TaxTMI Updates e-Newsletter
Jul 08,2023

Anticipatory bail in economic offences involving alleged GST fraud - gravity of offence and magnitude of alleged GST refund through bogus firms - custodial interrogation necessary for effective investigation - failure to comply with summons under Section 70 of the Central Goods and Service Tax Act, 2017 - role of statements of co-accused and documentary GSTR-1/GST-3B records as incriminating material - compliance with departmental guidelines for arrest in GST investigations

Anticipatory bail in economic offences involving alleged GST fraud - gravity of offence and magnitude of alleged GST refund through bogus firms - custodial interrogation necessary for effective investigation - failure to comply with summons under Section 70 of the Central Goods and Service Tax Act, 2017 - role of statements of co-accused and documentary GSTR-1/GST-3B records as incriminating material - Whether anticipatory bail should be granted to the applicant accused of offences under section 132 of the Central Goods and Service Tax Act, 2017 - HELD THAT: - The Court examined the material collected and the conduct of the applicant and concluded that anticipatory bail was not warranted. The investigation discloses allegations that the applicant was instrumental in forming multiple bogus firms which claimed substantial GST refunds; statements of several co-accused and documentary sales/purchase records (GSTR-1 and GST-3B) implicate the applicant as a principal accused. The applicant failed to appear despite service of three summons under Section 70. Given the gravity of the economic offence, the magnitude of the alleged fraud, and the necessity of custodial interrogation for effective investigation, the Court found that no case for anticipatory bail was made out. The Court also noted that departmental arrest guidelines have been followed and that a separate bail cancellation proceeding was pending, reinforcing the view that pre-arrest relief should be denied. [Paras 8]

Anticipatory bail is refused and the petition is dismissed.

Final Conclusion: On consideration of the material on record, the applicant's non-compliance with summons, statements of co-accused and documentary evidence pointing to large-scale GST refund fraud, and the need for custodial interrogation, the High Court dismissed the anticipatory bail application.

Tax treatment of works contracts executed pre-GST and post-GST - assessment under KVAT/COT regime for pre-GST works - calculation of tax difference between KVAT and GST - adjustment of input tax credit against output GST - supplementary agreement for revised GST-inclusive contract value - permissibility of filing returns/amended returns without interest or penalty - temporary protection from precipitative enforcement action

Assessment under KVAT/COT regime for pre-GST works - tax treatment of works contracts executed pre-GST and post-GST - calculation of tax difference between KVAT and GST - adjustment of input tax credit against output GST - Procedure for segregating contract works executed before and after 01.07.2017 and for computing and adjusting tax consequences between KVAT/COT and GST. - HELD THAT: - The Court ordained that respondents shall (a) calculate works executed pre-GST (prior to 01.07.2017) and payments received therefor and assess such pre-GST works under the KVAT regime (either COT or VAT as applicable); (b) compute the balance works completed or to be completed after 01.07.2017 within the original contract and derive the value/rate attributable to materials and KVAT items used for such balance works; (c) deduct the KVAT component from those materials and any service tax where applicable and add the applicable GST on those items; and (d) arrive at input tax credit on materials and set it off against output GST for those assessed under regular VAT. The net result required is a separate calculation of the "tax difference" on balance works executed or to be executed after 01.07.2017, which will inform subsequent commercial and tax adjustments between the parties. The directions prescribe a methodical, item-wise approach to segregate pre- and post-GST portions and to reconcile input credit and output liability under GST vis-a -vis KVAT/COT findings. [Paras 20]

Respondents are directed to follow the prescribed computation and adjustment procedure to determine the tax difference between KVAT/COT and GST for works split by the 01.07.2017 cut-off.

Supplementary agreement for revised GST-inclusive contract value - calculation of tax difference between KVAT and GST - Consequences and remedies where the revised GST-inclusive value for balance works differs from the original contract value. - HELD THAT: - The Court directed that based on the result of the tax-difference calculation, the concerned authority/employer shall decide whether the agreement needs amendment. If the revised GST-inclusive work value for the balance work (completed or to be completed after 01.07.2017) exceeds the original agreement value, the petitioners are to be paid or reimbursed the differential tax amount by the employer; similarly, if payments for pre-GST completed works are made post-GST, the employer must pay or reimburse any differential tax amount. Petitioners were given liberty to submit comprehensive representations to employers within four weeks and respondents were directed to consider and dispose those representations expeditiously within eight weeks. [Paras 20]

Employers/authorities must consider calculated tax differences and, where appropriate, execute supplementary agreements and make payments or reimbursements of any differential tax amounts.

Permissibility of filing returns/amended returns without interest or penalty - temporary protection from precipitative enforcement action - Interim procedural relief permitting filing of returns/amended returns and moratorium on enforcement action. - HELD THAT: - The Court permitted petitioners who had not filed GST returns after 01.07.2017 to file returns or amended returns pursuant to the differential-tax calculation under the prescribed procedure without insistence on interest, penalty, or limitation. Further, GST authorities were directed not to take precipitative action against the petitioners for six months from the date of receipt of the order. These directions provide a time-bound procedural window and temporary protection to enable reconciliation and compliance in accordance with the Court's computation framework. [Paras 20]

Petitioners may file returns/amended returns without interest, penalty or limitation pursuant to the prescribed computation and are protected from precipitative GST enforcement for six months.

Supplementary agreement for revised GST-inclusive contract value - calculation of tax difference between KVAT and GST - Determination by the concerned department whether the original agreement requires modification in light of the computed tax difference is to be made afresh by the department/authority. - HELD THAT: - The Court left it to the concerned department/authority to decide, on the basis of the tax-difference calculation, whether the underlying agreement requires alteration. This directs the administrative authority to undertake fresh consideration of contractual revision and related commercial adjustments, guided by the prescribed computations; the Court did not itself adjudicate the commercial necessity for amendment but remitted that question for administrative decision in the light of the computed results. [Paras 20]

The question whether agreements should be changed is remitted to the concerned department/authority for fresh decision based on the computed tax difference.

Final Conclusion: The writ petitions are disposed of by directing respondents to implement the computation and reconciliation procedure set out in the operative part of paragraph 20 of the earlier order dated 11.04.2023, permitting petitioners to submit representations and to file returns/amended returns without interest or penalty, granting a six month moratorium against precipitative action, and remitting to the concerned departments the decision whether contractual agreements should be amended in the light of the computed tax differences.

Rate of deduction of tax in the case of a non-resident who does not have a PAN -provisions of Section 206AA overrides the provisions of the Double Tax Avoidance Agreement or not? - DTAA between India and Netherlands - As per HC [2022 (8) TMI 40 - DELHI HIGH COURT] DTAA acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty

HELD THAT:- HC's impugned order does not call for interference. The special leave petition is accordingly dismissed.

Penny stock additions - Concurrent findings of fact - appellate interference on facts - no substantial question of law - reliance on appellate findings and precedent

HC [2022 (7) TMI 1340 - ALLAHABAD HIGH COURT] dismissed the Revenue's appeal, holding that the deletion of additions on the allegation of penny stock was supported by concurrent findings of fact by the CIT(A) and the Tribunal and that no substantial question of law warranted interference.

HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.

However, the question of law is kept open.

Income deemed to accrue or arise in India - Income received from sale of software licenses - Royalty under Article 12 of India Singapore Agreement - amounts paid by the concerned persons resident in India to non-resident - foreign software suppliers - Whether transaction constitutes as taxable income deemed to accrue in India u/s 9(1)(vi)? - HELD THAT:- The issue raised by the Revenue in the present special leave petition is covered against them vide judgment of this Court dated 02.03.2021 in “Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner of Income Tax & Anr. [2021 (3) TMI 138 - SUPREME COURT]

As Revenue states that a review petition has been filed against this judgment, which is currently pending, and the right of the Revenue to revive the present special leave petition may be reserved, in case the review petition is allowed.

Recording the aforesaid, the special leave petition is dismissed, as the same is covered by the aforesaid decision of this Court.

Requirement of issuance of show cause notice before best judgment assessment under the first proviso to Section 144 - service of statutory notice by electronic mail - assessment set aside for failure to effect valid service of notice - liberty to revenue to pass fresh assessment after compliance with statutory notice requirement

Service of statutory notice by electronic mail - requirement of issuance of show cause notice before best judgment assessment under the first proviso to Section 144 - assessment set aside for failure to effect valid service of notice - Show cause notices required by the first proviso to Section 144 were not validly served at the operative e-mail address of the petitioner and the assessment passed by resort to best judgment is vitiated. - HELD THAT: - The record demonstrates that statutory show cause notices were issued to an e-mail address not in use by the petitioner, whereas the petitioner's returns and earlier correspondence bore different operative e-mail addresses. The Assessing Officer was aware of the e-mail addresses used by the petitioner and yet issued the notices to an inoperative address. The first proviso to Section 144 mandates issuance of a show cause notice before adopting the best judgment assessment route; that requirement must be satisfied by valid service. Because service did not fructify, the statutory prerequisite to proceed with best judgment assessment remained unfulfilled, rendering the impugned assessment order unsustainable. The court therefore set aside the assessment order but granted the Assessing Officer liberty to proceed afresh in accordance with law, which includes issuing a formal show cause notice at the correct e-mail address and taking subsequent steps permitted under the Act. [Paras 5, 6, 7, 11, 12]

Impugned assessment order dated 16.05.2023 set aside for failure to serve the required show cause notices at the operative e-mail address; Assessing Officer permitted to proceed afresh after issuing formal show cause notice at correct e-mail address.

Final Conclusion: Writ petition allowed; assessment set aside for failure to comply with the statutory requirement of serving a show cause notice before resorting to best judgment assessment, with liberty to the Assessing Officer to pass a fresh assessment after issuing the requisite notice at the correct e-mail address.

Addition towards gross profit on bogus purchases - profit element embedded in tainted purchases - appellate tribunal's reasons and adequacy of reasoning - questions of fact v. questions of law - exercise of fact finding discretion in quantification of addition

Appellate tribunal's reasons and adequacy of reasoning - perverse order - Whether the ITAT's order was perverse for merely extracting part of the CIT(A)'s order without giving reasons for reducing the gross profit percentage. - HELD THAT: - The High Court examined paragraph 6 of the ITAT order and the material before the ITAT. The court found that the ITAT did not simply copy the CIT(A)'s conclusion but recorded the basis for arriving at a reduced percentage - namely, the assessee's own declared gross profit of 7.5% and the submissions made before the ITAT seeking a mid point between 12% and 7.5%. The court held that what constitutes sufficient reason varies with the facts of each case and that the ITAT's explanation, read in context, disclosed the factual basis for its conclusion. [Paras 6, 7]

ITAT's reasons were adequate and the order could not be characterized as perverse.

Profit element embedded in tainted purchases - exercise of fact finding discretion in quantification of addition - questions of fact v. questions of law - Whether the reduction of the gross profit addition from 12% to 8% was erroneous as a matter of law. - HELD THAT: - The court observed that the central controversy - the appropriate profit margin to be applied to purchases regarded as tainted - involved factual evaluation of the assessee's business, market norms and the computations placed before the authorities. CIT(A) had adopted 12% relying on market norms; ITAT reached 8% on the basis of the assessee's declared 7.5% and submissions seeking a compromise. Since the determination of the actual profit margin and the genuineness of the sellers are essentially questions of fact requiring evidence, the High Court held that the matter did not raise a substantial question of law. The ITAT's arithmetic compromise was therefore a factual exercise within its fact finding domain. [Paras 4, 7, 8]

Reduction to 8% was a factual appraisal by the ITAT and did not involve an error of law warranting interference.

Reliance on judicial precedent in quantification of additions - questions of fact v. questions of law - Whether the ITAT erred in ignoring the Gujarat High Court decision in N.K. Proteins (as contended by Revenue). - HELD THAT: - The judgment records that CIT(A) relied on Gujarat High Court authority in determining that only the profit element could be added. The High Court, however, treated the dispute ultimately as one of factual determination - the appropriate profit margin and the genuineness of sellers - and noted that such questions require evidence and fact finding. The High Court did not find any substantial question of law arising from any purported failure to follow or discuss the Gujarat decision that would justify interference with the ITAT's factual conclusion. [Paras 4, 8]

No legal error in the ITAT's treatment that would amount to ignoring binding precedent so as to raise a substantial question of law.

Final Conclusion: The appeal is dismissed. The ITAT's reduction of the gross profit addition to 8% was a fact based conclusion supported by the material and reasons on record, and no substantial question of law arises for this Court to entertain.

Faceless assessment procedure - service of show cause notice through National Faceless Assessment Centre - right to file reply and seek extension of time under faceless proceedings - obligation to consider adjournment request before closing opportunity to reply - quashing of assessment for denial of opportunity of response - direction for reopening portal and granting faceless personal hearing

Service of show cause notice through National Faceless Assessment Centre - right to file reply and seek extension of time under faceless proceedings - obligation to consider adjournment request before closing opportunity to reply - faceless assessment procedure - Assessment passed without considering the assessee's timely adjournment request and after the faceless portal window had been closed. - HELD THAT: - The Court found that the show cause notice under the faceless assessment scheme was dated 02.12.2022 and the portal window was closed on 09.12.2022. The petitioner emailed an adjournment request on 08.12.2022 seeking extension to 16.12.2022 and attempted to upload the reply on 16.12.2022 but the portal was closed. Section 144B(1)(xii)(b) and clause (xiii) require that the show cause notice be served through the National Faceless Assessment Centre and permit filing of a reply within the date specified or within extended time granted on an application to the NFAC. The Department neither accepted nor rejected the adjournment request nor communicated any decision thereon before proceeding to pass the assessment order on 17.12.2022. On these facts the Court concluded that the petitioner was deprived of the statutory opportunity to file a reply and that the assessment was therefore vitiated. [Paras 5, 6]

Impugned assessment order dated 17.12.2022 quashed and set aside for denial of opportunity to file reply and for failure to consider the adjournment request under the faceless assessment procedure.

Quashing of assessment for denial of opportunity of response - direction for reopening portal and granting faceless personal hearing - faceless assessment procedure - Whether the matter should be remitted for fresh consideration and the procedural relief to be afforded to the assessee. - HELD THAT: - Considering the peculiar facts - the admitted adjournment request, failed upload attempts and absence of departmental communication - the Court directed remedial steps rather than final adjudication on merits. The Court ordered the Department to reopen the portal to enable the petitioner to submit its explanation and documents, to intimate the petitioner if the portal is opened by a specified date, to permit uploading of the reply within a stipulated timeframe, and to grant a faceless personal hearing if requested, with at least five days' notice, in accordance with Section 144B(6)(vii)-(viii) and the NFAC's SOP. The Court mandated adherence to the Department's SOP governing faceless assessments. [Paras 7, 8]

Assessment remitted for fresh faceless proceedings with directions to reopen portal, allow submission of reply and documents, and grant faceless personal hearing on request, following the NFAC SOP.

Final Conclusion: Writ petition allowed; the faceless assessment order dated 17.12.2022 is quashed and set aside for denial of opportunity to reply. The matter is remitted with directions to reopen the faceless portal, permit submission of the petitioner's explanation and documents within the stipulated time, and to grant a faceless personal hearing if sought, in accordance with Section 144B and the NFAC SOP.

Misalignment between notice and Case Related Information Details (CRID) - notice under Section 148A(b) and order under Section 148A(d) of the Income-tax Act, 1961 - setting aside of impugned order for defective material - de novo exercise by Assessing Officer - obligation to furnish material information and afford opportunity to respond - requirement of personal hearing and speaking order

Misalignment between notice and Case Related Information Details (CRID) - notice under Section 148A(b) of the Income-tax Act, 1961 - The CRID appended to the notice did not align with the allegations in the body of the notice and appeared not to concern the petitioner. - HELD THAT: - The Court examined the notice dated 23.05.2022 issued under Section 148A(b) and the accompanying Case Related Information Details. The CRID furnished with the notice referred to a different person (Mr Rahul Dureja) despite an assertion that the PAN related to the petitioner, producing a clear misalignment between the information relied upon and the recipient of the notice. On that basis the Court found the notice and the consequent proceedings infected by defective material and unsuitable to sustain the order passed under Section 148A(d). The Court therefore concluded that the order premised on such misaligned material could not stand. [Paras 14, 15, 16]

Order dated 20.07.2022 passed under Section 148A(d) set aside.

Setting aside of impugned order for defective material - consequential collapse of notices issued under Section 148 and related show cause notices - de novo exercise by Assessing Officer - obligation to furnish material information and afford opportunity to respond - requirement of personal hearing and speaking order - Consequential notices issued on the basis of the impugned order would collapse; the Assessing Officer may undertake a de novo exercise only after furnishing material concerning the petitioner, affording opportunity to respond, holding a personal hearing, and passing a speaking order. - HELD THAT: - Following the setting aside of the order under Section 148A(d), the Court held that the consequential notice dated 20.07.2022 and other show cause notices which flowed from that order stand removed. The Court granted liberty to the Assessing Officer to proceed afresh (de novo). Before doing so, the AO is required to furnish to the petitioner the material information that concerns her, provide an opportunity to respond to that material, accord a personal hearing to the petitioner or her authorised representative, and thereafter pass a speaking order with a copy to the petitioner. These conditions ensure that any fresh proceedings are founded on correct material and accord the petitioner the statutory and procedural safeguards of hearing and reasoned decision-making. [Paras 18, 19, 20, 21, 22]

Impugned consequential notices set aside; AO permitted to undertake de novo consideration subject to furnishing material, opportunity to respond, personal hearing, and issuance of a speaking order.

Final Conclusion: Writ petition disposed of by setting aside the order dated 20.07.2022 under Section 148A(d) for misalignment between the notice and the CRID; consequential notices collapse. Assessing Officer permitted to proceed de novo after furnishing material information to the petitioner, affording opportunity to respond, providing personal hearing, and passing a speaking order.

Directory nature of procedural requirement to file Audit Report in Form No.10B - substantial compliance and condonation of delay in filing Form No.10B - entitlement to exemption under section 11 upon filing and verification of Form No.10B before completion of assessment - Assessing Officer's power to accept audit report before completion of assessment

Directory nature of procedural requirement to file Audit Report in Form No.10B - substantial compliance and condonation of delay in filing Form No.10B - entitlement to exemption under section 11 upon filing and verification of Form No.10B before completion of assessment - Whether the assessee's belated filing/uploading of Audit Report in Form No.10B, prior to completion of assessment proceedings, precludes entitlement to exemption under section 11. - HELD THAT: - The Tribunal held that the requirement to file the audit report in Form No.10B is procedural and directory in nature; substantial compliance suffices where the audit report is obtained and made available before completion of assessment. Relying on coordinate and High Court authorities, the Tribunal found that the assessee had uploaded Form No.10B before the deadline specified in the CPC communication and well before completion of assessment proceedings under section 143(3). Denial of exemption under section 11 solely on the technical ground that Form No.10B was not e-filed with the return was therefore unsustainable. The Tribunal directed that the availability and verification of Form No.10B by the Assessing Officer is the determinative step for entitlement to exemption, and that the claim should be examined on merits once Form No.10B is accepted and verified. [Paras 7, 8, 9]

Belated filing/uploading of Form No.10B does not by itself defeat exemption under section 11 if the audit report is available before completion of assessment; the claim must be considered on merits after verification of Form No.10B.

Assessing Officer's power to accept audit report before completion of assessment - substantial compliance and condonation of delay in filing Form No.10B - Whether the intimation under section 143(1) and the rectification order under section 154 could stand without the Assessing Officer having considered the Form No.10B uploaded by the assessee. - HELD THAT: - The Tribunal found that both the intimation under section 143(1) and the subsequent rectification rejection failed to take cognisance of the Form No.10B uploaded by the assessee and therefore could not sustain the denial of exemption. There was no regular assessment under section 143(3), and the AO had not verified the uploaded audit report. Following precedents that treat the filing requirement as procedural and amenable to condonation, the Tribunal set aside the impugned orders and remanded the matter to the Jurisdictional Assessing Officer with a direction to verify the Form No.10B, afford the assessee an opportunity, and decide the exemption claim on merits in accordance with law. [Paras 9]

Intimation and rectification orders are set aside; matter remitted to the Assessing Officer to verify the uploaded Form No.10B and decide the section 11 claim on merits after giving opportunity to the assessee.

Final Conclusion: Appeal allowed for statistical purposes; impugned intimation and rectification orders set aside and matter remitted to the Jurisdictional Assessing Officer to verify the uploaded Form No.10B and decide the assessee's claim for exemption under section 11 on merits in accordance with law.

Disallowance under section 14A read with Rule 8D - application of section 14A where investments made from interest-free own funds - availability of interest-free funds and appropriation of mixed funds - nexus between borrowed funds and fresh investments - requirement of exempt income for invocation of section 14A - reliance on South Indian Bank Ltd. precedent

Disallowance under section 14A read with Rule 8D - application of section 14A where investments made from interest-free own funds - availability of interest-free funds and appropriation of mixed funds - nexus between borrowed funds and fresh investments - requirement of exempt income for invocation of section 14A - reliance on South Indian Bank Ltd. precedent - Whether disallowance under section 14A read with Rule 8D was correctly made on fresh investment of Rs. 50,00,000/- given the assessee's available interest free funds and absence of exempt income. - HELD THAT: - The Tribunal examined the assessment addition where the AO applied section 14A read with Rule 8D to investments in shares aggregating Rs. 1,49,29,900/-, and noted that the CIT(A) had partly upheld disallowance in respect of the fresh investment of Rs. 50,00,000/-. The assessee's paid-up capital and substantial reserves and surplus showed that interest free own funds exceeded the investment, and there was no finding that borrowed funds were used for the acquisition of these shares. The Tribunal relied on the principle in South Indian Bank Ltd. that where interest free own funds exceed investments in tax free securities, investments are to be presumed made out of own funds and proportionate disallowance under section 14A is not warranted. Applying that principle and on the facts that there was no nexus between borrowings and the fresh investment and no exempt income was earned from the investments, the Tribunal held that section 14A did not apply and the disallowance could not be sustained. For these reasons the Tribunal did not concur with the CIT(A)'s partial upholding of the disallowance and allowed the appeal on these grounds. [Paras 2, 3]

Disallowance under section 14A read with Rule 8D in respect of the fresh investment is not sustainable; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that the disallowance under section 14A read with Rule 8D could not be sustained since the fresh investment was covered by the assessee's interest free own funds (with no nexus to borrowings) and no exempt income arose; the assessment addition was deleted.

Deduction under section 36(1)(va) of the Income-tax Act for employees' contributions to Provident Fund/ESIC - Requirement of deposit on or before the statutory due date as condition for deduction - Distinction between employer's own contribution and amounts retained/deducted from employees - Non-obstante clause in Section 43B does not permit deduction where employees' contributions are deposited after the statutory due date - Precedential effect of Checkmate Services Pvt. Ltd. on delayed deposits of employees' contributions

Deduction under section 36(1)(va) of the Income-tax Act for employees' contributions to Provident Fund/ESIC - Requirement of deposit on or before the statutory due date as condition for deduction - Precedential effect of Checkmate Services Pvt. Ltd. on delayed deposits of employees' contributions - Whether the disallowance made under section 36(1)(va) for delayed deposit of employees' contributions to P.F./E.S.I.C. was justified. - HELD THAT: - The Tribunal examined the question in light of the Hon'ble Supreme Court's decision in Checkmate Services Pvt. Ltd., which held that amounts deducted from employees' income and retained by the employer qualify as deemed income and are eligible for deduction under the Explanation to section 36(1)(va) only if deposited in terms of the relevant welfare enactment on or before the statutory due date. The Supreme Court drew a clear distinction between the employer's own contribution and contributions retained or deducted from employees, observing that the latter are held in trust and that timely deposit by the due date mandated by the relevant statute is an essential condition for treating such retained amounts as deductible. The Tribunal found, on the material on record, that the employees' contributions were deposited after the statute's prescribed due date and, applying the legal principle laid down in Checkmate Services Pvt. Ltd., concluded that the disallowance under section 36(1)(va) was correctly sustained. [Paras 8, 9]

Disallowance under section 36(1)(va) upheld and the appeal dismissed.

Final Conclusion: The Tribunal, following the Supreme Court's ruling in Checkmate Services Pvt. Ltd., dismissed the appeal and sustained the disallowance under section 36(1)(va) in respect of delayed deposit of employees' contributions for AY 2017-18.

Late filing fee under Section 234E - default in furnishing of TDS statement - machinery provision under Section 200A - charging provision - deductor's responsibility to comply with TDS provisions - applicability of amendment w.e.f. 01.06.2015

Late filing fee under Section 234E - default in furnishing of TDS statement - machinery provision under Section 200A - applicability of amendment w.e.f. 01.06.2015 - Validity of levy of fee under Section 234E for delayed filing of TDS statement for the transaction in financial year 2018-19 (AY 2019-20) in view of amendments brought by Section 200A w.e.f. 01.06.2015. - HELD THAT: - The Tribunal found on the material on record that the assessee deducted and deposited TDS but delayed filing the TDS statement in Form 26QB, for which the assessing officer imposed a fee under Section 234E. The Tribunal noted that Section 234E is a charging provision attracted on default in furnishing TDS statements and that Section 200A (as amended w.e.f. 01.06.2015) operates as a machinery provision permitting computation/adjustment at the time of processing. Relying on the distinction drawn by the High Court of Gujarat in Rajesh Kourani from the decision in Fatheraj Singhvi , the Tribunal held that the post-01.06.2015 regime does not negate the charging effect of Section 234E and that the fee could validly be imposed for delayed filing of the TDS statement. The Tribunal accordingly upheld the appellate authority's confirmation of the fee and found no reason to interfere. [Paras 6, 7]

Fee under Section 234E for delayed filing of TDS statement upheld and the assessee's appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the levy of the late filing fee under Section 234E for the delayed filing of the TDS statement for the transaction in financial year 2018-19 (AY 2019-20).

Exemption under section 11 - Condition under section 12A(1)(ba) - Filing return within time allowed under section 139 - Belated return under section 139(5) - CBDT Circular dated 23.04.2019 - Binding nature of CBDT circular on Revenue

Condition under section 12A(1)(ba) - Filing return within time allowed under section 139 - Belated return under section 139(5) - CBDT Circular dated 23.04.2019 - Binding nature of CBDT circular on Revenue - Exemption under section 11 - Whether the assessee satisfied the condition in section 12A(1)(ba) for claiming exemption under section 11 for A.Y. 2018-19 by filing a belated return within the time allowed under section 139, in view of the CBDT Circular dated 23.04.2019. - HELD THAT: - The Tribunal applied the decision in Bangarh Educational Welfare Trust v. ITO and examined CBDT Circular F.No.173/193/2019-ITA-I dated 23.04.2019 which clarified that for trusts registered under section 12AA the return of income must be furnished within the time allowed under section 139 and that orders raising demand under section 143(1)(a) on this ground may be rectified. The circular did not specify that only returns filed under section 139(1) qualify; therefore the beneficial construction that the phrase "time allowed under section 139" encompasses the mechanism for filing belated returns under section 139(5) was adopted. For A.Y. 2018-19 the last date for filing a belated return was 31.03.2019; the assessee filed its return on 15.11.2018 which fell within that period. The Tribunal treated the CBDT Circular as binding on Revenue authorities and concluded that the condition in section 12A(1)(ba) was fulfilled, entitling the assessee to exemption under section 11. The Coordinate Bench's reasoning was followed and no contrary precedent was shown by Revenue. [Paras 4, 6, 11]

The condition in section 12A(1)(ba) was satisfied by filing the belated return within the time allowed under section 139 for A.Y. 2018-19; the CIT(A)'s deletion of the addition was upheld and the Revenue's appeal dismissed.

Final Conclusion: Appeal dismissed: assessee entitled to exemption under section 11 for A.Y. 2018-19 since the belated return was filed within the time allowed under section 139 and the CBDT Circular dated 23.04.2019, which is binding on Revenue, directs acceptance of such returns for the purpose of section 12A(1)(ba).

Agricultural income - exemption under section 10(1) of the Act - acceptance of prior years' returns as corroborative evidence - burden of proof on the assessee to substantiate agricultural receipts - appreciation of remand report and inspection report - credibility of sale of timber supported by Tahsildar's permission and field observations

Agricultural income - acceptance of prior years' returns as corroborative evidence - credibility of sale of timber supported by Tahsildar's permission and field observations - appreciation of remand report and inspection report - Whether the addition of Rs. 4 lakhs treated as non-agricultural income was justified or the assessed amount should be accepted as agricultural income - HELD THAT: - The Tribunal reviewed the findings of the Assessing Officer and the CIT(A) and accepted the undisputed factual matrix: the assessee held over 11 acres, cultivated commercial crops (chilies and cotton) yielding about Rs. 3,32,010/-, had teak trees on field boundaries, and obtained Tahsildar's permission to cut trees. The ITO's inspection recorded physical evidence of cut tree stems and explained absence of remaining stems on account of subsequent cultivation and natural covering. The CIT(A) had relied on absence of direct sale vouchers to disbelieve receipt realization, despite earlier years' consistent return of agricultural income. The Tribunal applied a pragmatic evidentiary approach, observing that agriculturists ordinarily do not maintain formal commercial vouchers and that producing commercial crops on 11 acres would, in the ordinary course, result in sale and realization. Given the Tahsildar's permission, the ITO's field observations corroborating cutting of trees, and the reasonable allocation of amounts (major portion attributable to crop proceeds and remainder to timber sale), the Tribunal found the assessee's explanation satisfactory and concluded that no addition was warranted. The Tribunal therefore allowed the appeal on this issue. [Paras 10, 11, 12, 13, 14]

Assessee's explanation of agricultural income of Rs. 4 lakhs accepted and addition deleted; appeal allowed on this issue.

Final Conclusion: The Tribunal allowed the appeal by accepting the assessee's explanation that the amount assessed as non-agricultural income represented agricultural receipts (crop sale and timber sale) supported by prior returns, Tahsildar's permission and the ITO's inspection; the addition of Rs. 4 lakhs was deleted.

Disallowance of write-off of investments as capital expenditure - treatment of write-off/restatement of accounts as business loss - notional entries and absence of real income - direction to re-compute income on restated books

Disallowance of write-off of investments as capital expenditure - treatment of write-off/restatement of accounts as business loss - notional entries and absence of real income - Whether the investments, advances/debtors and bank balances written-off in the year are to be treated as disallowable capital items or as allowable business loss/adjustments on account of restatement of accounts where no real income has accrued - HELD THAT: - The Tribunal found on facts that the company had ceased functioning and its books, files and records were in possession of the Official Liquidator; investments held by the assessee were sold by the Official Liquidator and sale proceeds appropriated without details being made available to the assessee, so earlier balances were carried forward until the company's revival. A review upon revival resulted in write-offs and write-backs to reflect the correct state of affairs. The Tribunal held that these entries constituted a restatement of assets and liabilities to reflect non-existent investments, debtors and bank balances and were not indicative of any real income accruing to the assessee. On that basis the Tribunal concluded that the disallowances made by the Assessing Officer and upheld by the Commissioner (Appeals) could not be sustained and directed recomputation of the assessee's income/loss on the basis of the restated accounts. [Paras 4, 5]

Disallowance of the write-offs is reversed; matter remitted to the AO to recompute income/loss after giving effect to restatement of accounts.

Final Conclusion: Appeal allowed; the Tribunal held the write-offs to be restatement adjustments reflecting non-existent assets and not real income, set aside the additions and directed the Assessing Officer to recompute income/loss in accordance with the restated books.

Allowability of deduction of a statutory liability in the year of payment under section 43B - customs duty liability crystallised on failure of export obligation - deferred revenue expenditure - books of account not determinative for allowance of revenue expenditure - remand for verification of particulars of expenditure

Allowability of deduction of a statutory liability in the year of payment under section 43B - customs duty liability crystallised on failure of export obligation - Deductibility of customs duty paid during the year which arose from non-fulfilment of earlier export obligation - HELD THAT: - The assessee had earlier accounted for the benefit of duty-exemption when raw material was imported for intended export. In the year under appeal the assessee failed to fulfil the export obligation and consequently the customs duty became payable in that year. The Tribunal held that the expenditure crystallised in the year when the liability to pay arose and therefore the deduction of the duty paid in that year is allowable. The fact that the incentive had been treated as income in an earlier year does not preclude allowance of the duty when the liability actually arises and is discharged in the subsequent year. [Paras 2]

Deduction of the customs duty paid in the year when liability crystallised is allowed; corresponding ground allowed.

Deferred revenue expenditure - books of account not determinative for allowance of revenue expenditure - remand for verification of particulars of expenditure - Whether expenditure treated as deferred revenue expenditure in books but claimed in full in the computation of income in the first year is allowable - HELD THAT: - The Tribunal recognised that the expenditure was revenue in nature and that the assessee had, in the computation of income, claimed the expenditure in full in the first year while the books wrote it off over five years. Applying the principle that entries in books are not conclusive, and following Taparia Tools Ltd, the Tribunal held that the assessee could claim the full deduction in the first year if otherwise allowable under the Act. However, since the assessee had not furnished complete details of the expenditure, the Tribunal remanded the matter to the assessing officer with a direction to verify the particulars; if the expenditure is found to be revenue in nature, the full deduction is to be allowed. [Paras 3]

On merits the expenditure, if shown to be revenue in nature, is allowable in full in the first year; remanded to AO for verification of details.

Final Conclusion: The appeal is partly allowed: the customs duty payment is allowed as a deduction in the year in which the liability crystallised; the deferred revenue expenditure is accepted in principle as allowable in full if verified to be revenue in nature, and is remanded to the assessing officer for examination of particulars.

Remand for fresh consideration - opportunity of hearing - refund under the Customs Act, 1962 - paragraph 4.3 of Circular No. 6/2008-Customs - application of Sections 27 and 27A of the Customs Act, 1962 - deference to outcome of Special Leave Petition

Remand for fresh consideration - opportunity of hearing - paragraph 4.3 of Circular No. 6/2008-Customs - deference to outcome of Special Leave Petition - Impugned order set aside and matter remanded to the original authority for fresh consideration of refund applications after providing opportunity of hearing to the parties, to be decided in light of the outcome of the Special Leave Petition filed against the Bombay High Court's decision in CMS Info Systems Limited. - HELD THAT: - The Court accepted that the identical legal question addressed by the Division Bench in W.A.No.927 of 2013 and batch (order dated 25.04.2022) applies to the present petition. Relying on the operative direction extracted from that Division Bench order, the High Court set aside the impugned order and remanded the matter to the original authority with a mandate to reconsider the refund applications afresh. The remand is qualified: the original authority must provide the parties an opportunity of hearing and conduct its reconsideration having regard to the eventual decision on the Special Leave Petition filed against the Bombay High Court's judgment in CMS Info Systems Limited, with consequential application of the legal position concerning refund claims and the applicability of Sections 27 and 27A of the Customs Act, 1962 as relevant. [Paras 4, 5]

Impugned order set aside; matter remanded for fresh consideration of refund applications after hearing parties and in light of the outcome of the SLP concerning CMS Info Systems Limited.

Final Conclusion: Writ petition disposed by setting aside the impugned order and remanding the matter to the original authority for fresh consideration of refund applications after affording an opportunity of hearing, to be decided in accordance with the outcome of the Special Leave Petition against the Bombay High Court's decision in CMS Info Systems Limited; no costs.

Transaction value - rejection under Valuation Rules - commercial discount and bulk negotiation - misdeclaration - identity of goods and classification - mens rea for evasion of customs duty - confiscation and penalty

Transaction value - rejection under Valuation Rules - commercial discount and bulk negotiation - Whether the transaction value declared for the imported aroma chemical could be rejected and reassessed by the adjudicating authority. - HELD THAT: - The Tribunal examined the documentary record including purchase orders, order confirmations, invoices and email correspondence showing negotiated price reductions and a certificate from the foreign supplier. Valuation under the Customs Act is to follow the transaction value subject to the Valuation Rules (transaction value as default under Rule 3, additions under Rule 10 and rejection only under Rule 12). The contemporaneous documents establish that price reductions arose from ordinary commercial negotiation and bulk-order discounts and were reflected in the supplier's invoices and correspondence. The adjudicating authority ignored these documents and did not follow the sequential valuation approach under Rules 4-9 before reassessing value. In view of settled principles (as explained in Eicher Tractors Ltd. and subsequent authorities cited), absent material establishing that price was not the sole consideration or that the transaction fell within exceptions, the transaction value cannot be discarded merely because higher prices existed in other consignments or because the price changed over time. [Paras 20]

Transaction value could not be rejected; reassessment without applying the Valuation Rules sequentially is unsustainable.

Misdeclaration - identity of goods and classification - mens rea for evasion of customs duty - Whether describing/importing the product as "Aroma Chemical K-100" instead of "safranal" amounted to misdeclaration and justified confiscation. - HELD THAT: - The Tribunal took judicial notice of the chemical identity (IUPAC name and composition) and observed that both descriptions relate to the same organic compound and that the HSN classification (29122990) and applicable duty rate were the same. There was no evidence that the two names denoted different goods or that any benefit accrued to the importer by the change of nomenclature. Given identity of the chemical, identical classification and duty rate, and absence of material showing an intent to evade duty, the change of description did not amount to misdeclaration. The adjudicating authority's conclusion rested on assumptions and ignored documentary evidence on record. [Paras 21, 22]

Change of name from "safranal" to "Aroma Chemical K-100" is not misdeclaration; no intent to evade customs duty established and confiscation on that basis is not justifyable.

Confiscation and penalty - evidence of evasion - Whether confiscation of goods and imposition of penalties on the importer and its director were sustainable. - HELD THAT: - Confiscation and penalties were founded on findings of undervaluation and misdeclaration. Having held that the transaction value was acceptable and that there was no misdeclaration or mens rea to evade duty, the statutory preconditions for confiscation and penalty did not exist. The Tribunal noted absence of any evidence to rebut the supplier's invoices and email communications or to demonstrate deliberate evasion. Consequently, penalties and confiscation imposed by the adjudicating authority could not stand. [Paras 23, 24]

Confiscation and penalties set aside; impugned order quashed and appeals allowed.

Final Conclusion: The adjudicating authority's rejection of the transaction value and its findings of misdeclaration are unsustainable on the record; confiscation and penalties based on those findings are quashed and the appeals are allowed, with the impugned order set aside.

Valuation for levy of additional duty of customs (CVD) - transaction value under Section 14 of the Customs Act, 1962 - retail sale price (RSP) basis under the proviso to Section 3(2) of the Customs Tariff Act, 1975 - requirement to declare retail sale price under the Legal Metrology (Packaged Commodity) Rules, 2011 - goods notified under Section 4A of the Central Excise Act, 1944 - affixation of retail sale price requires element of sale/retail sale - entrustment model / retention of ownership by importer

Valuation for levy of additional duty of customs (CVD) - transaction value under Section 14 of the Customs Act, 1962 - retail sale price (RSP) basis under the proviso to Section 3(2) of the Customs Tariff Act, 1975 - requirement to declare retail sale price under the Legal Metrology (Packaged Commodity) Rules, 2011 - affixation of retail sale price requires element of sale/retail sale - entrustment model / retention of ownership by importer - Value of imported Set top Boxes for levy of CVD is to be determined on transaction value and not on RSP where there is no sale and ownership remains with the importer. - HELD THAT: - The proviso to Section 3(2) of the Customs Tariff Act, 1975 makes assessment on RSP contingent upon two cumulative conditions: (i) a requirement under the Legal Metrology regime or other law to declare RSP on the imported package, and (ii) the goods being notified under Section 4A of the Central Excise Act. The Legal Metrology (Packaged Commodity) Rules, 2011 require RSP to be declared only on packages intended for retail sale; the definition of retail sale price contemplates the maximum price at which a packaged commodity "may be sold" to the ultimate consumer. Where there is no element of sale (i.e., no transfer of property in goods), Rule 6(1)(e) (RSP declaration) is not attracted. The Tribunal examined the appellants' subscriber agreements, an auditor's certificate and audited financial statements showing STBs as capital assets and depreciation claimed, and held these facts demonstrate retention of ownership by the importer and absence of sale to subscribers. The Tribunal also relied on coordinate pronouncements (Bharti Telemedia & Ors.) and the Board's subsequent circular accepting that position. Applying these principles, the condition precedent of retail sale for invoking the RSP proviso is not satisfied for the STBs provided on entrustment, and therefore valuation for CVD must be by transaction value under Section 14 (Section 4 approach to valuation), not on RSP basis. The impugned appellate order directing assessment on RSP was set aside for lack of merit. [Paras 10, 11, 12, 13, 14]

Appeal allowed; impugned order set aside and CVD valuation to be on transaction value (not on RSP) for the imported STBs provided on entrustment.

Final Conclusion: The Tribunal allowed the appeal, holding that imported Set top Boxes supplied to subscribers on entrustment (with ownership retained by the importer) are not liable to CVD on RSP; valuation for CVD is to be on transaction value, and the impugned order assessing on RSP is set aside.

Financial debt - default - acknowledgement in financial statements - record of Information Utility - admission of fresh evidence on appeal - opportunity to file reply - ex-parte proceedings - collusion

Financial debt - default - acknowledgement in financial statements - record of Information Utility - Financial creditor proved existence of financial debt and default by the corporate debtor and the Adjudicating Authority rightly admitted the Section 7 application. - HELD THAT: - The Adjudicating Authority placed reliance on the balance sheet of the corporate debtor as on 31st March, 2017 and the financial statements of the financial creditor as on 31st March, 2018, both reflecting amounts shown as short term borrowings/loans from the financial creditor. The record of default from the Information Utility further indicated an outstanding funded credit facility and days past due. The Tribunal applied settled principles that acknowledgements in financial statements and authenticated records of the Information Utility establish a debt in default for the purposes of Section 7, particularly where no prior dispute or refutation of those records was made before the Adjudicating Authority. Reliance was also placed on authority holding that advances by associated parties having the commercial effect of borrowing constitute financial debt even if not interest bearing. On these bases the admission of the Section 7 application was upheld. [Paras 13, 14, 17, 19]

Adjudicating Authority correctly found financial debt and default and rightly admitted the Section 7 application.

Admission of fresh evidence on appeal - opportunity to file reply - ex-parte proceedings - Appellant was not entitled to a fresh opportunity to place the MoU before the Adjudicating Authority or to re-open ex parte proceedings as the MoU was not filed below. - HELD THAT: - The MoU dated 27.09.2017 was produced for the first time in this appeal and was not before the Adjudicating Authority. The record shows that the corporate debtor was granted opportunities to file a reply, failed to do so, and the Adjudicating Authority proceeded ex parte; the application to recall that order was subsequently withdrawn. The Tribunal held that absent satisfactory explanation for non filing and where the rejoinder was not placed before the Adjudicating Authority, the appellant cannot seek fresh opportunity on appeal to introduce the MoU or challenge the admitted records relied upon below. [Paras 8, 10, 11]

Request for an additional opportunity to produce the MoU before the Adjudicating Authority is refused and the MoU cannot be relied upon to overturn admission.

Collusion - malafide prosecution - letters of demand - Allegation that the Section 7 application was instituted in collusion or with malafide intent was rejected. - HELD THAT: - The Tribunal examined the contention of collusion and noted that the appellant itself placed on record multiple demand letters issued by the IRP/RP of the financial creditor in 2019 and 2020 demanding repayment. The Liquidator obtained specific permission from the Adjudicating Authority to file the Section 7 application and the application was filed after that permission; there was no material to substantiate collusion or malafide prosecution. Accordingly, the allegation was found to be without substance. [Paras 18]

Allegation of collusion or malafide prosecution is rejected.

Final Conclusion: The Tribunal finds no infirmity in the impugned order admitting the Section 7 application: financial debt and default were established on the material before the Adjudicating Authority, the appellant cannot raise for the first time the MoU on appeal or seek another opportunity after ex parte proceedings, and allegations of collusion are dismissed; the appeal is accordingly dismissed.

Sale of corporate debtor as a going concern - consequences under Section 53 of the Code - jurisdiction under Section 60(5)(c) of the Code to grant directions to implement sale - terms of e auction process document as contractually binding on sale - limitations on breadth of prayers by successful bidder

Sale of corporate debtor as a going concern - consequences under Section 53 of the Code - terms of e auction process document as contractually binding on sale - jurisdiction under Section 60(5)(c) of the Code to grant directions to implement sale - Entitlement of the successful bidder to seek directions from the Adjudicating Authority to give effect to the sale as a going concern and the legal consequence that creditors' claims are to be dealt with under Section 53 as contemplated by the process document. - HELD THAT: - The Tribunal held that where the corporate debtor is sold as a going concern and the e auction process document expressly provides that known and unknown liabilities as on the cut off date shall be dealt with under Section 53 of the Code, those consequences follow from the sale. The process document's provisions concerning transfer of ownership (including extinguishment and re issuance of shares) and treatment of liabilities are material terms which the successful bidder may rely on. Where roadblocks arise in effecting the transfer or getting statutory authorities to act, the successful bidder has locus to approach the Adjudicating Authority under Section 60(5)(c) of the Code for appropriate directions to implement the sale in accordance with the process document. The Tribunal therefore recognised the Adjudicating Authority's jurisdiction to grant clarificatory or implementational directions in liquidation proceedings to give effect to the contractual and statutory consequences of a sale as a going concern. [Paras 7, 8, 10, 12]

Successful bidder is entitled to seek directions under Section 60(5)(c) to implement a sale as a going concern and the liabilities specified in the process document are to be treated in accordance with Section 53.

Limitations on breadth of prayers by successful bidder - terms of e auction process document as contractually binding on sale - Validity and propriety of the prayers made in I.A. No. 3207/2022 by the successful bidder. - HELD THAT: - The Tribunal observed that the prayers in the impugned application were overbroad and general, and that a successful bidder in an e auction of a corporate debtor as a going concern may seek only such reliefs as are commensurate with and in accordance with the process document. General and sweeping prayers not tailored to the terms of the process document do not require consideration. Consequently, the Tribunal granted liberty to the successful bidder to file a fresh, appropriately framed application seeking specific reliefs and directions consonant with the e auction process document, which the Adjudicating Authority shall consider in accordance with law. [Paras 11, 12]

I.A. No. 3207/2022 contained overly general prayers; liberty granted to file a fresh application with prayers commensurate with the process document for the Adjudicating Authority's consideration.

Final Conclusion: Appeal partly allowed: the Tribunal held that the successful bidder may seek directions from the Adjudicating Authority under Section 60(5)(c) to give effect to a sale as a going concern and that liabilities are to be dealt with as per Section 53 where so provided in the process document; directed that the appellant be granted liberty to file a fresh, appropriately framed application for specific reliefs and concessions in accordance with the e auction process document, and remitted the matter to the Adjudicating Authority for consideration in accordance with law.

Service of demand notice by speed post and proof of delivery - validity of demand notice in Form 3 and requirement of invoices under Rule 5 - existence of operational debt, acknowledgement and breach of settlement agreement - assignment of debt and impleadment of assignee

Service of demand notice by speed post and proof of delivery - Demand Notice dated 15.10.2018 was validly served on the Corporate Debtor. - HELD THAT: - The Operational Creditor filed original postal receipts and service report downloaded from the postal website showing delivery to the registered office, and the Settlement Agreement executed by the Corporate Debtor specifically referred to the Demand Notice sent on 18.10.2018. The Adjudicating Authority therefore correctly found service proved and the Tribunal finds no infirmity in that finding. [Paras 11, 12, 13]

Finding of proper service of the Demand Notice is upheld.

Validity of demand notice in Form 3 and requirement of invoices under Rule 5 - Demand Notice in Form 3 was not defective for want of annexure of invoices in the facts of this case. - HELD THAT: - Rule 5 permits an Operational Creditor to deliver either a demand notice in Form 3 or a copy of an invoice in Form 4. Where the claim is made on the basis of a supply/installation agreement and an acknowledgement by the Corporate Debtor, issuance of Form 3 without attaching invoices is permissible. The Tribunal applied the principle in Neeraj Jain and held that in the present facts the Operational Creditor relied on the supply agreement and the Corporate Debtor's acknowledgement; hence Form 3 could not be faulted. [Paras 17, 18, 19, 20]

No defect is found in issuance of Demand Notice in Form 3 without invoices in the present case.

Existence of operational debt, acknowledgment and breach of settlement agreement - Operational debt was established and there was default caused by breach of the Settlement Agreement. - HELD THAT: - The Section 9 petition pleaded the original SITC agreement, subsequent contract dated 14.03.2015 with the Corporate Debtor, post dated cheques issued and an acknowledgement letter. The Settlement Agreement of 27.09.2021 acknowledged liability and provided a payment schedule; only the first instalment was paid and subsequent instalments were not honoured. The Adjudicating Authority therefore correctly found debt and default sufficient to admit the Section 9 application. Offers of partial payment after the admission hearing did not negate the pre existing default or compel acceptance of the breached settlement. [Paras 16, 21, 22, 23]

Admission of the Section 9 application on the ground of proved operational debt and default is affirmed.

Assignment of debt and impleadment of assignee - The validity of the Assignment dated 03.02.2023 was not adjudicated on merits and need not be considered for the purpose of this appeal; the assignee was impleaded to support the impugned order. - HELD THAT: - The Assignment in favour of Respondent No.3 was executed after institution of the Section 9 proceedings and was not a matter decided by the Adjudicating Authority. This Tribunal allowed impleadment of the assignee to support the admission order, and the Supreme Court declined to interfere with impleadment while leaving merits open. Consequently, arguments attacking the assignment were not considered in substance and are not determinative of this appeal. [Paras 25, 26]

Assignment issue left open; impleadment of the assignee does not vitiate the admission and its validity is not decided in this appeal.

Final Conclusion: The Tribunal finds no error in the NCLT's admission of the Section 9 application: service of the demand notice was proved, the Form 3 notice was valid on the facts, and the operational debt stood acknowledged and remained unpaid after breach of the Settlement Agreement. The appeal is dismissed and the deposit made by the appellant is ordered to be returned.

Res judicata in insolvency proceedings - finality of orders on appeal to the Supreme Court - admission of belated claims in CIRP - inclusion of contingent liabilities/homebuyers' claims in Information Memorandum - retrospective application of a subsequent appellate decision

Res judicata in insolvency proceedings - finality of orders on appeal to the Supreme Court - admission of belated claims in CIRP - Whether I.A. No. 3640 of 2022 seeking admission of the appellant's claim could be entertained after the identical grievance in I.A. No. 3213 of 2021 was rejected by the Adjudicating Authority, upheld by this Tribunal and by the Hon'ble Supreme Court. - HELD THAT: - The Tribunal held that the substantial reliefs sought in I.A. No. 3640 - principally admission of the appellant's claim and inclusion in the Resolution Plan - were the same as those earlier sought in I.A. No. 3213 of 2021. The earlier order refusing admission of the claim had attained finality following affirmation by this Tribunal and dismissal of the appeal by the Hon'ble Supreme Court. Applying settled principles that res judicata and finality of orders operate within the stages of the same proceeding, the appellant could not re-agitate the identical issue in the same CIRP by filing a fresh I.A. The Tribunal relied on authoritative pronouncements that once an order becomes final, it binds subsequent stages and cannot be reopened on the basis of a subsequent overruling decision, and that the doctrine of res judicata is applicable to IBC proceedings to prevent abuse of process and endless litigation. [Paras 12, 13, 16, 17]

I.A. No. 3640 of 2022 was not maintainable insofar as it sought admission of the same claim already finally rejected; the application was rightly rejected on res judicata/finality grounds.

Inclusion of contingent liabilities/homebuyers' claims in Information Memorandum - retrospective application of a subsequent appellate decision - Whether the appellant was entitled to relief based on this Tribunal's decision in Puneet Kaur (regarding inclusion of homebuyers' liabilities in the Information Memorandum) or by retrospective application of that decision. - HELD THAT: - The Tribunal examined the Resolution Plan and Information Memorandum and found that the appellant's asserted bookings (50 units) were already noted as contingent liabilities in the Information Memorandum and were specifically addressed in the Resolution Plan (see clauses dealing with such allottees and the proposed treatment). Because the Plan itself recorded and dealt with the appellant's claim and, in respect of nine units in the appellant's possession, the Resolution Professional had indicated conveyance/transfer would be effected if plan conditions were complied with, the appellant could not derive additional relief from the Puneet Kaur decision. Consequently, the subsequent pronouncement in Puneet Kaur did not entitle the appellant to reopen or obtain the relief sought where the Plan had already taken the claim into account and where earlier orders on the claim had attained finality. [Paras 17, 18, 19, 20]

Reliance on Puneet Kaur did not furnish a ground to grant the prayers in I.A. No. 3640; the grievance was either already reflected in the Information Memorandum/Resolution Plan or was otherwise concluded.

Final Conclusion: The Adjudicating Authority did not err in rejecting I.A. No. 3640 of 2022; the appeal is dismissed. The application was barred by finality/res judicata in respect of the claim already rejected up to the Supreme Court, and the appellant derived no additional entitlement from the subsequent Puneet Kaur decision as the claim had been noted and dealt with in the Information Memorandum and Resolution Plan.

Continuing guarantee - financial debt - cause of action / date of default - invocation of guarantee as basis for Section 7 claim - limitation defence to Section 7 application

Limitation defence to Section 7 application - cause of action / date of default - The Section 7 application was not barred by limitation. - HELD THAT: - The Tribunal examined the tripartite agreement and the Deed of Guarantee and held that the cause of action for invocation of guarantee arose on breach of the continuing guarantee when the guarantor was called upon to pay. The Financial Creditor issued a legal notice on 07.04.2021 and treated the date of default as 15.04.2021; the Section 7 application was filed on 24.04.2021. On these facts the claim fell within the limitation period and the plea that the application was time barred was rejected. [Paras 25]

Limitation defence rejected; Section 7 application held to be within time.

Continuing guarantee - financial debt - invocation of guarantee as basis for Section 7 claim - The Corporate Debtor was liable under the tripartite agreement and the Deed of continuing guarantee and the default constituted a financial debt entitling initiation of CIRP under Section 7. - HELD THAT: - The Tribunal analysed the Tripartite Agreement and the Deed of Guarantee executed on 03.10.2013 and found express clauses obliging the Sugar Factory/Corporate Debtor to recover amounts from farmers, to deduct amounts from cane payments and to provide an unconditional, irrevocable and continuing guarantee for repayment. The Financial Creditor had furnished periodic MIS statements of outstanding dues and, upon default by farmers, invoked the continuing guarantee by legal notice. The Deed contemplates that the guarantor may be treated as principal debtor and is continuing until full repayment; therefore the outstanding amounts constituted a financial debt and the Adjudicating Authority correctly admitted the Section 7 application and approved initiation of the CIRP. [Paras 26, 27, 29]

Liability of Corporate Debtor under continuing guarantee established; impugned order admitting Section 7 petition and initiating CIRP upheld.

Final Conclusion: The appeal is dismissed for lack of merit; the impugned order admitting the Section 7 application and initiating corporate insolvency resolution process against the Corporate Debtor is affirmed.

Service tax liability on reimbursement of foreign bank charges - Reverse charge mechanism under erstwhile Section 66A of the Finance Act, 1994 - Recipient of service (service recipient) - Banking and other financial services - Characterisation of service relationship between foreign bank and Indian bank

Service tax liability on reimbursement of foreign bank charges - Recipient of service (service recipient) - Reverse charge mechanism under erstwhile Section 66A of the Finance Act, 1994 - Characterisation of service relationship between foreign bank and Indian bank - Whether foreign bank charges levied by a foreign bank on an Indian bank and recovered by the Indian bank from the appellant as reimbursement attract service tax from the appellant under the reverse charge mechanism. - HELD THAT: - The Tribunal held that the legal relationship of service provider and service recipient in respect of foreign bank charges is between the foreign bank (service provider) and the Indian bank (service recipient). A combined reading of relevant international banking practices and the Board's Circular dated 10-02-2014 shows an implied contract and direct dealing between the foreign bank and the Indian bank; the exporter/importer in India neither knows the identity of the foreign bank nor has any agreement with it and is not the direct recipient of that service. Consequently, under the erstwhile reverse charge regime (Section 66A and associated rules/notifications), the Indian bank, not the exporter/importer, is liable to discharge service tax. The Tribunal applied its earlier decision in the appellant's own case and other precedents following the Board Circular to conclude that where no payment is made directly by the appellant to the foreign bank, the appellant cannot be treated as the service recipient and cannot be saddled with service tax liability. The Tribunal noted that only where service charges are paid directly by the appellant to the foreign bank (i.e., where the appellant is the direct recipient) would service tax liability lie on the appellant; quantification or verification of any such liability was remitted in prior reasoning but, on the facts of the present case, no direct payment was alleged or proved. [Paras 4, 5]

Demand of service tax raised on the appellant in respect of foreign bank charges reimbursed to the Indian bank is unsustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: Following the Board Circular dated 10-02-2014 and consistent precedents, foreign bank charges recovered by an Indian bank from the appellant as reimbursement do not impose service tax liability on the appellant under the reverse charge mechanism where the appellant has not directly received services from or paid the foreign bank; the demand is set aside and the appeal is allowed.

Definition of input service under Cenvat Credit Rules, 2004 - availment of Cenvat credit on employee/group insurance policies - proportionate reversal of Cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004 - option to determine/pay Cenvat reversal and directory nature of declaration under Rule 6(3)/(3A) - substantial compliance in reversal of Cenvat credit - reverse charge mechanism liability for legal services - imposition of penalty where legal tax liability is a question of law pending adjudication

Definition of input service under Cenvat Credit Rules, 2004 - availment of Cenvat credit on employee/group insurance policies - Cenvat credit availed on Group Personal Accident Policy, Group Term Life Policy and Group Mediclaim Policy taken for employees - HELD THAT: - The Tribunal examined the inclusive and wide scope of the expression 'input service' and applied authoritative decisions (including Coca Cola (I) Pvt. Ltd., Millipore, Ultratech Cement and the Larger Bench in Reliance Industries Ltd.) holding that each limb of the definition is independent and that services which form part of the cost of production or relate to business activities qualify as input services. The Tribunal noted that there was no evidence that the insurance services were for the personal use of employees and that Revenue conceded the issue was no longer res integra and favourable to the assessee. On this basis the Tribunal held that the Cenvat credit on the various employee insurance policies was admissible and that the order disallowing/reversing such credit was unsustainable. [Paras 11]

Cenvat credit on the employee/group insurance policies is admissible; the reversal/disallowance is set aside.

Proportionate reversal of Cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004 - option to determine/pay Cenvat reversal and directory nature of declaration under Rule 6(3)/(3A) - substantial compliance in reversal of Cenvat credit - Method and option adopted by the appellant under Rule 6 for reversal of Cenvat credit where both taxable and exempt/non taxable services are provided - HELD THAT: - The Tribunal analysed Rule 6(3) which provides alternative options for providers not maintaining separate accounts (five percent option, determination under sub rule (3A), maintenance of separate accounts, and related provisional/final determinations and due dates). It held that the requirement to file the declaration/option under Rule 6(3A) is directory and Revenue cannot compel exercise of a particular option. The assessee had computed the reversal in terms of clause (c) read with clause (h) and deposited the amount by the prescribed due date. The Tribunal emphasised that Rule 6 cannot be used oppressively to extract amounts beyond remedial measure and, where there is substantive compliance (calculation and timely payment on annual basis), the assessee is entitled to the benefit and cannot be treated as not having availed input service credit on common inputs; consequently the adjudication directing reversal was erroneous. [Paras 15]

Reversal of Cenvat credit on common input services under Rule 6 was wrongly ordered; the methodology and substantial compliance of the appellant were accepted.

Reverse charge mechanism liability for legal services - imposition of penalty where legal tax liability is a question of law pending adjudication - Liability, interest and penalty in respect of service tax on legal charges under reverse charge mechanism - HELD THAT: - The Tribunal noted that the liability under the relevant notification arises where the service recipient is located in the taxable territory; in the present case the recipient was in a non taxable territory and the appellant had discharged the alleged reverse charge liability. There was no evidence that the amount was paid beyond a reasonable time and the question of levy of service tax on legal services was a live question of law pending before the High Court of Delhi. In these circumstances the Tribunal held that imposition of penalty was unreasonable, particularly in absence of any positive act showing intention to evade duty. [Paras 16]

Findings of interest and imposition of penalty in respect of reverse charge on legal services are unsustainable and set aside.

Final Conclusion: All three demands raised after audit (disallowance of Cenvat credit on employee insurance, reversal methodology under Rule 6, and penalty/interest under reverse charge on legal services) were found unsustainable; the adjudicating order confirming the demands is set aside and the appeal is allowed.

Liability of sub-contractor to pay service tax despite main contractor having discharged tax - invocation of extended period of limitation in cases involving bona fide belief arising from departmental circulars and earlier precedents - remand for quantification of tax and interest for the normal period - penalty not leviable where there is no intention to evade

Liability of sub-contractor to pay service tax despite main contractor having discharged tax - Cenvat Rules allowing credit to main contractor - Appellant/sub-contractor's liability to pay service tax on erection, commissioning and installation services where the main contractor has already paid service tax. - HELD THAT: - Having considered conflicting Tribunal decisions and following the Larger Bench decision in CST v. Melange Developers Pvt. Ltd., the Tribunal holds that a sub-contractor who renders taxable services to the main contractor is liable to discharge service tax on the consideration received from the main contractor. The reasoning is that Section 68 (as noted by the Larger Bench) casts liability on every person providing taxable service, and the Cenvat mechanism permits the main contractor to take credit of tax paid by the sub-contractor, avoiding double taxation. Earlier contrary decisions are overruled by the Larger Bench and are not applicable. [Paras 9, 10]

Sub-contractor is liable to pay service tax even if the main contractor has discharged service tax liability.

Invocation of extended period of limitation in cases involving bona fide belief arising from departmental circulars and earlier precedents - Whether the department can invoke the extended period of limitation to demand service tax from the appellant. - HELD THAT: - The Tribunal examined earlier decisions and departmental circulars which had given rise to a bona fide belief that sub-contractors might not be separately liable when the main contractor had paid service tax. Relying on precedents (including Max Logistics and the Larger Bench in Melange), the Tribunal concluded that where the issue involves interpretation of law and there existed a bona fide belief based on circulars and earlier decisions, invocation of the extended period is not sustainable. The Tribunal also noted that tax paid when ultimately determined would be available as credit to the main contractor, and imputing intention to evade in such circumstances is not justified. [Paras 11, 12, 13, 14]

Extended period of limitation cannot be invoked to demand service tax in the circumstances of this case.

Remand for quantification of tax and interest for the normal period - Computation and determination of tax liability and interest for the normal (non-extended) period. - HELD THAT: - While holding the sub-contractor liable and disallowing invocation of extended limitation for earlier periods, the Tribunal accepted the appellant's challenge to assessment beyond limitation and identified the normal period (October, 2008 to March, 2009) as the period for which tax liability can be upheld. Consequently, the Tribunal remanded the matter to the original authority to compute the demand for the normal period along with interest, directing that the exercise be completed within two months from receipt of the certified copy of the order. [Paras 14]

Matter remanded to the original authority to determine tax liability and interest for the normal period (October,2008 to March 2009) within two months.

Penalty not leviable where there is no intention to evade - Levy of penalty on the appellant for alleged non-payment of service tax. - HELD THAT: - Considering the factual matrix, the existence of departmental circulars and earlier conflicting precedents that could give rise to a bona fide belief, and the absence of intention to evade tax, the Tribunal concluded that imposition of penalty is not warranted. The Tribunal observed that there was no deliberate attempt by the appellant to evade payment of service tax. [Paras 15]

Penalty cannot be imposed on the appellant.

Final Conclusion: Appeal partly allowed: the Tribunal affirms that a sub-contractor is liable to pay service tax notwithstanding payment by the main contractor, but holds that the extended period of limitation cannot be invoked in the circumstances; the matter is remanded to the original authority to compute tax and interest for the normal period (October, 2008 to March, 2009) within two months, and penalties are set aside for lack of intention to evade.

Characterisation of amount paid during investigation as amount paid under protest - revenue deposit - refund of revenue deposit - refund under Section 11B and Relevant Date under Section 11B(5) Explanation B - limitation for refund - interest on refund for deposits paid under protest - distinction between pre-deposit under Section 35F and revenue deposit

Characterisation of amount paid during investigation as amount paid under protest - revenue deposit - distinction between pre-deposit under Section 35F and revenue deposit - The amount deposited during investigation is a revenue deposit paid under protest and not a pre-deposit under Section 35F, and is refundable. - HELD THAT: - The Tribunal accepted that the sum deposited on 09.08.2015 at the stage of investigation was made pending investigation and, following Mafatlal Industries and decisions of this Tribunal, treated such payment as paid under protest and therefore a revenue deposit rather than an amount of duty or a statutory pre-deposit. While Section 11B governs refund claims generally and Section 35F deals with pre-deposits, the payment in question was not a pre-deposit under Section 35F but a revenue deposit paid under protest; it cannot be retained by the Department and is refundable along with interest. [Paras 6, 7]

The deposited amount is a revenue deposit paid under protest and is refundable; it is not a non-refundable pre-deposit under Section 35F.

Refund under Section 11B and Relevant Date under Section 11B(5) Explanation B - limitation for refund - interest on refund for deposits paid under protest - The refund claim for the revenue deposit filed after the Commissioner (Appeals) order was within the prescribed period because the Relevant Date for reckoning limitation is the date of that appellate order; the Department must refund the amount with interest. - HELD THAT: - Explanation B to Clause (5) of Section 11B defines the Relevant Date and sub-clause (ec) provides that where duty becomes refundable as a consequence of a judgement, decree or order of an appellate authority, that order's date is the Relevant Date. The refund application was filed within a week of the Commissioner (Appeals) order dated 18.01.2021 and there was no appeal by the Department; accordingly the claim falls within the statutory time-frame under Section 11B. The Tribunal therefore found the departmental rejection on limitation grounds untenable and directed refund of the deposit with interest. Reliance was placed on Tribunal precedents directing grant of interest on such deposits paid under protest. [Paras 8]

The refund claim was timely when reckoned from the Relevant Date (the Commissioner (Appeals) order); the Department is directed to refund the deposit with interest.

Final Conclusion: The impugned order rejecting the refund is set aside; the Department is directed to refund the revenue deposit (amount paid under protest) with interest at the directed rate from the date of deposit until payment and the appeal is allowed.

Business Auxiliary Services - toll collection not service to statutory authority - NHAI not a business concern - binding precedents on identical issue

Business Auxiliary Services - toll collection not service to statutory authority - NHAI not a business concern - binding precedents on identical issue - Whether tolling operations undertaken by the appellant for NHAI fall within the definition of Business Auxiliary Service and are taxable for the period 01.07.2003 to 31.03.2006. - HELD THAT: - The Tribunal examined the contractual arrangement under which the appellant performed toll operations for NHAI and applied precedents of this Tribunal, including the appellant's earlier decision, holding that NHAI is not established to be a business or commercial concern engaged in business activities. The Tribunal accepted the view in earlier orders that retention of a portion of toll collections by a contractor does not constitute provision of Business Auxiliary Services to NHAI because the activity is not incidental or auxiliary to any business carried on by NHAI. The decision noted that identical issues have been consistently decided by various benches in favour of the contractor and that the matter was no longer res integra. Applying those ratios to the facts, the Tribunal concluded that the toll collection activity cannot be characterized as BAS and therefore the demand of service tax confirmed by the authorities was unsustainable. [Paras 8, 10]

Impugned order confirming demand of service tax under Business Auxiliary Service is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that toll collection by the appellant for NHAI does not amount to a taxable Business Auxiliary Service for the period 01.07.2003 to 31.03.2006, set aside the impugned order and granted consequential relief.

Inclusion of value of free of cost materials in gross value for service tax abatement - abatement under the notification dated 01.03.2006 - effect of reversal of CENVAT credit on entitlement to abatement - simultaneous availment of CENVAT credit and abatement

Inclusion of value of free of cost materials in gross value for service tax abatement - abatement under the notification dated 01.03.2006 - The value of materials supplied free of cost by service recipients is not includible in the gross amount for the purpose of claiming abatement under the notification dated 01.03.2006. - HELD THAT: - The Tribunal applied the reasoning of the Supreme Court in Bhayana Builders, which construed the phrase "the gross amount charged by the service provider for such service provided or to be provided by him" to exclude goods/materials supplied free of charge by the service recipient because no price is charged by the service provider in respect of such goods and no amount is received by the service provider. The Court noted that Explanation 3 to sub-section (1) of Section 67 confirms that only amounts received for the taxable service are to be included, and that no prescribed valuation method compels inclusion of free-supplied materials. Applying that construction, the value of free materials does not form part of the taxable service value and therefore cannot be included for computing abatement under the notification dated 01.03.2006; the denial of abatement on this ground was unsustainable. [Paras 9, 10]

Denial of abatement on the ground that value of free materials must be included is set aside; free-supplied materials are not includible in gross value for abatement.

Effect of reversal of CENVAT credit on entitlement to abatement - simultaneous availment of CENVAT credit and abatement - Reversal of CENVAT credit during the relevant period is equivalent to non-availment of credit and therefore does not disentitle the appellant from claiming abatement under the notification dated 01.03.2006. - HELD THAT: - The Tribunal observed that the appellant had reversed the CENVAT credit (including cess) taken in ST-3 returns for the relevant period and placed reliance on the Supreme Court precedent in Chandrapur Magnet Wires, which holds that reversed credit is equivalent to non-availment. On that basis, the first proviso to the notification (precluding simultaneous availment of credit and abatement) could not be applied so as to deny abatement where credit had been reversed. Consequently, the abatement could not be refused on account of earlier credit entries that were subsequently reversed. [Paras 11, 12]

Since the appellant reversed the CENVAT credit taken, such reversal is treated as non-availment and abatement cannot be denied on the ground of simultaneous availment of credit.

Final Conclusion: The impugned order confirming demand, interest and penalties is set aside and the appeal allowed: abatement cannot be denied by including free-supplied materials in gross value, and reversal of CENVAT credit amounts to non-availment so as to preserve entitlement to abatement for the period April 2008 to March 2012.

Refund claim - limitation - unjust enrichment - deposit versus voluntary payment - National Litigation Policy - entitlement to refund where demand is not sustainable

Refund claim - entitlement to refund where demand is not sustainable - National Litigation Policy - Whether the appellant is entitled to refund of service tax paid where the Revenue's appeal was withdrawn under the National Litigation Policy and no demand remained sustainable - HELD THAT: - The Tribunal found that when the Commissioner (Appeals) dropped proceedings against the appellant there was no authoritative decision of the Apex Court rendering the appellant liable; subsequently the Revenue withdrew its appeal before the Tribunal under the National Litigation Policy on 27.02.2016, leaving no sustainable demand. The amount paid by the appellant while the appeal was pending before the Tribunal was therefore treated as a deposit. On these facts the Tribunal held that the appellant was entitled to the refund claimed and set aside the adjudicating authority's rejection of the refund claim.

Appeal allowed; appellant entitled to refund because no demand was sustainable after withdrawal of Revenue's appeal under the National Litigation Policy.

Limitation - unjust enrichment - deposit versus voluntary payment - Whether the refund claim was barred by limitation or by the doctrine of unjust enrichment in the facts of this case - HELD THAT: - The Tribunal applied the facts that the payment was made on 26.02.2011 while the Revenue's appeal was pending before the Tribunal and that the appellate proceedings were later withdrawn, concluding the payment operated as a deposit rather than a voluntary payment after an adverse final decision. Given that no demand remained sustainable, the Tribunal held that limitation did not apply and that the bar of unjust enrichment did not arise in these circumstances. The Tribunal also distinguished the decision relied upon by the Revenue (Tiger Logistics (India) Ltd.) as not applicable to the present facts.

Refund claim not barred by limitation and unjust enrichment did not apply; refund to be granted.

Final Conclusion: The adjudicating authority's rejection of the refund claim is set aside; the appeal is allowed and the appellant is entitled to refund with consequential relief, the payment having been treated as a deposit and no demand remaining sustainable after withdrawal of the Revenue's appeal under the National Litigation Policy.

Penalty under Rule 26(2) of the Central Excise Rules, 2002 - Non-retrospective operation of penal provisions - Admissibility and evidentiary weight of statements recorded under Section 14 of the Central Excise Act, 1994 - Liability for issuance of invoices for fraudulent passing of Cenvat credit

Admissibility and evidentiary weight of statements recorded under Section 14 of the Central Excise Act, 1994 - Statements given by the appellants were admissible and could be relied upon where cross-examination was conducted and nothing contrary emerged on record. - HELD THAT: - The Tribunal found that both appellants had given inculpatory statements and that the Adjudicating Authority conducted cross-examination. Although the appellant contended that no proper cross-examination was conducted, the record showed cross-examination took place and no contradictory evidence was brought on record to vitiate those statements. On that basis the Tribunal held the statements could be treated as evidence implicating the appellants in issuance of invoices used for passing fraudulent Cenvat credit. [Paras 4]

The inculpatory statements, having been subject to cross-examination and not disproved, were held admissible and were relied upon to find involvement of the appellants in passing fraudulent Cenvat credit.

Penalty under Rule 26(2) of the Central Excise Rules, 2002 - Non-retrospective operation of penal provisions - Liability for issuance of invoices for fraudulent passing of Cenvat credit - Rule 26(2) of the Central Excise Rules, 2002 is not applicable retrospectively and therefore penalty under that provision can be imposed only for transactions occurring on or after 01.04.2007; accordingly, appeals were allowed or partly allowed based on the date of transactions. - HELD THAT: - The Tribunal observed that Rule 26(2) came into force with effect from 01.04.2007 and held that it cannot be applied retrospectively to transactions prior to that date. Applying this principle to the facts, the Tribunal found that all transactions of M/s Jenil Empire were prior to 01.04.2007 and therefore no penalty under Rule 26(2) could be imposed on Jenil Empire. In respect of M/s Goodluck Empire, some transactions occurred after 01.04.2007 and were therefore subject to penalty under Rule 26(2); accordingly the penalty levied was reconsidered and reduced. [Paras 4, 5]

Penalty under Rule 26(2) applies only to transactions on or after 01.04.2007; Jenil Empire's appeal allowed (no penalty), Goodluck Empire partly allowed with penalty limited to post-01.04.2007 transactions and reduced.

Final Conclusion: The Tribunal held the inculpatory statements admissible where cross-examination occurred and nothing contrary emerged; it further applied the principle of non-retrospectivity to Rule 26(2) (operative from 01.04.2007), allowing Jenil Empire's appeal (all transactions prior to 01.04.2007) and partly allowing Goodluck Empire's appeal by restricting and reducing the penalty to liabilities arising from transactions after 01.04.2007.

Retrospective amendment - CENVAT Credit recovery - Temporal scope of retrospective operation - Validation of exemption notification

Retrospective amendment - CENVAT Credit recovery - Temporal scope of retrospective operation - Whether demands for recovery of unutilized CENVAT credit up to 28/02/2003 are sustainable in view of the retrospective amendment validating recovery only for the earlier period. - HELD THAT: - The Tribunal examined the scope of the retrospective amendment effected by Section 153 of the Finance Act, 2003 (validation of Notification No.33/99-CE dated 08.07.1999) and its temporal limits. While the High Court had upheld the constitutional validity of the retrospective amendment, the Tribunal held that the amendment validated recovery of CENVAT credit availed only for the period from 08/07/99 to 22/12/2002. The demands in the present appeals sought recovery of unutilized credit beyond 22/12/2002, up to 28/02/2003. Applying the Tribunal's earlier decision in Hunwal Tea Estate v. Commissioner of Central Excise, Dibrugarh (same facts and circumstances), the Tribunal found that recovery beyond 22/12/2002 was not authorised by the retrospective amendment and therefore the demands insofar as they extended up to 28/02/2003 were not sustainable. Consequentially, the impugned recovery orders were liable to be set aside.

Demands insofar as they sought recovery of CENVAT credit beyond 22/12/2002 (up to 28/02/2003) are not sustainable and are set aside.

Final Conclusion: The Tribunal allowed the appeals and set aside the impugned orders, holding that the retrospective amendment validated recovery of CENVAT credit only for the period 08/07/99 to 22/12/2002 and not beyond, consequently quashing demands raised up to 28/02/2003.

Eligibility of Cenvat credit on manpower recruitment and supply services - classification as input service under the definition of input service under Cenvat Credit Rules, 2004 - binding effect of a final adjudicatory order / consistency in departmental view

Eligibility of Cenvat credit on manpower recruitment and supply services - classification as input service under the definition of input service under Cenvat Credit Rules, 2004 - binding effect of a final adjudicatory order / consistency in departmental view - Cenvat credit availed on manpower recruitment and supply services (office boy, driver and manpower at guest house) for the period June, 2015 to April, 2016 is admissible. - HELD THAT: - The Tribunal examined whether the services of manpower recruitment and supply (office boy and driver used for facilitating manufacturing supervision and manpower at the guest house for sales promotion hospitality) qualify as input services under the Cenvat Credit Rules, 2004. The appellant relied upon an earlier Order-in-Appeal dated 22.2.2017 on an identical issue for the period April, 2013 to September, 2014 and on an Order-in-Original for the subsequent period which had applied that Order-in-Appeal to drop the demand. The earlier Order-in-Appeal has attained finality and was binding; the Commissioner (Appeals) below had misdirected himself regarding the period of that order. The Tribunal reiterated that Revenue cannot adopt a contrary view on an identical issue once a decision has become final, as permitting inconsistent departmental positions would create legal uncertainty for authorities and assessees. On that basis, and in absence of justification to take a contrary view, the Tribunal allowed the appeal and set aside the impugned order, granting consequential relief in accordance with law. [Paras 2, 3, 4]

The impugned order is set aside and the appeal is allowed; the disputed Cenvat credit is held admissible for the period in issue.

Final Conclusion: The Tribunal allowed the appeal, holding that Cenvat credit on the manpower recruitment and supply services in question is admissible for June, 2015 to April, 2016, setting aside the impugned order and granting consequential relief.

Effect of a High Court judgment striking down central rules - Retrospective effacement of struck down statutory provisions - Validity of executive notifications issued under invalid rules - Effect of Supreme Court suo motu directions on appointment processes - Quashing of selection process and requirement to reinitiate appointments - Legitimacy of experience criteria in appointment rules

Effect of a High Court judgment striking down central rules - Retrospective effacement of struck down statutory provisions - Validity of executive notifications issued under invalid rules - Quashing of selection process and requirement to reinitiate appointments - Notifications issued on 17.07.2022 under the Central Rules of 2020 are invalid because the impugned Rules had been struck down prior to the date of issuance and thus those Rules were not in the statute book. - HELD THAT: - The Court held that the Nagpur Bench of the Bombay High Court declared Rule 3(2)(b), 4(2)(c) and 6(9) of the 2020 Rules unconstitutional on 14.09.2021, and that declaration effaced those provisions from the statute book with nationwide effect. No interim stay of that judgment was shown to exist when the State issued notifications on 17.07.2022; the Supreme Court, while entertaining appeals, had not stayed the High Court judgment. Because the impugned Rules were therefore legally non-existent on the date the State called for applications, candidates excluded by those struck-down experience criteria were improperly prevented from applying, and any selection process founded on those notifications shares the same vice. Consequently the notifications and the consequent selection process cannot be sustained and must be quashed. [Paras 21, 22, 23, 24]

Impugned notifications quashed; selection process based on them invalidated and liable to be set aside.

Effect of Supreme Court suo motu directions on appointment processes - Validity of executive notifications issued under invalid rules - Quashing of selection process and requirement to reinitiate appointments - The Supreme Court's suo motu directions did not validate notifications issued after 22.10.2021 that were founded on rules already struck down by the High Court; the protective effect announced by the Supreme Court applied only to actions taken prior to that date. - HELD THAT: - The Court examined the Supreme Court's order of 22.10.2021 and concluded that the Supreme Court intended to preserve timelines and processes already initiated pursuant to its earlier order so that actions taken before 22.10.2021 would not be impeded by the Nagpur Bench judgment. In the present matters, Tamil Nadu had not issued notifications by 22.10.2021; its earliest notification was dated 19.12.2021 and the impugned notifications were dated 17.07.2022. Therefore the State could not rely on the Supreme Court's 22.10.2021 order to justify notifications issued after that date under Rules already struck down. The State's delay in initiating appointments under the monitoring of the Supreme Court undermined any contention that the notifications were protected by the suo motu proceedings. [Paras 17, 18, 19, 20]

Supreme Court suo motu directions did not validate the impugned post-22.10.2021 notifications; they do not save the impugned selection process.

Final Conclusion: Both writ petitions are allowed; the impugned notifications dated 17.07.2022 are quashed and the State is directed to take fresh action to make appointments in accordance with the directions of the Hon'ble Supreme Court in the referenced Civil Appeals. No order as to costs; connected impleading petitions dismissed.