TaxTMI Updates e-Newsletter
Jul 04,2024

Principles of natural justice / right to be heard - scope of show cause notice - imposition of interest and penalty without prior notice - remand for fresh consideration on payment of part amount - personal hearing upon remand - treating order as show cause notice

Principles of natural justice / right to be heard - scope of show cause notice - imposition of interest and penalty without prior notice - Impugned order imposes interest and penalty which were not part of the detailed show cause notice, and the petitioner was denied an opportunity to contest those components. - HELD THAT: - The detailed notice and earlier intimation set out eleven tax proposals corresponding to the inspection findings, but did not propose liability for interest or penalty. The final order, however, imposed penalty (at 10%) and interest, matters on which the petitioner had no opportunity to respond. The Court found that, as regards interest and penalty, there was no prior proposal enabling the petitioner to meet the case on merits, thereby occasioning a breach of the right to be heard. That deficiency in notice-making requires interference with the order and fresh consideration of those components after affording the petitioner an opportunity to respond. [Paras 4]

Order set aside to the extent it imposes interest and penalty without prior notice; those components to be reconsidered after affording the petitioner an opportunity to be heard.

Treating order as show cause notice - remand for fresh consideration on payment of part amount - personal hearing upon remand - Remedial course and terms on which the matter is remitted to the authority for fresh adjudication. - HELD THAT: - Having found that the petitioner lacked an opportunity to contest the interest and penalty imposed, the Court directed that the impugned order dated 06.02.2024 be treated as a show cause notice. The petitioner was permitted four weeks to file a response to that notice and was placed on terms to remit 10% of the disputed tax demand within the same period. Upon receipt and verification of the remitted amount, the authority is to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. The directions effectuate procedural fairness while balancing the respondent's interest by requiring partial payment as a condition for fresh adjudication. [Paras 5]

Impugned order treated as a show cause notice; petitioner to respond within four weeks and remit 10% of disputed tax demand as condition; on receipt, authority to provide personal hearing and pass fresh order within three months.

Final Conclusion: Writ petition disposed by quashing the impugned order to the extent it imposed interest and penalty without notice, treating the order as a show cause notice, permitting the petitioner four weeks to reply and requiring remittance of 10% of the disputed tax demand as a condition; on compliance the authority shall afford a personal hearing and pass a fresh order within three months.

Input tax credit - extension of limitation by GST Council recommendations - vesting of Input Tax Credit claim - interim protection against coercive recovery - notice and opportunity to file counter-affidavit

Interim protection against coercive recovery - notice and opportunity to file counter-affidavit - Interim relief restraining coercive action and requirement for respondents to file a counter-affidavit and cause notice - HELD THAT: - The High Court, after hearing counsel for both parties, issued notice returnable in four weeks and directed respondents to file their counter-affidavit. The Court declined to adjudicate the merits of the challenge to the assessment order at this stage but granted interim relief by restraining any coercive action pursuant to the impugned order dated 12.03.2024. The matter was directed to be listed with similar matters on the next date fixed. Ancillary directions included waiver of formal notice in view of appearance and requirement to furnish extra copies of the writ petition. [Paras 8, 12]

Notice issued returnable in four weeks; respondents to file counter-affidavit; no coercive action to be taken against the petitioner in terms of the impugned order until the next date of hearing.

Final Conclusion: The petition has been admitted for consideration; interim protection against coercive recovery has been granted and the respondents have been directed to file their counter-affidavit with the matter listed along with similar matters for further hearing.

Natural justice - opportunity to be heard - remand for fresh consideration - set aside - personal hearing - interim deposit as condition for remand - mismatch between GSTR returns and Form 26AS - assessment under GST

Natural justice - opportunity to be heard - mismatch between GSTR returns and Form 26AS - assessment under GST - remand for fresh consideration - interim deposit as condition for remand - Impugned assessment order set aside and remitted for fresh consideration on specified terms because the petitioner was not given a reasonable opportunity to contest the tax proposal arising from a mismatch between GST returns and Form 26AS. - HELD THAT: - The Court observed that the tax proposal arises from a purported mismatch between the petitioner's GSTR 3B/GSTR 9/9C returns and Form 26AS for the assessment period 2017-18, and that the petitioner contends the mismatch may be explained by pre-GST transactions reflected in Form 26AS but not in GST returns. In view of the petitioner's assertion that it was unaware of the proceedings and thereby could not participate, the interests of justice required setting aside the impugned order and remanding the matter for reconsideration. The Court imposed a condition that the petitioner remit 10% of the disputed tax demand within two weeks and permitted the petitioner to submit a reply to the show cause notice within that period. On receipt of the reply and being satisfied that the 10% amount was remitted, the assessing authority must afford a reasonable opportunity of hearing, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the reply. The direction preserves the assessing officer's obligation to examine the petitioner's explanation regarding the alleged mismatch. [Paras 3, 5, 6]

Impugned order dated 28.12.2023 set aside; matter remanded for fresh consideration on condition of 10% remittance, submission of reply, grant of reasonable opportunity including personal hearing, and issuance of a fresh order within three months.

Set aside - bank attachment - Bank attachment arising from the assessment order is lifted consequent to setting aside the impugned order. - HELD THAT: - The Court directed that because the assessment order has been set aside and remanded, the interim measure of bank attachment is to be raised. This follows from the order of setting aside and the conditional remand; no separate inquiry into the attachment's merits was directed. [Paras 6]

Bank attachment is raised (lifted) on account of the assessment order being set aside.

Final Conclusion: The writ petition is allowed in part: the impugned assessment order dated 28.12.2023 is set aside and remitted for fresh consideration on the petitioner remitting 10% of the disputed tax within two weeks and submitting a reply; on receipt of the reply and satisfaction of the deposit, the assessing authority shall grant a reasonable opportunity including a personal hearing and pass a fresh order within three months; the bank attachment is lifted; matter disposed without costs.

Natural justice - reasonable opportunity to be heard - treatment of sundry creditors as taxable supply - remand for fresh consideration - assessment set aside subject to deposit

Natural justice - reasonable opportunity to be heard - impugned assessment order was set aside for lack of adequate opportunity to contest the tax demand on merits - HELD THAT: - The Court found that although an audit report and show cause notice were issued and earlier replies were on record, the assessing officer proceeded to confirm significant tax proposals shortly after receiving further documents from the petitioner and without affording a fresh, meaningful opportunity to contest the demand on merits. The petitioner had filed replies and subsequently submitted additional documents which were not noticed in the impugned order. In these circumstances the Court held that interference with the impugned order was warranted on grounds of procedural unfairness and absence of a reasonable opportunity to be heard. [Paras 1, 2, 5]

Impugned order dated 25.04.2024 set aside on the ground that the petitioner was not provided a reasonable opportunity to contest the tax demand

Treatment of sundry creditors as taxable supply - remand for fresh consideration - assessment set aside subject to deposit - proposal treating sundry creditors/payables as taxable was not to be sustained without verification and was remanded for fresh consideration subject to conditions - HELD THAT: - The Court examined the assessing officer's reason for confirming the 4th audit proposal which treated aggregate payables as taxable on the basis that invoices, ledgers and contract documents were not placed before the authority. The Court observed that the petitioner had explained a large portion of the payables related to amounts payable to EPC contractors for supply and installation of capital goods and that, on payment and capitalization, the amounts would reflect as capital assets and, at worst, reversal of input tax credit would be the consequence if payment remained unpaid beyond the prescribed period. Given that the assessing officer did not notice subsequent documents filed by the petitioner and did not afford a fresh opportunity to verify the voluminous documentation, the Court held that the AO's blanket confirmation of the proposal solely for want of documentation was untenable and required fresh consideration. To protect revenue interest, the Court conditioned setting aside the order on a deposit by the petitioner and directed the assessing officer, upon satisfaction of receipt of the deposit, to afford a reasonable opportunity including personal hearing, and thereafter to pass a fresh order within a specified timeframe. [Paras 5, 7]

The finding treating the aggregate payables as taxable is remanded for fresh verification and adjudication; the impugned order is set aside subject to the petitioner remitting Rs. 50,00,000 within three weeks and the assessing officer is directed to provide a reasonable opportunity and pass a fresh order within four months of receipt of additional documents

Final Conclusion: Writ petition disposed of by setting aside the impugned order dated 25.04.2024 on grounds of inadequate opportunity to contest the demand; the matter is remitted for fresh consideration of the disputed proposals (notably the sundry creditors issue) subject to the petitioner depositing Rs. 50,00,000 within three weeks and the assessing officer affording a reasonable hearing and passing a fresh order within four months.

Cancellation of GST registration - Revival of GST registration - Filing of belated GST returns with payment of tax, interest and fee - Prohibition on utilisation of Input Tax Credit pending departmental scrutiny - Conditional revocation subject to compliance - Direction to modify GSTN portal to enable compliance

Cancellation of GST registration - Revival of GST registration - Filing of belated GST returns with payment of tax, interest and fee - Conditional revocation subject to compliance - GST registration cancelled on 28.06.2023 was ordered to be restored subject to specified compliance. - HELD THAT: - The High Court accepted the petitioner's challenge to the cancellation and directed restoration of registration provided the petitioner files returns for the period prior to cancellation (if not filed) and pays the corresponding tax dues along with interest and the fee for belated filing within forty five days from receipt of the order. The Court recorded that upon payment of tax, penalty and uploading of returns the registration shall stand revived forthwith. The restoration is expressly made conditional on these steps being completed by the petitioner, thereby permitting revival only after satisfaction of outstanding compliance and payments. [Paras 5, 6, 7]

Registration to be restored on completion of filing prior-period returns and payment of tax, interest and applicable fee within 45 days; restoration to take effect forthwith on compliance.

Prohibition on utilisation of Input Tax Credit pending departmental scrutiny - Filing of belated GST returns with payment of tax, interest and fee - Any unutilised Input Tax Credit (ITC) shall not be used to make the required payments and shall be permitted to be utilised only after departmental scrutiny and approval. - HELD THAT: - The Court prohibited the petitioner from making or adjusting payments of tax, interest, fine or fee from any ITC lying unutilised or unclaimed. Where ITC remains unutilised, it shall not be utilised until it is scrutinised and approved by an appropriate or competent officer of the Department; only such approved ITC may thereafter be utilised for discharging future tax liability. This preserves departmental oversight over ITC claims as a precondition to utilisation following revival. [Paras 5, 6, 7]

ITC may not be utilised for discharging the belated liabilities and may be used subsequently only after departmental scrutiny and approval.

Direction to modify GSTN portal to enable compliance - Respondent directed to take steps to enable the petitioner to file returns and pay dues on the GST portal within a specified time. - HELD THAT: - The Court directed the respondent to instruct the GST Network, New Delhi to make suitable changes in the architecture of the GST web portal to allow the petitioner to file returns and pay tax, penalty or fine, and required that this exercise be completed within thirty days from receipt of a copy of the order. This direction is procedural and intended to facilitate the petitioner's compliance with the conditional revival scheme ordered by the Court. [Paras 5, 7]

Respondent to instruct GSTN to enable filing and payment on the portal within 30 days so petitioner can comply and secure revival.

Final Conclusion: Writ petition disposed of by directing conditional restoration of GST registration on the petitioner filing prior-period and subsequent returns and paying requisite tax, interest and fees (without using unapproved ITC), and by directing the respondent to effect portal changes to enable such compliance within the stipulated timelines; no order as to costs.

Natural justice - service of notice and mode of communication via electronic portal - opportunity of personal hearing - remand on terms of interim deposit - mismatch between GSTR-1 and GSTR-3B - input tax credit implications

Natural justice - service of notice and mode of communication via electronic portal - opportunity of personal hearing - remand on terms of interim deposit - Whether the impugned order confirming tax demand could be sustained where subsequent communications and the final order were uploaded on the GST portal and the petitioner contended that it was thereby denied a reasonable opportunity to contest the demand - HELD THAT: - The Court found that the tax proposal arose from a mismatch between the petitioner's GSTR-3B returns and the GSTR-1 statement and that the petitioner had replied to the initial show cause notice. The petitioner, however, asserted that subsequent reminders and the impugned order were only uploaded on the GST portal and not otherwise communicated, resulting in denial of a reasonable opportunity to contest the demand. In the interest of justice the Court held that the petitioner should be given an opportunity to contest the demand on merits but placed the petitioner on terms by requiring an interim deposit. The Court therefore set aside the impugned order subject to the condition that the petitioner remit 10% of the disputed tax demand within two weeks of receipt of the order and be permitted to submit a reply to the show cause notice within that period. Upon verification of receipt of the said remittance, the tax authority was directed to provide a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within three months from receipt of the petitioner's reply. The remedial direction was aimed at curing the procedural defect while preserving the respondents' ability to adjudicate the tax liability on merits. [Paras 5, 6]

Impugned order set aside and matter remanded for fresh consideration; petitioner to remit 10% of disputed demand within two weeks, permitted to file reply, and on receipt the authority to grant personal hearing and pass fresh order within three months.

Final Conclusion: The writ petition is allowed in part: the impugned order is set aside and the matter remanded for fresh adjudication on terms that the petitioner remit 10% of the disputed tax demand within two weeks, file a reply, and thereafter be afforded a personal hearing before a fresh order is issued within three months.

Quashing of impugned assessment order - Exercise of equitable discretion despite delay and laches - Limitation and statutory time-bar in tax proceedings - Treatment of impugned order as addendum to show cause notice - Remand for fresh adjudication on merits after deposit - Right to personal hearing / opportunity to be heard

Quashing of impugned assessment order - Exercise of equitable discretion despite delay and laches - Limitation and statutory time-bar in tax proceedings - Validity of the impugned order dated 18.10.2023 for Assessment year 2019-20 and whether it should be quashed despite limitation/laches objections - HELD THAT: - The petition challenged the impugned assessment order passed for Assessment year 2019-20. The respondent contended that the writ was time barred and relied on laches and precedents on limitation. The Court, having considered submissions, found that the petitioner may have a case on merits and exercised its discretionary jurisdiction in favour of the petitioner. In consequence, the Court quashed the impugned order while imposing a conditional requirement that the petitioner deposit 10% of the disputed tax to the respondent's credit within 30 days from receipt of the order. The Court thereby balanced the objection of delay/limitation with the need to permit adjudication on merits by conditioning relief on a deposit and procedural safeguards. [Paras 7]

Impugned order quashed subject to petitioner depositing 10% of disputed tax within 30 days

Treatment of impugned order as addendum to show cause notice - Remand for fresh adjudication on merits - Right to personal hearing / opportunity to be heard - Consequences of quashing and directions for further proceedings by the revenue - HELD THAT: - The Court directed that the quashed order shall be treated as an addendum to the preceding show cause notice. The petitioner was directed to file a reply within 30 days from receipt of a copy of this order. Thereafter the respondent was directed to pass fresh orders on merits and in accordance with law, preferably within three months, subject to the deposit condition, and to hear the petitioner before passing the fresh order. These directions effectively remand the matter for fresh adjudication limited to merits and with an express opportunity of personal hearing. [Paras 8, 9]

Matter remitted for fresh adjudication; petitioner to file reply within 30 days and respondent to pass fresh orders preferably within three months after petitioner makes the directed deposit and is heard

Final Conclusion: Writ petition disposed by quashing the impugned assessment order for AY 2019-20 on merits-based discretion, subject to the petitioner depositing 10% of the disputed tax within 30 days; the impugned order is treated as an addendum to the show cause notice and the matter is remanded for fresh adjudication with an opportunity of personal hearing and specified timelines.

Remand on condition of partial deposit - principles of natural justice - opportunity to produce documents - burden to produce documentary evidence of goods movement - reconsideration of penalty on production of documents - personal hearing before fresh order

Principles of natural justice - opportunity to produce documents - burden to produce documentary evidence of goods movement - Validity of the impugned order imposing tax, interest and penalty in light of the opportunity afforded to the petitioner to place relevant documents on record - HELD THAT: - The Court found that the petitioner had been issued intimations and a show cause notice and was given multiple opportunities to place on record documents demonstrating movement of goods between group entities, such as e-way bills, lorry receipts and weighment slips. The petitioner, instead of furnishing those documents, sought further time citing notices for five financial years. On these facts the Court held that the petitioner could not be absolved of responsibility for failing to produce contemporaneous evidence earlier. However, the Court observed that substantial penalties had been imposed without consideration of documents the petitioner claims to possess, and that cumulatively these circumstances justified affording the petitioner another opportunity to substantiate the transactions. [Paras 5]

The impugned order is set aside insofar as it is necessary to permit reconsideration, the Court noting that while the petitioner had opportunities earlier, a fresh opportunity should be afforded because penalties were imposed without considering the claimed documents.

Remand on condition of partial deposit - reconsideration of penalty on production of documents - personal hearing before fresh order - Whether the matter should be remanded for fresh consideration and on what terms - HELD THAT: - The Court exercised its equitable power to remit the matter for fresh adjudication on stipulated terms. It directed that the petitioner remit 10% of the disputed tax demand in the aggregate (after credit for amounts earlier remitted) within three weeks of receipt of the order and, within the same period, submit a detailed reply to the show cause notice with all relevant documents. Upon receipt of the petitioner's reply and verification of the 10% deposit, the respondent is to grant a reasonable opportunity including a personal hearing and thereafter pass a fresh order within three months from receipt of the reply. These directions balance the respondent's procedural concerns with the petitioner's opportunity to substantiate the genuineness of transactions. [Paras 6]

Matter remanded for fresh consideration on condition that the petitioner deposits 10% of the disputed tax demand and furnishes a detailed reply with supporting documents; respondent to grant personal hearing and decide afresh within three months.

Final Conclusion: Writ petition allowed in part: impugned order set aside and remitted for fresh consideration on specified conditions (10% deposit, submission of documents and grant of personal hearing); matter to be decided by respondent within three months after receipt of petitioner's reply.

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Ceasing of provisional attachment after one year - Right to operate bank account following expiry of provisional attachment

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Ceasing of provisional attachment after one year - Right to operate bank account following expiry of provisional attachment - Provisional attachment dated 27.01.2022 of the petitioner's bank account has ceased to have effect after one year and the bank must permit operation of the account. - HELD THAT: - The Court noted that the provisional attachment order was issued on 27.01.2022 and that, in terms of Section 83(2) of the Act, a provisional attachment ceases to have effect after the expiry of one year from the date it is made. The respondents conceded that no fresh attachment order was issued after 27.01.2022. In light of the concession and the statutory consequence of expiry, the Court held that the provisional attachment has ceased to have effect and that the basis for any embargo on the account no longer subsists. The respondent bank was directed to permit operation of the account forthwith and not to impose any embargo based solely on the expired provisional attachment order. [Paras 2, 3, 4, 5]

Provisional attachment dated 27.01.2022 has ceased to have effect; bank directed to permit operation of the account and not to impose embargo based solely on that order.

Final Conclusion: Writ petition allowed; provisional attachment of the petitioner's bank account dated 27.01.2022 has ceased to have effect and the bank is directed to immediately permit operation of the account without embargo based solely on the expired attachment order.

Principle of natural justice - intimation of defects in appeal - rejection of appeal for non-supply of certified copy - mechanical/summary rejection of appeals - remand for removal of defects and fresh decision

Principle of natural justice - intimation of defects in appeal - rejection of appeal for non-supply of certified copy - Validity of rejection of the appeal dated 18.02.2021 for non-supply of certified copy where no notice of defect or opportunity to rectify was given to the appellant - HELD THAT: - The Court found that although the appeal was filed on 18.02.2021, the appellate authority rejected it on 20.05.2022 on the ground of non-supply of the certified copy without placing any material on record to show that the appellant had been intimated of the defect. Where an appeal is filed lacking a required document and the defect is capable of being cured, the appellate authority is obliged to inform the appellant of the defect and afford an opportunity to rectify it. A mechanical rejection after a long lapse without communicating defects and affording time for compliance is arbitrary, unreasonable and contrary to the Principle of natural justice. The Court noted that compliance with natural justice would permit rejection only after the appellant had been given notice and a chance to cure the defect; absence of such opportunity vitiates the rejection. [Paras 6, 7]

The rejection of the appeal for non-supply of the certified copies is set aside as arbitrary for want of intimation and opportunity to rectify.

Remand for removal of defects and fresh decision - mechanical/summary rejection of appeals - Relief and direction following setting aside of the rejection order - HELD THAT: - Having quashed the order of rejection, the Court remitted the matter to the appellate authority with directions to entertain the appeal and to point out any defects to the petitioner, allowing him to remove such defects within a stipulation to be fixed by that authority. The appellate authority is to thereafter decide the appeal in accordance with law. The Court observed that the principle applied in the cited precedent is equally applicable in this case and therefore a fresh consideration rather than summary dismissal is required. [Paras 7]

Order of rejection is set aside and the matter is remitted to the appellate authority to permit rectification of defects and to decide the appeal afresh in accordance with law.

Final Conclusion: Writ petition allowed: the appellate order rejecting the appeal for non-supply of certified copies is quashed and the matter is remitted to the appellate authority to intimate any defects to the petitioner, permit rectification within a stipulated time and decide the appeal afresh in accordance with law.

Maintainability of writ petition due to non-constitution of Appellate Tribunal - appeal under Section 112 and pre-deposit under Section 107 of the West Bengal GST Act - pre-deposit requirement for statutory appeal - judicial relaxation of pre-deposit on grounds of financial hardship - conditional stay of demand upon deposit

Maintainability of writ petition due to non-constitution of Appellate Tribunal - Writ petition maintainable because the Appellate Tribunal under the statute has not been constituted. - HELD THAT: - The Court accepted the submission that, in the absence of a constituted Appellate Tribunal within the meaning of the statute, an appeal under the statutory scheme cannot be heard before the tribunal and a writ petition seeking relief is maintainable. The court proceeded to entertain the petition on that basis and directed further steps for adjudication on the record available before the Appellate Authority. [Paras 3, 6]

Writ petition is maintainable and the matter should be heard by this Court in view of non-constitution of the Appellate Tribunal.

Pre-deposit requirement for statutory appeal - judicial relaxation of pre-deposit on grounds of financial hardship - Extent of deposit to be made by the petitioner pending the writ petition-court directed a reduced deposit of 5% of the remaining disputed tax in addition to any earlier deposit under the statutory provision. - HELD THAT: - Having regard to the petitioner's pleaded financial constraints (including effects of the Covid-19 pandemic) and in the exercise of judicial discretion to mitigate hardship where the statutory appellate forum is not available, the Court directed the petitioner to deposit with the GST authorities a sum equal to 5% of the remaining amount of tax in dispute, over and above the deposit already made under sub-section (6) of Section 107 of the Act. This direction balances the statutory pre-deposit requirement with the petitioner's financial predicament and facilitates continuation of the challenge before this Court. [Paras 4, 7]

Petitioner to deposit 5% of the remaining disputed tax in addition to the earlier deposit under Section 107(6).

Conditional stay of demand upon deposit - Effect of the directed deposit on the stay of recovery of the demand raised by respondents. - HELD THAT: - The Court ordered that if the directed payment is made within two weeks from the date of demand raised pursuant to the impugned appellate order, any demand raised by the respondents under the order dated 9th January, 2024, shall remain stayed until the end of September, 2024, or until further order, whichever is earlier. The stay is expressly conditional upon timely compliance with the deposit direction. [Paras 8]

Demand shall remain stayed till end of September 2024 (or until further order) if the directed deposit is made within two weeks.

Use of appellate record before the court - Procedure for placing the appellate record before this Court and filing of a paper book by the petitioner. - HELD THAT: - The parties agreed that the writ petition can be disposed of on the materials available before the Appellate Authority. The Court directed the petitioner to compile and file a paper book containing all documents filed before the Appellate Authority and to serve an advance copy on the respondents. The respondents were directed to ensure that the records of the Appellate Authority are placed before the Court when the matter is next taken up, facilitating adjudication on the existing appellate record. [Paras 9, 10, 11]

Petitioner to file a paper book of appellate records; respondents to place Appellate Authority records before the Court.

Final Conclusion: Writ petition admitted and heard on merits of maintainability; petitioner directed to make a further deposit of 5% of the remaining disputed tax (in addition to earlier deposit) within two weeks to secure a conditional stay of demand until end September 2024; directions given for filing of paper book and placing appellate records before the Court; matter listed in the Combined Monthly List of July 2024.

Non-speaking order - Requirement to record reasons for rejecting taxpayer's reply - Statutory mandate of personal hearing under Section 75(4) of the GST enactments - Remand for fresh consideration with opportunity of personal hearing - Verification of documentary evidence in tax proceedings

Non-speaking order - Requirement to record reasons for rejecting taxpayer's reply - Impugned order is unreasoned and unsustainable for failing to discuss and record reasons for rejecting the petitioner's reply and supporting documents. - HELD THAT: - The court examined the impugned order and noted that, although the petitioner's reply and various documents (audited financial statements, tax audit report, Form 26AS, trial balance and the reply) were adverted to, the order contains no discussion of that reply nor any reasoned explanation for its rejection. The extract in the order merely states that proper documents were not submitted without articulating why the documents produced were insufficient. For this reason the order is held to be a non-speaking, unreasoned order which cannot be sustained and is set aside. [Paras 5]

Impugned order quashed for being unreasoned; matter remitted for reconsideration.

Statutory mandate of personal hearing under Section 75(4) of the GST enactments - Verification of documentary evidence in tax proceedings - Statutory requirement of providing a personal hearing was not complied with and renders the proceedings flawed. - HELD THAT: - The court observed that sub-section (4) of Section 75 of the applicable GST enactments mandates that a personal hearing be provided either if requested or if an order adverse to the taxpayer is proposed. That statutory prescription was not followed in the present case. Given the absence of a personal hearing before issuing an adverse order, the procedure mandated by statute was breached, warranting set aside of the order. [Paras 6]

Proceedings vitiated by failure to afford personal hearing; remand required.

Remand for fresh consideration with opportunity of personal hearing - Matter remitted to the respondent for reconsideration with directions to provide a reasonable opportunity including a personal hearing and to pass a fresh reasoned order within three months. - HELD THAT: - In consequence of the defects identified-absence of reasoned rejection of the taxpayer's reply and non-compliance with the statutory requirement of a personal hearing-the court directed that the impugned order be set aside and the matter remanded. The respondent is required to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order. The fresh adjudication is to be completed within three months from receipt of the petitioner's reply. [Paras 7]

Remand to respondent for fresh consideration with personal hearing and issuance of a reasoned order within three months.

Final Conclusion: Impugned order dated 30.12.2023 set aside for being non-speaking and for failure to afford the statutorily mandated personal hearing; matter remitted to the respondent to reconsider after providing a reasonable opportunity including a personal hearing and to pass a fresh reasoned order within three months; no order as to costs.

Breach of principles of natural justice - mismatch between GSTR-3B and auto-populated GSTR-2A - entitlement to Input Tax Credit - Circular No. 183/15/2022-GST procedure for mismatch - right to personal hearing - quashing of assessment order - remand subject to conditional part-payment - lifting of bank attachment upon quashing

Breach of principles of natural justice - mismatch between GSTR-3B and auto-populated GSTR-2A - Circular No. 183/15/2022-GST procedure for mismatch - entitlement to Input Tax Credit - Validity of the assessment orders in view of alleged non-compliance with principles of natural justice and the procedural requirements for dealing with GSTR-3B/GSTR-2A mismatches - HELD THAT: - The Court found that the assessments arose from an alleged mismatch between the petitioner's GSTR-3B returns and the auto-populated GSTR-2A. Noting the difficulties addressed by Circular No. 183, which prescribes the procedure for handling such mismatches and envisages an enquiry and opportunity to produce supplier or Chartered Accountant certificates, the Court observed that the petitioner was unaware of preceding notices and that no detailed show cause notice had been afforded. Although the petitioner had not participated in the assessment proceedings, he produced a Chartered Accountant's certificate explaining the disparity. Balancing these facts, the Court concluded that interference was justified on grounds of procedural inadequacy and breach of natural justice and thus quashed the impugned assessment orders for fresh consideration. [Paras 6]

Impugned assessment orders quashed for lack of adequate compliance with procedural safeguards and principles of natural justice; matter remanded for fresh consideration.

Remand subject to conditional part-payment - right to personal hearing - quashing of assessment order - lifting of bank attachment upon quashing - Terms and directions governing the remand, including conditional part-payment, opportunity to respond, timeline for fresh assessment, and consequences for bank attachment - HELD THAT: - The Court directed that the writ petitions be remanded on specified terms: the petitioner is to remit 10% of the disputed tax demand for each assessment period within 15 days of receipt of this order and may submit a reply to the show cause notice within the same period. Upon receipt and verification of the remitted amount, the assessing officer must provide a reasonable opportunity, including personal hearing, and pass fresh assessment orders within two months. Because the impugned orders were quashed, any bank attachment shall be lifted. The Court imposed these conditional terms to balance the need for adherence to procedure with the respondents' statutory entitlement to protection of revenue. [Paras 7]

Remand ordered on conditions: petitioner to remit 10% of disputed demand per period and be afforded opportunity including personal hearing; fresh assessment within two months; bank attachment to be lifted consequent to quashing.

Final Conclusion: Both writ petitions are allowed by quashing the impugned assessment orders and remanding the matters for fresh consideration on the specified conditional terms (10% remittance per assessment period, opportunity to reply and personal hearing, fresh orders within two months); bank attachment stands lifted; no costs.

Applicability of CGST/SGST regime - production of documents pursuant to summons - preliminary adjudication of tax applicability - time bound decision by the authority

Production of documents pursuant to summons - Direction to comply with summons and produce documents called for by the Intelligence Officer - HELD THAT: - The Court directed the petitioner to produce all documents specified in the summonses dated 12.7.2023 and 21.10.2023 within seven days. The direction is conditional on the petitioner's compliance: upon production of the documents the first respondent shall hear the petitioner and proceed to decide the preliminary issue raised by the petitioner. The order requires immediate compliance with the statutory summons for inspection and production of records before further adjudicatory steps are taken. [Paras 5]

Petitioner to produce the documents called for by Exts. P1 and P6 within seven days and the matter is to proceed thereafter

Applicability of CGST/SGST regime - preliminary adjudication of tax applicability - time bound decision by the authority - Preliminary question on whether the petitioner's chitty operations fall within the CGST/SGST regime remitted to the Authority for decision - HELD THAT: - The Court did not decide the substantive question of whether the petitioner's chitties and related securities fall within the CGST/SGST net. Instead, it directed that after receiving the documents the first respondent shall hear the petitioner and first decide the petitioner's preliminary objection concerning applicability of the CGST/SGST regime. The Authority is to take a decision on that preliminary issue before proceeding further with the investigation or adjudication, and to do so in accordance with law. [Paras 5]

Preliminary issue as to applicability of CGST/SGST remitted to the first respondent for hearing and decision before further proceedings

Final Conclusion: Writ petition disposed directing compliance with the summonses within seven days and remitting the preliminary question of applicability of CGST/SGST to the first respondent for hearing and decision; pending interlocutory applications dismissed.

Input Tax Credit - Proof of payment of tax by supplier - Documentary evidence for ITC claim - Certificate from supplier under Circular No. 183/15/2022-GST - Assessment remand for verification

Input Tax Credit - Proof of payment of tax by supplier - Documentary evidence for ITC claim - Circular No. 183/15/2022-GST - Assessment remand for verification - Whether the impugned assessment order refusing/ignoring the petitioner's claim of input tax credit should be set aside and the matter remitted to the assessing officer for reconsideration in light of the petitioner's documents and Circular No. 183/15/2022-GST dated 27.12.2022. - HELD THAT: - The petitioner, a registered dealer, produced invoices, proof of payment and related documents to support the claim of input tax credit in respect of Copra received during the financial year 2017-18, but the assessing authority did not consider those documents in the impugned order. The Court noted that the Ministry's Circular No. 183/15/2022-GST provides that for the initial years 2017-18 and 2018-19, where discrepancies between GSTR-3B and GSTR-2A exist and the liability is below the specified threshold, the proper officer may require a certificate from the supplier confirming supply and payment of tax in his return. Having regard to the petitioner's production of some proof regarding invoice and tax payment, and the guidance in the Circular, the Court found it appropriate to set aside the assessment order and remit the matter to the assessing officer for fresh consideration. The petitioner was directed to obtain and produce the supplier's certificate contemplated by the Circular and to produce all other relevant documents; the assessing officer must consider the Circular and all materials submitted and thereafter pass a fresh order in accordance with law. The petitioner was directed to appear before the assessing officer within three weeks with all relevant evidence. [Paras 2, 3, 5, 6]

Impugned assessment order (Ext. P6) set aside and matter remitted to the assessing officer to reconsider the ITC claim in light of Circular No. 183/15/2022-GST and the documents/certificate to be produced by the petitioner; petitioner to appear before the assessing officer within three weeks and a fresh order to be passed in accordance with law.

Final Conclusion: Writ petition disposed by setting aside the impugned assessment order and remitting the matter to the assessing officer for reconsideration in accordance with Circular No. 183/15/2022-GST and on production of the supplier's certificate and other relevant documents; petitioner directed to appear before the assessing officer within three weeks.

Validity of notice issued under Section 148 - Faceless assessment scheme and automated allocation - Scheme under Section 151A - Jurisdiction of Jurisdictional Assessing Officer versus Faceless Assessing Officer - Notice under Section 148 issued through automated allocation - Assessment framed under Section 147 void ab initio

Validity of notice issued under Section 148 - Faceless assessment scheme and automated allocation - Jurisdiction of Jurisdictional Assessing Officer versus Faceless Assessing Officer - Assessment framed under Section 147 void ab initio - Whether the notice under Section 148 and the order under Section 148A(d) issued and passed by the Jurisdictional Assessing Officer are valid where CBDT Notification No.18/2022 dated 29.03.2022 mandates automated allocation and faceless issuance under the Scheme framed under Section 151A. - HELD THAT: - The Scheme issued by CBDT by Notification No.18/2022 pursuant to Section 151A mandates that issuance of notice under Section 148 and assessment/reassessment under Section 147 shall be through automated allocation and in a faceless manner, to the extent provided in Section 144B. The snapshot of the record shows the notice under Section 148 and the order under Section 148A(d) were issued and passed by the Jurisdictional Assessing Officer and not by the Faceless Assessing Officer (NFAC). The Tribunal held that the Scheme contemplates specific jurisdictional allocation to the FAO for issuance of notice under Section 148 and does not permit concurrent jurisdiction of the JAO and FAO. Allowing both would frustrate the Scheme and render faceless proceedings redundant. The mandatory character of "automated allocation" in paragraph 3 of the Scheme means the department cannot choose to bypass the prescribed allocation mechanism. Applying these principles to the facts, the issuance of notice under Section 148 and the order under Section 148A(d) by the JAO contravened Notification No.18/2022 and Section 151A, and therefore the reassessment proceedings under Section 147 based on that notice are void ab initio. [Paras 8, 10, 11, 12, 15]

The notice under Section 148 and the order under Section 148A(d) issued/passed by the Jurisdictional Assessing Officer are invalid under Notification No.18/2022; the assessment framed under Section 147 is quashed as void ab initio.

Final Conclusion: Appeal allowed; reassessment proceedings and assessment framed under Section 147 for Assessment Year: 2016-17 quashed as void ab initio for non-compliance with the faceless Scheme under Notification No.18/2022; other grounds not adjudicated.

Revenue receipt versus capital receipt - capital asset - rights in property - transfer (including relinquishment of rights) - license versus lease - intention and exclusive possession test - trading/agency contract - compensation on termination - loss of source of income versus loss of an asset of enduring value - compensation for termination of contract

Revenue receipt versus capital receipt - capital asset - rights in property - transfer (including relinquishment of rights) - license versus lease - intention and exclusive possession test - trading/agency contract - compensation on termination - Nature of Rs. 32.42 crores received by the assessee under the Settlement Agreement/Consent Terms - revenue receipt and not long term capital gain - HELD THAT: - The operating licence agreement dated 03.05.1986 was a commercial trading/service contract under which ITC operated the Hotel for ELEL, collected revenue, bore operating costs and paid licence fees linked to gross turnover; no right, title or interest in the Hotel was created in favour of ITC. The settlement/consent terms and award merely terminated and settled disputes arising out of that trading contract and recorded a payment described as relinquishment of rights to operate the Hotel. Applying established principles distinguishing compensation for termination of a trading contract (revenue) from compensation for loss of an asset of enduring value (capital), the Court found that the payment was in respect of trading operations and not for transfer of any capital asset or enduring proprietary right. The licence, read in entirety (including Articles V, VI, IX, XVII and XVIII), did not confer proprietary interest; the payment was therefore compensatory for loss/termination of a trading arrangement and not chargeable as long term capital gain under Sections 2(14), 2(47) and 45. Earlier authorities treating termination/compromise receipts in similar circumstances as revenue receipts were applied to reach this conclusion. [Paras 23, 30, 31, 32]

Rs. 32.42 crores is a revenue receipt in the hands of the assessee and not a long term capital gain

Final Conclusion: The appeal is allowed in part: the ITAT's finding that Rs. 32.42 crores constituted long term capital gain is set aside and the amount is held to be a revenue receipt assessable as business income for AY 2006 07.

Section 80-IC deduction - Thirteenth Schedule negative list - construction of schedule Part A vis-a -vis Part B - interpretation of exemption provisions in a taxing statute - manufacture as qualifying activity for deduction - assessee's burden to show inclusion in the positive list

Manufacture as qualifying activity for deduction - Section 80-IC deduction - Whether the process adopted by the assessee amounted to manufacture and thus attracted deduction under Section 80-IC. - HELD THAT: - The Tribunal had earlier declined Revenue's plea on the manufacturing aspect; the High Court records undisputed material showing the unit commenced production on 27.06.2006 in the notified area and that the product was pan masala produced from listed raw materials none of which include tobacco. Applying the ordinary and grammatical meaning of 'manufacture' and having regard to the factual findings recorded by the Assessing Officer and the Commissioner (Appeals), the Court holds that the process adopted by the assessee amounts to manufacture/production within the meaning of Section 80-IC(2). The determinative factual and legal finding is that the unit did manufacture pan masala in the specified notified unit and therefore satisfies the primary predicate for claiming the deduction under Section 80-IC(2)(a)(i). [Paras 16]

The assessee's process is manufacture and satisfies the qualifying activity for deduction under Section 80-IC.

Thirteenth Schedule negative list - construction of schedule Part A vis-a -vis Part B - interpretation of exemption provisions in a taxing statute - assessee's burden to show inclusion in the positive list - Whether pan masala without tobacco is excluded from deduction by Entry 1 of Part A of the Thirteenth Schedule or otherwise falls outside eligibility. - HELD THAT: - Section 80-IC(2)(a) provides that an undertaking established in a notified area is eligible unless it manufactures an article specified in the Thirteenth Schedule. Part A of the Thirteenth Schedule (applicable to Sikkim) lists 'Tobacco and tobacco products (including cigarettes, cigars and gutka, etc.)' but does not expressly include 'pan masala'. Entry 1 of Part B (applicable to Himachal Pradesh and Uttaranchal) expressly mentions 'pan masala'. The Court holds that it is impermissible to import the text of Part B into Part A; the Legislature's omission of 'pan masala' from Part A is decisive. Applying established principles of strict construction of fiscal statutes and the assessee's burden to show inclusion in the positive list, the Tribunal's conclusion that pan masala is covered by Part A is contrary to the plain language of the schedule. Consequently an item not specified in Part A cannot be treated as excluded by reference to Part B. [Paras 18, 19]

Pan masala (without tobacco) is not excluded by Entry 1 of Part A of the Thirteenth Schedule for Sikkim and therefore does not fall within the negative list that would bar Section 80-IC deduction.

Final Conclusion: Both substantial questions of law are answered in favour of the assessee: the product manufactured is pan masala without tobacco and the Thirteenth Schedule Part A for Sikkim does not exclude pan masala; accordingly the assessee is entitled to deduction under Section 80-IC(2)(a)(i) read with Section 80-IC(3) for the assessment years in issue and the Tribunal's impugned orders are set aside.

Extension of time to comply with court directions - reopened assessment and reassessment proceedings under Section 148 of the Income tax Act, 1961 - reasoned order on objections to notice under Section 148 - faceless assessment procedure and physical verification of documents - timeliness of interim application

Extension of time to comply with court directions - reopened assessment and reassessment proceedings under Section 148 of the Income tax Act, 1961 - reasoned order on objections to notice under Section 148 - timeliness of interim application - Extension of time of six months from 30.06.2024 granted to the revenue to comply with the High Court order dated 23.01.2024 enabling filing of objections to the notice dated 31.03.2021 and completion of reassessment proceedings. - HELD THAT: - The Court observed that the objections under paragraph six of its order dated 23.01.2024 have been decided by the Assessing Officer by an order dated 8.6.2024, albeit beyond the timeline fixed by the Court. Paragraph seven of the earlier order required completion of reassessment proceedings on or before 30.6.2024. The interim application filed on 24.6.2024 was within the timeline prescribed by paragraph seven. Given that the Assessing Officer must now undertake the second step of completing reassessment and that voluminous documents require consideration, the Court found it appropriate in the facts and circumstances to extend the time sought. The interim relief was therefore granted in terms of the prayer for a further six months from 30.6.2024, while keeping all contentions open. [Paras 7, 9, 10, 11]

Interim application allowed; time extended for six months from 30.06.2024 to comply with the order dated 23.01.2024.

Faceless assessment procedure and physical verification of documents - reasoned order on objections to notice under Section 148 - Permission for the Assessing Officer to consider the assessee's request for physical verification of documents and to communicate his decision within two weeks. - HELD THAT: - The Court noted the assessee's application to the Assessing Officer dated 21.6.2024 seeking physical verification on the ground that the faceless assessment procedure makes uploading voluminous documents difficult. The Court held that it is permissible for the Assessing Officer to consider that application and take an appropriate view as required by law, and directed that the decision be communicated to the assessee/petitioner within two weeks from the date of the order. This direction was issued while expressly leaving all contentions of the parties open. [Paras 13, 14]

Assessing Officer permitted to consider the request for physical verification and to communicate his decision within two weeks.

Final Conclusion: The interim application is allowed: the revenue is granted an extension of six months from 30.06.2024 to comply with the Court's order dated 23.01.2024, and the Assessing Officer is directed to consider the assessee's request for physical verification of documents and communicate his decision within two weeks; all other contentions remain open.

Reopening of assessment - failure to disclose fully and truly all material facts - reason to believe - change of opinion - borrowed satisfaction - writ remedy against notice under Section 148

Reopening of assessment - failure to disclose fully and truly all material facts - reason to believe - change of opinion - borrowed satisfaction - Validity of the reopening of assessment by issuance of notice under Section 148 for A.Y. 2013-14 - HELD THAT: - The Court examined whether the Assessing Officer had requisite reason to believe that income chargeable to tax had escaped assessment for A.Y. 2013-14 and whether such belief was based on material coming to the AO after the original assessment. The recorded reasons relied on audit observations already available in the assessment record and amounted to a borrowed satisfaction of the Audit Party rather than fresh material newly discovered by the AO. The original assessment order (dated 28.03.2016) was a speaking order where the AO had perused books, invoices and formed an opinion that the imported items were for packing and treated as revenue expenditure; consequently the reassessment grounds sought a contrary view on identical material which amounted to a change of opinion. Applying the principles in Calcutta Discount, Mangalam Publications and TechSpan, the Court held that reopening cannot be justified where no new tangible material with a live link to escapement has been placed on record and where the reopening is founded on reconsideration of the same facts previously examined. For the claimed imported items and the amounts claimed under Section 80IC, there was no material to show that these were not before the AO at the time of original assessment or that they amounted to undisclosed capital expenditure or non-manufacturing receipts; therefore the statutory precondition of failure to disclose fully and truly such material facts was not satisfied. [Paras 30, 32, 33, 34, 35]

Reopening of the assessment and the notice issued on 30.03.2021 were quashed as the reasons were based on the same material already considered in the original assessment and amounted to impermissible change of opinion/borrowed satisfaction.

Writ remedy against notice under Section 148 - Maintainability of writ challenging the notice under Section 148 and rejection of objections - HELD THAT: - The Court considered whether relief by way of writ was barred by existence of alternate remedies. Relying on Calcutta Discount Co. the Court observed that High Courts can, in a fit case, entertain writs to prevent an authority from acting without jurisdiction and to avert lengthy proceedings and harassment where conditions precedent to jurisdiction are alleged to be absent. Given the contention that statutory preconditions for reopening were not satisfied and the challenge was taken at the earliest opportunity, the Court found it appropriate to exercise writ jurisdiction to examine and set aside the impugned action. [Paras 36]

Writ petition held maintainable; the rejection of objections was quashed along with the reopening notice.

Final Conclusion: Writ petition allowed. The notice under Section 148 dated 30.03.2021 for A.Y. 2013-14 and the order rejecting the petitioner's objections were quashed on the ground that the reopening was founded on the same material already considered in the original assessment (constituting change of opinion/borrowed satisfaction) and the High Court entertained the writ as a fit case to prevent action taken without jurisdiction.

Cancellation of registration under Section 12AA(3) - genuineness of activities of a charitable trust - application of funds to the objects of the trust - treatment of donations as general donations and taxation under settlement proceedings - proof required to sustain cancellation of registration

Cancellation of registration under Section 12AA(3) - genuineness of activities of a charitable trust - application of funds to the objects of the trust - treatment of donations as general donations and taxation under settlement proceedings - Validity of cancellation of the assessee Trust's registration under Section 12AA(3) on the basis of alleged receipt of bogus donations and purported money-laundering - HELD THAT: - The Tribunal found that cancellation under Section 12AA(3) can be ordered only if the Commissioner is satisfied that the activities of the trust are not genuine and/or are not being carried out in accordance with its objects, and that no material supported satisfaction on either limb. The record showed that the sum identified by the Revenue was ultimately treated as a general donation and subjected to tax in settlement proceedings, and the Trust's application of the funds for charitable purposes was not disbelieved by the CIT(E). Statements relied on by the Revenue (including those from SHGPH personnel) did not, by themselves, establish that the Trust had paid out cash and received back donations as cheques, nor did the Revenue examine alleged brokers. There was no material demonstrating that the Trust participated in laundering or that the donations were bogus; on the contrary, the evidence indicated that unaccounted monies of trustees had been routed as donations into the Trust rather than Trust funds being misapplied. In these circumstances the requisite satisfaction under Section 12AA(3) to cancel registration was absent and the Tribunal's quashing of the cancellation was untainted by illegality or perversity. [Paras 6, 8, 9, 10]

Cancellation of the Trust's registration under Section 12AA(3) quashed; appeal dismissed

Final Conclusion: The High Court affirmed the Tribunal's finding that the Revenue failed to establish either non-genuineness of activities or non-application of funds to the Trust's objects required for cancellation under Section 12AA(3); the cancellation order was quashed and the appeal dismissed.

Best judgment assessment - estimation of income by applying a net profit rate - rejection of books of account and consequent estimation - use of material from comparable cases and past profit rates - due diligence, prudence and objective standards in assessment - notice under Section 133(6) for verification of transactions

Best judgment assessment - estimation of income by applying a net profit rate - use of material from comparable cases and past profit rates - rejection of books of account and consequent estimation - Authority of appellate authorities to estimate income by applying a net profit rate in best judgment assessment where books are rejected and no statutory guideline prescribes the percentage - HELD THAT: - The Court held that where the assessing officer rejects books of account after deficiencies and non-verification of purchases (including non-response to notices under Section 133(6)), appellate authorities may, in the exercise of best judgment, estimate income by applying an appropriate net profit percentage provided the estimate has nexus with material on record and is not arbitrary. The CIT(A) and Tribunal may take assistance from net profit rates reflected in the assessee's past and comparable cases and from accepted practices in the trade; but they must act with due diligence, prudence and reasonableness, grounded on objective standards and documented justification. In the present case the CIT(A) applied an 8% net profit rate after noting the assessee's failure to produce verification, prior years' and others' profit rates, and the assessee's own acceptance of the rate before the CIT(A). The Tribunal upheld those findings, and the High Court found no material to show the 8% determination was perverse or legally unsustainable. The Court reiterated that some degree of guesswork is inherent in best judgment assessments, but such estimates are immune from interference so long as they are connected to the record and not exercised arbitrarily or capriciously. [Paras 7, 8, 10, 11]

The appellate authorities were entitled to estimate income by applying a net profit rate of 8% on the gross contract receipts in the circumstances; the determination was not arbitrary and is sustained.

Final Conclusion: The substantial question of law is answered in favour of the assessee: the CIT(A) and the Tribunal validly applied an estimated net profit rate in a best judgment assessment on the facts of this case. The revenue's appeal is dismissed.

Addition on account of unexplained expenditure - addition on account of unsubstantiated legal expenses - value of entries in seized diary as evidential material - onus on Revenue to disprove sworn affidavit and explanations - concurrent findings of fact and test of perversity - search and seizure under Section 132

Addition on account of unexplained expenditure - value of entries in seized diary as evidential material - onus on Revenue to disprove sworn affidavit and explanations - concurrent findings of fact and test of perversity - Deletion of addition of Rs. 2,28,54,314/- as unexplained expenditure upheld by the Tribunal and challenged by Revenue - HELD THAT: - The Tribunal accepted the assessee's explanation that group companies had offered the corresponding amounts as income for Assessment Year 2007-08, treating that as a plausible explanation for the entries. The assessee also filed a sworn affidavit supporting its stance. The Assessing Officer failed to bring corroborative evidence to disprove the affidavit or to establish that the diary entries related exclusively to Assessment Year 2010-11, relying instead on presumption. The High Court found no perversity in the Tribunal's concurrent factual findings: the Tribunal and the Commissioner (Appeals) reached a possible view on the materials on record, namely that the department had not satisfactorily disproved the assessee's explanation and affidavit, and therefore the addition could not be sustained.

The Tribunal's deletion of the unexplained expenditure addition is sustained; the Revenue's challenge fails.

Addition on account of unsubstantiated legal expenses - value of entries in seized diary as evidential material - onus on Revenue to disprove sworn affidavit and explanations - concurrent findings of fact and test of perversity - Deletion of addition of Rs. 2,00,00,000/- treated as legal expenses upheld by the Tribunal and challenged by Revenue - HELD THAT: - On the materials, the Tribunal observed that the seized diary did not show dates or particulars sufficient to conclude that the amount was actually incurred by the assessee as legal expenses in the relevant year. The assessee filed a duly sworn affidavit asserting its position, which the Assessing Officer did not disprove or corroborate with independent evidence. Given the absence of discernible particulars and corroboration, the Tribunal and the CIT(A) recorded a factual conclusion that the addition could not be sustained. The High Court held that this was a possible view based on the record and not perverse.

The Tribunal's deletion of the addition treated as legal expenses is sustained; the Revenue's challenge fails.

Final Conclusion: The Revenue's appeal is dismissed. The High Court finds no question of law arising, upholds the Tribunal's concurrent factual findings that the additions were not justified on the record, and declines to interfere as the conclusions are not perverse.

Approved superannuation fund - Exemption under Section 10(25)(iii) - Withdrawal of approval - Assessing officer's jurisdiction to withdraw approval - Quasi-judicial character of approval and withdrawal - Deemed withdrawal on alteration of rules/constitution

Approved superannuation fund - Assessing officer's jurisdiction to withdraw approval - Exemption under Section 10(25)(iii) - Quasi-judicial character of approval and withdrawal - Whether the assessing officer could deny exemption under Section 10(25)(iii) by holding that the fund lost its recognition in the absence of any withdrawal of the approval by the Commissioner - HELD THAT: - The Court held that approval of a superannuation fund is granted and can be withdrawn only by the Chief Commissioner or Commissioner under the rules; the assessing officer has no power to withdraw or treat the approval as having ceased. The Rules (Part B, Fourth Schedule) require written communication of withdrawal by the competent authority after giving trustees a reasonable opportunity of being heard, and provide for appeals against such withdrawal. In consequence, where the approval continued for the assessment year (admitted in this case for AY 2005-06) the assessing officer could not, on the basis of alleged non-compliance with conditions, treat the fund as unapproved and deny exemption. If the assessing officer suspects non-compliance he may call for information or bring the matter to the competent authority for possible withdrawal, but he cannot himself undo the approval. The Court relied on the settled principle that quasi judicial orders of approval cannot be treated as void or non existent by inferior authorities and cited precedents recognizing that until the competent authority withdraws approval, taxing authorities must proceed on the basis that the fund satisfies the conditions for recognition. Applying these principles to the facts, the ITAT's conclusion that the fund lost recognition and that exemption under Section 10(25)(iii) was forfeited was without jurisdiction and legally unsustainable. [Paras 16, 17, 19, 20, 23]

The Tribunal erred in law; in absence of any withdrawal of the approval by the Commissioner, the assessing officer could not deny exemption and the ITAT order upholding such denial is set aside.

Final Conclusion: The appeal is allowed: the substantial question is answered in favour of the assessee - where approval of the superannuation fund for AY 2005-06 remained unwithdrawn, the assessing officer had no jurisdiction to treat the fund as unapproved and deny exemption under Section 10(25)(iii); the ITAT order is set aside.

Penalty under section 271FA - Reasonable cause for delay in filing SFT/AIR - Obligation to file Specified Financial Transactions (SFT)/Annual Information Return (AIR) - Notice under section 285BA and consequential compliance

Penalty under section 271FA - Reasonable cause for delay in filing SFT/AIR - Notice under section 285BA and consequential compliance - Whether penalty under section 271FA could be sustained where the assessee failed to file the SFT/AIR within the statutory time and did not furnish a reasonable cause for the delay. - HELD THAT: - The assessee, a cooperative bank, was statutorily obliged to file the Specified Financial Transactions/Annual Information Return by 31.1.2017 but did not do so. The assessing authority issued notices under section 285BA(5) and subsequently a showcause/penalty notice under section 271FA read with section 274; despite opportunities, the assessee did not file the SFT by the time the penalty order was passed. The assessee contended that there was a reasonable cause for delay and relied on an ITAT Nagpur decision where penalty was deleted on grounds of reasonable cause. The Tribunal distinguished that precedent on the factual matrix because, in the present case, the assessee did not adduce any reasonable or justifiable cause for non-filing and had been repeatedly called upon by the department without compliance. The Tribunal emphasised that submission of AIR/SFT is a mandatory compliance to enable the Department to track high-value transactions and that the assessee should have suo moto filed the return. On these facts, and in the absence of any acceptable explanation, the Tribunal found no error in the authorities below in imposing and confirming the penalty under section 271FA. [Paras 7, 8, 9, 10]

Penalty under section 271FA confirmed and the assessee's appeal dismissed.

Final Conclusion: The Tribunal upheld the penalty imposed under section 271FA for non-filing of SFT/AIR for AY 2017-18, finding no reasonable cause for delay, and dismissed the appeal.

Exemption under Section 11 - Condonation of delay in filing audit report - Audit report in Form No. 10B - Registration under Section 12A - Return processed under Section 143(1)(a)

Exemption under Section 11 - Audit report in Form No. 10B - Condonation of delay in filing audit report - Registration under Section 12A - Assessee entitled to exemption under Section 11 for AY 2022-23 after condonation of delay in filing Form No.10B - HELD THAT: - The tribunal recorded that the sole reason for denial of exemption under Section 11 in the return processed under Section 143(1)(a) was the belated filing of the audit report in Form No.10B. The assessee possessed registration under Section 12A and there was no adverse finding by the authorities as to the correctness of the claim that amounts were applied for charitable purposes. The assessee's application under Section 119(2)(b) for condonation of delay (132 days) in filing Form No.10B for AY 2022-23 was allowed after the impugned order. Given that the only ground for denial was the delay and that delay has been condoned, the tribunal held that the assessee is entitled to the benefit of exemption under Section 11 as claimed in the return for AY 2022-23. [Paras 4]

Sole ground of denial being delay in filing Form 10B having been condoned, the assessee's claim for exemption under Section 11 for AY 2022-23 is allowed.

Final Conclusion: Appeal allowed: exemption under Section 11 granted for Assessment Year 2022-23 following condonation of delay in filing Form No.10B.

Exemption under Section 11(2) - Filing of Form No.10 and Form No.10B - Requirement of filing audit report before the due date under Section 139(1) - Rectification under Section 154

Exemption under Section 11(2) - Filing of Form No.10 and Form No.10B - Requirement of filing audit report before the due date under Section 139(1) - Whether the claim for deduction under Section 11(2) can be denied because Form No.10B was not filed along with the return of income - HELD THAT: - The return was filed on 29.11.2014 and Form No.10 and the audit report in Form No.10B were filed on 30.11.2014. The Central Processing Centre had initially disallowed the exemption noting missing information in Schedule J & I and that the required forms were not filed along with the return. The assessee corrected the deficiency by filing a revised return and produced evidence of filing Form No.10 and Form No.10B within the time allowed under Section 139(1). The Tribunal held that the audit report in Form No.10B need not be physically filed along with the return; it is sufficient if it is filed within the statutory due date prescribed by Section 139(1). Since the audit report and Form No.10 were filed within the permissible time, the claim under Section 11(2) was rightly allowed by the CIT(A). [Paras 7, 8]

The CIT(A)'s allowance of the deduction under Section 11(2) is upheld as Form No.10 and Form No.10B were filed within the time allowed under Section 139(1).

Final Conclusion: Revenue's appeal is dismissed; the order of the CIT(A) allowing the exemption under Section 11(2) is upheld because the requisite forms were filed within the statutory due date.

Requirement of specificity in a notice - defective show-cause notice - penalty under section 271(1)(c) read with section 274 - fatal defect in mandatory communication - deletion of penalty for non-specific charge - prejudice test in challenge to notice

Requirement of specificity in a notice - defective show-cause notice - penalty under section 271(1)(c) read with section 274 - deletion of penalty for non-specific charge - Validity of the notice issued under section 274 read with section 271(1)(c) and consequent sustainment of penalty for Assessment Year 2015-16 - HELD THAT: - An additional ground challenging the penalty notice as defective for failure to specify the applicable limb of section 271(1)(c) was admitted as a pure question of law. The Tribunal examined competing Bombay High Court authorities: Mohd. Farhan A. Shaikh, which held that absence of a specific charge is fatal and a notice must be precise, and Veena Estate (P) Ltd., where the Court applied a prejudice-based approach on the peculiar facts of that case. The Tribunal found the facts of the present case aligned with Mohd. Farhan A. Shaikh and distinguished Veena Estate on its own peculiar factual matrix. Applying the principle that a mandatory requirement for a valid communication is fatal if not met and that a notice must give no room for ambiguity, the Tribunal concluded the Assessing Officer failed to specify the charge in the show-cause notice and, therefore, the penalty could not be sustained. [Paras 3, 9, 10]

Penalty under section 271(1)(c) for AY 2015-16 deleted as the notice under section 274 read with section 271(1)(c) was non-specific and therefore defective.

Final Conclusion: The appeal is allowed; the penalty imposed under section 271(1)(c) for Assessment Year 2015-16 is quashed because the show-cause notice issued under section 274 read with section 271(1)(c) did not specify the applicable charge and was therefore defective.

Penalty under section 271(1)(c) of the Income-tax Act - furnishing of inaccurate particulars of income - classification of asset for depreciation - interpretation of 'computer' for block of depreciation - mere disallowance not attracting penalty - precedential reliance on principles in Reliance Petro Products

Penalty under section 271(1)(c) of the Income-tax Act - furnishing of inaccurate particulars of income - classification of asset for depreciation - mere disallowance not attracting penalty - precedential reliance on principles in Reliance Petro Products - Validity of penalty imposed under section 271(1)(c) for excess depreciation claimed on biometric devices by treating them as part of the computer block - HELD THAT: - The Tribunal examined whether the assessee's claim of higher depreciation on biometric devices (treating them as part of the computer block) amounted to furnishing inaccurate particulars of income warranting penalty under section 271(1)(c). The assessment disallowed the higher rate by classifying the devices under plant and machinery and made an addition; the issue is one of classification and interpretation of the scope of 'computer' for depreciation purposes rather than falsity of the asset or concealment. Reliance was placed on the Supreme Court's reasoning in Reliance Petro Products to the effect that merely making a claim which is unsustainable in law does not, by itself, constitute furnishing inaccurate particulars and cannot attract penalty unless details furnished are incorrect, erroneous or false. Applying those principles, and noting that the assessee had disclosed and explained the claim and that the dispute concerned legal interpretation of asset classification, the Tribunal held that the non-acceptance of the claim by the Assessing Officer did not justify imposition of penalty. The penalty was therefore not sustainable and was deleted.

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

Final Conclusion: The Tribunal deleted the penalty levied under section 271(1)(c) in respect of the disputed depreciation claim on biometric devices for AY 2012-13, holding that the contested classification was a matter of interpretation and mere disallowance did not amount to furnishing inaccurate particulars of income.

Condonation of delay - exemption under sections 11 and 12 - registration under section 12AA - retrospective operation of the first proviso to section 12A(2) - CBDT Circular No. 01/2015 dated 21.01.2015 - remand for de novo assessment - non-production of books of account and supporting documents - natural justice - additions not confronted

Condonation of delay - interest of justice - Delay in filing the appeal before the Tribunal was condoned. - HELD THAT: - The assessee filed a condonation application explaining the cause of delay (illness and subsequent death of the president's sister and delay in becoming aware of the appellate order). The Revenue raised no objection to condonation. Having considered the explanation and absence of objection from the Department, the Tribunal found the reasons satisfactory and condoned the delay of 68 days to enable adjudication on merits. [Paras 2]

Delay condoned.

Applicability of registration under section 12AA to earlier assessment years - retrospective operation of the first proviso to section 12A(2) - CBDT Circular No. 01/2015 dated 21.01.2015 - remand for de novo assessment - Whether the benefit of exemption under sections 11 and 12 by virtue of registration under section 12AA (and the proviso to section 12A(2) as explained by CBDT Circular No. 01/2015) applies to the year under assessment and whether the matter requires fresh adjudication. - HELD THAT: - The Tribunal noted that the question regarding the applicability of the registration and the amended proviso to section 12A(2), and the reliance on CBDT Circular No. 01/2015, was neither raised nor considered by the Assessing Officer during assessment. Given the absence of consideration at the AO level and the material bearing on the contention, the Tribunal held it appropriate to set aside the case to the file of the AO for a de novo fresh assessment. The AO is directed to consider all arguments of the assessee, including the cited CBDT Circular and the claimed applicability of registration to earlier years, and to examine all books of account and supporting documentary evidence after affording the assessee proper opportunity of being heard. [Paras 9]

Matter remanded to the Assessing Officer for de novo assessment with directions to consider the applicability of registration under section 12AA and the proviso to section 12A(2) (and CBDT Circular No. 01/2015), and to examine books and documents after giving opportunity of hearing.

Non-production of books of account and supporting documents - dismissal for non-prosecution - natural justice - additions not confronted - The factual finding that the assessee did not produce books of account or documentary evidence before the AO or the first appellate authority and that the CIT(A) issued notices which were not complied with. - HELD THAT: - The Tribunal recorded that no documentary evidence, books of account, bills or vouchers were produced before the Assessing Officer or before the CIT(A). The CIT(A) had issued four notices through the departmental portal and by e-mail, yet the assessee did not comply or appear before the first appellate authority. While the CIT(A) treated the conduct as non-prosecution and declined to interfere with the AO's findings, the Tribunal, despite noting this lack of cooperation, directed a fresh assessment to ensure that the new statutory/contentions (including registration applicability and the CBDT circular) are examined on merits after production of records and opportunity to be heard. [Paras 9]

Recorded non-production/non-compliance but directed fresh assessment to permit examination of records and contentions on merits.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and set aside the assessment matter to the file of the Assessing Officer for de novo fresh assessment; the AO is directed to consider the applicability of registration under section 12AA and the first proviso to section 12A(2) (including CBDT Circular No. 01/2015), to examine books and supporting documents after affording the assessee proper opportunity of hearing; the appeal is allowed for statistical purposes.

Transaction value - rejection of declared value under Rule 12 - identical goods valuation under Rule 4 - commercial level and quantity adjustments - burden on department to prove under-valuation - Legal Metrology (Packaged Commodities) Rules, 2011 applicability - Drugs and Cosmetics Act, 1940 applicability

Transaction value - burden on department to prove under-valuation - Prices declared in the 44 B/Es filed by the appellants are to be accepted as the transaction value for customs assessment. - HELD THAT: - The Tribunal held that Section 14 read with Rule 3(1) requires the assessable value to be the price actually paid or payable where the buyer and seller are unrelated and price is the sole consideration. The invoices correspond with the B/Es, payments were routed through banking channels and there was no evidence of any additional payment or mis-description attributable to the appellants. Reliance on Supreme Court decisions establishes that an invoice price must be accepted unless under-valuation is proved by the Department. The adjudicating authority erred in discarding the invoice prices without material showing extraneous payments or mis-declaration and by failing to apply Section 14 and Rule 3(1) properly. [Paras 7]

Declared invoice prices in the disputed B/Es represent the transaction value and cannot be rejected absent proof of under-valuation.

Rejection of declared value under Rule 12 - identical goods valuation under Rule 4 - commercial level and quantity adjustments - The department could not validly reject the declared values relying on two contemporaneous B/Es and proceed to determine value under Rule 4. - HELD THAT: - Rule 12 provides the procedure to raise reasonable doubt and, if sustained, to proceed sequentially through Rules 4-9. Even assuming doubt, Rule 4 permits use of transaction value of identical goods only where sales are at the same commercial level and in substantially the same quantity, with adjustments demonstrated by evidence. The Tribunal found the contemporaneous imports relied upon by the Department related to retail-level, minuscule quantities, whereas the appellants imported at wholesale commercial level in vastly larger quantities (as set out in the record). Statements relied upon by the Department did not show mala fides or additional payments by the appellants. Therefore, Rule 4 could not be applied to re-determine value in these facts. [Paras 8]

Rejection of declared value and determination under Rule 4 using the two B/Es was not permissible given difference in commercial level, quantity and absence of proof of undervaluation.

Legal Metrology (Packaged Commodities) Rules, 2011 applicability - Drugs and Cosmetics Act, 1940 applicability - Appellants, as importers/wholesalers of perfumes and deodorants in wholesale packages, fall within the regulatory scope of the Drugs and Cosmetics statute and not the Retail provisions of the Legal Metrology Rules; they were not required to comply with retail MRP affixation applicable to retail packages. - HELD THAT: - The Tribunal examined Rule 2(k) and 2(r) of the Legal Metrology Rules and Rule 24 (declarations on wholesale packages) and concluded that wholesale packages intended for intermediaries are governed differently from retail packages. The proviso to Rule 24 preserves situations where other laws require declarations on wholesale packages. For imported cosmetics, Rule 129H and Part XV of the Drugs and Cosmetics Rules require labelling and registration compliance; the Department did not allege any contravention of the Drugs and Cosmetics statute against the appellants nor did the enforcement authorities initiate proceedings. Hence, the appellants, being wholesale importers, were outside the ambit of the retail MRP requirements relied upon by Revenue. [Paras 9]

Appellants are governed by the Drugs and Cosmetics regime for imported cosmetics and not by retail labelling obligations under the Legal Metrology Rules; therefore MRP-based valuation could not be imposed on wholesale imports.

Final Conclusion: The Tribunal set aside the adjudication order in entirety: declared invoice prices were accepted as transaction value, re-determination of value and confiscation, demand, interest and penalties were unsustainable, and the appeal was allowed with consequential reliefs.

Application of Section 123 regarding onus of proof where goods seized by police and handed over to Customs - burden of proof on the Revenue to establish smuggled nature of goods - confiscation of seized goods and currency - imposition of penalty under Section 112 of the Customs Act, 1962 - seizure by police and subsequent delivery to Customs

Application of Section 123 regarding onus of proof where goods seized by police and handed over to Customs - seizure by police and subsequent delivery to Customs - burden of proof on the Revenue to establish smuggled nature of goods - Whether Section 123 of the Customs Act, 1962 applies and casts the onus on the appellants where the goods were seized by police and later handed over to Customs - HELD THAT: - The Tribunal held that where goods are seized by police under other laws and possession vests in the police and thereafter transferred to Customs on judicial direction, there is no fresh seizure by Customs within the meaning of the Customs provisions which would attract Section 123. Relying on the Apex Court's decision in Gian Chand & Others and subsequent tribunal authorities, the onus to prove that the goods are smuggled lies on the Revenue and not on the appellants because Customs did not effect the original seizure from the appellants. The Tribunal therefore concluded that Section 123 is not applicable in the facts of the present case. [Paras 8, 9]

Section 123 does not apply where the police seized the goods and later handed them over to Customs; the burden to prove smuggling is on the Revenue.

Confiscation of seized goods and currency - imposition of penalty under Section 112 of the Customs Act, 1962 - burden of proof on the Revenue to establish smuggled nature of goods - Whether penalties and confiscation ordered by the Adjudicating Authority can be sustained where the Revenue failed to prove that the seized gold was smuggled and that the seized currency represented sale proceeds - HELD THAT: - The Tribunal found that the Revenue failed to discharge the burden of proving that the seized gold was smuggled and that the recovered currency constituted sale proceeds of smuggled gold. Because the foundational onus lay on the Revenue (in view of the police seizure and subsequent handing over), the Tribunal concluded that the Adjudicating Authority could not validly impose penalties under Section 112 on the appellants. The order therefore set aside the penalties imposed on the appellants. The judgment also records the consequence on confiscation in the terms used by the Tribunal. [Paras 10, 11, 12]

Penalties imposed on the appellants are set aside as the Revenue failed to prove smuggling; the Tribunal accordingly allowed the appeals seeking immunity from penalties.

Final Conclusion: Appeals allowed in part: Section 123 held inapplicable because the goods were seized by police and handed to Customs; burden to prove smuggling lay on the Revenue, which failed to discharge it; penalties imposed under Section 112 are set aside and the appeals disposing the challenge to penalty are allowed.

Court's equitable discretion to validate dispositions made during the interregnum under Section 536(2) - void versus voidable construction of 'void' in statutory provisions - bonafide purchaser for consideration without notice - doctrine of relation back under Section 441 - protection of bona fide transactions in winding up in the interest of justice

Court's equitable discretion to validate dispositions made during the interregnum under Section 536(2) - void versus voidable construction of 'void' in statutory provisions - bonafide purchaser for consideration without notice - Whether the sale agreement dated 5th September 2007 is rendered void by Section 536(2) of the Companies Act, 1956 or is a valid, subsisting and binding transaction - HELD THAT: - The Court applied the principle that Section 536(2) declares dispositions after commencement of winding up void but qualifies this by the saving words "unless the Court otherwise orders", conferring equitable discretion to validate interregnum transactions. Reliance was placed on authoritative exposition that the word "void" in this context may mean voidable and that categorical nullity would paralyse company business and produce unjust enrichment. On the facts the Applicant carried out due diligence (public notice, MIDC approval, bank NOC), paid the registered consideration, invested substantially in the property, settled the petitioner's dues by MOU and there were no outstanding claims from workmen or creditors. Applying the legal principle to these facts, the transaction was held to be bona fide, fair, just and reasonable and therefore entitled to protection under the Court's discretion under Section 536(2). The Official Liquidator's arguments that the sale was after presentation of the petition and therefore null were rejected on these grounds. [Paras 40, 41, 42, 43, 44]

Sale agreement dated 5th September 2007 is not affected by Section 536(2) and is ratified as a valid, subsisting and binding transaction.

Protection of bona fide transactions in winding up in the interest of justice - bonafide purchaser for consideration without notice - Whether the Applicant is entitled to injunctive relief restraining the Official Liquidator from dispossessing the Applicant and disturbing its possession of the property - HELD THAT: - In view of the conclusion that the sale agreement is bona fide and binding, and having regard to the Applicant's registered title, payment of consideration, subsequent investments, employment of workers and absence of claims against the company in liquidation, the Court exercised its equitable jurisdiction to protect the Applicant's possession. The Official Liquidator's request for stay of the order was considered and rejected in light of the findings that the 2007 transaction was valid and protected. [Paras 44, 45, 47]

Permanent injunction granted restraining the Official Liquidator from disturbing the Applicant's possession; application made absolute as to prayers seeking non-application of Section 536(2) and injunctive relief; stay refused.

Final Conclusion: The sale dated 5th September 2007 is ratified as a bona fide, valid and binding transaction not hit by Section 536(2); the Applicant is entitled to injunctive protection against dispossession by the Official Liquidator and the request for stay of the order is refused.

Commercial wisdom of the Committee of Creditors - limited judicial review under Section 30(2) and Section 31 - material irregularity in conduct of CIRP by the Resolution Professional - rational classification in eligibility criteria for prospective resolution applicants - locus of a homebuyers' association to challenge approval of a resolution plan - approval of resolution plan notwithstanding pending claims - modification and implementation of assured returns under a resolution plan - use of sale of parking spaces and unsold inventory as a source of funding in a resolution plan - opportunity to prospective resolution applicants and extension of timelines

Rational classification in eligibility criteria for prospective resolution applicants - commercial wisdom of the Committee of Creditors - Different eligibility criteria for associations of allottees vis-a -vis other resolution applicants - HELD THAT: - The CoC exercised its regulatory power under the CIRP framework to specify differing eligibility criteria for categories of prospective resolution applicants. The Tribunal found that differing requirements (including lower performance guarantee for an allottees' association) were rationally based on admitted claims of homebuyers (constituting the vast majority of the CoC) and the commercial objective of maximizing value and effecting revival. The minutes of the CoC meeting show approval of the revised criteria and the cut-off rationale, and the Tribunal held that classification for associations did not amount to impermissible discrimination nor contravened CIRP Regulations. [Paras 32, 33]

Different eligibility criteria for associations of allottees as compared to other resolution applicants is sustainable and does not violate the CIRP Regulations.

Rational classification in eligibility criteria for prospective resolution applicants - Validity of the cut-off date (03.01.2020) for registration of an allottees' association - HELD THAT: - The Committee of Creditors was constituted by a report dated 03.01.2020 and the CoC fixed that associations formed prior to constitution of CoC would qualify for relaxed criteria. The Tribunal found a rational nexus for choosing the constitution date of CoC as the cut-off and observed the Appellant failed to challenge the criteria before the RP or the Adjudicating Authority in a timely manner; registration after that date could not be allowed to retroactively confer eligibility. [Paras 34, 35, 36]

The requirement that an allottees' association be registered prior to 03.01.2020 has a rational basis and cannot be set aside.

Locus of a homebuyers' association to challenge approval of a resolution plan - Locus of Crown Business Park Tower A Buyers Association to file the appeal - HELD THAT: - Though respondents contended the association comprised members who had already voted in the CoC and therefore minority homebuyers lack locus, the Tribunal examined the substance of the association's objections (including eligibility criteria and pending claim-admissions) and concluded that the association raised issues warranting adjudication. The appeal of the association was therefore maintainable and not to be dismissed solely on locus grounds. [Paras 37]

Crown Business Park Tower A Buyers Association has locus to file the appeal.

Approval of resolution plan notwithstanding pending claims - Discrepancy between unsold area stated in addendum and the resolution plan (83,940 sq. ft. v. 1,00,000 sq. ft.) - HELD THAT: - The Tribunal accepted the SRA's accounting: total project saleable area minus admitted-claim area left a larger balance (2,49,171 sq. ft.), of which SRA rationally treated 1,00,000 sq. ft. as available for its funding calculations and retained balance for contingencies. Given CoC deliberations and the SRA's business decision and undertaking to bear liabilities arising from pending claims, the numeric difference did not amount to a material illegality warranting rejection of the plan. [Paras 39, 41, 44]

The reference to 1,00,000 sq. ft. in the resolution plan is not incorrect or a ground to set aside the plan in the facts of this case.

Approval of resolution plan notwithstanding pending claims - commercial wisdom of the Committee of Creditors - Whether a resolution plan could be approved without certainty about saleable area due to pending allottee claims - HELD THAT: - The Adjudicating Authority had consciously categorised and deferred many pending applications and the SRA undertook before the Tribunal/Adjudicating Authority to honour liabilities arising from claims admitted later. The Tribunal held that where the CoC and Adjudicating Authority adopt this sequenced approach and the SRA assumes the risk, absence of finality on saleable area is not a fatal defect under Section 30(2)/31. [Paras 41, 42, 43]

The resolution plan could be approved despite lack of final certainty on saleable area in the circumstances of the case.

Approval of resolution plan notwithstanding pending claims - Certainty of saleable area and large number of pending applications by allottees - HELD THAT: - While acknowledging the absence of certainty about saleable area due to many pending claims, the Tribunal reiterated that such uncertainty alone is not a ground to fault the plan when the Adjudicating Authority chose to hear pending applications after approval and the SRA had contemplated and provided for contingencies in the plan. [Paras 50]

Lack of certainty on saleable area because of pending applications does not vitiate approval of the resolution plan.

Commercial wisdom of the Committee of Creditors - Correctness of receivables figure in the resolution plan (Rs.36.66 Cr. v. Rs.62.95 Cr. in IM) - HELD THAT: - The Information Memorandum used project-wide figures; the resolution plan adopted receivables limited to the area/claims actually admitted at the time (4,46,240 sq. ft.). The Tribunal held that computing receivables on the basis of admitted claims was a business decision of the SRA and not a contravention of law. [Paras 46, 49]

Receivables shown in the resolution plan are not incorrect when calculated on admitted claims; this does not invalidate the plan.

Use of sale of parking spaces and unsold inventory as a source of funding in a resolution plan - Permissibility of raising funds by sale/allocation of covered parking slots - HELD THAT: - The Tribunal distinguished authorities on common areas and noted RERA's definition covers open parking; the project had covered parking (with budgeted expenditure recorded). The plan allocated parking on an earmarked and priced basis and adjusted assured returns against parking allocation. Precedents on separate parking charges were held applicable. Therefore sale/allocation of covered parking as a funding source was permissible. [Paras 54, 56]

The component of funding from sale/allocation of covered parking slots at the rates proposed was permissible and available to the SRA.

Approval of resolution plan notwithstanding pending claims - Whether the Adjudicating Authority erred in approving the plan while keeping allottee applications pending - HELD THAT: - Given the Adjudicating Authority's deliberate sequencing (approving plan first and directing subsequent hearings) and the SRA's undertaking to honor liabilities arising from admitted claims, the Tribunal found no impermissible error in that course; it was a permissible exercise of discretion to manage large volumes of applications. [Paras 59, 62]

No error in approving the plan while pending allottee applications were directed to be adjudicated thereafter.

Modification and implementation of assured returns under a resolution plan - Whether non-commitment by the SRA to pay assured returns of Rs.52.50 Cr. amounted to modification of the approved plan - HELD THAT: - The resolution plan expressly provided for adjustment of assured returns against parking/allottee options and contained Clause 8.18.10 allowing surplus allocation to assured returns and modification of assured returns in case of deficit/shortfall. The Tribunal held that conditional treatment of assured returns was part of the plan itself; inability to pay because of shortfall does not amount to an unauthorized post-approval modification. [Paras 61, 63]

Non-commitment or conditional payment of assured returns by the SRA in the plan is not a post-approval modification of the resolution plan.

Opportunity to prospective resolution applicants and extension of timelines - Whether Cimco Projects was denied equal opportunity to submit a resolution plan - HELD THAT: - The CoC extended timelines to 30.09.2020 and later considered but declined further extension after e-voting. Cimco was informed of the refusal and chose not to submit a plan; having had the extension and opportunity, Cimco cannot complain of denial of opportunity. Its failure to file a plan estopped it from challenging approval. [Paras 64, 66]

Cimco Projects was given ample opportunity; the approval is not vitiated on this ground.

Limited judicial review under Section 30(2) and Section 31 - Whether Suspended Director Amarjit Singh was denied opportunity in respect of IA No.5006/2021 - HELD THAT: - The record shows IA No.5006/2021 was heard and reserved on 29.11.2022, the Adjudicating Authority considered detailed submissions and relied on precedents about limited review of CoC commercial wisdom before dismissing the IA. The Tribunal found the suspended director was heard and his objections were considered before dismissal. [Paras 69, 71, 72]

Amarjit Singh was given opportunity and his objections in IA No.5006/2021 were considered and rejected.

Material irregularity in conduct of CIRP by the Resolution Professional - limited judicial review under Section 30(2) and Section 31 - Whether material irregularities by the Resolution Professional justified interference with CoC's approval - HELD THAT: - The Tribunal reviewed allegations about defective IM, claim tabulation, and process but found the RP's actions were approved by CoC, claims were collated/verified and CoC reconstituted where necessary. Given the CoC's dominant homebuyer composition and SRA's undertakings and contingency planning in the plan, no material irregularity was established that would warrant upset of the commercial decision under Section 30(2)/31. [Paras 73, 84]

No material irregularity by the RP was made out to justify interference; the CoC decision stands.

Approval of resolution plan notwithstanding pending claims - Whether sufficient grounds exist in the appeals to interfere with the approved resolution plan - HELD THAT: - Applying authorities limiting judicial scrutiny of CoC commercial decisions and considering the totality (CoC voting share, SRA undertakings, contingency clauses, RP process), the Tribunal concluded that the appellants failed to demonstrate contravention of Section 30(2) or material irregularity warranting interference; the Adjudicating Authority did not err in approval. [Paras 73, 85, 86]

No sufficient grounds made out to interfere with the CoC-approved resolution plan; appeals (except App.No.431 as qualified) dismissed.

Remand for fresh consideration - IA No.247 of 2024 (claim rejection) - disposition and further course - HELD THAT: - The applicants have an IA pending (IA No.1805 of 2023) before the Adjudicating Authority challenging rejection of claim. The Tribunal disposed IA No.247 of 2024 by granting liberty to pursue the pending IA before the Adjudicating Authority for adjudication in accordance with law. [Paras 77]

IA No.247 of 2024 disposed with liberty to pursue IA No.1805 of 2023 before the Adjudicating Authority.

Remand for fresh consideration - IA No.2173 of 2023 (Yashvardhan Township) - disposition and further course - HELD THAT: - The applicant has IA No.4970/2023 pending before the Adjudicating Authority concerning admission of claims. The Tribunal declined to adjudicate these factual claim disputes and disposed IA No.2173 by granting leave to pursue the pending proceedings before the Adjudicating Authority. [Paras 79]

IA No.2173 of 2023 disposed with liberty to pursue pending proceedings before the Adjudicating Authority.

Remand for fresh consideration - IA No.5789 of 2023 (Rising Buildtech) - disposition and further course - HELD THAT: - The applicant's contested claim and related avoidance/preferential transaction matters are pending before the Adjudicating Authority. The Tribunal declined to decide and disposed IA No.5789 by granting liberty to the applicant to pursue its pending applications before the Adjudicating Authority. [Paras 81]

IA No.5789 of 2023 disposed with liberty to pursue pending applications before the Adjudicating Authority.

Remand for fresh consideration - IA No.3763 of 2023 (Mars Infra Engineering) - disposition and further course - HELD THAT: - The applicant's claim had related proceedings before the Adjudicating Authority and issues regarding compromise/other fora. The Tribunal found no basis to pass orders in the appeal and disposed IA No.3763 by directing the applicant, if it has proceedings before the Adjudicating Authority, to pursue them there. [Paras 82]

IA No.3763 of 2023 disposed with liberty to pursue relevant proceedings before the Adjudicating Authority.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's approval of the resolution plan subject to the Successful Resolution Applicant honouring liabilities arising from subsequently admitted claims and directed early adjudication of pending applications by the Adjudicating Authority; appeals challenging the plan were dismissed except that certain interlocutory applications were disposed granting liberty to pursue pending claims/IA proceedings before the Adjudicating Authority.

Interim moratorium - date of filing - e-filing constitutes filing - registration/numbering by Registry is ministerial - defects in filing are curable and do not defer filing date - presentation at filing counter / electronic registration under NCLT Rules

Date of filing - e-filing constitutes filing - presentation at filing counter / electronic registration under NCLT Rules - defects in filing are curable and do not defer filing date - interim moratorium - Whether the interim moratorium under Section 96 of the IBC commences from the date of e-filing/presentation of the application or only when the Registry numbers/registrars the application after removing defects - HELD THAT: - The Tribunal held that the date of filing for applications under Section 95/96 must be determined by reference to the statutory rules governing filing (NCLT Rules, including Rule 14(2) and Rule 23 read with Rule 10). Where electronic filing facilities exist, filing is complete on e-filing/electronic registration and presentation at the filing counter; numbering by the Registry is a ministerial process and cannot be equated with the act of filing. Reliance was placed on the three Member Bench decision in Krishan Kumar Basia which examined the Rules and the statutory scheme and concluded that filing occurs when the application is presented/electronically registered and that treating filing as dependent on subsequent numbering would create uncertainty as to the commencement of the interim moratorium. The Tribunal further noted the Supreme Court principle (Vidyawati Gupta) that procedural defects are curable and do not necessarily render an initial filing non est; where defects are cured the date of initial presentation should generally prevail. Applying these principles to the facts, the Tribunal found IFCI's application was e-filed and complete (not a skeleton filing) prior to the competing creditor's filing for the purposes of moratorium, and hence the Adjudicating Authority did not lack jurisdiction in appointing the resolution professional. [Paras 9, 11, 12, 14, 15]

Filing is the act of presentation/electronic filing as per NCLT Rules; numbering by Registry is ministerial and does not defer commencement of interim moratorium, and consequently the Adjudicating Authority's appointment of the resolution professional was not without jurisdiction.

Final Conclusion: The Appeal is dismissed; the order of the Adjudicating Authority dated 01.05.2024 appointing the Resolution Professional is upheld.

Voluntariness of statement - retracted confession and corroboration - admissibility of statements recorded by enforcement officers - principles of natural justice and cross-examination of witnesses - under invoicing / undervaluation of imports as evidence of contravention - use of seized documents as independent corroborative evidence - abetment liability requires evidence of aiding and assisting - confiscation under Section 63 of FERA upheld where contravention established

Voluntariness of statement - retracted confession and corroboration - admissibility of statements recorded by enforcement officers - Statements recorded from the Appellant in August 1994 were voluntary and admissible despite subsequent retraction - HELD THAT: - The Tribunal examined the circumstances of the statements, noting they were in the Appellant's handwriting, in a language known to him, contained details of personal knowledge (family, business interests) and explanations of seized documents. Reliance was placed on precedent that a retracted confession may be acted upon if substantially corroborated by independent and cogent evidence. The Tribunal found the statements to be natural and convincing in most parts and accepted the Ld. Adjudicating Authority's conclusion that the statements were voluntary and represent what the Appellant wished to state. [Paras 11, 12]

Statements of the Appellant were true and voluntary and could be relied upon as corroborated evidence

Use of seized documents as independent corroborative evidence - under invoicing / undervaluation of imports as evidence of contravention - SCNs were not vague and the seized documents identified in annexures supplied adequate particulars to sustain charges - HELD THAT: - Each SCN contained annexures listing seized documents (statements, bank draft, diary entries, faxes, bank transcripts) specifying premises of recovery and pages. Because these documents were referred to in the statements and disclosed to noticees, the Tribunal rejected the contention that the SCNs were vague or baseless and held the documents retained evidential value against the Appellant. [Paras 13]

SCNs were sufficiently particularised and not vague; seized documents could be relied upon

Admissibility of statements recorded by enforcement officers - principles of natural justice and cross-examination of witnesses - Denial of cross examination of co noticees and other witnesses did not vitiate the proceedings or cause prejudice to the Appellant - HELD THAT: - The Adjudicating Authority had disclosed relevant material and documents to the noticees and the Appellant was given opportunity to rebut and explain the same. The Tribunal applied authority holding that refusal to permit routine cross examination of officers or producers of disclosed documents is not necessarily contrary to the Evidence Act or principles of natural justice where disclosure and opportunity to rebut has been furnished, and no mala fides was pleaded. [Paras 15, 16]

Refusal to permit cross examination did not prejudice the Appellant and was not ground for reversal

Under invoicing / undervaluation of imports as evidence of contravention - use of seized documents as independent corroborative evidence - Charge in SCN I (contraventions of Sections 8(1) and 9(1)(a) of FERA) proved only to the extent of the under valuation quantified at US$ 1,14,150; related acknowledgment of debt contravening Section 9(1)(c) established - HELD THAT: - The Appellant admitted in his statements that he handled 32 consignments of Carbamezapine between August 1993 and July 1994 with under valuation totalling US$ 1,14,150 and that the differential was paid by his sister abroad. Paper book documents showed a marked decline in CIF values in 1993 94 compared to earlier years and the Appellant offered no cogent explanation. On that basis the Tribunal held the charge proved to the quantified extent but reduced the scope of liability from the larger amount earlier treated by the Adjudicating Authority. [Paras 17, 18, 19, 20, 28]

SCN I established for under valuation of US$ 1,14,150 and acknowledgment of debt; excess findings/penalty beyond that extent set aside

Contraventions involving payments on instructions from non residents - use of seized communications and recipient confirmations as corroboration - SCN II (payments to various persons on instructions from a non resident) proved for contravention of Section 9(1)(d) - HELD THAT: - The Appellant's statement and a recovered fax (forwarded instructions) identified payments made to specified recipients; enquiries confirmed receipt by recipients; seized diary entries corroborated a named payment. In absence of credible documentary proof that funds were legally sourced by the non resident, the Tribunal upheld the Adjudicating Authority's finding of contravention for the amount specified in the SCN. [Paras 21, 22]

SCN II established for contravention of Section 9(1)(d)

Acquisition and placement to NRE account of non resident - bank records and unexplained credits as indicia of contravention - SCN III (acquisition/crediting of foreign currency to cousin's NRE account) established for contraventions of Sections 8(1) and 9(1)(e) - HELD THAT: - Bank records (account transcript, credit slips), power of attorney and credits in several instalments were relied upon. The Appellant's explanations (that amounts were brought or sent by relatives) were treated as afterthoughts and no satisfactory explanation was given for the mode and bifurcation of credits. In absence of explanation the Tribunal affirmed the Adjudicating Authority's findings. [Paras 23, 24]

SCN III established for contraventions of Sections 8(1) and 9(1)(e)

Use of NRE account and bank instructions to remit foreign exchange - confiscation under Section 63 of FERA - SCNs IV and VI (instructions to bank / use of cousin's NRE account to remit foreign exchange) established and confiscation of US$ 8,200 upheld - HELD THAT: - Canara Bank records and the Appellant's refusal to explain the draft of US$ 8,200, together with the pattern of credits and applicable Exchange Control Manual guidance, justified suspicion. In absence of satisfactory explanation the Tribunal found the contraventions established and did not interfere with the confiscation order made under Section 63. [Paras 25, 26]

SCN IV & SCN VI established; confiscation of US$ 8,200 maintained

Abetment liability requires evidence of aiding and assisting - Abetment charge against the Appellant in SCN VII (abetting bank officials) not proved - HELD THAT: - Although contraventions by the bank and its officials were confirmed, the Tribunal found no evidence that the Appellant aided, assisted or induced the bank or its officials to commit those contraventions. On that basis the abetment charge under Section 64(2) was held not established against the Appellant. [Paras 27]

Abetment charge in SCN VII not established against the Appellant

Distinct adjudication on separate SCN / reopening for other companies - SCN II dated 11.06.1996 (relating to under valuation in names of other companies) not established and Impugned Order dated 31.03.1997 set aside insofar as it pertains to the Appellant - HELD THAT: - The Appellant's statements specifically denied involvement in under valuation for imports made in the names of M/s Suru Pvt. Ltd. and M/s Alcon Pharmaceuticals, and he explained possession of related documents as due to local sales activity. The Tribunal, declining to rely upon co noticees' statements, found no independent evidence connecting the Appellant to those under valuations and set aside the findings under that SCN. [Paras 29, 30, 31, 32, 34]

SCN II of 11.06.1996 not proved; Impugned Order of 31.03.1997 set aside as to the Appellant and pre deposit to be refunded

Judicial reduction of penalty and adjustment of pre deposit - Consolidated penalty under SCNs I-VI reduced to Rs. 10,00,000 and pre deposit adjusted; pre deposit under the set aside order to be refunded - HELD THAT: - Having limited the proven contraventions and set aside the abetment finding in SCN VII, the Tribunal exercised its discretion to reduce the consolidated penalty for SCNs I-VI to Rs.10,00,000, directed adjustment of the pre deposit already made against the reduced penalty, and ordered refund of the earlier pre deposit relating to the set aside SCN within three months. [Paras 33, 34]

Penalty reduced to Rs.10,00,000 (adjusted with prior pre deposit); refund of pre deposit ordered for the set aside SCN

Final Conclusion: One adjudication (SCN II dated 11.06.1996) was set aside and its pre deposit ordered refunded; other SCNs were variably upheld (under valuation quantified, payments on instructions, unexplained foreign currency credits and remittances established), confiscation of US$ 8,200 maintained, abetment finding against the Appellant dismissed, consolidated penalty for established contraventions reduced to Rs.10,00,000 and pre deposit adjusted; the appeals were partly allowed and disposed of accordingly.

Stay of criminal proceedings - predicate offence - proceeds of crime - continuing offence - retrospective application of penal statute - independence of money-laundering offence - double jeopardy

Stay of criminal proceedings - predicate offence - Whether the trial under PMLA must be stayed pending disposal of the appeal against conviction in the predicate offence. - HELD THAT: - The Court held that the petitioner's argument that the PMLA trial must be stayed because his appeal against conviction in the predicate offence is pending is without merit. The trial court conviction dated 27.09.2016 remains operative and has not been stayed; therefore, the commission of the predicate offence stands established for the purposes of the PMLA proceedings. Consequently, the pendency of the appeal does not justify a stay of the PMLA trial, and the Special Court proceedings cannot be stayed on this ground. [Paras 20]

Stay of the PMLA trial was not warranted merely because the appeal against conviction in the predicate offence is pending.

Proceeds of crime - Whether absence of an identified 'proceeds of crime' invalidates the PMLA prosecution at the stage when cognizance and framing of charges have already occurred. - HELD THAT: - The Court observed that determination of whether any property constitutes 'proceeds of crime' under the PMLA is a matter to be decided at trial. The learned Special Court had taken cognizance and framed charges after noting that independent investigation under PMLA revealed acquisition of properties projected as untainted money and that provisional attachment had been made. Given that cognizance and framing of charges stand and no stay was granted earlier, the Court declined to stay the trial on the ground that proceeds of crime are not identified. [Paras 21]

The question whether particular property constitutes 'proceeds of crime' is for trial; it does not justify staying the PMLA proceedings at this stage.

Continuing offence - retrospective application of penal statute - Whether PMLA can be applied where the predicate offence predates its inclusion as a scheduled offence and whether money laundering is a continuing offence permitting prosecution. - HELD THAT: - Relying on the ratio of the Hon'ble Apex Court, the Court held that money laundering can constitute a continuing offence and is not dependent on the date of commission of the scheduled offence; the relevant date is when a person indulges in processes or activities connected with proceeds of crime. The Court noted that a review against the Apex Court's decision had been filed but no stay or direction had been issued, so the binding precedent stands. Accordingly, the argument that PMLA is inapplicable because the check period predates inclusion of Section 13 PC Act in the schedule was rejected for the purpose of resisting continuation of trial. [Paras 23, 24]

PMLA prosecution is maintainable in respect of continuing dealings with proceeds of crime even if the predicate offence was committed prior to its inclusion in the schedule; this does not warrant a stay.

Double jeopardy - independence of money-laundering offence - Whether prosecuting the petitioner under PMLA after conviction under the PC Act would amount to double jeopardy or violate Article 20(2). - HELD THAT: - The Court applied the Apex Court's teaching that the offence of money laundering is independent and addresses the process or activity connected with proceeds of crime and is distinct from the scheduled offence itself. Section 13 PC Act being a scheduled offence and not being declared unconstitutional, prosecution under PMLA does not amount to double jeopardy merely because the predicate offence has been prosecuted; the distinct elements and independent aim of Section 3 of PMLA mean both prosecutions can validly proceed. [Paras 25, 26, 27]

Continuation of PMLA proceedings does not amount to double jeopardy and is not barred by Article 20(2) in the circumstances of this case.

Final Conclusion: The applications for stay of the PMLA trial were dismissed: conviction in the predicate offence remains operative and does not mandate a stay; whether property amounts to 'proceeds of crime' is a trial issue; money laundering is a continuing and independent offence permitting prosecution despite the temporal gap with the predicate offence; and invoking PMLA in addition to the PC Act does not constitute double jeopardy.

Retention of property - Computation of statutory time-limits and termination of proceedings - Exclusion of period for computation of limitation due to Covid-19 - Provisional attachment and 180 days ceiling - Composition of Adjudicating Authority - Single-member bench - Qualifications for Members of Adjudicating Authority

Retention of property - Provisional attachment and 180 days ceiling - Exclusion of period for computation of limitation due to Covid-19 - Computation of statutory time-limits and termination of proceedings - Impugned confirmation of freezing/retention was not vitiated by being passed after 180 days. - HELD THAT: - The Tribunal examined Section 20(1)-(4) (retention of seized/frozen property) which ordinarily restricts retention to 180 days unless the Adjudicating Authority permits continuation. The appellant challenged the order of 22.08.2022 as being beyond 180 days from freezing dated 05.11.2021. The Tribunal held that the Supreme Court's orders in the Suo Motu proceedings (restored and clarified on 10.01.2022) excluded the period from 15.03.2020 to 28.02.2022 for computation of limitation and, expressly, for termination of proceedings. Reliance was placed on appellate and High Court decisions discussed in the judgment (including the detailed reasoning in Hygro Chemicals Pharmtek Pvt. Ltd.), and on Prakash Corporates which interpreted the scope of the Suo Motu orders. Applying that exclusion, the 180-day ceiling is to be computed after omitting the period 15.03.2020-28.02.2022; accordingly the confirmation order of 22.08.2022 fell within the permissible period. The Tribunal rejected the contrary approach taken by some High Courts as distinguishable or not in consonance with the Supreme Court's clarified orders, and observed that Section 20(4) preserves the Adjudicating Authority's power to permit retention beyond 180 days where prima facie involvement in money laundering is recorded. [Paras 13, 15, 16, 17, 20]

The challenge to the order as having been passed beyond 180 days is rejected; the period from 15.03.2020 to 28.02.2022 is excluded in computing the 180 days and the confirmation order stands.

Composition of Adjudicating Authority - Single-member bench - Qualifications for Members of Adjudicating Authority - Impugned order was not vitiated by being passed by a single Member or by a Member not from the field of law. - HELD THAT: - The Tribunal considered Section 6 (composition and Benches of the Adjudicating Authority) and Rule 3 of the 2007 Rules (qualifications for Members). Section 6 permits the Chairperson to constitute Benches with one or two Members and contemplates exercise of jurisdiction by such Benches; it does not mandate that every Bench must comprise three Members or that a single-member Bench must be from the field of law. The Member who passed the impugned order possessed the qualifications prescribed under the Rules. The Tribunal relied on precedent (including J. Sekhar and subsequent High Court decisions) and statutory text to conclude that single member Benches are permissible and that technical/administrative/finance members may adjudicate so long as prescribed qualifications are met. Consequently the argument of coram non-judice fails. [Paras 24, 25, 26, 27, 28]

The composition of the Adjudicating Authority and the competence of the Member who passed the order are upheld; the challenge on this ground fails.

Final Conclusion: Both grounds advanced by the appellant - (i) that the confirmation order was beyond the 180 day period, and (ii) that the Adjudicating Authority was improperly constituted because the order was passed by a single Member not from the field of law - were considered and rejected. The appeal is dismissed.

No service tax on fees collected for statutory duties undertaken in public interest - technical inspection and certification service - statutory testing mandated by Rule 22 of the Arms Rules, 1962 - binding precedential effect of coordinate Bench decision upheld by a superior court

No service tax on fees collected for statutory duties undertaken in public interest - technical inspection and certification service - statutory testing mandated by Rule 22 of the Arms Rules, 1962 - Whether the amounts collected by the appellant as quality assurance/testing charges for proof testing of firearms are taxable as 'technical inspection and certification' services or are fees for performance of statutory duties not liable to service tax. - HELD THAT: - The Tribunal accepted the reasoning of a coordinate Bench which in turn relied upon the judgment of the Hon'ble Jammu & Kashmir High Court and subsequent administrative clarification that testing fees collected by an authorized government establishment for proof testing of firearms are charged pursuant to a statutory requirement (Rule 22, Arms Rules, 1962) and are in the nature of compulsory levies for performance of sovereign/public functions. Such activities are undertaken in public interest and do not constitute a taxable service for consideration. The Tribunal noted the CESTAT/Bhopal precedent and the circulars which treated analogous statutory testing (e.g., gas cylinders, certificates by inspectorates) as non-taxable, and applied the principle of judicial discipline that a Bench of co-equal strength should follow an earlier coordinate Bench decision which is founded on a superior court's judgment. On that basis the impugned demand, interest and penalties premised on service tax liability were set aside. [Paras 6, 7]

Impugned order set aside; charges collected by the appellant are not exigible to service tax and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's order demanding service tax (and associated interest/penalties) on quality assurance/testing charges, holding such charges to be fees for performance of statutory duties under Rule 22 of the Arms Rules, 1962 and therefore not taxable; the appellant is entitled to consequential relief as per law.

Interpretation of Section 67(1)(a) of the Finance Act, 1994 on assessable value - Rule 7 of Service Tax (Determination of Value) Rules, 2006 - Tax deducted at source (TDS) as a statutory obligation - Consideration for taxable services - Double taxation and legislative sanction - Precedential effect of earlier Tribunal decisions

Tax deducted at source (TDS) as a statutory obligation - Consideration for taxable services - Interpretation of Section 67(1)(a) of the Finance Act, 1994 on assessable value - Rule 7 of Service Tax (Determination of Value) Rules, 2006 - Double taxation and legislative sanction - Whether the TDS amount retained and deposited by the appellant on behalf of the foreign service provider is includible in the assessable value for service tax - HELD THAT: - The Tribunal held that TDS arises from a statutory obligation and, in ordinary course, cannot be treated as consideration for the service unless the legislature has expressly so provided. Applying Section 67(1)(a) and Rule 7, service tax is leviable on the actual consideration charged by the service provider; an obligation to deduct and deposit tax at source does not convert the TDS into receipt of the service provider or into consideration for the service. The court relied on the principle that double taxation can only be sanctioned by express legislative enactment and on earlier Tribunal decisions (including the appellant's own final orders and the decision in Adani Bunkering Pvt. Ltd. v. CCE, Ahmedabad - II) which held that TDS deposited over and above the invoice value is not exigible to service tax. Applying these precedents and reasoning, the Tribunal concluded that the TDS paid by the appellant on behalf of the foreign service provider is not part of the value of taxable services and cannot be subjected to service tax. [Paras 8, 9, 10]

The demand for service tax on the TDS amount is unsustainable; the impugned order is set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that TDS paid and deposited by the appellant on behalf of the foreign service provider does not form part of the assessable value of taxable services and therefore is not liable to service tax; the impugned order confirming demand is set aside with consequential relief as per law.

Classification of services as per Section 65A(2) - essential character of composite services - composite service - burden of proof on Revenue in classification and chargeability - master and servant relationship versus principal-to-principal (manpower supply) relationship - extended period of limitation for demand and penalty

Classification of services as per Section 65A(2) - essential character of composite services - composite service - burden of proof on Revenue in classification and chargeability - master and servant relationship versus principal-to-principal (manpower supply) relationship - Whether the Department proved that the appellant's activities were correctly classifiable as Maintenance/Repair (or other services) rather than as Manpower Recruitment/Supply, and whether the demand confirmed on that basis is sustainable. - HELD THAT: - The Tribunal applied the principle that classification and chargeability require the Revenue to discharge the burden of proof. The adjudication below did not apply any test to determine whether the relationship between the appellant and the workmen was one of master-servant (which would attract Maintenance/Repair) or of principal-to-principal (manpower supply), nor did it examine the contracts, parties' relationships or the essential character of the transactions. Given the mixed question of fact and law, and the absence of findings establishing the true nature of the service, Revenue failed to prove that the services were other than manpower supply. Reliance on the principle in Section 65A(2) that a composite service be classified by its essential character supports that the transaction could not be presumed to be maintenance/repair without proper examination. Consequently the classification and resultant demand could not be sustained. [Paras 6, 7, 8, 9]

Revenue failed to prove the contested classification; the demand based on classification other than manpower supply is not sustainable and is set aside.

Extended period of limitation for demand and penalty - burden of proof on Revenue in classification and chargeability - Whether the extended period invocation and penalties confirmed by the authorities are maintainable in the circumstances. - HELD THAT: - Because Revenue did not prove the true nature of the disputed activity or establish suppression or other facts justifying invocation of the extended period, the Tribunal found it unnecessary to examine the correctness of the extended period or to uphold the penalties. The failure to establish the substantive case on classification means that the questions of extended limitation and imposition of penalty do not arise. [Paras 9, 10]

Extended period invocation and penalties cannot be sustained in view of Revenue's failure to prove the substantive classification; those aspects do not survive.

Final Conclusion: Impugned order is set aside and the appeal is allowed; appellant is entitled to consequential relief as per law.

Refund under Section 11B - exemption for SEZ units - limitation period prescribed by subordinate legislation cannot override statutory period - mandatory conditions for grant of exemption - remand for verification of compliance with notification conditions

Refund under Section 11B - exemption for SEZ units - limitation period prescribed by subordinate legislation cannot override statutory period - Applicability of statutory time limit under Section 11B to refund claims for services provided to SEZ units prior to 03.03.2009 and the non-application of the six month limitation imposed by Notification No.9/2009-ST to such claims. - HELD THAT: - The Tribunal held that the notification granting unconditional exemption to taxable services provided to a SEZ unit does not oust the statutory right to seek refund under Section 11B within the time prescribed by that provision. A limitation imposed for the first time by subordinate legislation cannot prevail over the parent statute; therefore treating claims for the period up to 02.03.2009 as time barred by applying the six month limit in Notification No.9/2009 ST is legally incorrect. The Tribunal relied on the principle that substantive rights, including period of limitation, cannot be re formulated by notification and accordingly upheld the impugned order insofar as it applied the statutory limitation under Section 11B to the refund claims for the period up to 02.03.2009. [Paras 5, 7]

Impugned order upheld on the issue of limitation: refund claims for the period up to 02.03.2009 are governed by Section 11B and not by the six month limit in the notification.

Mandatory conditions for grant of exemption - requisite approval from committee - remand for verification of compliance with notification conditions - Whether the respondent had complied with the mandatory requirement of furnishing the list of approved services from the approval committee for the period from 03.03.2009 and whether the refund claim for that period satisfies the conditions of the notification. - HELD THAT: - The Tribunal observed that compliance with mandatory conditions attached to an exemption is essential and must be strictly established by the claimant. The record was silent as to whether the respondent had furnished the list of approved services as required by Notification No.9/2009 ST; since this condition affects the essence of the exemption, the Tribunal found it inappropriate to deny substantive relief without affording an opportunity to demonstrate compliance. Consequently, the matter was remanded to the original authority for de novo adjudication limited to examining compliance with the notification condition, with directions to follow principles of natural justice and to decide the issue on merits within a specified timeframe. [Paras 6, 7]

Matter remanded to the Original Authority to examine and decide, after affording opportunity, whether the respondent complied with the requirement of producing the approval committee list and other conditions for refund for the period from 03.03.2009; decision to be rendered within ninety days.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) insofar as refund claims for the period up to 02.03.2009 are governed by Section 11B and not by the six month limit in the notification, but remanded the claims from 03.03.2009 to the original authority for de novo consideration of compliance with the notification's mandatory conditions, directing a time bound, reasoned adjudication and opportunity to be given to the respondent; the appeal is disposed on these terms.

Business Support Service - Negative list of services - Revenue sharing arrangement - Renting of immovable property - Scope of show cause notice - Joint venture/partnership test - Principal-to-principal relationship

Business Support Service - Revenue sharing arrangement - Renting of immovable property - Principal-to-principal relationship - Negative list of services - Whether the amounts retained/received by the appellant on account of screening of films on revenue sharing basis for the periods 2013 14 and 2014 15 were exigible to service tax and liable to recovery as held in the impugned order - HELD THAT: - The Tribunal found that the show cause notices and their adjudication proceeded on the basis of pre 1.7.2012 formulations and that the impugned order travelled beyond the scope of those SCNs. Applying the settled tests in decisions relied upon by the Bench, a mere revenue sharing arrangement does not ipso facto create a service provider-service recipient relationship; where parties operate in a joint/revenue sharing venture the element of quid pro quo for a service is absent and the activity cannot be treated as Business Support Service or renting to the distributor. The Allahabad Bench's earlier Final Order in the appellant's case and subsequent Division Bench decisions (including INOX) - as upheld by the Supreme Court in respect of the same issue - support the conclusion that screening on a revenue sharing model, with no transfer of copyright and where consideration flows to the distributor, does not attract service tax under the heads invoked by the adjudicating authority. Additionally, the impugned order relied on a negative list/high court decision which post dated the legal framework underlying the issued SCNs; the Tribunal held that an adjudication which goes beyond the allegations in the SCN is unsustainable. For these reasons the confirmation of demand was set aside. [Paras 4, 5]

The confirmation of the service tax demand in respect of screening of films on revenue sharing basis for the impugned period is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the impugned order confirming service tax demand in respect of screening of films on revenue sharing basis for the stated period is set aside in view of error in proceeding beyond the SCNs and the persuasive precedents holding that such revenue sharing exhibition does not attract the service tax heads relied upon by the adjudicating authority.

Adjustment of excess service tax - refund of excess service tax - adjustment under Rule 6(2) of Service Tax Rules, 1994 - wrong availment of CENVAT Credit - maintainability of revenue appeal - effect of Supreme Court interim order in RAI on tax liability

Adjustment of excess service tax - refund of excess service tax - adjustment under Rule 6(2) of Service Tax Rules, 1994 - effect of Supreme Court interim order in RAI on tax liability - Validity of the appellant's adjustment of excess service tax (including amount paid by the service recipient pursuant to the Supreme Court interim order) against subsequent service tax liability, as an alternative to refund. - HELD THAT: - The Tribunal found undisputed facts of excess payment of service tax by the appellant (100%) together with 50% paid by the service recipient pursuant to the Supreme Court interim order, resulting in an excess outflow by the appellant. The adjudicating authority allowed adjustment of that excess against future tax liability, treating it as adjustment under Rule 6(2) of the Service Tax Rules rather than as CENVAT credit. The Tribunal observed that the show cause notice and original order did not charge wrong availment of CENVAT Credit under the CENVAT Credit Rules (e.g., Rule 14), and the adjudication proceeded on the question of adjustment/refund of excess tax paid. On these facts, the Tribunal held that where excess service tax has in fact been paid (whether directly by the assessee or effectively borne due to amount debited by the assessee for sum paid by the recipient under the interim order), the excess amount is available either for refund or for adjustment against future liability, and that the appellant's choice to adjust the excess under Rule 6(2) is permissible and not illegal. [Paras 4]

The adjustment made by the appellant of the excess paid service tax towards subsequent tax liability is lawful and correct; the adjudicating authority's order allowing the adjustment contains no illegality.

Wrong availment of CENVAT Credit - maintainability of revenue appeal - Whether the Commissioner (Appeals) order confirming demand was sustainable where the revenue's appeal proceeded on the premise of wrong availment of CENVAT credit despite absence of such a case in the show cause notice and original order. - HELD THAT: - The Tribunal examined the grounds of the revenue's appeal and the record of the show cause notice and original adjudication and concluded that the revenue framed its appeal on the erroneous assumption that the appellant had wrongly availed CENVAT credit. The Tribunal noted absence of any proposal or demand framed under provisions applicable to recovery of wrongly availed CENVAT credit and that the original adjudication dealt with adjustment/refund of excess service tax. Because the Commissioner (Appeals) confirmed the full demand by treating the issue as one of wrong availment of CENVAT credit, the appellate order was founded on a mistaken premise and was vitiated. The Tribunal therefore found the Commissioner (Appeals) order to be not maintainable on that ground. [Paras 4]

The Commissioner (Appeals) order is vitiated and unsustainable because the revenue's appeal was prosecuted on an incorrect foundation of alleged wrong availment of CENVAT credit which was not the case before the adjudicating authority.

Final Conclusion: The impugned order of the Commissioner (Appeals) is set aside; the appellant's adjustment of excess service tax against subsequent liability is upheld and consequential relief is granted in favour of the appellant.

Consideration as essential element of service - definition of 'service' under Section 65B(44) - charging of service tax on value of taxable service (Section 66) - valuation of taxable services and gross amount charged (Section 67) - no service tax on notional or uncharged consideration

Consideration as essential element of service - definition of 'service' under Section 65B(44) - no service tax on notional or uncharged consideration - Whether service tax can be levied where no consideration was received and no service was in fact provided - HELD THAT: - The Tribunal examined the minutes of meeting of 01.03.2006 which recorded that the appellant ceased charging the cargo handling charge of Rs.50 per MT for export of sulphuric acid after Hindalco installed pipeline and performed the minimal connecting activity itself. The Court applied the statutory definition of 'service' introduced by the negative list regime (section 65B(44)) and observed that a necessary ingredient of a taxable service is the flow of consideration from recipient to provider. Reliance was placed on the Tribunal/Supreme Court line of authority exemplified by Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd., wherein it was held that in the post-01.07.2012 regime absence of consideration excludes an activity from being a 'service'. The Tribunal further clarified that the concept of non-monetary or indirect benefits does not substitute for contractual consideration in determining whether an activity is a 'service'; assessable value under valuation provisions follows only when a taxable service (i.e., with consideration) exists. Applying these principles to the undisputed factual finding that no charge was levied or received, the Tribunal concluded that the statutory ingredients for levy under the charging provision were not satisfied and service tax could not be imposed on a notional value. [Paras 4]

The demand of service tax on the notional or uncharged cargo handling charges is unsustainable and is set aside.

Valuation of taxable services and gross amount charged (Section 67) - no service tax on notional or uncharged consideration - Whether the department can include an amount not charged by the service provider in the 'gross amount charged' for valuation under Section 67 - HELD THAT: - The Tribunal recorded the settled position that Section 67 determines assessable value by reference to the gross amount charged where consideration is in money. Section 67(1)(i) and the Explanation make clear that 'consideration' includes amounts payable for taxable services and that 'gross amount charged' consists of amounts actually charged. Since in the present case no amount was charged or received for the cargo handling service, the statutory test for inclusion in gross amount charged is not met. Reliance on valuation rules or notional computation under Rule 3 was rejected in view of the primary absence of consideration and service. Consequently, the Department's attempt to value and tax an uncollected charge was held to be contrary to the statutory scheme. [Paras 4]

The valuation contention is rejected; an amount not charged cannot be included in the gross amount charged for service tax purposes.

Final Conclusion: The appeals are allowed: the impugned orders charging service tax on uncharged cargo handling fees are set aside, since no consideration was received and the statutory requirements of 'service' and valuation under the charging provisions are not satisfied.

Classification of construction services as Commercial or Industrial Construction Service versus Works Contract Service - composite contract doctrine - abatement as evidence of composite nature - application of precedent in taxability of composite construction contracts - penalty under Section 78 for non-payment of service tax and bona fide belief/non-suppression

Classification of construction services as Commercial or Industrial Construction Service versus Works Contract Service - composite contract doctrine - abatement as evidence of composite nature - application of precedent in taxability of composite construction contracts - Demand of service tax characterised as Commercial or Industrial Construction Services (CICS) for composite construction contracts - HELD THAT: - The Tribunal held that the construction contracts executed by the assessee were composite in nature involving supply of goods as well as rendition of services. The department itself quantified the demand after granting 67% abatement under Notification No.1/2006, which the Tribunal treated as establishing the composite character of the contracts. Applying the principle in CCE v. Larsen & Toubro and the Tribunal's decisions in Real Value Promoters and related orders (including Central Park West and Jain Housing & Construction Ltd.), the court concluded that where contracts are composite, levy prior to the relevant amendment can only be under Works Contract Services and not under CICS. Consequently, the demand framed under CICS for the disputed period prior to 01.07.2012 cannot be sustained and is set aside. [Paras 10, 11, 12]

Demand of service tax under CICS for the disputed period prior to 01.07.2012 set aside as contracts are composite and such demand cannot sustain under CICS.

Penalty under Section 78 for non-payment of service tax and bona fide belief/non-suppression - Appeal by the department against non-imposition of penalty under Section 78 - HELD THAT: - The department's appeal against the adjudicating authority's decision not to impose penalty under Section 78 was negatived because the primary demand itself was held unsustainable. The Tribunal observed that the assessee had accounted for receipts and acted on a bona fide belief regarding tax liability to Public Sector Undertakings, and having set aside the demand, found the departmental appeal without merit. [Paras 13]

Departmental appeal against non-imposition of penalty dismissed as without merits in view of setting aside of the demand.

Final Conclusion: The impugned order is set aside; the appeals filed by the assessee are allowed with consequential reliefs, if any, and the appeal filed by the department is dismissed.

Proportionate apportionment of input tax credit between taxable and exempted goods - Remand for fresh adjudication - Application of binding precedent on Cenvat credit (Gujarat Narmada) - Set aside and remit for de novo consideration

Proportionate apportionment of input tax credit between taxable and exempted goods - Application of binding precedent on Cenvat credit (Gujarat Narmada) - Remand for fresh adjudication - Whether the Tribunal's order allowing full Cenvat credit should be set aside and the matter remitted for fresh consideration of apportionment of input credit between taxable and exempted supplies in light of the Apex Court decision. - HELD THAT: - The Tribunal's 2006 order was rendered without the benefit of the Apex Court's decision in Commissioner of Central Excise, Vadodara-II v. Gujarat Narmada Valley Fertilizers Co. Ltd., which addressed entitlement to input credit and remanded quantification of apportioned credit. Both parties accepted that the Tribunal did not have that precedent when deciding the appeal and agreed to fresh consideration. In these circumstances the Tribunal's order is set aside and the matter is remitted to the Tribunal for de novo consideration of the proportion of input tax credit to be apportioned between taxable and exempted final products, with all contentions of the parties kept open. The Tribunal is requested to give both parties an opportunity of hearing and to endeavor to dispose the remitted matter at the earliest and preferably by 30th October 2024. [Paras 5]

Impugned Tribunal order set aside and matter remanded to the Tribunal for fresh adjudication on apportionment of Cenvat credit between taxable and exempted goods, keeping all contentions open.

Final Conclusion: The Tribunal's impugned order is set aside and the appeal remitted for de novo consideration of the proportionate apportionment of Cenvat credit between taxable and exempted products in light of the Apex Court precedent; parties to be heard and the Tribunal urged to dispose the matter preferably by 30th October 2024.

Pre-deposit under Section 35F - deposit during pendency of appeal as pre-deposit - refund of pre-deposit - doctrine of unjust enrichment - interest on delayed refund under Section 35FF - Cenvat credit adjustment from refund

Pre-deposit under Section 35F - deposit during pendency of appeal as pre-deposit - Whether amounts paid by the appellants during the pendency of appeals qualify as pre-deposit for the purposes of Section 35F - HELD THAT: - The Tribunal examined the statutory scheme of Section 35F (pre-2006 and as amended) and relevant Board circulars and case law. It held that, prior to the 06.08.2014 amendment, the general rule was payment of the adjudicated duty pending appeal while waiver/stay was an exception; payments made during investigation or pending appeals thus take the colour of pre-deposit when appeals are filed. The Tribunal relied on precedent (including Suvidhe and Ghaziabad Ship Breakers reasoning and subsequent decisions) and CBEC/CBIC circulars to conclude that amounts deposited/paid under protest while pursuing appeals before Commissioner (Appeals), Tribunal and Supreme Court are to be treated as pre-deposit under Section 35F/Section 35L and not as final duty. The lower authorities' contrary construction-that the deposits became duty once the first appellate authority refused stay-was rejected as legally incorrect and inconsistent with Chapter VIA and the Apex Court's final order in favour of the appellants. [Paras 23, 32, 33, 34, 35]

Amounts deposited/paid by the appellants during the pendency of appeals are to be treated as pre-deposit under Section 35F (and Section 35L) and not as payment of duty.

Doctrine of unjust enrichment - refund of pre-deposit - Whether the provisions of Section 11B and the doctrine of unjust enrichment apply to refund of such pre-deposits - HELD THAT: - The Tribunal reviewed the legal position and authorities which distinguish refund of pre-deposits from refund of duty. It noted CBEC circulars and Supreme Court and High Court precedents holding that deposits made under protest during adjudication/appeals are not payments of duty and therefore not governed by Section 11B. While acknowledging that unjust enrichment is an equitable principle applicable in refunds generally, the Tribunal found that where an amount is a pre-deposit its refund is not subject to the statutory rigours of Section 11B; alternatively, even if unjust enrichment were considered as a principle of equity, the appellants had produced Chartered Accountant evidence rebutting the presumption of passing on the incidence and Revenue failed to controvert it. The Tribunal accordingly answered the question negatively and directed refund. [Paras 38, 44, 46, 59, 60]

Section 11B and the statutory presumption of passing on do not apply to refunds of the pre-deposits in this case; alternatively, the presumption was rebutted and unjust enrichment was not established.

Interest on delayed refund under Section 35FF - refund of pre-deposit - Whether appellants are entitled to interest on delayed refund and for which periods/rates - HELD THAT: - The Tribunal analysed Section 35FF as enacted w.e.f. 10.05.2008 and amended w.e.f. 06.08.2014. It observed that Section 35FF initially applied to amounts deposited pursuant to orders under the first proviso to Section 35F, and after the 2014 amendment extended to deposits under Section 35F generally. The Tribunal held that appellants are not entitled to interest under Section 35FF for deposits made prior to 06.08.2014 except insofar as established by judicial precedent (not accepted as a basis to award beyond statutory scope). Consequent to the 06.08.2014 amendment, appellants are entitled to statutory interest for deposits made on or after 06.08.2014 at the rate prescribed by law. The Tribunal therefore granted interest only for amounts deposited on or after 06.08.2014 in terms of Section 35FF as amended. [Paras 61, 62]

Appellants are entitled to interest on delayed refund only for amounts deposited on or after 06.08.2014, at the statutory rate prescribed under Section 35FF (as amended).

Cenvat credit adjustment from refund - refund of pre-deposit - Whether refund should be subject to deduction of Cenvat credit availed by the appellants - HELD THAT: - The Tribunal noted that the appellants had conceded that Cenvat credit taken on inputs used in manufacture of clinker may be adjusted against any refund. The authorities below had not deducted such credit. The Tribunal held that refund is to be made after deducting the Cenvat credit availed in respect of inputs used in manufacture of clinker during the disputed period; if Revenue believed the Cenvat credit was wrongly availed it could pursue appropriate recovery proceedings separately. This adjustment was made as a condition of granting the refund. [Paras 57, 62, 63]

Refund shall be granted after deducting Cenvat credit availed by the appellants on inputs used in manufacture of clinker for the period in dispute.

Final Conclusion: Appeals allowed in part: the Tribunal directed refund of amounts deposited/paid by the appellants during the pendency of appeals (treated as pre-deposit under Section 35F/Section 35L), held that Section 11B/doctrine of unjust enrichment do not bar the refund (or were rebutted on the facts), ordered deduction of Cenvat credit availed from the refundable amount, and granted statutory interest only for sums deposited on or after 06.08.2014 in accordance with Section 35FF.

Classification of captively consumed resins as prepared adhesives under Chapter 35-06 versus plastics under Chapter 39-09 - marketability as determinative for excisability of intermediate/captive products - extended period of limitation and requirement of suppression to invoke it - principles of natural justice - right to production of test reports and cross-examination of witnesses - binding effect of departmental acceptance of Tribunal judgments and consistency of revenue stand - CBEC guidance on non-excisability of short-shelf life captive binders/resins

Classification of captively consumed resins as prepared adhesives under Chapter 35-06 versus plastics under Chapter 39-09 - CBEC guidance on non-excisability of short-shelf life captive binders/resins - binding effect of departmental acceptance of Tribunal judgments and consistency of revenue stand - Mixture of Melamine Formaldehyde Resin and Cardanol Phenolic Formaldehyde used as adhesive/glue/resin for manufacture of laminates is classifiable under Chapter 35-06 and entitled to exemption under Notification No.50/2003-CE. - HELD THAT: - The Tribunal examined the core controversy whether the captively consumed resins employed as adhesive in manufacture of laminates merit classification under heading 3506 or 3909. It noted consistent Tribunal decisions on identical facts holding such mixtures to be prepared glues/adhesives under Chapter 35 (Virgo Industries; Shirdi Industries; Greenlam; Balaji Action Buildwell) and observed that the Department has not challenged those decisions before a higher court. The Tribunal also relied on the CBEC circular recognising that short shelf life captive binders/resins made for in house use are not chargeable to excise if not marketable. Having regard to the comparable factual matrix, absence of findings showing marketability or commercial sale by the appellant, and the settled precedents, the Tribunal concluded that the products in question fall within Chapter 3506 and are therefore eligible for the notified exemption. [Paras 9, 10, 11, 12, 13]

Classification under Chapter 35-06 accepted; exemption under Notification No.50/2003-CE upheld.

Marketability as determinative for excisability of intermediate/captive products - principles of natural justice - right to production of test reports and cross-examination of witnesses - Revenue failed to establish marketability of the captive resin mixtures and the impugned adjudication violated principles of natural justice by denying test reports and opportunity for cross examination. - HELD THAT: - The Tribunal found no market inquiry or evidence that the appellant purchased or sold the resins in the market; marketability is an essential ingredient for treating an intermediate product as excisable. The Commissioner relied on test reports and third party material, but the appellant's requests for production of the chemical examiner's report and to cross examine witnesses were not acceded to, and the report was produced only at hearing. The Tribunal treated the adjudication as vitiated by non speaking order and denial of procedural safeguards, aligning with precedents that intermediate captive products with no marketability are not dutiable. [Paras 14, 15]

Adjudication set aside for want of proof of marketability and for breach of natural justice in not furnishing test reports or permitting cross examination.

Extended period of limitation and requirement of suppression to invoke it - binding effect of departmental acceptance of Tribunal judgments and consistency of revenue stand - Substantial part of the demand (up to December 2010) is time barred; extended period under Section 11A cannot be invoked as there is no suppression when facts were disclosed to the Department. - HELD THAT: - The Tribunal observed that the appellant had filed a declaration in November 2006 detailing finished goods and raw materials including the resins, and the Department verified the unit and allowed exemption. The Department raised objections only after more than four years; given that the activity had been reflected in statutory/private records and there was no evidence of suppression with intent to evade duty, invocation of the extended period is not justified. The Tribunal relied on settled authorities that mere technical controversy or disclosure in records excludes suppression and therefore held the substantial portion of the demand barred by limitation. [Paras 17]

Demand up to December 2010 barred by limitation; extended period invocation rejected for lack of suppression.

Final Conclusion: Appeal allowed; impugned order of the Commissioner set aside insofar as it confirms duty and imposes penalty, with consequential relief as per law.

Common parlance test - user test - strict interpretation of taxing statutes - classification of goods for fiscal entry - scientific/dictionary/internet meaning test - benefit of doubt in favour of assessee - burden on Revenue to establish classification

Classification of goods for fiscal entry - common parlance test - user test - scientific/dictionary/internet meaning test - Whether the goods 'PET Reisin' and 'PVC Granuels' fall within the entry 'Chemicals' in Entry No. 51 of the Schedule to the Assam Entry Tax Act, 2008 for the period 08.12.2009 to 14.08.2013. - HELD THAT: - No definition of 'chemicals' appears in the Assam Entry Tax Act, 2008; accordingly the correct approach is to ascertain the meaning in common parlance or trade/commercial usage rather than by technical, scientific, dictionary or internet-derived meanings. The authorities below accepted that the goods are not found in a chemical/chemist's shop but proceeded to classify them by applying scientific, dictionary and internet tests without applying the common parlance/user test as directed by earlier Division Bench guidance. Central Excise classification (where PET resins and PVC granules appear under different chapters than chemicals) and the Government of India concessional CST notification treating PET resin as 'raw material' for plastics are relevant indicia inconsistent with treating these goods as 'chemicals'. Absent tangible material from the Revenue discharging its burden to show that these items are understood in trade as 'chemicals', and giving the benefit of any doubt to the assessee, PET Reisin and PVC Granuels cannot be classified as 'chemicals' under Entry 51 for the stated period. [Paras 54, 55, 56, 57, 58]

PET Reisin and PVC Granuels are not 'chemicals' within Entry 51 of the Schedule to the Assam Entry Tax Act, 2008 for the period 08.12.2009 to 14.08.2013, and the common parlance/user test must be applied for classification.

Strict interpretation of taxing statutes - benefit of doubt in favour of assessee - burden on Revenue to establish classification - Whether the impugned assessment, appellate and revisional orders levying entry tax on these goods are sustainable and what relief follows. - HELD THAT: - Taxing statutes require strict interpretation and entries ambiguous between two meanings must be resolved in favour of the taxpayer. The Revenue failed to produce tangible evidence showing these goods fall within the disputed entry and relied on inappropriate tests. Having held that the goods are not 'chemicals' under Entry 51 for the relevant period, the impugned assessment, appellate and revisional orders imposing entry tax on PET Reisin and PVC Granuels are unsustainable. Consequentially, tax paid, if any, on these items during the relevant period is to be refunded to the petitioners. [Paras 56, 57, 60, 61]

The assessment, appellate and revisional orders levying entry tax on PET Reisin and PVC Granuels for the period in question are quashed; tax paid, if any, shall be refunded to the petitioners.

Final Conclusion: Applying the common parlance/user test and construing the taxing entries strictly in favour of the assessee, the Court holds that 'PET Reisin' and 'PVC Granuels' are not 'chemicals' under Entry 51 for 08.12.2009 to 14.08.2013; the impugned assessment, appellate and revisional orders are set aside and any tax paid on these items for the said period shall be refunded.

Sale in course of import - application of Section 5(2) of the Central Sales Tax Act, 1956 - privity of contract - movement of goods integrally connected with the contract - import occasioned by the sale - interim protection in revenue matters - deposit as condition for interim relief

Sale in course of import - application of Section 5(2) of the Central Sales Tax Act, 1956 - movement of goods integrally connected with the contract - privity of contract - import occasioned by the sale - Whether the sales of medical equipment by the petitioner took place in the course of import so as to attract the deeming provision of Section 5(2) of the Central Sales Tax Act, 1956 - HELD THAT: - The Court recognised the settled principle that Section 5(2) does not mandate privity of contract between the foreign supplier and the ultimate Indian purchaser; what is material is whether the sale occasioned the import and whether the movement of goods was integrally connected with the contract for supply. The Board had recorded factual findings that there were two independent sales and that the import was not inextricably bound up with the local sale. Given those findings, the question whether the transactions fall within Section 5(2) requires consideration on evidence and exchange of affidavits rather than immediate adjudication on writ. The Court therefore did not decide the substantive question on merits but directed that the issue be heard on the record after affidavits are filed so that the factual matrix-whether the import was occasioned by the sale and whether movements were integrally connected-can be examined. [Paras 10]

Substantive question under Section 5(2) not finally adjudicated; matter to be considered on exchange of affidavits and heard on merits.

Interim protection in revenue matters - deposit as condition for interim relief - Whether interim protection against coercive steps should be granted to the petitioner and on what terms - HELD THAT: - The Court found that the petitioner had made out a prima facie case and that the matter required determination on affidavits. Balancing the revenue character of the dispute with the petitioner's entitlement to interim relief, the Court granted conditional interim protection restraining the respondents from taking coercive action to recover the tax charged under the Central Sales Tax Act for a limited period, subject to the petitioner making a specified deposit. The Court directed the deposited sum to be placed in an interest-bearing fixed deposit and permitted the respondents to file affidavits in opposition within a stipulated time-frame. The interim restraint was fixed for an initial short period and continued thereafter until the end of the specified calendar month or until further order. [Paras 11, 12, 13]

Interim protection granted restraining coercive steps subject to petitioner depositing the directed amount within two weeks; interim order to continue till end of the specified period or until further order.

Final Conclusion: The writ petition is directed to be heard on merits after exchange of affidavits on the question whether the sales occasioned the imports and whether the movements were integrally connected; meanwhile conditional interim protection has been granted restraining coercive measures subject to the petitioner's compliance with the deposit direction and within the time and terms specified by the Court.

Empanelment - Notice Inviting Tender - Pre-evaluation criteria - Branch office continuity requirement - Firm Constitution Certificate - Beneficial corrigendum - Disqualification for non-compliance

Branch office continuity requirement - Firm Constitution Certificate - Disqualification for non-compliance - Petitioner was correctly disqualified for failing to prove that the firm's Branch Office in Bihar had been situated continuously for the requisite five years as per ICAI records and for not furnishing the required Firm Constitution Certificate for the last five years. - HELD THAT: - The NIT required that CA firms with head offices outside Bihar must have a Branch Office in Bihar continuously for more than five years (as per ICAI records) and produce supporting records, including Firm Constitution Certificates evidencing such continuity. The corrigendum did not remove the five year continuity requirement; it altered ancillary documentary requirements (for example, GST registration condition) in a manner favourable to bidders but preserved the core five year test. The petitioner produced records showing the firm's head office details and a branch address, but did not establish, by ICAI records or by the requisite Firm Constitution Certificates for the last five years, continuous presence of the Bihar branch. The evaluating authority recorded that the proposal was not evaluated because the last five year FCC was not attached. In these circumstances the disqualification for failure to comply with the specified pre evaluation criterion was upheld.

Disqualification for failing to prove five year continuous Branch Office presence and for not producing the requisite Firm Constitution Certificates is justified; the petition challenging that disqualification is dismissed.

Notice Inviting Tender - Pre-evaluation criteria - Beneficial corrigendum - Corrigendum dated 27.04.2023 was beneficial to tenderers in relaxing certain documentary stipulations but did not alter the substantive five year Branch Office continuity requirement nor render the date of tender submission material to the continuity test. - HELD THAT: - The original NIT already contained the five year branch continuity requirement. Corrigendum II modified documentary particulars (for example, it no longer mandated three years of GST registration in Bihar) and clarified proof of bank accounts, thereby being beneficial. However, it left intact the essential condition that the branch must have existed continuously for five years as per ICAI records. Because the five year requirement was present in both the original NIT and the corrigendum, the fact that the petitioner submitted the tender on the last extended date did not cure the lack of evidence of five year continuity. The court therefore treated the corrigendum as not altering the determinative eligibility criterion.

Corrigendum did not negate the five year continuity requirement and did not render the submission date decisive; the contention based on corrigendum fails.

Final Conclusion: The petitioner's challenge to non empanelment is dismissed: the corrigendum was beneficial but did not remove the five year branch continuity requirement, and the petitioner failed to produce the requisite Firm Constitution Certificates proving continuous presence in Bihar for the prescribed period, justifying disqualification.