 and 05.05.2021 quashed and set aside; respondents directed to grant benefit accordingly.

Final Conclusion: Writ petition allowed; respondents directed to grant the benefit of Notification No.13/2022-Central Tax for the period April 2018 to January, 2019 and to reconsider/sanction the refund claim accordingly; impugned orders quashed and set aside, with no order as to costs.

Notional income - income escaping assessment - reassessment under Section 148A(d) of the Income Tax Act - capital gains - requirement of a taxable event by sale for chargeability - use of SEBI ex parte orders as a basis for tax action - remand for fresh consideration

Notional income - income escaping assessment - capital gains - requirement of a taxable event by sale for chargeability - Validity of the proposal to reopen assessment on the basis of a purported notional profit where the shares were not sold in the year under consideration - HELD THAT: - The Court found that the impugned order under Section 148A(d) proceeded on the premise that a notional profit had arisen because the market price of allotted shares had appreciated, without addressing the petitioner's specific and documentary reply that the shares were not sold during the Financial Year 2015-16. The Revenue conceded before the Court that there was no dispute about absence of sale in that year. As no sale took place, no capital gains crystallised in the relevant year and therefore there was no incidence of income that could be said to have escaped assessment. The Court also examined the internal report and noted that it relied on an ex parte SEBI order and general concerns about post-allotment price manipulation, but observed that such material did not establish an assessable event in the year in question. Because the proposed reassessment rested solely on an alleged notional profit without any taxable event, the foundational basis for invoking reassessment was absent and the proposal could not stand. [Paras 5, 6, 7, 8]

The proposal to reopen assessment on the basis of a notional profit where no sale occurred in Financial Year 2015-16 was unsustainable; the impugned order was quashed for lack of any basis showing income had escaped assessment.

Reassessment under Section 148A(d) of the Income Tax Act - remand for fresh consideration - Whether the matter should be remanded to the assessing officer for fresh consideration instead of quashing the impugned order - HELD THAT: - Having concluded that the proposal for reassessment lacked any factual foundation because the shares were not sold in the relevant year and no other ground was advanced in the notice, the Court found there had been no application of mind to the petitioner's explicit and documented reply. In these circumstances the Court declined the Revenue's request for a remand for fresh consideration, holding that where the very basis for the reassessment proposal does not exist as a matter of fact, remand was not warranted and the impugned order had to be quashed. [Paras 9, 10, 11]

Request for remand rejected; impugned order quashed and set aside.

Final Conclusion: The order proposing reassessment under Section 148A(d) was quashed because it rested solely on an asserted notional profit despite uncontested documentary proof that no sale occurred in Financial Year 2015-16; remand for fresh consideration was refused.

Condonation of delay - power under Section 119(2)(b) to condone delay - deduction under Section 80JJAA - Form-10DA compliance - genuine hardship as ground for exercise of discretion - exercise of discretion liberally

Condonation of delay - power under Section 119(2)(b) to condone delay - Form-10DA compliance - genuine hardship as ground for exercise of discretion - Whether the delay in filing Form-10DA for Assessment Year 2022-23 should be condoned under Section 119(2)(b) and the return processed on that basis. - HELD THAT: - The petitioner filed Form-10DA on 07.11.2022 along with the return for Assessment Year 2022-23 although the Chartered Accountant had signed the Form-10DA on 30.06.2022 (within the prescribed time). The application under Section 119(2)(b) set out reasons including continuation of the COVID-19 pandemic and medical grounds, and averred that the delay was neither willful nor wanton. The impugned order rejected the application on the premise that the power to condone delay is to be exercised only in 'extraordinary circumstances'. The Court held that Section 119(2)(b) contains no such restrictive gloss and that the discretion must be exercised so as to avoid genuine hardship to the assessee. Having regard to the CA's timely signature, the subsequent filing with the return, the reasons furnished for delay, and the fact that the deduction under Section 80JJAA had been accepted by intimation under Section 143(1) (and later rectified), the Court found it appropriate to exercise the discretion to condone the delay to prevent genuine hardship to the petitioner.

Impugned order dated 05.12.2023 set aside; respondents directed to receive Form-10DA and process the petitioner's return for Assessment Year 2022-23 on that basis.

Final Conclusion: Writ petition allowed: delay in filing Form-10DA for Assessment Year 2022-23 condoned under Section 119(2)(b); respondents directed to accept the form and process the return accordingly; connected petitions closed without costs.

Addition under Section 68 (share capital/subscriber credit) - burden to establish identity, creditworthiness and genuineness of shareholders - evaluation of documentary evidence and summons compliance - speaking order and appellate scrutiny of factual findings - exercise of powers under Section 263 and directions for further inquiry

Addition under Section 68 (share capital/subscriber credit) - burden to establish identity, creditworthiness and genuineness of shareholders - evaluation of documentary evidence and summons compliance - speaking order and appellate scrutiny of factual findings - Legality of deletion of addition made under Section 68 by the assessing officer and whether the Tribunal/CIT(A) erred in accepting the assessee's paper evidence without proper enquiry. - HELD THAT: - The High Court examined whether the learned Tribunal incorrectly deleted the addition by relying solely on the assessee's paper submissions and without addressing the duty to verify identity, creditworthiness and genuineness of the share subscriptions. The Court noted that the Tribunal had reproduced the CIT(A)'s findings, recorded submissions of both parties and specifically took into account the documents filed in the paper book, including share applications and allotment records, bank statements, IT acknowledgments, audited financial statements and explanations regarding source of funds. The Tribunal also recorded that notices issued under Section 133(6) had been complied with by the share applicants who furnished evidence establishing their identity, creditworthiness and the genuineness of the transactions, and that the director had appeared and given a statement on oath. The Court further observed that the Principal CIT had earlier exercised powers under Section 263, set aside the assessment and issued directions which were scrupulously followed and factually considered by the CIT(A). On this factual foundation the Court concluded that the matter was essentially one of fact and that no substantial question of law arose from the Tribunal's order.

The deletion of the addition under Section 68 was upheld; the Tribunal's and CIT(A)'s factual findings were sustained and no substantial question of law was made out.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal's order affirming the CIT(A)'s deletion of the addition under Section 68 for assessment year 2009-10 is sustained as a factual conclusion and raises no substantial question of law.

Exemption under Section 53 of the Urban Planning and Development Act, 1973 - Eligibility based on registration under Sections 12A and 80G of the Income Tax Act, 1961 - Application of the Niyamavali, 2014 and consequential circulars - Exemption for religious and charitable institutions from development charges/process fee - Remand for fresh administrative decision

Exemption under Section 53 of the Urban Planning and Development Act, 1973 - Eligibility based on registration under Sections 12A and 80G of the Income Tax Act, 1961 - Application of the Niyamavali, 2014 and consequential circulars - Exemption for religious and charitable institutions from development charges/process fee - Claim of exemption from process fee/development charges by the petitioner society in view of Niyamavali, 2014 and registration under Sections 12A and 80G of the Income Tax Act, 1961 - HELD THAT: - The Court found that the petitioner is a charitable society which applied for and obtained sanction of the plan on 17.11.2014 and thereafter secured registration under Sections 12A and 80G effective from 01.04.2014 by order dated 29.03.2016. The State's Niyamavali, 2014 and the consequential circulars, together with antecedent government orders exempt religious and charitable institutions working for public charitable purposes from payment of development charges/process fee. Having regard to the retrospective effect of the income-tax registration to 01.04.2014 and the scheme of exemptions under the Niyamavali and government orders, the Court concluded that the petitioner is entitled to the concession from payment of process fee/development charges as contemplated by those instruments. The impugned demand notice and consequential order refusing exemption could not be sustained in the facts of the case and were set aside.

Petitioner's claim for exemption under the Niyamavali, 2014 read with registration under Sections 12A and 80G is accepted and the impugned demand and refusal order are set aside.

Remand for fresh administrative decision - Application of the Niyamavali, 2014 and consequential circulars - Procedure to be followed after setting aside the impugned orders - HELD THAT: - Although the impugned orders were set aside, the Court did not itself quantify or compute any exemption or adjustment. Instead, the matter was remitted to the Vice Chairman, Saharanpur Development Authority for fresh consideration. The Vice Chairman is directed to take a fresh decision within six weeks from production of certified copy of the order, specifically considering the Niyamavali, 2014 and the petitioner's registration under Sections 12A and 80G of the Income Tax Act, 1961. The remand is for a fresh administrative decision in the light of the legal conclusions reached by the Court.

Matter relegated to the Vice Chairman, SDA for fresh decision within six weeks, considering the Niyamavali, 2014 and the petitioner's income-tax registrations.

Final Conclusion: Writ petition allowed; impugned demand notice and consequential order set aside, and matter remitted to the Vice Chairman, Saharanpur Development Authority to decide afresh within six weeks in accordance with the Niyamavali, 2014 and the petitioner's registration under Sections 12A and 80G of the Income Tax Act, 1961.

Condonation of delay in filing return under Section 119(2)(b) of the Income-tax Act, 1961 - Power to condone delay for genuine hardship - Reliance on administrative instructions in Circular 9/2015 for verification of genuineness and hardship - Treatment of return as filed within time - Assessment contestable on merits but not on limitation after condonation

Condonation of delay in filing return under Section 119(2)(b) of the Income-tax Act, 1961 - Power to condone delay for genuine hardship - Reliance on administrative instructions in Circular 9/2015 for verification of genuineness and hardship - Treatment of return as filed within time - Assessment contestable on merits but not on limitation after condonation - Quashing of the impugned order refusing to condone 15 days' delay in filing the return for assessment year 2021-2022 and directing respondents to treat the return as filed within time. - HELD THAT: - The petitioner, a widow running a small proprietorship dealing in herbs, furnished reasons for a 15 day delay in filing the return for assessment year 2021 2022, including a computer crash and consequent recomputation. The Court noted that authorities possess power under Section 119(2)(b) to condone short delays where sufficient reasons and genuine hardship exist. The Court also relied on Circular 9/2015 which requires satisfaction as to correctness/genuineness of income/loss and genuine hardship before exercising condonation powers. Having found the delay adequately explained on the factual matrix, the Court quashed the impugned order dated 07.11.2023 and directed the respondents to treat the return as within time, while preserving the respondents' liberty to examine the assessment on merits but not to challenge it on limitation grounds.

Writ petition allowed; impugned order dated 07.11.2023 quashed and respondents directed to treat the return for assessment year 2021 2022 as filed within time; respondents may question assessment on merits but not on limitation.

Final Conclusion: The High Court allowed the writ petition, quashed the order refusing condonation of the 15 day delay and directed the revenue to treat the return for assessment year 2021 2022 as filed within time, leaving only merits of assessment open to scrutiny.

Exemption on encashment of earned leave under Section 10AA(ii) of the Income Tax Act - Power of the Executive to fix exemption limit - Mandamus against policy decision - Retrospective revision of tax exemption - Doctrine of separation of powers

Exemption on encashment of earned leave under Section 10AA(ii) of the Income Tax Act - Power of the Executive to fix exemption limit - Mandamus against policy decision - Doctrine of separation of powers - Whether the High Court can issue a writ of mandamus directing respondents to revise the upper limit for tax exemption on encashment of earned leave with retrospective effect for employees who retired before 01.04.2023. - HELD THAT: - The Court observed that the statutory scheme contemplates that the Central Government, by notification, shall specify the limit for exemption on encashment of earned leave and that issuance of such notification is an executive function. The last notification prior to 2023 was dated 31.05.2002 and the Government did not issue further notifications notwithstanding subsequent pay revisions; a new notification was issued effective 01.04.2023. Given the constitutional separation of powers and the policy nature of fixing exemption limits, the Court concluded that it is not competent to direct the Executive to revise the limit retrospectively for employees who retired before 01.04.2023. While expressing sympathy for the petitioners, the Court refrained from issuing mandamus and instead granted liberty to petitioners to press their representations before the Government for consideration. [Paras 4, 5, 7, 8]

Mandamus refused; court will not direct retrospective revision of the exemption limit fixed by executive notification; petitioners granted liberty to approach the Government.

Final Conclusion: Writ petitions disposed of: no writ of mandamus will be issued directing retrospective revision of the upper limit for exemption on earned leave encashment for employees retired before 01.04.2023; petitioners permitted to make representations to the Government.

Revised return under section 139(5) and its deemed acceptance - rectification under section 154 and deemed acceptance under section 154(8) - deduction/exemption under section 11 - misclassification of income (Profit & Gains of Business or Profession v. Income from Other Sources)

Revised return under section 139(5) and its deemed acceptance - deduction/exemption under section 11 - misclassification of income (Profit & Gains of Business or Profession v. Income from Other Sources) - Whether the document filed on 05/03/2018 should be treated as a revised return under section 139(5) (and hence deemed accepted) and whether exemption under section 11 must be allowed after correction of the head of income. - HELD THAT: - The Tribunal found that the filing of 05/03/2018, though described as a rectification application and erroneously referenced to section 139(4), was in substance a revised return correcting the head of income from "Profit & Gains of Business or Profession" to "Income from Other Sources" and was filed within the time permitted for a revised return. Given that no intimation under section 143(1) had been issued by CPC Bangalore within one year from the end of the financial year in which the revised return was filed, the revised return is to be deemed accepted by the Revenue. The Tribunal held that both lower authorities erred in ignoring the revised return and that, on the corrected return, the assessee had disclosed receipts and utilization particulars sufficient to claim exemption under section 11; consequently the exemption should be allowed as claimed in the return. [Paras 13, 16]

The filing of 05/03/2018 is to be treated as a revised return (section 139(5)) deemed accepted, and the exemption under section 11 is to be allowed as claimed.

Rectification under section 154 and deemed acceptance under section 154(8) - rejection of rectification by assessing officer for lack of particulars - Whether the rectification application under section 154 filed within 15 days of the intimation required action by CPC and whether the AO erred in rejecting the later rectification for lack of specified particulars. - HELD THAT: - The Tribunal observed that, even if the filing is viewed as a rectification under section 154, the rectification lodged on 05/03/2018 was made within 15 days of the intimation and, under section 154(8), CPC was obliged to pass an order within six months; failure to do so results in deemed acceptance. Further, the assessing officer's rejection of the subsequent rectification was unsustainable insofar as it relied on CPC having correctly processed the return while failing to take into account the unprocessed revised return, and the AO did not specify what particulars were missing. Thus the AO's reasoning for rejecting the rectification application was not appreciated and was set aside. [Paras 14, 15]

The rectification/revised filing of 05/03/2018 is deemed accepted by reason of CPC's non-action within the statutory period, and the AO's rejection for unspecified deficiencies is unsustainable.

Final Conclusion: The Tribunal allowed the appeal, holding that the filing dated 05/03/2018 must be treated as a timely revised return (or, alternatively, a rectification deemed accepted), that the exemption under section 11 is to be granted on the corrected return, and that the lower authorities erred in rejecting the claim.

Matching of income between return and tax-audit report - double taxation - adjustment during processing of return under section 143(1) - rectification of mistake procedure - addition to income on account of unexplained inconsistency

Matching of income between return and tax-audit report - double taxation - addition to income on account of unexplained inconsistency - Whether the addition of long term capital gain of Rs. 2,62,383/- sustained by the Commissioner (Appeals) should be upheld when the assessee declared LTCG of Rs. 2,53,211/- in the return of income - HELD THAT: - The Tribunal found that the assessee had declared long term capital gain of Rs. 2,53,211/- in the return and paid tax accordingly, while the tax-audit report recorded LTCG of Rs. 2,62,383/-, giving rise to an apparent inconsistency. The Commissioner (Appeals) confirmed the entire amount shown in the audit report, but the Tribunal observed that confirmation of the full audit-reported figure would result in double taxation of the LTCG already offered in the return. Both parties accepted that only the difference between the audit figure and the return figure was exigible. Applying the principle that an addition should be limited to the unexplained or undeclared portion where a part of the same income has been admitted in the return, the Tribunal held that only the differential amount of Rs. 9,172/- could be sustained as addition, and the balance Rs. 2,53,211/- declared in the return must be deleted from the addition confirmed by the Commissioner (Appeals). [Paras 5]

Addition sustained only to the extent of the differential amount of Rs. 9,172/-, and the addition of Rs. 2,53,211/- (being LTCG declared in the return) deleted.

Final Conclusion: The appeal is partly allowed: the Tribunal sustains addition only to the extent of the unexplained differential LTCG (Rs. 9,172/-) and grants relief by deleting the addition corresponding to the LTCG already declared in the return; otherwise the addition confirmed by the Commissioner (Appeals) is set aside.

Requirements of appellate order under section 250(6) - setting aside appellate order for lack of nexus with appellant's grounds - remand for fresh adjudication with opportunity of hearing - assessment proceedings under section 147/148 - addition under section 56(2)(vii)(b) as deemed income - treatment of unexplained bank deposits - reference to Valuation Officer / DVO report for fair market value

Requirements of appellate order under section 250(6) - setting aside appellate order for lack of nexus with appellant's grounds - Ld. CIT(A)'s order was not passed on the facts and grounds of the assessee's appeal and therefore is liable to be set aside. - HELD THAT: - The Tribunal found that the appellate order under challenge does not relate to the appellant's assessment: the facts, assessed income, assessment unit and grounds recorded in the CIT(A)'s order correspond to a different case/assessment year. Section 250(6) mandates that the Commissioner (Appeals) record the points for determination, the decision thereon and reasons. Because the points for determination in the order under challenge are different from those raised by the assessee, the order fails to meet the statutory requirement and cannot stand as the appellant's appellate order. [Paras 7]

Ld. CIT(A)'s order set aside for not adjudicating the appeal on the appellant's facts and grounds and for non-compliance with the mandate of section 250(6).

Remand for fresh adjudication with opportunity of hearing - reference to Valuation Officer / DVO report for fair market value - The matter is remitted to the Ld. CIT(A) for fresh adjudication on merits after giving the assessee reasonable opportunity and considering all materials including valuation report and bank evidence. - HELD THAT: - Having set aside the defective appellate order, the Tribunal directed remand to enable the CIT(A) to decide the appeal afresh in accordance with law. The remand requires the appellate authority to consider all materials already on record and any additional information or explanations it may call for, including the Valuation Officer's report that was not considered earlier and the explanations/documentary evidence regarding bank deposits. The Tribunal expressly refrained from expressing any opinion on the merits of those claims, leaving such determinations to the appellate authority upon fresh hearing. [Paras 7, 8]

Matter remitted to Ld. CIT(A) for fresh adjudication on merits after affording reasonable opportunity and considering all relevant material.

Assessment proceedings under section 147/148 - addition under section 56(2)(vii)(b) as deemed income - treatment of unexplained bank deposits - Other substantive grounds (additions under section 56(2)(vii)(b), consequential relief under section 49(4), unexplained bank deposits and interest under section 234B) were not decided and have become academic as consequence of the remand. - HELD THAT: - Because the appellate order was set aside and the matter remitted for fresh adjudication, the Tribunal did not adjudicate the merits of the additions treated as deemed income under section 56(2)(vii)(b), the claimed consequential relief under section 49(4), the disputed treatment of certain bank credits, or the levy of interest under section 234B. These grounds remain open for determination by the CIT(A) upon rehearing and therefore are academically covered by the remand. [Paras 9]

Substantive grounds not decided by the Tribunal and treated as academic pending fresh adjudication by the appellate authority.

Final Conclusion: The Tribunal set aside the Ld. CIT(A)'s order for non-compliance with the statutory requirements of section 250(6) and remitted the appeal to the Ld. CIT(A) for fresh adjudication after affording the assessee a reasonable opportunity to be heard; consequential substantive grounds were left open as academic.

Addition under section 69C as income from bogus purchases - gross profit embedded in bogus purchases - adoption of a gross profit percentage to determine taxable income - set-off of business loss against deemed income determined on account of bogus purchases - reassessment proceedings under section 147 read with section 144

Reassessment proceedings under section 147 read with section 144 - Validity of the appellate order's general challenge to the CIT(A)'s dismissal of the appeal. - HELD THAT: - The first ground was general in nature and the assessee failed to comply with notices at appellate stages and before the Tribunal. The Tribunal recorded that the written submission was on file but no appearance or compliance occurred; therefore the general challenge did not succeed on the merits and is dismissed. [Paras 8]

General ground of appeal dismissed.

Addition under section 69C as income from bogus purchases - gross profit embedded in bogus purchases - adoption of a gross profit percentage to determine taxable income - Whether the entire purchase amount of Rs. 980,000 booked against Ankita Enterprises could be added as income under section 69C, and if not, the correct measure of addition. - HELD THAT: - The Tribunal accepted that the assessing officer treated purchases as bogus on the basis of investigation and absence of corroborative primary evidence, but held that only the gross profit embedded in such purchases could be added rather than the entire purchase amount. The purchases dated late March 2010 were shown as outstanding at year-end and later paid; assessee claimed the items formed part of closing stock and purchases were at market rates. Due to non-production of detailed information and non-compliance by the assessee, the Tribunal adopted a conservative approach and, as a matter of practical computation, directed adoption of 12.5% of the alleged bogus purchases as the income to be added. The AO was thus directed to restrict the addition to 12.5% of the claimed purchases from Ankita Enterprises. [Paras 9, 10]

Addition confirmed only to the extent of 12.5% of the purchases of Rs. 980,000; remainder not added.

Set-off of business loss against deemed income determined on account of bogus purchases - Whether the assessee is entitled to set off the returned loss against income determined on account of bogus purchases for the relevant assessment year. - HELD THAT: - The Tribunal considered the assessee's claim in light of CBDT clarification regarding ambiguity as to set-off of losses against certain deemed incomes prior to amendment effective 1/4/2017. Observing that the impugned year is 2010-11 and that the circular clarified the availability of set-off in earlier years, the Tribunal held that the assessee is entitled to set off the returned loss against the income determined on account of the bogus purchases for the assessment year in question. [Paras 11]

Assessee entitled to set off the loss of Rs. 3,795,790 against the income determined on account of the bogus purchases for AY 2010 - 11.

Final Conclusion: Appeal partly allowed: the addition on account of purchases from Ankita Enterprises is restricted to 12.5% of the claimed amount, and the assessee is permitted to set off the returned loss for AY 2010 - 11 against the income so determined; other general challenge dismissed.

Deduction under section 43B - Misclassification in Income Tax Return - Reliance on Tax Audit Report (Form 3CD) - Bonafide non reporting by auditor - Correction of return versus revised return - Prevention of over assessment and refusal on technical grounds - Processing of return by CPC under section 143(1)

Deduction under section 43B - Misclassification in Income Tax Return - Reliance on Tax Audit Report (Form 3CD) - Bonafide non reporting by auditor - Processing of return by CPC under section 143(1) - Prevention of over assessment and refusal on technical grounds - Whether the deduction claimed as gratuity under section 43B could be denied by CPC/AO and sustained by the CIT(A) solely because it was misclassified in the ITR and omitted from the tax audit report (Form 3CD). - HELD THAT: - The Tribunal examined that the disallowance arose from (a) incorrect classification of the gratuity claim in the ITR and (b) absence of reporting in the original tax audit report, leading CPC while processing the return under section 143(1) to add back the amount. The assessee subsequently filed a revised tax audit report and revised ITR and sought rectification, which CPC did not accept. The Tribunal held that where the claim is genuine and supporting material is on record, inadvertent misclassification in the ITR and bonafide non reporting in the audit report cannot justify denial of a legitimate deduction. Reliance was placed on the distinction between correction and revision of return and on authorities and a CBDT circular emphasising that departmental officers should not take advantage of technical mistakes and must assist taxpayers to secure reliefs to which they are clearly entitled. Applying these principles, the Tribunal concluded that the deduction under section 43B was rightly claimed on the merits and ought to have been allowed notwithstanding the technical misclassification and initial Form 3CD omission; therefore the addition sustained by the CIT(A) was set aside. [Paras 11, 15]

The disallowance of the gratuity claimed under section 43B, made on the basis of misclassification in the ITR and omission from the tax audit report, is untenable and is deleted; the assessee's claim is allowed.

Final Conclusion: The appeal is allowed: the addition of the gratuity under section 43B made by CPC and confirmed by the CIT(A) on account of incorrect classification in the ITR and non reporting in Form 3CD is set aside and the deduction is to be allowed.

Filing of objections before the Dispute Resolution Panel under Section 144C(2) - Obligation of Assessing Officer where no valid objections are received under Section 144C(3) and (4) - Effect of delayed or invalid intimation of objections on jurisdiction to pass final assessment - Power of the Dispute Resolution Panel to confirm, reduce or enhance variations under Section 144C(8) - Requirement of Dispute Resolution Panel directions for Assessing Officer to pass assessment under Section 144C(13)

Filing of objections before the Dispute Resolution Panel under Section 144C(2) - Effect of delayed or invalid intimation of objections on jurisdiction to pass final assessment - Validity of the final assessment order passed by the Assessing Officer under Section 147 read with Section 144C(13) where objections before the DRP were held by the DRP to be time-barred and the AO passed the final order after the alleged delay - HELD THAT: - The Tribunal examined Section 144C(2)-(4) and noted that an eligible assessee must file objections with the Dispute Resolution Panel within 30 days of receipt of the draft order and must also intimate the Assessing Officer. If no objections are received within that period the AO may complete the assessment under sub-section (3). The DRP in this case concluded that the assessee's objections were not validly filed within the prescribed time and accordingly did not issue directions for the guidance of the AO. The DRP expressly observed that the AO should have passed the final assessment order in accordance with the statutory timelines given the lapse in intimation and recorded that it would not issue directions to enable completion of assessment. The Tribunal held that because the DRP did not issue directions under Section 144C(5) and (8) but merely rejected the objections as barred by limitation, the Assessing Officer's subsequent final order under Section 144C(13) was not a valid exercise of power conferred by those provisions. The Tribunal concluded that the AO's order was therefore devoid of jurisdiction, since the statutory scheme contemplates either valid objections leading to DRP directions or the AO completing the assessment within the specific timelines where no valid objections subsist; the course adopted did not conform to that scheme and the AO failed to act within the mandated timelines.

The final assessment order passed by the Assessing Officer under Section 144C(13) is devoid of jurisdiction and is set aside.

Final Conclusion: The additional ground challenging limitation is sustained; the Assessing Officer's final assessment order is held to be without jurisdiction and the appeals are allowed.

Condonation of delay - Deduction under section 80P (co-operative societies) - Classification of interest income as business income or income from other sources - Definition of "co-operative society" for entitlement to section 80P - Remand for fresh adjudication - entitlement to claim cost of funds on interest income

Condonation of delay - Delay in filing the appeal before the Tribunal - HELD THAT: - The Tribunal considered the affidavit explaining the delay and, applying the principles in Collector, Land Acquisition v. Mst. Katiji (as cited), found sufficient reasons for the delay of 158 days. Having heard both parties, the Tribunal exercised its discretion to condone the delay and admit the appeal for adjudication on merits. [Paras 2, 3]

Delay of 158 days in filing the appeal is condoned and the appeal is admitted.

Deduction under section 80P (co-operative societies) - Definition of "co-operative society" for entitlement to section 80P - Classification of interest income as business income or income from other sources - entitlement to claim cost of funds on interest income - Remand for fresh adjudication - Whether the disallowance of deduction claimed under section 80P and related classification of interest income should be finally adjudicated by the Tribunal - HELD THAT: - The Tribunal noted that the assessing officer and CIT(A) disallowed the deduction under chapter VIA on the ground that the assessee is registered under the Karnataka Souharda Sahakari Act, 1997 and not under the Karnataka Co-operative Societies Act, 1959. The assessee did not appear before the CIT(A) and the appeal before CIT(A) was dismissed for non-prosecution. Having considered the rival submissions and the array of recent decisions and contentions placed before it, the Tribunal did not decide the substantive merits on entitlement to deduction, allocation of interest income, or related issues (including cost of funds). Instead, in the interest of justice, the Tribunal remitted the matter to the CIT(Appeals) for fresh consideration and decision according to law after affording the assessee a reasonable opportunity of being heard. The Tribunal also directed the assessee to update its correct email-id and phone number on the departmental portal and warned against seeking unnecessary adjournments. [Paras 4, 5, 6, 9]

Matter remitted to the CIT(A) for fresh adjudication on merits (including entitlement under section 80P and related issues); directions issued to the assessee regarding contact details and avoidance of unnecessary adjournments.

Statistical allowance of appeal - Disposition of the appeal pending remand - HELD THAT: - Because the substantive issues were remitted to the CIT(A) for fresh consideration, the Tribunal recorded the appeal as allowed for statistical purposes without pronouncing on the merits. [Paras 10]

Appeal is allowed for statistical purposes.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, remitted the substantive disputes concerning entitlement to deduction under section 80P (and related classification of interest income and cost of funds issues) to the CIT(A) for fresh consideration after affording the assessee an opportunity of hearing, directed the assessee to update contact details and avoid unnecessary adjournments, and allowed the appeal for statistical purposes.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of the revenue - requirement of inquiries and verification before invoking section 263 - limited scope of reassessment under section 148 - exemption under section 54 - Explanation 2 to section 263 (clause (a) and (b)) - two views doctrine - permissible alternative view of Assessing Officer

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of the revenue - requirement of inquiries and verification before invoking section 263 - limited scope of reassessment under section 148 - exemption under section 54 - two views doctrine - permissible alternative view of Assessing Officer - Validity of the Principal Commissioner's order under section 263 setting aside the assessment where AO had examined the claim for exemption under section 54 in reassessment proceedings under section 147/148. - HELD THAT: - The Tribunal held that the prerequisite for exercise of revisional powers under section 263 is satisfaction, recorded in writing, of the twin conditions that the AO's order is (i) erroneous and (ii) prejudicial to the interests of the revenue. Explanation 2(a)-(b) to section 263 applies only if the AO has failed to make inquiries or verification which a reasonable and prudent officer would have carried out or has allowed relief without inquiry. The facts show the case was reopened under section 148 to verify source of investment, the AO issued queries, obtained information under section 133(6), considered the assessee's replies and ultimately allowed the section 54 claim after applying his mind. The Principal Commissioner did not point to any specific omission or legal unsustainability in the AO's view; rather he sought further verification and adopted a contrary view. Where the AO has taken a possible view after enquiry and material is on record, mere difference of opinion of the Principal Commissioner or a desire for deeper investigation does not satisfy Explanation 2. The Tribunal applied the principle that section 263 is not to be used to substitute the Commissioner's judgment for a permissible view taken by the AO and that reopening for a limited purpose does not permit widening of scope indirectly under section 263. Consequently, the Tribunal found that neither clause (a) nor (b) of Explanation 2 was attracted and the Principal Commissioner's order amounted to impermissible change of opinion. [Paras 12, 13, 14, 15, 17]

Order of the Principal Commissioner under section 263 is set aside and the assessment order dated 26.03.2022 passed by the AO is restored.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that the Principal Commissioner had no valid basis to invoke section 263 because the AO had made the requisite enquiries, taken a plausible view in allowing the section 54 exemption, and the conditions in Explanation 2 to section 263 were not satisfied; the assessment order dated 26.03.2022 is restored.

Recording of satisfaction note under section 153C - Assumption of jurisdiction under section 153C/153A in case of search - Requirement of incriminating material for completed/unabated assessment years - Recording of satisfaction by the Assessing Officer of the searched person and independent satisfaction by the AO of the other person - Addition on account of unexplained capital contributions - Validity of assessment order in absence of computer-generated Document Identification Number (DIN)

Recording of satisfaction note under section 153C - Recording of satisfaction by the Assessing Officer of the searched person and independent satisfaction by the AO of the other person - Validity of the satisfaction note and consequent assumption of jurisdiction under section 153C - HELD THAT: - The Tribunal examined the satisfaction note dated 26.12.2018 and held it deficient: it did not mention the date of search, did not describe nature or identify seized documents, did not refer to assessment years and did not show independent application of mind by the AO. Reliance was placed on the CBDT Circular No.24/2015 and precedents requiring a paper satisfaction note prepared with specific particulars and, where necessary, separate satisfactions even if the same AO is involved. For these defects the assumption of jurisdiction under section 153C in respect of the Assessment Year 2016-17 was held invalid, void ab initio and bad in law. [Paras 9, 11]

Assumption of jurisdiction under section 153C quashed for want of valid satisfaction note.

Requirement of incriminating material for completed/unabated assessment years - Assumption of jurisdiction under section 153C/153A in case of search - Whether additions could be made in respect of a completed/unabated assessment year in absence of incriminating material unearthed during search - HELD THAT: - Applying the Supreme Court's reasoning in Abhisar Buildwell and the line of High Court authorities cited therein, the Tribunal held that AY 2016-17 was a completed and unabated year and that for such years additions can be made under search-triggered provisions only if there is nexus with incriminating material seized or requisitioned during the search. In the present case no specific seized incriminating material was identified or linked to the impugned additions; the additions related to capital contributions made in an earlier year. Consequently the addition for the completed/unabated year could not be sustained. [Paras 12, 13, 14]

Addition for AY 2016-17 deleted as no incriminating material linked to the search justified reopening of the completed assessment.

Addition on account of unexplained capital contributions - Merits of addition made under explanation of capital contributions - HELD THAT: - Although merits were rendered largely academic after quashing the assessment on the legal issues, the Tribunal noted the assessing officer's own findings that the alleged capital contribution of the assessee was received in the preceding year (FY 2014-15) and that no fresh funds were received in the year under appeal. On that factual matrix and in view of the legal conclusions reached, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition made under the assessment order. [Paras 14]

Addition under the impugned assessment order is not sustainable and requires no interference.

Validity of assessment order in absence of computer-generated Document Identification Number (DIN) - Challenge to assessment order for lack of DIN - HELD THAT: - The assessee raised lack of DIN in the assessment order but during hearing the ground was not pressed in view of the interim position in Brandix Mauritius Holdings Ltd. The Tribunal recorded that the ground was not pressed and treated it accordingly. [Paras 17, 18]

Ground challenging assessment for absence of DIN dismissed as not pressed.

Final Conclusion: The revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s quashing of the assessment under section 153C for AY 2016-17 for want of a valid satisfaction note and, applying the settled law on completed/unabated years, confirms deletion of the additions; the assessee's cross-objection is partly allowed.

Provisional assessment - date of service of finalization of provisional assessment - computation of period of limitation for refund - refund claim under section 27 - adjustment of duty after final assessment - communication/notice of assessment - limitation as a condition precedent to refund

Provisional assessment - date of service of finalization of provisional assessment - computation of period of limitation for refund - refund claim under section 27 - adjustment of duty after final assessment - Whether the relevant date for computing the one year limitation for filing a refund claim arising from provisional assessment is the date of adjustment of duty after final assessment as contemplated by section 27(1B)(c) or the date of service/communication of the order finalizing the provisional assessment. - HELD THAT: - The Court examined sections 18 and 27 and the CESTAT's reliance on precedents holding that the date on which the finalization of the provisional assessment is served/communicated to the assessee is the operative date for remedial action. The Court noted that an entitlement to refund arises once provisional assessment is finalized, but the one year period under section 27 must be computed having regard to the date from which the assessee is put on notice of the final assessment. The judgment reasons that mere availability of the final assessment on the departmental portal does not amount to communication to the assessee; actual service/communication is a precondition for computing limitation under section 27(1B)(c). Applying this principle to the facts, the Court accepted the tribunal's approach of treating the date of service/communication of finalization as the relevant date for limitation. [Paras 6, 9, 10]

The date of service/communication of finalization of the provisional assessment is the relevant date for computing the one year limitation under section 27(1B)(c); the tribunal's approach in this regard is upheld.

Communication/notice of assessment - limitation as a condition precedent to refund - refund claim under section 27 - Whether upload of the final assessment on the departmental ICEGATE portal constitutes sufficient compliance with communication to the assessee for the purpose of triggering the one year limitation for refund. - HELD THAT: - The Court considered the department's submission that the assessee could have ascertained the final assessment from the ICEGATE portal. It observed that mere uploading to a portal does not, without more, amount to communication to the assessee. The Court relied on the adjudicating authority's finding that the assessee had not received acknowledgement of an earlier letter seeking finalization and that the assessee only became aware upon formal communication. The Court held that actual communication/service is the sine qua non for commencement of the limitation period under section 27(1B)(c). [Paras 8, 9]

Uploading the final assessment on the departmental portal, without effective communication to the assessee, does not commence the one year limitation period; the tribunal rightly treated communication/service as essential.

Final Conclusion: The High Court found no infirmity in the tribunal's conclusion that the date of service/communication of the finalization of provisional assessment is the relevant date for computing the one year limitation under section 27(1B)(c), and that mere uploading on the departmental portal does not suffice as communication; the revenue appeal is dismissed.

Refund under Notification No. 102/2007-Customs - identity and correlation between imported goods and goods sold domestically - classification under HSN CTH 0802090 - fitness for human consumption as per Port Health Officer report - relevance of end-use and VAT registration to refund claim

Classification under HSN CTH 0802090 - identity and correlation between imported goods and goods sold domestically - Imported "Betel Nut Industrial Grade" (areca/ betel nut) is the same product as "Supari" (edible areca nut) for the purposes of claiming refund under the notification - HELD THAT: - The Tribunal and Commissioner (Appeals) examined tariff classification, HSN explanatory notes and external authoritative references and concluded that areca nut, betel nut and supari denote the same product. The Commissioner (Appeals) relied on the classification under Chapter 8 (CTH 0802090), HSN notes indicating inclusion of areca (betel) nuts as items used chiefly as a masticator, and DGFT meeting minutes treating areca nut and supari as identical. On the material before them the imported goods were classified as edible goods not suitable for immediate consumption and could be processed for edible use. The High Court found no infirmity in these findings and accepted that there is no distinction for the purpose of the refund claim between the imported description and the goods sold domestically.

Imported "Betel Nut Industrial Grade" and domestic "Supari" are the same product for the purpose of entitlement to refund under the notification.

Refund under Notification No. 102/2007-Customs - fitness for human consumption as per Port Health Officer report - relevance of end-use and VAT registration to refund claim - Adjudicating authority's denial of refund based on PHO finding of not fit for human consumption, VAT registration of importer and alleged lack of invoice correlation was not a valid basis to refuse refund - HELD THAT: - The Commissioner (Appeals) and the Tribunal focussed on whether the imported goods on which Special Additional Duty was paid were subsequently sold on payment of appropriate VAT/CST or otherwise; those critical facts were not refuted by the adjudicating authority. The Commissioner (Appeals) held that objections regarding the name, nature or status of the importer, end-use of the goods, or VAT registration were extraneous to the statutory test for granting refund under the notification. The Tribunal concurred in upholding the refund where correlation between import and sale was not contested. The High Court agreed with the concurrent authorities that the adjudicating authority's reasons were not tenable and that the appeal by revenue lacked merit.

Denial of refund by the adjudicating authority on the cited grounds was unsustainable; the Tribunal and Commissioner (Appeals) rightly allowed the refund and the High Court found no error in upholding those orders.

Final Conclusion: The High Court dismissed the revenue's appeal, holding that the imported areca/betel nut and domestic supari are the same for refund purposes and that the adjudicating authority's grounds for denying refund were extraneous; the CESTAT's affirmance of the Commissioner (Appeals) order stands and no question of law is made out.

Refund of customs duty - effect of pending appeal on grant of refund - CBEC Circular No. 572/9/2001-CX dated 22.2.2001 - Tribunal's power to confirm refund pursuant to earlier adjudicatory order

Effect of pending appeal on grant of refund - refund of customs duty - Tribunal's power to confirm refund pursuant to earlier adjudicatory order - Whether the Tribunal could confirm the grant of refund despite an appeal being pending against the earlier Tribunal order - HELD THAT: - The High Court held that the Tribunal was entitled to confirm the refund granted by the Commissioner (Appeals) even though an appeal against the earlier Tribunal order was pending. The court observed that the revenue was bound by the CBEC Circular dated 22.2.2001 which mandates that where a refund arises out of an adjudicatory order of the Commissioner or the Tribunal, the refund must be granted after three months from the date of the order unless a stay is obtained from a higher forum. In light of this binding administrative circular, the pendency of an appeal did not operate as an automatic bar to the grant of refund where no stay had been directed by a higher authority. [Paras 3, 4]

Tribunal validly confirmed the refund; pendency of appeal did not preclude grant of refund in absence of a stay

CBEC Circular No. 572/9/2001-CX dated 22.2.2001 - Tribunal's reliance on precedent/orders - refund of customs duty - Whether the Tribunal erred by relying on its earlier order and the CBEC circular without re examining the merits before directing the refund - HELD THAT: - The court found no error in the Tribunal's approach. The Tribunal expressly relied upon CBEC Circular No. 572/9/2001-CX dated 22.2.2001, which prescribes the administrative position that refunds arising from adjudicatory orders must be paid unless stayed. Given the circular's clear mandate and the absence of any stay from a higher forum, the Tribunal was justified in directing the refund rather than re opening the merits of the underlying adjudication at that stage. The High Court concluded that the revenue's contention that merits ought to have been re examined was untenable in view of the circular and the factual position that no stay had been obtained. [Paras 4, 5]

No error in Tribunal's reliance on the CBEC circular and its earlier order; refusal of revenue's challenge upheld

Final Conclusion: The appeal is dismissed; the Tribunal's order confirming the refund is upheld as consistent with CBEC Circular No. 572/9/2001-CX dated 22.2.2001 and the absence of any stay on the earlier order.

Monetary limit for filing appeals - Instructions issued under Section 131BA - Binding nature of Board's circulars - Reduction of Government litigation - Low tax effect - dismissal of appeals below threshold

Monetary limit for filing appeals - Instructions issued under Section 131BA - Binding nature of Board's circulars - Low tax effect - dismissal of appeals below threshold - Maintainability of the Revenue's appeal in view of CBIC instructions dated 02.11.2023 prescribing monetary limits for filing appeals before the CESTAT. - HELD THAT: - The Tribunal examined the CBIC instruction dated 02.11.2023 which, issued under the Board's power in Section 131BA of the Customs Act, prescribes that appeals shall not be filed before the CESTAT where the duty involved is below Rs.50 lakhs and directs withdrawal of pending appeals below that limit. The appeal before the Tribunal involves duty below the prescribed threshold and does not fall within any of the enumerated exceptions. The Tribunal observed consistent judicial treatment upholding the binding character of Board instructions directing reduction of government litigation and dismissal/withdrawal of departmental appeals where the tax effect is below the stipulated monetary limit. In light of the circular's statutory provenance and the consistent precedents applying its mandate, the Tribunal concluded that the present appeal is not maintainable and should be dismissed, while leaving open any question of law for future consideration. [Paras 6, 7, 8, 10]

The appeal is not maintainable under the CBIC instructions dated 02.11.2023 and is dismissed on the ground of low tax effect.

Final Conclusion: Appeal dismissed as not maintainable under the CBIC instruction dated 02.11.2023 prescribing a Rs.50 lakh threshold for filing appeals before the CESTAT; question of law left open.

Reduction of Government Litigation and Monetary Threshold for Filing Appeals before Tribunals - Binding Nature of Board's Instructions under Section 131BA of the Customs Act - Withdrawal of Pending Appeals Below Prescribed Monetary Limit - Exceptions to Monetary Limits for Filing Appeals

Reduction of Government Litigation and Monetary Threshold for Filing Appeals before Tribunals - Binding Nature of Board's Instructions under Section 131BA of the Customs Act - Withdrawal of Pending Appeals Below Prescribed Monetary Limit - Exceptions to Monetary Limits for Filing Appeals - Maintainability of the Department's appeals in view of CBIC instructions dated 02.11.2023 prescribing a monetary limit of Rs.50 lakhs for filing appeals before the CESTAT. - HELD THAT: - The Tribunal held that the CBIC circular dated 02.11.2023 prescribes that no appeal shall be filed before the CESTAT where the duty involved is less than Rs.50 lakhs and further directs withdrawal of pending appeals below that threshold. The circular was issued under the Board's power in Section 131BA of the Customs Act and, in the Tribunal's view, is binding on the department. The appeals on record fall within the ambit of the circular since the duty involved in each appeal is below the prescribed limit. The Tribunal relied upon consistent decisions of appellate fora and High Courts which have dismissed departmental appeals falling below the prescribed monetary thresholds and observed that the Board's instructions are intended to reduce litigation and must be followed by the department. Applying these principles, the Tribunal concluded that the present appeals are not maintainable and directed dismissal, while leaving any question of law open. [Paras 6, 7, 8, 10]

All seven departmental appeals are dismissed as not maintainable under the CBIC instructions dated 02.11.2023 prescribing the Rs.50 lakh threshold for appeals before the CESTAT; question of law left open.

Final Conclusion: The appeals filed by the Revenue were dismissed as not maintainable because each involves duty below the Rs.50 lakh threshold set by the CBIC instruction dated 02.11.2023 issued under Section 131BA; the Tribunal left any question of law open.

Inclusion of free materials supplied by the service recipient in taxable value - composition scheme for works contracts - valuation under Rule 2A and works contract valuation principles - extended period of limitation and suppression of facts (wilful suppression) - penalty linked to extended period - reliance on Form 26AS / ST-3 / balance sheet without further investigation - taxability of non-commercial construction (educational institutions / charitable trusts) - requirement of specificity and proper investigation in a show cause notice

Inclusion of free materials supplied by the service recipient in taxable value - composition scheme for works contracts - Whether value of materials supplied free of cost by the service recipient must be included in taxable value so as to deny the composition scheme. - HELD THAT: - The Tribunal applied the ratio of the Hon'ble Apex Court in CST vs. Bhayana Builders and held that value which is not part of the contract between the service provider and the service recipient is irrelevant for determination of value of taxable services. The adjudicating authority's disallowance of concessional composition rate on the ground that free supplies were not added was therefore unsustainable. The Tribunal noted that where service tax on free materials (FOC) had already been paid with interest before issuance of show cause notice, and where the Supreme Court's reasoning excludes inclusion of recipient-supplied materials, the demand confirming denial of composition on that basis could not be sustained. [Paras 6, 7]

FOC supplied by the service recipient need not be included in taxable value for denying the composition scheme; the finding denying composition is set aside.

Reliance on Form 26AS / ST-3 / balance sheet without further investigation - requirement of specificity and proper investigation in a show cause notice - Whether a demand raised merely by comparing figures from Form 26AS, balance sheet and ST-3 returns, without investigating reasons for differences, is sustainable. - HELD THAT: - The Tribunal held that raising demand solely on the basis of differences between returns and third party data (Form 26AS, balance sheet, ST-3) without examining reasons for the discrepancy, exemptions, abatements or whether amounts reflected constituted consideration for services is impermissible. The show cause notice lacked necessary investigation and material particulars; the Tribunal relied on precedents that a vague or unintelligible show cause notice founded on audit alone is inadequate to sustain demand. [Paras 7, 8]

Demand founded on unexamined differences in Form 26AS/ST-3/balance sheet is unsustainable; impugned order set aside on this ground.

Taxability of non-commercial construction (educational institutions / charitable trusts) - Whether construction of buildings for schools/foundations (charitable/educational institutions) attracts service tax as commercial construction. - HELD THAT: - The Tribunal found that construction for schools or foundations set up under trusts and whose income is exempt under the Income Tax Act constitutes non-commercial construction and is not taxable as commercial activity. The adjudicating authority failed to consider the documentary evidence furnished by the appellant regarding the charitable/educational nature of the beneficiaries; its contrary conclusion rested on conjecture and was held unsustainable. [Paras 9]

Construction carried out for bona fide educational/charitable institutions is non commercial and not taxable; related findings in the impugned order are set aside.

Extended period of limitation and suppression of facts (wilful suppression) - penalty linked to extended period - Whether the extended period of limitation could be invoked and penalty imposed where the show cause notice was based on audit, allegations of non registration/non filing were found false, and wilful suppression was not established. - HELD THAT: - The Tribunal applied settled jurisprudence that invocation of the extended period requires proof of deliberate suppression, fraud, collusion or willful misstatement; mere differences revealed by audit or omissions not shown to be deliberate cannot sustain reopening. The adjudicating authority itself recorded that allegations of non registration and non filing were incorrect and that the appellant had been registered and filing returns. Because the show cause notice was founded on audit without proof of wilful suppression, extended period could not be invoked. Consequentially, since the ingredients for penalty under the relevant penal provision are co extensive with those for invoking the extended period, the penalty under Section 78 could not be sustained. The Tribunal also noted binding authority that where extended period is not invokable, demand for the normal period relating to the same transactions cannot be confirmed for the period in issue (pre-amendment). [Paras 10, 11, 12, 13]

Extended period invocation and penalty under Section 78 are not sustainable; demand (to the extent based on extended period) and penalty are set aside and cannot be confirmed for the same transactions for the period in dispute.

Requirement of specificity and proper investigation in a show cause notice - Whether the show cause notice, being vague and issued without proper investigation, invalidated the subsequent demand. - HELD THAT: - Relying on authority that a show cause notice is foundational and must contain specific, intelligible allegations to afford a fair opportunity to meet the case, the Tribunal found that the notice in this case lacked material particulars and was issued without adequate investigation. Certain allegations in the notice (e.g., late registration, non filing of returns) were found to be false by the adjudicating authority itself, reinforcing that the notice was deficient and the demand thus unsustainable. [Paras 6, 8]

Show cause notice was deficient and issued without proper investigation; impugned order based on that notice is unsustainable.

Final Conclusion: The appeal is allowed. The Tribunal set aside the impugned order, holding that (i) recipient supplied free materials need not be included in taxable value for denying the composition scheme; (ii) demands based solely on unexplored differences in Form 26AS/ST 3/balance sheet and on an audit based vague show cause notice are unsustainable; (iii) constructions for bona fide educational/charitable institutions are non commercial and not taxable; and (iv) extended period and associated penalty could not be invoked. Consequential relief, if any, to follow in accordance with law.

Business Auxiliary Services - Goods Transport Agency service - consideration in taxable service - absence of contract and consideration

Business Auxiliary Services - consideration in taxable service - absence of contract and consideration - Whether the appellant was liable to service tax under Business Auxiliary Services for the margin retained on freight paid to hired vehicle owners - HELD THAT: - The Tribunal found that the appellant had hired vehicles from vehicle owners to fulfil its contractual obligation to provide GTA services to its client and that the hired vehicles were used to render GTA to the client. There was no agreement or contract shown between the appellant and the vehicle owners for the provision of any auxiliary service by the vehicle owners to the appellant, nor was there any evidence of a flow of consideration from those vehicle owners to the appellant. The adjudicating authority's conclusion that the appellant had promoted the transport business of the vehicle owners was unsupported by evidence and inconsistent with findings that the appellant had arranged vehicles and received freight for transporting goods for the client. Because a taxable BAS requires that a service be provided for consideration, and there was no contract or consideration from the transporters/vehicle owners to the appellant for promotion or marketing services, the allegation that the retained margin constituted consideration for BAS was unsustainable. [Paras 7, 8, 9, 10, 11]

The demand for service tax under Business Auxiliary Services on the margin retained by the appellant is rejected; the impugned order is set aside.

Final Conclusion: Appeal allowed; the Tribunal sets aside the impugned order and rejects the imposition of service tax under Business Auxiliary Services on the appellant's retained margin for hired vehicles, with consequential benefits as per law.

CENVAT credit - export of service - Business Auxiliary Service - refund of CENVAT credit under Notification No. 5/2006 - benefit of the service accruing outside India / meaning of 'used outside India'

CENVAT credit - export of service - Business Auxiliary Service - benefit of the service accruing outside India / meaning of 'used outside India' - refund of CENVAT credit under Notification No. 5/2006 - Denial of CENVAT credit on the ground that the services rendered were not export of service and were used in India. - HELD THAT: - The Tribunal examined the service contract ('Buying Agency Agreement') and concluded that the appellant provided services to a foreign principal (service recipient located outside India) in terms of the agreement and received consideration in foreign currency. The appellant's functions were to identify and deal with suppliers within India to procure merchandise for the foreign principal and to perform quality control, delivery coordination and related tasks on behalf of the principal; the agent was not marketing the product to Indian consumers for its own account. Applying the principle that for Category III services the relevant factor is the location of the service receiver and that export can be sustained so long as the benefit of the service accrues outside India, and having regard to CBEC Circular No. 111/05/2009 which explains that 'used outside India' means the benefit of the service should accrue outside India, the Tribunal held that the lower authorities misappreciated the facts and erred in treating the services as Business Auxiliary Services used in India. Reliance on precedents dealing with similar buying/agency arrangements supported the conclusion that the services were export of service and that denial of refund of CENVAT credit under Notification No.5/2006 was unsustainable. For these reasons the impugned order was set aside and the appeals allowed. [Paras 3, 7, 9, 10]

The denial of CENVAT credit was unsustainable; the impugned order is set aside and the appeals are allowed.

Final Conclusion: The Tribunal set aside the impugned order denying refund of CENVAT credit, holding that the appellant's services to a foreign principal qualified as export of service (benefit accruing outside India) and allowed the appeals with consequential reliefs as per law.

Sovereign function - Renting of Immovable Property Services - taxability of services by municipal/local authorities - Mega Exemption Notification - reverse charge mechanism - limitation/extended period - remand for fresh consideration and quantification

Sovereign function - Renting of Immovable Property Services - taxability of services by municipal/local authorities - Whether demands of service tax on various receipts of the municipal appellants, including Renting of Immovable Property Services, are sustainable or require fresh adjudication - HELD THAT: - The Tribunal noted conflicting High Court decisions and recent remand orders and held that the question whether services rendered by the municipal appellants amount to discharge of a sovereign function (and therefore fall outside the levy) requires fresh examination. Following precedents which remanded similar matters for reconsideration, the Tribunal set aside the impugned orders and remanded the matters to the adjudicating authority for fresh adjudication on merits after giving the appellants an opportunity to furnish evidence and for personal hearing. The Tribunal expressly left open all issues relating to taxability, observing that if the activities are in discharge of sovereign functions entrusted by the State enactment and the Constitution (Articles 243W/243X and relevant municipal statute), the levy cannot be attracted. [Paras 7]

Impugned orders set aside and matter remanded to adjudicating authority to decide afresh whether the municipal services are taxable or constitute sovereign functions

Limitation/extended period - Consideration of limitation (extended period) in relation to demands raised against the municipal appellants - HELD THAT: - The Tribunal observed that the appellants are local authorities and a wing of the State and recorded that no positive act of suppression with intent to evade tax is alleged in the show cause notices. In view of the remand on merits, the adjudicating authority was directed to examine the question of limitation/extended period and record clear findings after affording opportunity to the appellants to place material in support. [Paras 8]

Limitation issue remanded to the adjudicating authority for fresh consideration with opportunity to the appellants

Reverse charge mechanism - Liability, if any, under the reverse charge mechanism in respect of part of the demand - HELD THAT: - The Tribunal recorded the appellants' contention that they are not liable under the reverse charge mechanism and left the issue open for adjudication. The adjudicating authority is directed on remand to consider the applicability of reverse charge after allowing the appellants to furnish evidence and be heard.

Reverse charge contention left open and remanded for fresh adjudication

Remand for fresh consideration and quantification - Quantification of demand and ancillary issues if liability is sustained - HELD THAT: - The Tribunal held that, should the adjudicating authority conclude that any part of the demand is sustainable, the authority must quantify the demand after examining actual amounts received in respect of each service. All ancillary issues relating to computation and any reduction or dropping of demands were left open for the adjudicating authority to consider on remand. [Paras 9]

Adjudicating authority to quantify any sustained demand on fresh consideration

Final Conclusion: Impugned orders set aside; both appeals allowed by way of remand to the adjudicating authority to re-examine taxability (including whether services are sovereign functions), limitation, reverse charge and quantification after giving the appellants an opportunity to produce evidence and for personal hearing; all issues left open.

Construction of Residential Complex Service - Works Contract Service - Show Cause Notice - departure from Show Cause Notice not permissible - no levy of service tax under Works Contract Service prior to 01.06.2007 - composition scheme for works contract - CENVAT credit on input services

Construction of Residential Complex Service - Works Contract Service - Macro Marble Projects Ltd. affirmed by Supreme Court - Demand under Construction of Residential Complex Service in respect of the Wenlock Woods project is not sustainable. - HELD THAT: - The Tribunal examined the development agreement and construction clauses and accepted that the contracts were joint development/works-contract in nature involving supply of materials and construction activity. Reliance was placed on the coordinate Bench decision in Macro Marble Projects Ltd., affirmed by the Supreme Court, which led the Tribunal to hold that the construction in question could not be taxed as separate individual units under CRCS. Consequently, the demand framed under CRCS for the Wanlock Woods project was held unsustainable. [Paras 9]

The demand under CRCS for the Wenlock Woods project is set aside.

Show Cause Notice - departure from Show Cause Notice not permissible - Works Contract Service - no levy of service tax under Works Contract Service prior to 01.06.2007 - Larsen & Toubro Ltd. (Supreme Court) - Confirmation of demand under Works Contract Service where the Show Cause Notice proposed levy under CRCS is not sustainable; levy under WCS prior to 01.06.2007 cannot be upheld. - HELD THAT: - The Tribunal found that the Show Cause Notice had proposed demand only under CRCS. The adjudicating authority confirmed demand on the alternative ground of Works Contract Service, which the Tribunal held to be impermissible because it travels beyond the grounds proposed in the SCN and denies the assessee opportunity to meet that case. Further, having regard to the Supreme Court decision in Larsen & Toubro Ltd., there could be no levy under Works Contract Service before 01.06.2007. Even for the post-01.06.2007 period, the Tribunal emphasised that confirmation under WCS was contrary to the SCN which framed the case only under CRCS. On these bases the impugned confirmations under WCS were held incorrect. [Paras 10, 11]

The confirmations under Works Contract Service (and related portions of the impugned order) are set aside.

Final Conclusion: The impugned order is set aside and the appeal is allowed; demands confirmed under CRCS for the Wenlock Woods project and confirmations under WCS (including those founded on grounds not in the Show Cause Notice and any pre-01.06.2007 WCS levy) are quashed, with consequential legal benefits to the appellant as per law.

Reduced penalty under second proviso to Section 78(1) of the Finance Act, 1994 - requirement of payment within thirty days of communication of adjudication order for entitlement to 25% reduced penalty - first proviso to Section 78(1) - entitlement to 50% penalty where conditions satisfied - application of Commissioner (Appeals) findings on maintenance of records for concessional penalty

Reduced penalty under second proviso to Section 78(1) of the Finance Act, 1994 - requirement of payment within thirty days of communication of adjudication order for entitlement to 25% reduced penalty - Applicability of 25% reduced penalty under the second proviso to Section 78(1) in the facts of the case - HELD THAT: - The second proviso to Section 78(1) confers an option to pay a reduced penalty of 25% provided the service tax, interest and the reduced penalty are paid within thirty days of communication of the adjudication order determining the service tax under Section 73(2). The Tribunal found that the appellants did not pay the determined service tax and interest within thirty days of the Order-in-Original dated 31.05.2022. Reliance on the reasoning in Tops Security Ltd. establishes that an appellate authority cannot extend that thirty-day period for availing the 25% benefit. Since the statutory condition of payment within thirty days was not satisfied, the appellant is not entitled to the 25% reduced penalty. [Paras 9]

25% reduced penalty under the second proviso to Section 78(1) is not available to the appellant.

First proviso to Section 78(1) - entitlement to 50% penalty where conditions satisfied - application of Commissioner (Appeals) findings on maintenance of records for concessional penalty - Entitlement to penalty at 50% under the first proviso to Section 78(1) for the period 08.04.2011 to 14.05.2015 - HELD THAT: - The first proviso to Section 78(1) operates as an exception to the mandatory 100% penalty where specified conditions (including maintenance of requisite records) are satisfied, reducing the penalty to 50% for the period beginning 08.04.2011 up to 14.05.2015. The Commissioner (Appeals) recorded detailed, unchallenged findings that the appellants maintained certain records and details of transactions for the material period; the Revenue has not appealed against those findings. On that basis the Tribunal held that the appellants meet the conditions of the first proviso for the stated period and thus the service tax finally determined for that period is liable to penalty at 50%. For periods beyond 14.05.2015, the appellants remain liable to penalty at 100%. The Tribunal directed the appellants to compute the total penalty liability accordingly and submit proof of discharge to the jurisdictional authority. [Paras 10]

Penalty at 50% is available for the period 08.04.2011 upto 14.05.2015; penalty at 100% applies for the period beyond that date. Appellants to compute and submit liability with proof of payment.

Final Conclusion: The appeal is disposed of: the appellants are not entitled to the 25% reduced penalty under the second proviso to Section 78(1) because the statutory thirty-day payment condition was not met; however, on the basis of the unchallenged findings of the Commissioner (Appeals) they are entitled to benefit of the first proviso and penalty at 50% for the period 08.04.2011 upto 14.05.2015, while penalty at 100% applies for periods thereafter, and they are directed to compute and submit the adjusted liability with proof of payment.

Summary order. Petition not entertained and dismissed because a wrong order was annexed; petition dismissed with liberty to file a fresh petition.

Manufacture versus process in job-work - marketability test for excisability - liability of principal manufacturer vis-a -vis job-worker for excise duty - protection of substantial benefit against technical irregularities - Rule 16A of the Central Excise Rules, 2002 (removal of inputs to job-worker)

Manufacture versus process in job-work - marketability test for excisability - Whether the processes undertaken by the appellants on aluminium ingots amounted to manufacture so as to attract central excise duty - HELD THAT: - The Tribunal held that the processes performed by the appellants on the aluminium ingots did not amount to manufacture. Applying the marketability test, the Court accepted that duty attaches only when the product is marketable in the condition in which it is removed. Citing and following precedents reflected in the impugned reasoning, the Tribunal found no evidence that the items returned by the job-worker were marketable as they required further processing, testing and repair. On that factual basis the processes were held not to constitute manufacture and therefore the goods were not excisable as produced by the appellants. [Paras 7, 8]

Processes undertaken by the appellants do not amount to manufacture; the products were not marketable in the condition in which removed.

Liability of principal manufacturer vis-a -vis job-worker for excise duty - protection of substantial benefit against technical irregularities - Rule 16A of the Central Excise Rules, 2002 (removal of inputs to job-worker) - Whether the appellants can be fastened with liability to pay excise duty where inputs were received from a principal manufacturer who had sought permission under Rule 16A and the challans erroneously mentioned Notification No.214/86 - HELD THAT: - The Tribunal recorded that the principal manufacturer had applied for permission under Rule 16A and had kept the Department informed; the Department was aware that inputs were being sent out for job-work. The appellants received inputs and returned processed material to the principal manufacturer and were paid only job charges. The Tribunal held that a substantial benefit (removal for job-work under Rule 16A) cannot be denied to the job-worker for a technical/clerical error in mentioning the wrong notification on challans, particularly where the Department had been put on notice and delay in granting permission was not the fault of the job-worker. Further, even if manufacture had been found, duty would be exigible from the principal manufacturer and not from the job-worker who merely returned the goods to the principal. [Paras 5, 6, 8]

Appellants cannot be fastened with payment of excise duty; benefit of removal to job-worker cannot be denied for the challan error and, in any event, liability rests on the principal manufacturer.

Final Conclusion: Both appeals allowed; the processes carried out by the appellants do not amount to manufacture and they are not liable to pay the excise duty challenged in respect of the specified periods; the principal manufacturer, if at all liable, is the proper person to be charged.

Classification of beverages under Central Excise Tariff - Fruit pulp or fruit juice based drinks - Lemonade - Common parlance test - Supporting legislation test - Interpretation of Regulation 2.3.10 and Regulation 2.3.30 - Precedent of Larger Bench

Classification of beverages under Central Excise Tariff - Fruit pulp or fruit juice based drinks - Lemonade - Common parlance test - Supporting legislation test - Interpretation of Regulation 2.3.10 and Regulation 2.3.30 - Precedent of Larger Bench - Product "Minute Maid Nimbu Fresh" is classifiable as a fruit pulp or fruit juice based drink under Tariff Item 2202 90 20 and not as lemonade under Tariff Item 2202 10 20. - HELD THAT: - The Tribunal found the classification issue to be settled by its Larger Bench decision which held that products with lemon or lime juice content not less than 5% and Total Soluble Solids not less than 10% satisfy the definitions in Regulations 2.3.10 and 2.3.30 and thus fall within the category of fruit juice based drinks. Applying both the common parlance test and the supporting legislation test, the Larger Bench concluded that such products are classifiable under Tariff Item 2202 90 20. The Tribunal rejected reliance on the earlier contrary decision and followed the Larger Bench and subsequent Division Bench orders in similar matters, holding that the impugned product (MMNF) meets the regulatory thresholds and therefore is classifiable as a fruit pulp or fruit juice based drink. [Paras 10, 11]

Appeal allowed; "Minute Maid Nimbu Fresh" held classifiable under Tariff Item 2202 90 20 and consequential relief granted.

Final Conclusion: The Tribunal allowed the appeal, following its Larger Bench precedent that "Minute Maid Nimbu Fresh" is a fruit pulp/fruit juice based drink (Tariff Item 2202 90 20), and granted consequential relief in respect of the demand and penalties relating to the period April 2011 to August 2012.

Manufacture - CENVAT credit - denial of CENVAT credit despite duty payment - extended period of limitation by alleging suppression - penalty under Rule 15A of the CENVAT Credit Rules

Manufacture - CENVAT credit - denial of CENVAT credit despite duty payment - Activity of embossing logo on caseskin amounted to manufacture and CENVAT credit availed on inputs was rightly available to the appellant - HELD THAT: - The Tribunal examined whether the process undertaken by the appellant - embossing the logo of a customer on caseskin obtained by cutting the coil - amounted to manufacture so as to permit CENVAT credit on inputs. Reliance was placed on preceding High Court decisions which establish that where the final product is dutiable and duty has been levied and collected by the department treating the activity as manufacture, denial or reversal of CENVAT credit is not permissible. The Revenue did not dispute that duty on the finished product was paid; its contention was confined to contesting the manufacturing nature of the process. Applying the settled ratio of the cited High Court authorities, the Tribunal held that the denial of credit in the impugned order was contrary to law and therefore had to be set aside, with consequential benefits to the appellant.

Impugned demand for reversal of CENVAT credit set aside and appeal allowed.

Penalty under Rule 15A of the CENVAT Credit Rules - Penalty imposed under Rule 15A was liable to be set aside - HELD THAT: - The penalty was imposed solely on the basis of the appellant's statement without independent corroborative evidence. Further, the Tribunal's primary finding setting aside the substantive demand against the main appellant equally applied to the appellant facing penalty. In the absence of independent evidence and in view of the setting aside of the substantive order, the Tribunal found the penal order unsustainable.

Penalty under Rule 15A set aside and appeal allowed.

Final Conclusion: Both appeals allowed: the demand for reversal of CENVAT credit was set aside and the penalty under Rule 15A was quashed; consequential benefits granted as per law.

Inclusion of buyer-paid tooling cost in assessable value and amortisation under valuation rules - Application of Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to buyer supplied tools - Amortisation of tooling cost and associated development/service charges into value of final goods - Exemption of tools under Notification No.67/95-CE and adjustment of duty element in amortised value - Double taxation-distinction between duty on capital goods (tools) and duty on final excisable product - Extended time limit for assessment under proviso to Section 11A(1) of the Central Excise Act-requirement of positive intention to evade

Inclusion of buyer-paid tooling cost in assessable value and amortisation under valuation rules - Application of Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to buyer supplied tools - Cost of tools supplied or paid for by the buyer must be included in the assessable value of the finished goods and amortised for payment of duty. - HELD THAT: - The Tribunal held that where tools (jigs, fixtures, moulds, dies) are manufactured or provided for use in production at the buyer's cost and the finished goods' price is fixed taking that supply into account, the monetary value attributable to the use of such tools is an additional consideration that must be included under the valuation rules. The decision follows the reasoning in the Larger Bench authority as applied in the Tribunal's earlier order: the price of the finished product is not the sole consideration when the buyer has provided or borne the cost of tooling necessary for manufacture. Consequently, the proportionate cost must be brought into the assessable value and amortised in accordance with Rule 6 of the CVR 2000. [Paras 4]

The cost of buyer-paid tools used in manufacture is includible and must be amortised into the assessable value of the final products.

Double taxation-distinction between duty on capital goods (tools) and duty on final excisable product - Levying duty on tools and subsequently on finished products using those tools does not constitute double taxation. - HELD THAT: - The Tribunal explained that duty paid on tools (capital goods) and duty on final products are levies on two distinct excisable goods. If tools are purchased in the market, their price would ordinarily enter the price of the finished product. Therefore, treating the tools' value as part of the assessable value of the finished goods does not amount to taxation twice on the same excisable product but reflects taxation of separate goods. [Paras 5]

The plea of double taxation is rejected; duty on tools and duty on finished products are distinct and both may be relevant for assessment.

Exemption of tools under Notification No.67/95-CE and adjustment of duty element in amortised value - Tools captively manufactured and used in the factory are eligible for exemption under Notification No.67/95-CE; the duty element on such exempted tools must be excluded when re working amortised value. - HELD THAT: - The Tribunal agreed with the coordinate bench view that the exemption applies to jigs, fixtures, patterns and tooling irrespective of ownership. Accordingly, while the monetary cost charged to the buyer must be amortised into the value of final goods, the excise duty component applicable to the tools (to the extent exempt) should not form part of the amortised assessable value and the demand must be re computed excluding that duty element. [Paras 6]

The appellant is eligible for the benefit of Notification No.67/95-CE; amortised value must be adjusted to exclude the duty element on exempted tools.

Amortisation of tooling cost and associated development/service charges into value of final goods - Amounts collected from the buyer for development or service charges related to tooling, when used in manufacture of the buyer's products, must be included in the amortised cost for valuation of the finished goods. - HELD THAT: - The Tribunal held that amortisation entails spreading the total monetary value of the asset and related services over its useful period. Thus, payments made by the buyer towards development or service activities connected to tool manufacture, which contribute to the manufacture of the final product, form part of the value to be amortised into the assessable value of the finished goods (subject to adjustment for any exempted duty on tools). The question is one of inclusion in valuation rather than whether tax has been discharged under another head. [Paras 7]

Development and service charges related to tools paid by the buyer are includible in the amortised value of the final products.

Extended time limit for assessment under proviso to Section 11A(1) of the Central Excise Act-requirement of positive intention to evade - Extended period for invoking demand cannot be applied absent a finding of positive intention to evade duty (fraud, collusion, willful misstatement or suppression). - HELD THAT: - The Tribunal observed that mere failure or negligence in declaring the correct value or payment does not amount to suppression with intent to evade duty, especially where the valuation issue is complex. The impugned order did not record any finding of positive intention to evade; accordingly, the extended period under the proviso could not be invoked and the demand must be confined to the normal period. [Paras 7]

Extended limitation period is not invocable; demand must be limited to the normal period.

Remand for re-quantification and natural justice in reassessment - Matter remanded to the original authority for re-quantification of duty for the normal period, excluding duty element on exempt tools, with opportunity to the appellant to be heard. - HELD THAT: - Having decided inclusion, exemption adjustment and that extended period is not invocable, the Tribunal directed remand to the adjudicating authority to re quantify the demand for the normal period. The authority must follow principles of natural justice, afford time bound opportunity for oral and written submissions, and complete the process expeditiously. The appellant is to cooperate and the adjudication is to be completed within ninety days of receipt of the order. [Paras 9]

The order is modified and the matter is remanded for re quantification of the demand for the normal period with a time bound opportunity to the appellant; appeal disposed on these terms.

Final Conclusion: The Tribunal held that buyer paid tooling costs and related development/service charges must be included and amortised into the assessable value of finished goods under the valuation rules; the tools are eligible for exemption under Notification No.67/95-CE and the duty element must be excluded from amortised value; the extended period was not invocable for lack of positive intent to evade; the matter is remanded to the original authority for re quantification of the demand for the normal period, with opportunity to the appellant, to be completed within ninety days.

Unjust enrichment - provisional assessment and finalisation under Rule 7 of the Central Excise Rules, 2002 - adjustment of excess duty against short payment - refund of excess duty - final assessment determines aggregate duty liability for the period

Unjust enrichment - provisional assessment and finalisation under Rule 7 of the Central Excise Rules, 2002 - adjustment of excess duty against short payment - refund of excess duty - Authorities below were not justified in rejecting the refund claims on the ground of unjust enrichment - HELD THAT: - The Tribunal examined whether refund claims arising on finalisation of provisional assessments could be rejected by applying the doctrine of unjust enrichment. Applying the mandate of Rule 7 of the Central Excise Rules, 2002 and following this Bench's earlier final order in the appellant's own case and the reasoning of the High Court of Karnataka in Toyota Kirloskar, the Tribunal held that final assessment determines the ultimate duty liability for the entire relevant period in aggregate. Excess duty paid after such finalisation, after appropriate adjustment against any short payments for the period, is refundable. Where duty paid in excess for the period is ascertainable on finalisation and is refundable, the bar of unjust enrichment does not operate to deny the refund. The Tribunal therefore set aside the appellate authority's rejection of the refund to the extent it was based on unjust enrichment and allowed the appeals with consequential reliefs. [Paras 6, 7, 8]

Refund claims rejected on the ground of unjust enrichment were set aside and the appeals allowed, following the Tribunal's earlier order and the High Court's reasoning that excess duty on finalisation is refundable after aggregate adjustment.

Final Conclusion: The impugned order rejecting the refund claims on the basis of unjust enrichment is set aside; appeals are allowed and the refunds are to be granted after aggregate adjustment in accordance with Rule 7 and the Tribunal's earlier decision, with consequential reliefs as per law.

Chargeability of education cess and S&H cess on excise duty - cess levied as surcharge on existing levies - prohibition on charging cess on cess - measure of excise duty under proviso to Section 3(1) of the Central Excise Act, 1944 - binding effect of Tribunal larger-bench precedent on similar cess demands

Chargeability of education cess and S&H cess on excise duty - cess levied as surcharge on existing levies - prohibition on charging cess on cess - Revenue was not justified in demanding education cess and secondary and higher education cess on the excise duty determined as payable for the period November 2011 to May 2012. - HELD THAT: - The Tribunal held that education cess and S&H cess are cesses levied as a surcharge on existing levies and consequently the base for such surcharge cannot itself include the cesses. Applying the ratio of the Larger Bench in Kumar Arch Tech Pvt. Ltd. (as followed by this Bench in M/s. Kanam Latex Industries Pvt. Ltd.), the aggregate of duties of customs which forms the measure of excise under the proviso to Section 3(1) of the Central Excise Act, 1944 does not include education cess and S&H cess. To permit charging cess on the sum that already includes cess would amount to charging cess on cess, for which there is no legislative sanction. In view of this principle and the directly applicable precedents, the confirmed demands for the cesses on the excise duty determined as payable were unsustainable and liable to be set aside. [Paras 6, 7]

Impugned order and the demand for education cess and S&H cess are set aside and the appeal is allowed with consequential relief as per law.

Final Conclusion: Following binding Tribunal precedent that education cess and S&H cess are surcharge on existing levies and cannot be levied on cess, the confirmed demand for those cesses on excise duty for November 2011 to May 2012 is quashed and the appeal is allowed.

Purchase tax under the TNVAT Act - adjournment and right to be heard / personal hearing - revision under Section 84 of the TNVAT Act - remand for fresh assessment on merits - deposit as condition for relief

Adjournment and right to be heard / personal hearing - revision under Section 84 of the TNVAT Act - Validity of the order dated 09.11.2022 rejecting the petition for revision of the assessment orders dated 28.09.2022 for AYs 2014-2015 and 2015-2016 - HELD THAT: - The Court found that the respondent passed the impugned assessment orders dated 28.09.2022 and thereafter rejected the petitioner's application for revision by order dated 09.11.2022 without adequately dealing with the petitioner's request for further time and without affording an effective personal hearing. The order rejecting the revision was recorded as being passed in undue haste and, having regard to the substantial tax amounts involved and the petitioner's communicated intent to file objections and produce documents, the rejection could not stand. In order to balance interests and secure adjudication on merits, the rejection order dated 09.11.2022 is set aside and the matter is directed to be considered afresh, subject to conditions specified by the Court. [Paras 4, 5, 6]

Order dated 09.11.2022 rejecting the petition for revision is set aside and the matters for AYs 2014-2015 and 2015-2016 are remitted for fresh consideration.

Remand for fresh assessment on merits - deposit as condition for relief - Terms on which fresh consideration is to be proceeded with and directions for conduct of fresh assessment - HELD THAT: - The Court directed that fresh orders be passed after affording a personal hearing to the petitioner and after the petitioner produces all required documents and cooperates with the assessing officer. As a condition for granting the relief of fresh consideration, the petitioner was required to deposit 10% of the disputed tax in cash by way of demand draft within 30 days from receipt of the order. The assessing officer was directed to take into account assessment orders dated 31.10.2022 (pertaining to earlier assessment years) if they bear on the facts of these years, and to pass fresh orders on merits and in accordance with law following the hearing and documentary production. [Paras 6]

The assessments for AYs 2014-2015 and 2015-2016 are remitted for fresh hearing and fresh orders after the petitioner deposits 10% of the disputed tax and cooperates by producing documents; the assessing officer shall consider earlier relevant assessment orders where applicable.

Final Conclusion: The order rejecting revision dated 09.11.2022 is set aside; the assessments for AYs 2014-2015 and 2015-2016 are remitted for fresh consideration on merits after the petitioner deposits 10% of the disputed tax and avails a personal hearing, with the assessing officer to consider earlier relevant assessment orders where applicable.

Suppression of turnover - assessment by verification of purchase data - pre-revision notice - production of books alone not a sufficient reply on remand - 0.5% tax under Section 3(4) of the Tamil Nadu Value Added Tax Act - statutory appeal

Suppression of turnover - assessment by verification of purchase data - production of books alone not a sufficient reply on remand - Validity of the impugned assessment order for Assessment Year 2014-2015 - HELD THAT: - The Court held that the challenge to the impugned order lacked merit. On the earlier order being set aside, the petitioner was required to furnish a clear and complete reply; merely producing Ledgers, Profit and Loss Account and Balance Sheets after issuance of a pre-revision notice was inadequate. The departmental verification of purchase data disclosed a large discrepancy between purchases and the sales reported in monthly returns, and the second respondent's counter affidavit alleged suppression of turnover and resulting tax liability. Having regard to these facts and the petitioner's failure to file an adequate explanation, the Court found no ground to fault the impugned order. [Paras 9, 10]

Writ petition dismissed; impugned order sustained.

Pre-revision notice - statutory appeal - Availability of further remedy to the petitioner following dismissal of the writ petition - HELD THAT: - The Court granted the petitioner liberty to pursue the statutory remedy available under the relevant statute by filing an appeal before the Appellate Authority. A time limit of 30 days from receipt of a copy of this order was specified for filing the statutory appeal. [Paras 11]

Liberty granted to file statutory appeal within 30 days.

Final Conclusion: The writ petition challenging the assessment for Assessment Year 2014-2015 is dismissed for want of merit; the petitioner is permitted to file a statutory appeal before the Appellate Authority within 30 days from receipt of the order.

Non-grant of refund - Writ of Mandamus - interest under section 38 of the VAT Act - direction to dispose of pending refund applications

Non-grant of refund - direction to dispose of pending refund applications - Writ of Mandamus - interest under section 38 of the VAT Act - Petition not entertained on merits; respondents directed to decide the petitioners' pending refund applications - HELD THAT: - The court recorded that the petitioners claim to have paid amounts by way of challans and had filed refund applications (including a request for interest under section 38 of the VAT Act). On the material before it the respondents had not passed any order disposing of those refund applications. The affidavit in reply and the rejoinder raised disputed questions of fact relating to service of notice and whether assessment orders were passed for the relevant period; those factual disputes precluded adjudication of the merits in this petition. Rather than decide the substantive entitlement, the court declined to entertain the petition on merits and directed the respondent authorities to pass appropriate orders disposing of the refund applications within 12 weeks from receipt of the order. The court thereby left the contested factual and substantive issues for determination by the authorities while providing a timetable for disposal. [Paras 10, 11, 12]

Petition not entertained on merits; respondents directed to pass appropriate orders disposing of the refund applications within 12 weeks from receipt of this order.

Final Conclusion: Writ petition dismissed without deciding substantive entitlement; respondents to adjudicate the pending refund applications (including any claim for interest) and pass appropriate orders within twelve weeks; petition disposed.

Benefit of amnesty where tax and interest already paid - waiver of interest and penalty under the amnesty scheme - interpretation of Clause 4.5 and Clause 8 of the Amnesty Scheme - pre-deposit requirement for penalty under amnesty - quashing of attachment and refund with statutory interest

Benefit of amnesty where tax and interest already paid - waiver of interest and penalty under the amnesty scheme - interpretation of Clause 4.5 of the Amnesty Scheme - Petitioner entitled to waiver of penalty under the Vera Samadhan Yojna, 2019 despite having paid tax and interest prior to the assessment order - HELD THAT: - The Court held that the Amnesty Scheme aims to secure expeditious resolution of old disputes and to bring taxpayers who have paid tax within its ambit. Clause 4.1 grants remission of interest and penalty upon payment of tax; Clauses 4.3 and 4.4 address enforcement and voluntary disclosure; Clause 4.5 applies to cases where the assessment order pertains only to interest or penalty and prescribes payment of 20% of outstanding demand. The petitioner's challenge to the assessment was against tax, interest and penalty and the petitioner had paid tax and interest prior to framing of the assessment. The respondent-authority misconstrued Clause 4.5 by treating the outstanding demand (after set-off of tax and interest already paid) as a penalty-only demand and thereby insisting on the 20% pre-deposit. Reading Clauses 4.1, 4.5 and the Scheme as a whole, and in the light of precedents favouring inclusion of taxpayers who had already paid tax/interest, the Court concluded that the petitioner was entitled to waiver of penalty under the Scheme. The respondent's invocation of Clause 4.5 in the facts of this case was therefore erroneous. [Paras 10, 11, 12, 13, 15]

Application for benefit under the Amnesty Scheme granted and petitioner held entitled to waiver of penalty.

Pre-deposit requirement for penalty under amnesty - quashing of attachment and refund with statutory interest - Impugned communication rejecting amnesty application and resultant attachment quashed; recovery to be refunded with statutory interest - HELD THAT: - Because the authority wrongly denied the petitioner the benefit of the Amnesty Scheme by demanding payment under Clause 4.5 despite the petitioner having paid tax and interest and having contested tax, interest and penalty, the Court found the rejection unsustainable. Consequent coercive steps taken by the department, including detachment of the bank account, were set aside. The Court directed grant of the Scheme's benefit and ordered refund of amounts recovered pursuant to the impugned recovery proceedings with statutory interest within a fixed period. [Paras 16]

Impugned communication and attachment quashed; respondents directed to grant amnesty benefit and refund amounts with statutory interest.

Final Conclusion: Writ petitions allowed: the petitioner is entitled to waiver of penalty under the Vera Samadhan Yojna, 2019 having paid tax and interest prior to assessment; the communication rejecting amnesty and the bank account attachment are quashed and respondents directed to grant amnesty benefit and refund amounts recovered with statutory interest within 12 weeks.