TaxTMI Updates e-Newsletter
Jul 09,2024

Personal hearing - opportunity of hearing where an order adverse to the taxpayer is proposed - remand for reconsideration - IGST component of confirmed tax demand - input tax credit reconciliation - condition precedent of deposit for remand - partial setting aside of assessment order

Personal hearing - opportunity of hearing where an order adverse to the taxpayer is proposed - partial setting aside of assessment order - Whether absence of a personal hearing vitiated the assessment so as to require interference and remand. - HELD THAT: - The court found that a personal hearing was not provided because the petitioner had not requested one, but Section 75(4) of the applicable GST enactments mandates that a personal hearing be afforded either on request or when an order adverse to the taxpayer is proposed. The assessing officer's consideration of the petitioner's written reply did not obviate the statutory requirement to offer a personal hearing in respect of an adverse order. Given that the petitioner had accepted the SGST and CGST liability, interference was confined to the IGST component; accordingly the impugned order was partly set aside and remanded for reconsideration limited to the IGST component so that the petitioner may be afforded a personal hearing before a fresh order is passed. [Paras 4, 5]

Impugned order dated 27.04.2024 is partly set aside and the matter is remanded for reconsideration limited to the IGST component, with a direction to provide a personal hearing before issuing a fresh order.

IGST component of confirmed tax demand - input tax credit reconciliation - condition precedent of deposit for remand - remand for reconsideration - Terms on which remand was ordered, including deposit condition and opportunity to file additional reply regarding IGST and ITC reconciliation. - HELD THAT: - The court noted that the petitioner had not earlier stated that the ITC availed tallied with the available ITC; therefore the petitioner was to be put on terms. As a precondition to remand limited to the IGST component, the petitioner agreed to and was ordered to remit a specified sum within a fixed period. Upon receipt of that sum and the petitioner's additional reply (permitted within the stated period), the respondent must provide a reasonable opportunity including a personal hearing and thereafter issue a fresh order within three months from receipt of the petitioner's reply. The directions confine reconsideration to the IGST aspect and require verification of the deposit before proceeding. [Paras 4, 5]

Remand granted only for the IGST component subject to the petitioner remitting the specified sum within 15 days and being allowed to file an additional reply; on compliance, the respondent must provide personal hearing and pass a fresh order within three months.

Final Conclusion: Writ petition disposed of by partly setting aside the assessment order dated 27.04.2024 and remanding the matter only insofar as the IGST component is concerned, subject to the petitioner remitting the specified sum within 15 days and being permitted to file an additional reply; on compliance, the respondent shall provide a personal hearing and pass a fresh order within three months.

Revocation of cancellation of GST registration - filing of returns and payment of tax with interest and fee for belated filing - prohibition on adjustment from Input Tax Credit - scrutiny and approval of Input Tax Credit before utilisation - revival of registration upon payment and uploading of returns - directions to GST Network to enable filing and payment

Revocation of cancellation of GST registration - filing of returns and payment of tax with interest and fee for belated filing - prohibition on adjustment from Input Tax Credit - scrutiny and approval of Input Tax Credit before utilisation - revival of registration upon payment and uploading of returns - directions to GST Network to enable filing and payment - Cancellation of the petitioner's GST registration is set aside and registration is to be restored subject to specified conditions - HELD THAT: - The Court disposed of the writ petition by directing conditional revocation of the cancellation order dated 07.07.2023. The petitioner is required to file all returns for the period prior to cancellation, if not already filed, and to pay the tax dues together with interest and the fee for belated filing within forty five days of receipt of the order. Any payment of tax, interest, fine or fee shall not be made or adjusted from any Input Tax Credit (ITC) lying unutilized or unclaimed; unutilized ITC shall not be utilized until it is scrutinized and approved by an appropriate officer of the Department, and only such approved ITC may thereafter be used for discharging future tax liability. The petitioner must also pay GST and file returns for the period subsequent to cancellation declaring correct values of supplies; any ITC earned for those periods shall be usable only after departmental scrutiny and approval. Upon payment of tax, penalty and uploading of returns in accordance with these conditions, the registration shall stand revived forthwith. The respondent is directed to instruct the GST Network to modify the GST portal architecture to permit filing of returns and payment of tax/penalty/fine, and to complete that exercise within thirty days of receipt of the order. The restoration is expressly made subject to and conditional upon compliance with these directions. [Paras 4, 5, 6]

Writ petition allowed by directing conditional revocation of GST registration subject to filing of returns, payment of tax/interest/fee, non-adjustment from unapproved ITC, departmental scrutiny and approval of ITC, and portal modifications to enable compliance; registration to be revived on fulfillment of these conditions.

Final Conclusion: The writ petition is disposed of by directing conditional restoration of the petitioner's GST registration on compliance with the specified requirements; no costs.

Writ petition disposed without adjudication on merits - Relegation to administrative authority for fresh representation - Mandate to consider representation strictly in accordance with law - Direction fixing timeline for administrative consideration

Writ petition disposed without adjudication on merits - Relegation to administrative authority for fresh representation - Mandate to consider representation strictly in accordance with law - Direction fixing timeline for administrative consideration - Writ petition disposed by directing the petitioner to file a fresh representation and directing the Joint Commissioner to consider it within a specified time without entering into merits. - HELD THAT: - The High Court, by consent of parties and without adjudicating the substantive claim concerning additional GST, disposed of the writ petition and directed a procedural course. The petitioner was directed to file a fresh representation before the Joint Commissioner, O/o the Commissioner CGST and Central Excise, within one week. The Joint Commissioner was directed to consider the representation strictly in accordance with law and to do so within three weeks from the date of production of a certified copy of the order. The Court expressly refrained from expressing any view on the merits of the claim and confined its order to administrative reconsideration by the statutory authority as proposed by respondents No.2 and 3. [Paras 5]

Petition disposed; petitioner to file fresh representation within one week and Joint Commissioner to consider it in accordance with law within three weeks of production of certified copy; no adjudication on merits.

Final Conclusion: Writ petition disposed by directing fresh representation to the Joint Commissioner and mandating expeditious consideration in accordance with law within the timelines specified; substantive merits left open.

Validity of show cause notice - Requirement of specific allegations and reasons for administrative action - Retrospective cancellation of registration - Restoration of cancelled GST registration - Right to issue fresh show cause notice

Validity of show cause notice - Requirement of specific allegations and reasons for administrative action - Impugned show cause notice failed to meet the statutory/essential requirements and was incapable of eliciting a meaningful response. - HELD THAT: - The show cause notice merely alleged "non compliance of any specified provisions in the GST Act or the Rules made thereunder" without identifying which provisions were purportedly violated or articulating the factual matrix underpinning the allegation. A show cause notice must enable the noticee to understand the case against it and to make an effective response. The impugned notice, being vague and non-specific, did not satisfy that requirement and therefore was invalid.

The impugned show cause notice is set aside as legally defective.

Retrospective cancellation of registration - Requirement of specific allegations and reasons for administrative action - Cancellation of the petitioner's GSTIN with retrospective effect was not supported by any stated reasons and the cancellation order lacked requisite reasoning. - HELD THAT: - The cancellation order recorded that no reply had been received to the show cause notice but otherwise did not state reasons for (a) arriving at cancellation, or (b) making it retrospective to a prior date. The order's opening sentence inconsistently suggested examination of a reply and submissions, but the operative conclusion was that no reply had been received; in any event, the order did not indicate material findings or legal basis for retrospective cancellation. Administrative action affecting registration, especially with retrospective effect, requires clear reasons; absence of such reasons renders the cancellation invalid.

The cancellation order is quashed for want of adequate reasoning and for failing to state reasons for retrospective cancellation.

Restoration of cancelled GST registration - Petitioner's GSTIN was ordered to be restored pending further lawful action by the respondents. - HELD THAT: - Given that both the show cause notice and the cancellation order were set aside for being legally defective and devoid of requisite reasons, the court directed immediate restoration of the petitioner's GST registration. The tabular portion of the impugned order recorded no tax or cess as due or payable, underscoring the absence of adjudicated liability that might justify continuing the cancellation.

The petitioner's GSTIN is to be restored forthwith.

Right to issue fresh show cause notice - Requirement of specific allegations and reasons for administrative action - Respondents are permitted to initiate fresh proceedings by issuing a new show cause notice in accordance with law specifying reasons. - HELD THAT: - The court's setting aside of the defective notice and order does not preclude the respondents from taking lawful action. If the respondents choose to proceed, they must issue a fresh show cause notice that clearly sets out the grounds and reasons for proposing cancellation, thereby enabling the petitioner to make an effective response and ensuring any subsequent order is reasoned and legally sustainable.

Respondents may issue a fresh show cause notice in accordance with law; prior defective proceedings are set aside.

Final Conclusion: The impugned show cause notice and cancellation order are quashed for want of specific allegations and reasons; the petitioner's GSTIN is restored forthwith, and the respondents may, if they so choose, issue a fresh, reasoned show cause notice in accordance with law. All rights and contentions are reserved.

Availability of statutory appeal as alternative remedy - Doctrine of alternative efficacious remedy - Maintainability of writ petition in presence of alternative remedy - Discretion to decline writ under Article 226 - Interim relief not to be granted where petition is non-maintainable - Appeal under Section 107 of the GST Act, 2017

Availability of statutory appeal as alternative remedy - Maintainability of writ petition in presence of alternative remedy - Doctrine of alternative efficacious remedy - Writ petition under Article 226 is not maintainable because an efficacious statutory appeal remedy is available under the GST scheme. - HELD THAT: - The Court examined the singular question of maintainability in light of the availability of a statutory appeal under the GST enactment. Relying on the settled principle that where a statute provides a specific appellate remedy the same is ordinarily to be availed of, the Court held that the petitioner could not bypass that remedy by invoking writ jurisdiction. The judgment refers to earlier decisions in Hindustan Coca Cola Beverage Private Limited , Hameed Kunju and Ansal Housing and Construction Limited for the proposition that writ petitions should be declined when an alternative efficacious statutory appeal exists. Applying that doctrine to the facts, the Court concluded that the present challenge to the show-cause and adjudication orders for the years 2017-18 and 2018-19 must be pursued by way of the statutory appeal mechanism rather than by entertaining the writ petition.

Writ petition dismissed as not maintainable for want of alternative remedy.

Interim relief not to be granted where petition is non-maintainable - Discretion to decline writ under Article 226 - No interim stay of the impugned recovery/adjudication order granted because the petition is not maintainable. - HELD THAT: - Given the determination that the writ petition is not maintainable on account of the availability of a statutory appeal, the Court found no basis to entertain or grant interim relief. The question of staying the impugned order was held to be moot in the present proceedings and was therefore not considered on merits.

Interim relief refused; stay not granted.

Appeal under Section 107 of the GST Act, 2017 - Doctrine of alternative efficacious remedy - Petitioner permitted liberty to avail the statutory appeal remedy and to apply for stay before the appropriate appellate authority. - HELD THAT: - While declining to entertain the writ petition, the Court expressly left the petitioner free to invoke the statutory remedy by filing an appeal under Section 107 of the GST Act, 2017 and, if so advised, to seek a stay from the appellate forum in accordance with law. This preserves the petitioner's right to challenge the impugned show-cause and adjudication orders through the prescribed statutory channel.

Liberty granted to file appeal under Section 107 of the GST Act, 2017 and to seek stay as per law.

Final Conclusion: The writ petition impugning the show-cause notice dated 25.09.2023 and the adjudication order dated 19.12.2023 for the tax years 2017-18 and 2018-19 is dismissed as not maintainable in view of the availability of a statutory appeal; no interim relief is granted, and the petitioner is at liberty to pursue the remedy of appeal under Section 107 of the GST Act, 2017 and to apply for stay before the appellate authority.

Manual filing and processing under rule 97A - Non-obstante clause overriding procedural rules - Electronic filing requirement versus manual filing - Inapplicability of departmental circulars to override a statutory rule - Assessee friendly approach to refund processing

Manual filing and processing under rule 97A - Electronic filing requirement versus manual filing - Non-obstante clause overriding procedural rules - Rule 97A permits manual filing and processing of applications under Chapter X despite rule 89's reference to electronic filing on the common portal, and must be construed to include manual filing. - HELD THAT: - The Court examined Chapter X of the CGST Rules and noted rule 89 prescribes electronic filing of refund applications on the common portal but rule 97A-inserted by notification dated 15.11.2017-contains a non obstante clause which provides that any reference to electronic filing in the Chapter shall, in respect of that process or procedure, include manual filing. The plain construction of rule 97A is that it overrides the exclusive operation of rule 89 insofar as it allows manual filing and processing. To accept the Department's argument that only online applications can be received and processed would render rule 97A redundant; such a construction is impermissible as it would defeat the legislative purpose. The Court therefore held that rule 97A is operative and must be given effect to in allowing manual filing and processing under Chapter X. [Paras 7, 8, 9]

Rule 97A is a statutory provision permitting manual filing and processing under Chapter X and must be given effect despite rule 89's electronic filing mandate.

Inapplicability of departmental circulars to override a statutory rule - Assessee friendly approach to refund processing - A departmental circular or instruction issued under section 168 cannot be applied so as to negate or derogate from the statutory rule 97A; technicalities should not impede genuine refund claims and the Department should adopt an assessee friendly approach. - HELD THAT: - The Court acknowledged that officers are bound by instructions issued under section 168, but emphasised that such instructions cannot be applied to ignore or override a statutory rule framed under section 164. Relying on the reasoning in the cited precedent, the Court held that the impugned circular cannot affect or control rule 97A or deprive it of operation. The Court further observed that the Department should adopt a liberal and assessee friendly approach in processing genuine refund claims to avoid unwarranted litigation and to foster revenue collection, and that technicalities should not stand in the way of the assessee receiving refunds. [Paras 4, 9, 10]

The impugned circular cannot be used to override rule 97A; the Department must act in an assessee friendly manner in processing genuine refund claims.

Quashing of impugned appellate order and mandamus to process refund application - The impugned appellate order dated 17.9.2021 is quashed and the respondents are directed to process the manual refund application dated 28.1.2019. - HELD THAT: - Applying the foregoing construction of rule 97A and the principle that departmental instructions cannot negate a statutory rule, the Court allowed the petitioner's prayers. In view of the Court's decision in Laxmi Organic Industries Ltd. (paras. 7-10), and considering the need for a liberal approach by the Department in genuine refund matters, the writ petitions were disposed by quashing the impugned appellate order and directing the respondents to process the manual refund application dated 28.1.2019. [Paras 3, 5]

Impugned appellate order dated 17.9.2021 quashed; respondents directed to process the manual refund application dated 28.1.2019.

Final Conclusion: The petition is allowed: the appellate order dated 17.9.2021 is quashed and the respondents are directed to process the manual refund application dated 28.1.2019; departmental instructions cannot be applied so as to negate rule 97A, and the Department should adopt a liberal, assessee friendly approach in processing genuine refund claims.

Violation of principles of natural justice - Right to personal hearing - Conditional setting aside of assessment order - Remand for fresh adjudication on merits - Service of show cause notice by registered post - Imposition of interest as specified in show cause notice - Jurisdiction of assessing officer under GST (no monetary limit)

Violation of principles of natural justice - Right to personal hearing - Conditional setting aside of assessment order - Impugned assessment order confirmed without hearing was liable to be set aside and the petitioner was entitled to a fresh opportunity to be heard. - HELD THAT: - The Court found that although service of the show cause notice was placed on record by the respondent, the assessment proposal was confirmed without affording the petitioner a hearing on the merits. The petitioner asserted he could demonstrate that only eligible Input Tax Credit was claimed. In the interest of justice, the Court set aside the impugned order and directed re-consideration, conditioned on the petitioner making a specified remittance and being given a reasonable opportunity including a personal hearing before a fresh order is passed.

Impugned order dated 05.12.2023 set aside on condition that the petitioner remits the directed amount and is afforded a personal hearing prior to a fresh order.

Service of show cause notice by registered post - Imposition of interest as specified in show cause notice - The show cause notice expressly informed the petitioner that interest would be levied; therefore the contention that interest was not referred to in the notice was not accepted. - HELD THAT: - On perusal of the show cause notice, the Court observed that it specifically stated that interest at 18% per annum would be levied unless payment was made. Accordingly, the petitioner's submission that the show cause notice did not refer to a demand for interest was not sustained.

Petitioner's objection that interest was not mentioned in the show cause notice rejected.

Jurisdiction of assessing officer under GST (no monetary limit) - Contention that the Deputy State Tax Officer lacked jurisdiction where the tax demand exceeded a monetary threshold was rejected. - HELD THAT: - The Court noted that the notifications relied upon by the petitioner related to proceedings under the Tamil Nadu VAT Act and the Central Sales Tax Act and were not applicable to the GST statutory scheme. The Court observed there was no monetary limit under the applicable GST statutes conferring jurisdictional effect as contended by the petitioner.

Jurisdictional objection based on a monetary limit was not accepted.

Remand for fresh adjudication on merits - Conditional remittal and timeline for fresh order - The matter was remitted for fresh consideration on merits upon compliance by the petitioner with the Court's condition, with a direction to pass a fresh order within a specified timeframe. - HELD THAT: - The Court directed that the petitioner remit the stipulated sum within three weeks and permitted the petitioner to submit a reply to the show cause notice within that period. Upon satisfying itself of receipt of the remitted amount, the respondent was directed to provide a reasonable opportunity including a personal hearing and thereafter pass a fresh order within three months from receipt of the petitioner's reply. Thus the substantive dispute on the tax proposal is to be re-examined afresh by the authority.

Issue remanded for fresh adjudication on the stated conditions and within the prescribed timelines.

Final Conclusion: Writ petition allowed by setting aside the assessment order dated 05.12.2023 on condition of the petitioner's remittance and subject to the authority providing a reasonable opportunity including personal hearing and passing a fresh order within the prescribed timeframe; jurisdictional objection was rejected and the challenge to omission of interest in the show cause notice was negatived.

Cancellation of GST registration - suspension of GST registration - failure to furnish returns under Section 39 of the Central Goods and Services Tax Act, 2017 - opportunity of hearing and fresh adjudication - remand for fresh decision

Cancellation of GST registration - failure to furnish returns under Section 39 of the Central Goods and Services Tax Act, 2017 - opportunity of hearing and fresh adjudication - Order rejecting the petitioner's application for cancellation of GSTIN (with effect from 31.03.2023) set aside and matter remitted for fresh decision - HELD THAT: - The petitioner had applied for cancellation of its GSTIN dated 20.04.2023 on the ground that its threshold turnover for the financial year ending on 31.03.2023 was below the taxable threshold and sought cancellation with effect from 31.03.2023. Notices issued by the revenue (26.05.2023 and 28.12.2023) after the application, and the consequent rejection order dated 22.04.2024 were recorded. The Court observed that the petitioner did not respond to portal notices because the cancellation application had been filed and that at least one notice (28.12.2023) was issued after considerable delay. In view of these facts and the pendency of a show cause notice dated 13.05.2024 (which also led to suspension), the Court found it appropriate to set aside the impugned rejection order and to direct a fresh hearing and adjudication. The petitioner is directed to file the documents called for in the notice dated 28.12.2023 and to appear before the concerned officer; the concerned officer must afford an opportunity of hearing and decide the cancellation application afresh, while also addressing the show cause notice and any contention relating to non-filing of returns under Section 39. [Paras 11, 12]

Order dated 22.04.2024 rejecting the cancellation application is set aside; petitioner to appear on 10.07.2024 at 11.30 AM and the concerned officer to decide the cancellation application afresh after hearing and while considering the impugned show cause notice.

Final Conclusion: The High Court set aside the order rejecting the petitioner's application for cancellation of GST registration (sought with effect from 31.03.2023), directed the petitioner to produce documents and appear for hearing, and remitted the matter to the concerned officer for fresh adjudication of the cancellation application and the pending show cause notice after affording an opportunity of hearing.

Quashing of order - Remand for fresh adjudication - Opportunity of hearing - Attachment and recovery of amounts - Exercise of discretion for interim relief - Statutory limitation for filing appeal

Quashing of order - Remand for fresh adjudication - Exercise of discretion for interim relief - Impugned order dated 28.07.2022 in Form GST DRC 07 quashed and matter remitted to respondent for fresh decision on merits. - HELD THAT: - The Court, taking into account that amounts were attached and partially recovered after the petitioner became aware of the impugned order and notices, exercised its discretionary power to grant partial relief. The impugned order is quashed and is to be treated as an addendum to the earlier show cause notices. The petitioner is directed to file a reply within 30 days from receipt of this order. The respondent is directed to consider the matter afresh on merits and in accordance with law, giving the petitioner an opportunity of hearing, and to pass fresh orders expeditiously and preferably within three months. The Court did not adjudicate the substantive merits of the demand in the impugned order but remitted the matter for fresh consideration.

Impugned order quashed; matter remitted for fresh adjudication after affording opportunity to the petitioner; timelines for filing reply and passing fresh orders prescribed.

Attachment and recovery of amounts - Opportunity of hearing - Direction to treat the impugned order as addendum to the show cause notices and to permit the petitioner to be heard before fresh orders are passed. - HELD THAT: - Because the petitioner became aware of the impugned order only after attachment of bank account and partial recoveries, the Court directed that the quashed order shall be treated as an addendum to the earlier show cause notices and that the petitioner be allowed to file a reply within 30 days. The respondent must hear the petitioner before passing fresh orders, ensuring that the prejudice from prior non-receipt of notices is addressed in the fresh adjudication.

Impugned order to be treated as addendum to show cause notices; petitioner to file reply within 30 days; respondent to hear petitioner before passing fresh orders.

Final Conclusion: Writ petition allowed in part: impugned order dated 28.07.2022 is quashed and remitted for fresh adjudication; petitioner to file reply within 30 days and respondent to pass fresh orders on merits after hearing the petitioner, preferably within three months; no costs.

Quashing of assessment order - remand for fresh adjudication - condition of interim deposit for grant of relief - opportunity to be heard / personal hearing - treatment of impugned order as addendum to show cause notice

Opportunity to be heard / personal hearing - quashing of assessment order - Impugned assessment order set aside and petitioner granted fresh hearing on merits - HELD THAT: - The Court found that the impugned order confirmed a demand without recording any discussion of the petitioner's reply or the submissions made at the personal hearing, and that an appearance by one of the petitioner's staff resulted in a concession without the petitioner's knowledge. In view of this deficiency in adjudicatory reasoning and the lack of adequate consideration of the petitioner's contentions, the Court exercised its supervisory jurisdiction to quash the impugned order and afford the petitioner a fresh opportunity to be heard. The Court directed that the petitioner must file a detailed reply within the time prescribed and that the respondent is to decide the matter afresh on merits and in accordance with law. [Paras 6, 7, 8, 9]

Impugned order quashed and matter remanded for fresh adjudication with direction to afford the petitioner a fresh hearing and to pass fresh orders on merits.

Condition of interim deposit for grant of relief - Petitioner required to make interim deposit as condition for fresh consideration - HELD THAT: - As a condition for recalling the matter for fresh adjudication, the Court imposed an interim requirement that the petitioner deposit 20% of the disputed tax from its Electronic Cash Register within 30 days of receipt of the order. The Court linked the grant of the fresh opportunity to this deposit and to the petitioner filing a detailed reply within the same period, thereby balancing the interests of revenue with the petitioner's right to be heard. [Paras 6, 7]

Petitioner to deposit 20% of the disputed tax within 30 days and file a detailed reply; fresh adjudication subject to compliance.

Treatment of impugned order as addendum to show cause notice - Impugned order to be treated as addendum to the earlier show cause notice for purposes of fresh adjudication - HELD THAT: - The Court directed that the quashed impugned order shall be treated as an addendum to the show cause notice that preceded it, ensuring that the record of proceedings remains available and that the respondent takes into account the chronology of the show cause process when conducting the fresh inquiry and passing a new order. [Paras 8]

Impugned order to be treated as an addendum to the show cause notice during the fresh proceedings.

Final Conclusion: Writ petition disposed of by quashing the assessment order and remanding the matter for fresh adjudication on merits; directions include deposit of 20% of disputed tax and filing of detailed reply within 30 days, and respondent to pass fresh orders expeditiously, preferably within two months.

Wrongful availment of Input Tax Credit - transitional VAT credit claimed by filing Form TRAN-1 - failure to consider representation and documentary evidence - setting aside of order and remand for reconsideration - right to reasonable opportunity including personal hearing

Failure to consider representation and documentary evidence - Impugned order recorded that no objections or documentary evidence were filed despite record showing the petitioner had filed a reply with attachments. - HELD THAT: - The petitioner filed a reply dated 10.10.2023 to the show cause notice, asserting that transitional VAT credit had been claimed by filing Form TRAN-1, and uploaded supporting documents on the portal. The impugned order nevertheless recorded that no objections or documentary evidence were filed. That finding is contrary to the documents on record and renders the impugned order unsustainable. [Paras 4]

Finding in the impugned order that no reply or documentary evidence was filed is incorrect; the impugned order cannot be sustained and is set aside.

Setting aside of order and remand for reconsideration - right to reasonable opportunity including personal hearing - Matter remanded for fresh consideration with directions to afford the petitioner a reasonable opportunity, including personal hearing, and to pass a fresh order within a specified time. - HELD THAT: - In light of the incorrect factual finding and the availability on record of the petitioner's reply and attachments, the appropriate course is to remit the matter to the respondent for reconsideration. The respondent must afford the petitioner a reasonable opportunity to be heard, including a personal hearing, and thereafter decide the matter afresh. A time limit of three months from receipt of this order for issuance of the fresh order has been directed. [Paras 5]

Impugned order set aside; matter remanded for fresh consideration after affording a reasonable opportunity including personal hearing, and a fresh order to be passed within three months.

Final Conclusion: The writ petition is disposed of by setting aside the impugned order and remanding the matter for fresh consideration after giving the petitioner a reasonable opportunity, including personal hearing; no costs.

Rectification petition - GSTR-1 and GSTR-3B reconciliation - prima facie case for consideration of rectification - prevention of coercive recovery pending disposal

Rectification petition - GSTR-1 and GSTR-3B reconciliation - prima facie case for consideration of rectification - Rectification petition filed by the petitioner to correct an inadvertent reporting error in GSTR-1 should be considered and disposed of expeditiously. - HELD THAT: - The petitioner produced the GSTR-3B for January 2018-2019 and the GSTR-1 statement (filed belatedly and incorrectly described as July 2019-2020) showing that the outward taxable value for IGST tallies and that a comparison generates an excess liability figure of Rs. 4,17,577/-. On this material the Court found a prima facie case that the impugned order was founded on an inadvertent error in the GSTR-1 filing and not on any contested legal principle. In view of the pending rectification petition dated 01.06.2024 and the documentary reconciliation placed on record, the Court directed the respondent to consider and dispose of the rectification petition within three months from receipt of the order. [Paras 5, 6]

Respondent directed to consider and dispose of the rectification petition dated 01.06.2024 within three months from receipt of a copy of this order.

Prevention of coercive recovery pending disposal - rectification petition - Whether recovery or coercive measures under the impugned order could be initiated pending disposal of the rectification petition. - HELD THAT: - Having found a prima facie case and because the rectification petition remains pending, the Court exercised its supervisory jurisdiction to protect the petitioner from immediate recovery action that might defeat effective relief. The Court restrained the respondent from initiating recovery or coercive measures pursuant to the order in original until the rectification petition is disposed of in accordance with the directions given. [Paras 6]

Respondent restrained from initiating recovery or coercive measures pursuant to the order in original until disposal of the rectification petition.

Final Conclusion: Writ petition disposed of by directing the respondent to decide the rectification petition dated 01.06.2024 within three months; meanwhile the respondent is restrained from commencing recovery or coercive steps under the impugned order.

Classification of coated, impregnated or laminated textile fabrics - Heading 5903 - Chapter Note 2(a) of Chapter 59 (exclusions for Heading 5903) - partially coated/partially covered fabrics - application of explanatory notes to HSN in tariff classification - advance ruling and appellate authority for advance ruling - quash and remand for de novo adjudication - binding effect of quashed administrative circular

Classification of coated, impregnated or laminated textile fabrics - Heading 5903 - Chapter Note 2(a) of Chapter 59 (exclusions for Heading 5903) - partially coated/partially covered fabrics - application of explanatory notes to HSN in tariff classification - Whether the fusible interlining fabric of cotton manufactured by the petitioner is correctly classifiable under Heading 5903 of Chapter 59 or falls within the exclusions of Chapter Note 2(a) and thus under Chapters 50-55/58/60 - HELD THAT: - The Court examined the ATIRA test reports and the authorities' comparison of those results with the exclusion criteria in Chapter Note 2(a). The appellate authority had treated the sample as satisfying the criteria for Heading 5903 by construing the test results to show coating that is visible with the naked eye only in the form of film and by interpreting 'partially' as not encompassing a fabric with one side fully coated and the other uncoated. The High Court found that the ATIRA reports and subsequent clarification expressly describe the coating as partial/non-continuous and note permeability (air and water), indicating a partially coated fabric. Chapter Note 2(a)(4) excludes from Heading 5903 fabrics that are partially coated or partially covered with plastics and bearing designs resulting from these treatments; accordingly, a partially coated fusible interlining falls outside Heading 5903 and is ordinarily classifiable in Chapters 50-55/58/60 depending on its nature. The appellate authority's reliance on a dictionary-led narrowing of the term 'partially' and its conflation of different kinds of coating led to an erroneous comparison with the Note's criteria and to a misapplication of the explanatory notes to HSN. The Court therefore concluded that the impugned classification under Heading 5903 was unsustainable on the material test evidence. [Paras 9, 10, 11, 12]

Impugned classification under Heading 5903 is not tenable; the sample is partially coated and falls within the exclusions of Chapter Note 2(a) and thus within Chapters 50-55/58/60 rather than Chapter 59.

Advance ruling and appellate authority for advance ruling - quash and remand for de novo adjudication - binding effect of quashed administrative circular - Whether the orders of the Advance Ruling Authority and the Appellate Authority for Advance Ruling should be interfered with and what further relief is appropriate - HELD THAT: - The Court held that the Appellate Authority had erred in law by failing to appropriately apply Chapter Note 2(a) to the ATIRA test results and by not giving determinative effect to the test evidence showing partial coating. The Court also observed that the quashing by the High Court of the earlier administrative circular relied upon by revenue undermines reliance on that circular to justify classification under Heading 5903. In view of these legal and factual errors, the Court quashed the impugned appellate order and directed that the Advance Ruling Authority should consider and decide the matter afresh (de novo) after affording the petitioner an opportunity of hearing and after considering the petitioner's authorities and distinguishing the contrary rulings relied upon by the Authority with reasons. The remand is for fresh adjudication on merits in light of the correct application of Chapter Note 2(a) and the test reports. [Paras 11, 12, 13]

Impugned orders dated 08.04.2021 are quashed; matter is remitted to the Advance Ruling Authority for de novo consideration after hearing the petitioner and in accordance with the Court's reasons.

Final Conclusion: The petition is allowed; the Appellate Authority for Advance Ruling's order confirming classification under Heading 5903 is quashed and set aside. The specimen fusible interlining fabric, being partially coated as per test reports, falls within the exclusions of Chapter Note 2(a) and therefore is to be regarded as falling under Chapters 50-55/58/60 rather than Heading 5903; the matter is remitted to the Advance Ruling Authority for fresh adjudication de novo after hearing the petitioner.

Refund of unutilised input tax credit under Section 54(3) of the CGST Act - transitional credit carried forward under Section 140 of the CGST Act as opening balance in electronic credit ledger - Form GST TRAN-1 as basis for transitional CENVAT/ITC carry forward - application of CBIC Circulars in relation to electronic credit ledger validations for early tax periods - refund computation under Rule 89(4) of the CGST Rules

Transitional credit carried forward under Section 140 of the CGST Act as opening balance in electronic credit ledger - Form GST TRAN-1 as basis for transitional CENVAT/ITC carry forward - refund of unutilised input tax credit under Section 54(3) of the CGST Act - Transitional credit shown and approved in Form GST TRAN-1 is to be treated as the opening balance of unutilised input tax credit for the purpose of claiming refund for the months of July, 2017 and August, 2017. - HELD THAT: - The Court accepted that Section 140(1) permits a registered person to take the closing balance of CENVAT/eligible duties carried forward in the return prior to the appointed day into the electronic credit ledger as on 01.07.2017. Rule 117 required filing of TRAN-1 within the prescribed period and the transitional credit carried forward as per TRAN-1, once verified and approved by the authority, constitutes the opening unutilised ITC available in the electronic credit ledger. Applying these provisions, the adjudicating authority rightly sanctioned refund based on the transitional credit reflected in the approved TRAN-1 and the petitioner was therefore entitled to the refund of unutilised ITC for the relevant months. [Paras 18, 19, 20, 22]

Refund entitlement upheld: approved TRAN-1 transitional credit treated as opening balance available for refund for July, 2017 and August, 2017; impugned appellate order denying refund quashed.

Application of CBIC Circulars in relation to electronic credit ledger validations for early tax periods - refund computation under Rule 89(4) of the CGST Rules - refund of unutilised input tax credit under Section 54(3) of the CGST Act - Commissioner (Appeals) erred in relying on the later circular and electronic ledger validation to deny refund for the first two months of the GST regime where transitional credit under Section 140(1) applied. - HELD THAT: - The Commissioner (Appeals) took a literal view of the circular requiring balance in the electronic ledger at the end of the tax period after return filing, and on that basis allowed the department's appeal. The Court held that such reliance overlooked the statutory scheme under Section 140(1) which brings the carried forward transitional credit into the opening electronic ledger balance as on 01.07.2017. Consequently, the circular's portal validation and timing could not be permitted to nullify the statutory entitlement arising from an approved TRAN-1 for the initial months (July and August 2017). The Commissioner (Appeals)'s interpretation was therefore incorrect and resulted in denial of a statutory benefit. [Paras 20, 21]

Reliance on the circular and portal validation to deny refund for July and August 2017 was misplaced; appellate order overturned.

Final Conclusion: The petitions succeed. The Commissioner (Appeals) order denying refund, the show cause notice and recovery orders based on that order are quashed and set aside; the petitioner is entitled to the refund determined by the adjudicating authority based on the approved TRAN-1 transitional credit for July, 2017 and August, 2017.

Show cause notice - transitional credit - ineligible input tax credit - notice must contain reasons and particulars - treatment of order as show cause - opportunity of personal hearing - rectification petition

Show cause notice - notice must contain reasons and particulars - transitional credit - Impugned show cause notice did not disclose reasons or particulars for denial of transitional credit and was therefore defective. - HELD THAT: - The Court examined the show cause notice and found it unclear why the petitioner was called upon to show cause in respect of the alleged ineligible input tax credit of about the stated amount. The petitioner had replied pointing out absence of particulars and reliance on earlier verification of TRAN 1 data; the impugned order confirmed demand largely because documents were not submitted or a personal hearing was not attended, suggesting the substantive reply may not have been considered. Given the absence of necessary particulars in the notice, the Court treated the defect as material and proceeded to afford remedial directions rather than sustain the order.

The show cause notice was defective for lack of reasons/particulars and could not sustain the confirmed demand.

Treatment of order as show cause - rectification petition - The impugned order is to be treated as a show cause notice and the respondent directed to issue a supplemental notice setting out reasons for denying transitional credit. - HELD THAT: - Because the original show cause lacked necessary particulars, the Court directed that the impugned order be treated as a show cause notice and ordered the respondent to issue a supplement specifying reasons for denial of transitional credit. The Court imposed a timeline for issuance of the supplement and acknowledged the pendency of a rectification petition but proceeded to prescribe the course for fresh consideration.

Respondent to issue a supplemental notice setting out reasons for denial within two weeks of receipt of the order.

Opportunity of personal hearing - transitional credit - Petitioner to be given an opportunity to reply to the supplement and a reasonable opportunity, including personal hearing, before a fresh order is passed. - HELD THAT: - The Court directed that upon receipt of the supplemental statement of reasons, the petitioner shall have two weeks to file a reply. Thereafter the respondent must provide a reasonable opportunity to the petitioner, expressly including a personal hearing, before issuing a fresh order. This direction was given because the impugned order appeared to have proceeded without considering the petitioner's substantive reply, possibly due to non uploading of documents on the portal.

Petitioner to reply within two weeks of supplement; respondent to provide reasonable opportunity including personal hearing and then pass a fresh order.

Treatment of order as show cause - opportunity of personal hearing - Timelines for final disposal: fresh order to be passed within two months from receipt of the petitioner's reply. - HELD THAT: - To conclude the remedial process within a definite period, the Court directed that after receipt of the petitioner's reply and upon providing the required opportunity of hearing, the respondent shall issue a fresh order within two months. The directions are procedural and intended to ensure that the matter is adjudicated on merits after affording adequate opportunity to the petitioner.

Respondent to pass a fresh order within two months from receipt of the petitioner's reply.

Final Conclusion: Writ petition disposed by directing that the impugned order be treated as a show cause notice; respondent to issue a supplement stating reasons for denial of transitional credit within two weeks, petitioner to reply within two weeks, respondent to afford a reasonable opportunity including personal hearing and pass a fresh order within two months; connected petitions closed, no costs.

Disposal of objections to reopening - notice under section 148 - speaking order - reopening of assessment - quashing and remand of reassessment order for disposal of objections - GKN Driveshafts procedure for objections to reassessment

Disposal of objections to reopening - speaking order - GKN Driveshafts procedure for objections to reassessment - obligation of the Assessing Officer to decide objections filed against reasons recorded for reopening before proceeding with assessment - HELD THAT: - The Court held that, in light of the binding principle in GKN Driveshafts, once reasons for reopening are furnished and objections are filed by the assessee, the Assessing Officer is under a mandate to dispose of those objections by passing a speaking order before proceeding further with reassessment. It was not disputed that the Assessing Officer did not pass any order disposing of the objections filed by the petitioner. The Court therefore found the procedure mandated by the precedent was not complied with and treated that failure as a fatal procedural irregularity warranting interference without entering into the merits of the alleged escapement of income. [Paras 10, 11]

The Assessing Officer was required to dispose of the objections by a speaking order before proceeding with assessment; failure to do so vitiates the reassessment process.

Notice under section 148 - reopening of assessment - quashing and remand of reassessment order for disposal of objections - consequential relief in respect of assessment orders passed without disposing objections - HELD THAT: - Having found the Assessing Officer did not comply with the mandatory procedural requirement to decide objections, the Court quashed and set aside the impugned assessment orders for the three assessment years insofar as they were passed without such disposal. The matter was remitted to the Assessing Officer with a direction to dispose of the objections after giving the petitioner an opportunity of hearing and to complete that exercise within twelve weeks from receipt of the copy of the order. The Court expressly refrained from adjudicating the merits of the reopening or the correctness of the reasons recorded. [Paras 12]

Impugned assessment orders quashed and matters remitted to the Assessing Officer to decide the objections by a speaking order within twelve weeks; no decision on merit of reopening.

Final Conclusion: The Court quashed the assessment orders for AY 2016-17, 2013-14 and 2015-16 because the Assessing Officer proceeded without disposing the objections to the reasons for reopening; the matters are remitted to the Assessing Officer to pass a speaking order on the objections after hearing the petitioner within twelve weeks, the Court making no pronouncement on the merits of the reopening.

Directory nature of filing Form 10/10B - Claim of exemption under section 11(2) of the Income tax Act - CPC intimation under section 143(1) of the Income tax Act - Condonation procedure under CBDT Circular No. 2/2020 and section 119(2)

Directory nature of filing Form 10/10B - Claim of exemption under section 11(2) of the Income tax Act - Failure to file Form 10/10B before the due date under section 139(1) is not fatal to the claim of exemption under section 11(2) when the form is on record at the time of CPC intimation. - HELD THAT: - The Tribunal, after consideration of precedent relied upon by the parties and the coordinate Bench decision in Ramji Mandir Religious and Charitable Trust, held that filing of Form 10/10B is directory in nature. Consequently, non-filing by the due date prescribed under section 139(1) does not automatically defeat the trust's entitlement to exemption under section 11(2) where the Form 10 is available on record when the CPC processed and passed the intimation under section 143(1). The Bench therefore departed from the view that late filing per se warrants denial of exemption and applied the directory/mandatory distinction to uphold the assessee's claim. [Paras 5]

The disallowance of the exemption under section 11(2) for failure to file Form 10/10B by the due date is not justified where Form 10 was on record at the time of CPC intimation.

CPC intimation under section 143(1) of the Income tax Act - Condonation procedure under CBDT Circular No. 2/2020 and section 119(2) - Direction to the Assessing Officer to consider the belatedly filed Form 10 on record and pass appropriate orders. - HELD THAT: - The Tribunal noted the Revenue's reliance on CBDT Circular No. 2/2020 requiring a condonation application under section 119(2) for belated audit reports, but, respectfully following the coordinate Bench, directed that since Form 10 was available when the CPC passed the intimation, the Assessing Officer should consider the Form and pass fresh orders accordingly. The matter is therefore returned to the AO for consideration of the Form 10 on record and for passing consequential orders in accordance with law. [Paras 5]

The Assessing Officer is directed to consider the Form 10 on record and pass appropriate orders.

Final Conclusion: Appeal allowed; the Tribunal held that belated filing of Form 10/10B is directory and, since Form 10 was on record at the time of CPC intimation, the disallowance of exemption under section 11/12 was set aside and the matter remitted to the Assessing Officer to consider the Form and pass appropriate orders.

Refund consequent on order in appeal - Section 240 - refund to be made by assessing officer without application - Section 239 - time-barred refund claim by self-assessment - entitlement to refund determined in assessment/rectification proceedings

Refund consequent on order in appeal - Section 240 - refund to be made by assessing officer without application - Section 239 - time-barred refund claim by self-assessment - Applicability of Section 240 and not Section 239 to the assessee's refund claim which arose consequent to an order passed in appeal/rectification. - HELD THAT: - The Tribunal examined whether the Assessing Officer and the CIT(A) were justified in rejecting the refund on the ground that the return was filed beyond one year and, therefore, the claim was barred under Section 239(2)(c). The Tribunal relied on the reasoning in the cited High Court decision which distinguishes between claims made by the assessee under Section 239 (self-assessed refunds within the statutory time limit) and refunds that arise automatically as a result of an order in appeal or other proceedings, which fall under Section 240. The Tribunal noted that an order under Sections 251/154/147/143(3) had been passed determining a refund for the assessee; accordingly the refund arose consequent to the appellate/rectification proceedings and did not require a fresh claim by the assessee within the one-year period prescribed for self-assessed refunds. Applying that distinction, the Tribunal held that Section 240 governs the present case and Section 239(2)(c) was inapplicable.

Section 240 applies; the refund could not be denied on the ground of the one year limitation under Section 239.

Entitlement to refund determined in assessment/rectification proceedings - refund to be granted consequent on appellate order - Assessee's entitlement to the refund as computed in the rectification/assessment order and consequent direction for payment. - HELD THAT: - The Tribunal recorded that the ACIT (by order dated 31.01.2018) determined that a refund was due to the assessee. Having held that Section 240 governs refunds arising from such orders, the Tribunal set aside the AO's and CIT(A)'s orders that had denied the refund on the basis of Section 239. The Tribunal therefore allowed the appeal and directed that the refund determined by the assessing authority be granted to the assessee.

The orders of the AO and CIT(A) are set aside and the assessee is entitled to the refund as determined in the assessment/rectification proceedings.

Final Conclusion: The appeal is allowed: the Tribunal held that the refund arose consequent to an order in appeal/rectification and is governed by Section 240 (not time barred under Section 239), set aside the orders denying refund and directed payment of the refund determined by the assessing authority.

Revisionary jurisdiction under section 263 - Scope of reassessment under section 147 - Assessee's entitlement under section 152(2) - Explanation 3 to section 147 - Doctrine of merger - Limitation for exercise of revision under section 263

Scope of reassessment under section 147 - Assessee's entitlement under section 152(2) - Validity of the Principal CIT's exercise of revisionary jurisdiction under section 263 against the A.O.'s reassessment order dated 29.03.2022 in respect of share capital/share premium and unsecured loans which were not the subject-matter of the reassessment. - HELD THAT: - The Tribunal held that the A.O. had reopened assessment under Section 147 on the basis of cash deposits. In the reassessment proceedings the A.O. accepted the explanation for those cash deposits and made no addition on that issue. Once the A.O. did not make any addition in respect of the very matter which formed the reason to reopen, he was thereby divested of jurisdiction to make independent additions in respect of other unrelated issues (the share capital/share premium and unsecured loans) which were not the subject-matter of the reassessment. Consequently the Principal CIT could not validly treat the reassessment order as "erroneous and prejudicial" under Section 263 on the ground that the A.O. had failed to verify those independent issues, because the A.O. had no lawful power in the reassessment to reopen or enhance those matters. The Tribunal applied the statutory scheme confining the scope of reassessment to "escaped assessment" and rejected any notion that reassessment proceedings generally permit redoing the entire original assessment; the A.O.'s jurisdiction in reassessment is limited to the matters which legitimately form the basis of the notice under Section 148 and which remain open in the reassessment. For these reasons the Principal CIT's revision of the A.O.'s reassessment was held to exceed jurisdiction and to be unsustainable. [Paras 11, 12, 13, 14, 17]

Principal CIT's exercise of revision under section 263 against the reassessment order dated 29.03.2022 in respect of the two independent issues is without jurisdiction and is set aside.

Revisionary jurisdiction under section 263 - Limitation for exercise of revision under section 263 - Doctrine of merger - Extent of Principal CIT's power to revise the original assessment and the relevant date for limitation when the subject-matter of reassessment is distinct from the subject-matter of the original assessment. - HELD THAT: - The Tribunal observed that although the Principal CIT could not impugn the reassessment in respect of matters outside its scope, the Commissioner retained jurisdiction under Section 263 to examine and, if necessary, revise the original assessment (the order dated 29.08.2016) in respect of issues that formed part of that original assessment. Where the subject-matter of reassessment is distinct and different from the subject-matter of the original assessment, the period of limitation for exercising the revisionary power under Section 263 must be computed from the date of the original assessment order; the doctrine of merger does not operate to shift the relevant date to the reassessment when the matters are different. Thus, while the Principal CIT could have revised the original assessment insofar as the two independent issues related to the original assessment, he could not do so by impugning the reassessment order which did not deal with those issues. [Paras 15, 16]

Principal CIT's power under section 263 to revise the original assessment exists, but where reassessment deals with different subject-matter the limitation for section 263 is reckoned from the original assessment date; the Principal CIT erred in invoking section 263 against the reassessment order in the present case.

Final Conclusion: Appeal allowed. The revision under section 263 dated 30.03.2024 insofar as it impugns the reassessment order dated 29.03.2022 in respect of share capital/share premium and unsecured loans is quashed; the reassessment order of the A.O. stands undisturbed. The Principal CIT retains, separately, the power to revisit the original assessment within the appropriate limitation period applicable to that original order.

Deduction under section 80P(2)(a)(i) - deduction under section 80P(2)(d) - cost of funds deduction under section 57 - remand for de-novo consideration - application of Mavilayi Service Co-operative Bank Ltd. principles

Deduction under section 80P(2)(a)(i) - application of Mavilayi Service Co-operative Bank Ltd. principles - remand for de-novo consideration - Claim for deduction of interest income under section 80P(2)(a)(i) remitted to the Assessing Officer for fresh examination. - HELD THAT: - The Tribunal noted that coordinate bench decisions dealing with identical facts have directed de-novo consideration of claims for deduction under section 80P(2)(a)(i) in the light of the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. The Tribunal observed that the question whether interest earned on deposits constitutes income eligible for deduction under section 80P(2)(a)(i) requires fresh application of the principles enunciated by the Apex Court - including consideration of the definition of "member" under the relevant State Co-operative Societies Act and the distinction drawn by the Supreme Court regarding entities falling within section 80P(4). On that basis, the Tribunal restored the issue to the file of the AO for de-novo adjudication and for granting the assessee a meaningful opportunity of being heard. [Paras 11, 12]

Issue remitted to the AO for fresh consideration in the light of the coordinate bench and Supreme Court decisions.

Deduction under section 80P(2)(d) - application of Mavilayi Service Co-operative Bank Ltd. principles - remand for de-novo consideration - Claim for deduction under section 80P(2)(d) in respect of interest/dividend from investments with co-operative societies remitted to the Assessing Officer for verification. - HELD THAT: - Relying on the coordinate bench's directions, the Tribunal directed the AO to verify whether the interest/dividend was received out of investments made with co-operative societies. The Tribunal recorded that, if such income arises from investments with co-operative societies, the assessee may be entitled to deduction under section 80P(2)(d) in the light of the Supreme Court's observations cited by the coordinate bench. The matter was therefore restored to the AO to examine the factual matrix and apply the legal principles accordingly. [Paras 11, 12]

AO to verify source of interest/dividend and decide entitlement to deduction under section 80P(2)(d) after de-novo consideration.

Cost of funds deduction under section 57 - remand for de-novo consideration - Claim for allowance of cost of funds under section 57 remitted to the Assessing Officer for determination. - HELD THAT: - The Tribunal observed that if the interest income is assessed as income from other sources, the assesssee may be entitled to claim deduction under section 57 (cost of funds) and directed the AO to decide the allowance of such expenditure in accordance with law. The AO was instructed to provide meaningful opportunities to the assessee and to consider the claim on the basis of material placed on record. [Paras 11, 12]

AO to examine and decide the claim for cost of funds under section 57 in the fresh proceedings.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and restored the matter to the Assessing Officer for de-novo consideration of the claims for deduction under sections 80P(2)(a)(i) and 80P(2)(d), and for determination of any allowable cost of funds under section 57, in accordance with the coordinate bench and Supreme Court decisions; the AO to grant meaningful opportunities and proceed in accordance with law.

Entitlement of transferee/resulting company to claim TDS credit on amalgamation - verification of assessment of relevant income before allowing transferred TDS credit - procedural non-compliance under Rule 37BA not to preclude substantive adjudication where facts admit claim

Entitlement of transferee/resulting company to claim TDS credit on amalgamation - entitlement where TDS certificates are in name of amalgamating company but income assessed in transferee's hands - Assessee entitled to claim TDS credit relating to income of the amalgamating company which has been offered and assessed in the hands of the assessee for AY 2021-22. - HELD THAT: - The Tribunal accepted the assessee's case that pursuant to the NCLT-approved scheme the merged entity's income was incorporated and offered to tax in the assessee's returns and that TDS credit arising therefrom was claimed in AY 2021-22. Relying on coordinate bench decisions addressing identical factual situations, the Tribunal held that where the income of the amalgamating/merged entity is taken into account in the hands of the resulting/transferee company, the transferee is entitled to the corresponding TDS credit even if the TDS certificates are in the name of the amalgamating company. The Tribunal therefore set aside the CIT(A)'s confirmation of the disallowance and directed that TDS credit be allowed, subject to verification that the relevant income has been assessed in this year. [Paras 5, 6]

Appeal allowed and assessee entitled to TDS credit after verification of assessment of relevant income.

Procedural non-compliance under Rule 37BA not to preclude substantive adjudication where facts admit claim - verification of assessment of relevant income before allowing transferred TDS credit - The Ld. CIT(A)'s dismissal on the ground of non-filing of declarations/procedural requirements under Rule 37BA was set aside and the matter remitted to the AO for factual verification. - HELD THAT: - The Tribunal observed that the CIT(A) relied on procedural aspects of Rule 37BA to dismiss the claim, whereas the facts showed that the assessee itself was the deductor and the claimed credit related to the merged entity whose income was offered to tax in the assessee's return. The Tribunal therefore found that the matter required factual verification by the AO rather than a denial on procedural grounds alone. Consequently, the Tribunal directed the AO to allow the TDS credit after verifying that the relevant income has indeed been assessed in the year under consideration. [Paras 5]

Order of the CIT(A) set aside and matter remitted to AO for verification and allowance of TDS credit upon satisfaction of assessment of the relevant income.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2021-22, set aside the CIT(A)'s order which had relied on procedural non-compliance, and directed the assessing officer to permit the claimed TDS credit after verifying that the corresponding income has been assessed in the assessee's hands.

Applicability of provisions of Section 69A to cash recorded in books - Deemed income under Section 69A for money not recorded in books - Books of account maintained and audited - Recording of cash sales in books as evidence of source - Rejection of books of account as precondition for invoking Section 69A

Applicability of provisions of Section 69A to cash recorded in books - Books of account maintained and audited - Recording of cash sales in books as evidence of source - Rejection of books of account as precondition for invoking Section 69A - Addition under Section 69A could not be sustained in respect of cash deposits that were recorded in the assessee's audited books of account and declared in the return. - HELD THAT: - The Tribunal held that Section 69A applies where the assessee is found to be owner of money which is not recorded in the books of account and no satisfactory explanation is furnished. Here the assessee's cash deposits were reflected in the cash book and balance sheet, the books were audited and a tax audit report was filed, and sales records (including receipts from a named customer) supported the asserted source of the cash. The Assessing Officer did not reject the books of account or find discrepancies in sales, purchases or stocks; he only observed absence of certain vouchers and delay in bank deposits. The Tribunal found the authorities below had not shown that the statutory condition for invoking Section 69A (unrecorded money) was satisfied, and relied on consistent precedents holding that additions under Section 69A/69 cannot be made where the amounts are disclosed in and supported by books of account. Cases relied upon by the assessing authorities were distinguishable on facts. For these reasons the addition was deleted and the assessment order sustained only to the extent consistent with recorded books. [Paras 11, 12, 20]

Addition under Section 69A deleted and appeal allowed.

Final Conclusion: The Tribunal reversed the CIT(A)'s finding and directed deletion of the addition made under Section 69A in respect of the cash deposits for AY 2017-18, since the amounts were recorded in the assessee's audited books and adequately explained.

Penalty under section 270A - under-reporting in consequence of misreporting - identification of specific clause under section 270A(9) - bona fide reliance on tax consultant - deletion of penalty for defective notice

Penalty under section 270A - identification of specific clause under section 270A(9) - deletion of penalty for defective notice - Whether penalty under section 270A of the Income-tax Act could be sustained where the penalty notice did not specify the particular limb of section 270A(9) alleged to be attracted. - HELD THAT: - The Tribunal examined the penalty notice and found that it merely referred to penalty under section 270A without specifying any particular sub section or clause/limb of section 270A(9). Section 270A(8) prescribes enhanced penalty where under reported income is in consequence of misreporting, and section 270A(9) enumerates distinct categories (clauses (a) to (f)) constituting misreporting. The assessee had explained that the incorrect claims were made by the tax consultant without the assessee's knowledge, produced police complaints and corrected the return on receipt of notice. Following the earlier Coordinate Bench decision in Shashikant Sukdeo Ambekar (ITA No.365 & 366/PUN/2023), the Tribunal held that where the Assessing Officer fails to identify which specific clause of section 270A(9) is invoked, the assessee is deprived of the opportunity to file a focused reply addressing the particular limb; consequently the penalty cannot be sustained. Applying that principle to the facts, the Tribunal deleted the penalty imposed under section 270A. [Paras 9, 10, 11]

Penalty under section 270A deleted because the penalty notice did not specify the particular clause of section 270A(9) relied upon.

Final Conclusion: Appeal allowed: penalty of Rs. 1,61,548 imposed under section 270A for assessment year 2018-19 deleted on the ground that the penalty notice failed to identify the specific limb of section 270A(9) relied upon.

Arm's length price - Transfer pricing adjustment on interest - Transfer pricing treatment of corporate guarantee - Deduction under section 35(2AB) - weighted deduction for R&D expenditure - Section 36(1)(iii) - disallowance of interest on diverted funds - Section 14A - disallowance in respect of exempt income - Section 40(a)(ia) - tax deduction at source on payments to non-residents - Characterisation of foreign currency forward contracts - business loss vs speculative loss - Computation under section 115JB

Arm's length price - Transfer pricing adjustment on interest - Transfer pricing adjustment in respect of interest charged on loans advanced to associated enterprise - HELD THAT: - For loans obtained from banks and on lent to the AE, the Tribunal held that interest can be charged only for the actual period for which amounts were advanced to the AE; TPO's computation assuming the entire 180 days was therefore incorrect. Consequently, upward TP adjustments in respect of interest on loans taken from Corporation Bank and Allahabad Bank were deleted. Separately, a loan advanced to the AE out of the assessee's own funds required benchmarking against foreign currency lending to unrelated parties (CUP) and was not adjudicated by the CIT(A); that part of the adjustment is set aside to the file of the AO for readjudication applying the two fold principle articulated (i.e., recoverability of bank borrowing cost where funds are borrowed and benchmarking to prevailing rates in the AE's country where funds are own funds). [Paras 4]

TP adjustment in respect of bank funded loans deleted; adjustment relating to loan advanced out of own funds remanded to AO for fresh adjudication.

Deduction under section 35(2AB) - weighted deduction for R&D expenditure - Claim for weighted deduction under section 35(2AB) on gross R&D expenditure without netting contract research income - HELD THAT: - The Tribunal observed that, for the relevant period, section 35(2AB) permitted weighted deduction for expenditure on in house scientific research and there was no legal requirement then to net off contract research income; the CIT(A) had not examined the claim on merits. The AO is directed to verify factual matrix (including that income from contract research was deducted by the assessee from eligible expenditure) and thereafter allow deduction on the gross eligible R&D expenditure in accordance with the statute. Related claims for clinical trial expenses outside the R&D facility were to be verified by the AO for actual expense before allowing the claim. The Tribunal noted coordinate bench decisions in the assessee's favour and directed compliance with verification. [Paras 5, 10]

Assessee's claim allowed in principle; AO directed to verify and allow weighted deduction on gross eligible R&D expenditure and to verify clinical trial expenses before admission.

Transfer pricing treatment of corporate guarantee - Whether corporate guarantee furnished to AE without charging fee is an international transaction and quantum of ALP adjustment - HELD THAT: - The Tribunal accepted that corporate guarantees to overseas AEs constitute international transactions subject to TP rules and that the guarantor assumes compensable risk. Benchmarking must be by reference to independent third party transactions; a pragmatic yardstick is the guarantee commission charged by banks. Considering precedents and facts, the Tribunal directed that the guarantee commission adjustment be restricted to 0.5% (based on average bank commission) of the corporate guarantee amount rather than the AO's higher rate, and accordingly allowed the Revenue's ground in part. [Paras 8]

Adjustment on account of corporate guarantee allowed in part and restricted to 0.5% of the corporate guarantee amount.

Section 36(1)(iii) - disallowance of interest on diverted funds - Disallowance under section 36(1)(iii) in respect of interest attributable to alleged diversion of interest bearing funds as interest free advances to related concerns - HELD THAT: - AO's addition rested on an assumed nexus that interest bearing funds were used for interest free advances; assessee maintained it used interest free funds and furnished no contrary material. The Tribunal found no basis to sustain the disallowance, relying also on the coordinate bench decision in the assessee's own case and related High Court confirmation; the CIT(A)'s deletion was upheld. [Paras 9]

Disallowance under section 36(1)(iii) deleted; Revenue's ground dismissed.

Depreciation on R&D assets - Deduction under section 35(2AB) - interaction with depreciation - Entitlement to depreciation on assets removed from R&D facility and related adjustments - HELD THAT: - The assessee contended that assets taken out of R&D in an earlier year were offered to tax then and thus it was entitled to proportionate depreciation; the record was unclear. The Tribunal directed the AO to verify whether the assets were offered and treated in the earlier year and, if so, to allow appropriate depreciation on opening WDV in the present year. The AO must also verify the manner in which the disputed additional depreciation was claimed and whether it was erroneously set off against section 35(2AB) deduction; verifications were ordered before final adjudication. [Paras 11]

Matter remanded to AO for verification and consequential grant of depreciation if claim is found correct.

Product registration expense - revenue v. capital - Characterisation of product registration expenses as revenue expenditure - HELD THAT: - Following coordinate bench and High Court precedent in the assessee's own case, the Tribunal agreed that the product registration expenses were revenue in nature and upheld the CIT(A)'s deletion of the AO's capitalisation/disallowance. [Paras 12]

Deletion of addition upheld; product registration expenses treated as revenue expenditure.

Section 14A - disallowance in respect of exempt income - Computation of disallowance under section 14A and effect of suo moto disallowance in computation - HELD THAT: - The Tribunal followed coordinate bench authority that disallowance under section 14A cannot exceed the exempt income; the CIT(A) properly restricted the disallowance to the exempt income figure and, accordingly, allowed the assessee's withdrawal of suo moto disallowance recorded in the computation. The AO's objections that the relief did not emanate from the assessment order were rejected as the AO had specifically recorded the suo moto disallowance. [Paras 13]

Disallowance under section 14A restricted to exempt income; assessee's suo moto withdrawal allowed; Revenue's grounds dismissed.

Section 40(a)(ia) - tax deduction at source on payments to non-residents - DTAA - make available clause and characterization of FTS - Disallowance under section 40(a)(ia) on payments to non resident entities characterised by AO as fees for technical services - HELD THAT: - The Tribunal accepted the CIT(A)'s factual finding that payments related to lodging/boarding, legal/professional services and reimbursements which did not 'make available' technical knowledge, skill or know how. Identical reasoning had been applied in the assessee's own earlier year and the coordinate bench finding was followed; accordingly the AO's disallowance was deleted. [Paras 14]

Disallowance under section 40(a)(ia) deleted; Revenue's ground dismissed.

Characterisation of foreign currency forward contracts - business loss vs speculative loss - Whether foreign currency loss was a business loss or a speculative loss - HELD THAT: - The Tribunal relied on the coordinate bench decision in the assessee's earlier year, affirmed by the High Court, which treated the forex contracts entered to hedge export receivables (and associated losses) as hedging transactions incidental to business and not speculative. The Tribunal found the nature of the current year's transactions similar and, in absence of distinguishing material, upheld the CIT(A)'s deletion of the speculative loss addition. [Paras 15]

Foreign currency loss treated as business loss; deletion of addition upheld and Revenue's ground dismissed.

Computation under section 115JB - Adjustment under section 115JB consequential on disallowance under section 14A - HELD THAT: - Since the disallowance under section 14A was deleted, the adjustment under section 115JB based on that disallowance could not survive. The Revenue did not press the ground. The Tribunal dismissed the Revenue's challenge. [Paras 16]

Adjustment under section 115JB deleted; Revenue's ground dismissed.

Final Conclusion: For AY 2010 11 the Tribunal partly allowed both appeals: it deleted TP adjustments in respect of bank funded interest and remitted the loan out of own funds interest adjustment to the AO; directed verification and allowance of the assessee's weighted deduction under section 35(2AB) on gross eligible R&D expenditure (with limited verifications); restricted corporate guarantee adjustment to 0.5% of the guarantee amount; upheld deletions of additions under sections 36(1)(iii), 14A, 40(a)(ia), and for foreign currency loss; remitted certain depreciation and clinical trial verification issues to the AO for factual verification; and dismissed other Revenue grounds as recorded above.

Work-in-progress valuation - Reference to District Valuation Officer under section 142A - Rejection of books of accounts - Assessment under section 144 based on estimated valuation - Applicability of CBDT Valuation Guidelines 2009 - Reliability of valuer's certificate

Work-in-progress valuation - Reference to District Valuation Officer under section 142A - Rejection of books of accounts - Assessment under section 144 based on estimated valuation - Deletion of addition made by AO and confirmed by CIT(A) in respect of valuation of WIP for AY 2013-14. - HELD THAT: - The Tribunal held that the AO's reference to the DVO under section 142A (pre-amendment context) for valuation of work-in-progress was not a proper exercise because the AO did not reject the books of accounts or record dissatisfaction with the accounts as required before making an assessment under section 144. The rejection of books is a prerequisite to proceed on estimated figures; there was no finding of significant inaccuracies, incompleteness, or non-conformity with accounting principles in the assessee's books. The addition was founded on an estimated valuation rather than discrediting the actual costs recorded in the books. Further, the Valuer's clarification that his certificate was not withdrawn was not considered by revenue. Although the CIT(A) applied the CBDT 2009 guidelines and reworked the estimate to give partial relief, that exercise did not cure the fundamental infirmity of invoking estimation without rejecting books. Therefore the addition confirmed by the CIT(A) was deleted. [Paras 6]

Addition of Rs. 1,17,42,202/- confirmed by the CIT(A) for AY 2013-14 is deleted and the appeal is allowed.

Work-in-progress valuation - Reference to District Valuation Officer under section 142A - Applicability of CBDT Valuation Guidelines 2009 - Telescoping effect of WIP between assessment years - Application of the same legal reasoning to allow the assessee's appeal for AY 2014-15. - HELD THAT: - The Tribunal found no material change in facts or law between the two assessment years and applied the conclusions reached in AY 2013-14 to AY 2014-15. The principles that the AO must record reasons to reject books before making an estimated assessment, and that valuation by DVO cannot supplant accounted costs without such rejection, were held to apply equally. Consequently, the addition confirmed by the CIT(A) for AY 2014-15 could not be sustained for the same reasons identified in the earlier year. [Paras 8, 9, 10, 11]

Grounds of appeal for AY 2014-15 are allowed and the addition is set aside in accordance with the Tribunal's findings for AY 2013-14.

Final Conclusion: Both appeals for AYs 2013-14 and 2014-15 are allowed: additions made on the basis of DVO's valuation of work-in-progress and confirmed by the CIT(A) are deleted because the Assessing Officer did not reject or discredit the books of accounts before proceeding to make estimated assessments.

Penalty under section 271D - Reasonable time for initiation of penalty proceedings - Bona fide acceptance and applicability of section 273B - Acceptance of cash consideration for immovable property - Selective enforcement and Article 14 - Return processed under section 143(1) as effective assessment

Reasonable time for initiation of penalty proceedings - Return processed under section 143(1) as effective assessment - Initiation of penalty proceedings after substantial lapse of time was not within reasonable time and therefore invalid. - HELD THAT: - The Tribunal noted that the assessee's return for the year was filed and processed under section 143(1) on 08/09/2017, while the impugned penalty notice was issued on 06/07/2021. Having examined the timeline and relied on coordinate decisions, the Tribunal held that penalty proceedings cannot hang indefinitely and must be initiated within a reasonable time. In the factual matrix the initiation after approximately four years was held to be not in reasonable time, particularly where the return had been processed and no assessment proceedings were shown to be pending; the processing of the return under section 143(1) was treated as operative for these purposes and served as the relevant reference point for measuring reasonableness of delay. [Paras 8]

Penalty proceedings initiated after the lapse were not within reasonable time and thus unsustainable.

Penalty under section 271D - Bona fide acceptance and applicability of section 273B - The assessee had plausible and bona fide cause for accepting cash and, applying section 273B, no penalty was leviable under section 271D. - HELD THAT: - The Tribunal accepted that the cash receipts arose in the first year immediately following the amendment restricting cash payments for immovable property, and that the purchasers were unable to obtain demand drafts because of restricted banking hours. Having regard to the complexity and evolving nature of tax law, the Tribunal applied the established principle that where an assessee's explanation is bona fide and plausible, penalty should not be imposed. It further observed that section 273B operates to exclude imposition of penalty in such circumstances. On the material before it - confirmations from buyers and the surrounding facts - the Tribunal concluded that there was reasonable cause and bonafide belief to treat the acceptance of cash as excused and that penalty under section 271D was therefore not leviable. [Paras 10]

Assessee's explanation held bona fide; section 273B applies and no penalty under section 271D is leviable.

Selective enforcement and Article 14 - Penalty under section 271D - Selective non-imposition of penalty on other participants in the same transaction was impermissible and weighed against sustaining the penalty. - HELD THAT: - The Tribunal observed that other persons involved in the same transaction who had also received cash were not proceeded against by the department. It held that such 'pick and choose' enforcement lacks plausible justification and would be contrary to the guarantee of equality under Article 14. This factor reinforced the conclusion that imposing penalty on the assessee was unjustified in the circumstances. [Paras 11]

Selective enforcement noted as violative of equality and a further reason to delete the penalty.

Final Conclusion: The Tribunal deleted the penalty imposed under section 271D for assessment year 2016-17, allowing the assessee's appeal on the grounds of unreasonable delay in initiation of penalty proceedings, bona fide/ reasonable cause under section 273B, and impermissible selective enforcement contrary to Article 14.

Turnover filter in transfer pricing comparability - functional and risk analysis (FAR) in transfer pricing - working capital adjustment under transfer pricing rules - set-off of brought forward losses against transfer pricing adjustments - jurisdictional validity of assessment orders arising from transfer by NFAC under section 144B

Jurisdictional validity of assessment orders arising from transfer by NFAC under section 144B - Jurisdictional challenge under section 144B to validity of final assessment order - HELD THAT: - Assessee contended that the final assessment could not be validly passed by the jurisdictional AO because the case was handled by NFAC and any transfer back required prior approval of the Board under the procedure in clause 8 of section 144B. Revenue produced internal ITBA order-sheet entries and communications and relied on CBDT circular dated 06.09.2021 explaining technical reasons and transfer procedure. The Tribunal found that technical glitches had prevented portal reflection and that the transfer back to the jurisdictional AO had been made with requisite approval as recorded in the DCIT letter and in the circular's procedure; accordingly the final order was held valid and the ground was dismissed. [Paras 4]

Ground dismissed; final assessment upheld as jurisdictionally valid.

Turnover filter in transfer pricing comparability - Exclusion of high turnover comparables (turnover > Rs.200 crore) from the comparable set - HELD THAT: - Assessee challenged inclusion of several comparables whose turnover substantially exceeded the assessee's. Tribunal reviewed precedents from coordinate benches and High Courts and followed the line of authority holding that turnover is a relevant criterion and that companies with turnover markedly higher than the assessee (above the accepted upper band) may be excluded as not comparable. Applying that approach to the admitted facts for A.Y. 2018-19, the Tribunal excluded the listed high turnover comparables. [Paras 5]

Ground allowed; specified high turnover comparables excluded from the comparable set.

Functional and risk analysis (FAR) in transfer pricing - Exclusion of Manipal Digital Systems Pvt. Ltd. on functional and segmental differences - HELD THAT: - Only Manipal Digital Systems required functional comparison after other comparables were excluded on turnover. Assessee showed Manipal's primary business involved pre press, pre media and e book distribution activities, whereas the assessee provided pure ITeS services to its AE. The Tribunal noted absence of segmental details for Manipal and, following a coordinate bench precedent under similar facts, found it not functionally comparable and directed its exclusion. [Paras 6]

Ground partly allowed; Manipal excluded from the comparable list.

Transfer pricing comparables - remand for verification and inclusion - Inclusion of five comparables remanded to AO/TPO for verification - HELD THAT: - Assessee sought inclusion of specified comparables which the DRP had not accepted despite objections and authorities cited by the assessee. The Tribunal did not decide inclusion on the papers but remitted these comparables to the AO/TPO for fresh verification and consideration in accordance with transfer pricing principles, directing that the assessee be given proper opportunity of hearing. [Paras 7]

Ground allowed for statistical purposes and remanded for verification and fresh consideration.

Working capital adjustment under transfer pricing rules - Working capital adjustment remitted for determination by AO/TPO - HELD THAT: - Assessee claimed working capital adjustment; Tribunal observed the issue was covered by coordinate bench authority (Huawei Technologies) which requires that working capital adjustment be allowed or comparables be treated as non comparable if accurate adjustments cannot be made. Following that reasoning the Tribunal remitted the matter to the AO/TPO to determine the correct working capital adjustment. [Paras 8]

Ground allowed for statistical purposes and remitted to AO/TPO for determination of working capital adjustment.

Set-off of brought forward losses against transfer pricing adjustments - Direction to grant set off of brought forward losses against the final transfer pricing adjustment - HELD THAT: - Assessee had declared nil total income after setting off brought forward losses. The TPO/AO had proposed transfer pricing adjustments subsequently reduced but the final assessment did not set off brought forward business losses against the final adjusted income. The Tribunal found this to be an error in law and directed the AO/TPO to grant the set off of brought forward losses against the final adjustment. [Paras 9]

Ground allowed; AO/TPO directed to grant set off of brought forward losses against the final adjustment.

Final Conclusion: The appeal is partly allowed: the Tribunal upheld jurisdiction of the assessing officer under the transfer from NFAC, excluded specified high turnover and functionally dissimilar comparables (including Manipal), remanded certain comparables and the working capital adjustment to the AO/TPO for fresh verification and computation with opportunity to the assessee, and directed grant of set off of brought forward losses against the final transfer pricing adjustment for A.Y. 2018-19.

Chargeability under section 56(2)(viib) for share premium on issue of shares - Fair market value determined by prescribed methods under Rule 11UA (DCF and NAV) - Assessing Officer's power to scrutinise valuation report but not to change the method adopted under Rule 11UA - Valuation based on Discounted Cash Flow (DCF) method as accepted valuation technique - Disallowance of interest under section 36(1)(iii) where borrowed funds are applied for non-business purposes - Presumption that investments/advances are made out of available own funds where sufficient own funds exist (Reliance Utilities principle) - Characterisation of zero coupon debentures as consideration for transfer of assets (not as investment)

Chargeability under section 56(2)(viib) for share premium on issue of shares - Fair market value determined by prescribed methods under Rule 11UA (DCF and NAV) - Assessing Officer's power to scrutinise valuation report but not to change the method adopted under Rule 11UA - Deletion of addition made under section 56(2)(viib) in respect of share premium received on issue of shares - HELD THAT: - The assessee issued shares to an independent corporate investor and furnished a valuation report prepared by an auditor applying the DCF method under Rule 11UA(2). The auditor's DCF-based fair market value exceeded the issue price; the Assessing Officer rejected the valuation without applying any of the prescribed methods and treated the premium as nil. The Tribunal noted that the AO is entitled to scrutinise or obtain an independent valuation but cannot substitute a different method than that chosen by the assessee under Rule 11UA(2). Valuation is not an exact science; projected financials may deviate from subsequent results and do not, by themselves, vitiate a recognised valuation methodology. Given (a) the use of a prescribed valuation method (DCF), (b) absence of any specific flaw pointed out in the valuation, and (c) subscription by a substantial unrelated corporate investor whose genuineness and creditworthiness were not doubted, the addition under section 56(2)(viib) could not be sustained. [Paras 7, 10, 11, 12]

Addition of Rs. 58,99,99,990 as share premium under section 56(2)(viib) deleted; Revenue's grounds dismissed.

Disallowance of interest under section 36(1)(iii) where borrowed funds are applied for non-business purposes - Characterisation of zero coupon debentures as consideration for transfer of assets (not as investment) - Presumption that investments/advances are made out of available own funds where sufficient own funds exist (Reliance Utilities principle) - Disallowance under section 36(1)(iii) of interest on account of alleged utilisation of interest bearing borrowed funds for interest free advances/investments - HELD THAT: - The AO made a pro rata disallowance of interest treating certain advances/investments as made out of interest bearing funds. On appeal, the CIT(A) deleted the disallowance insofar as the zero coupon debentures were concerned after accepting that those debentures formed part of consideration for transfer of assets and liabilities to the recipient company. As to the interest free security deposit given to the subsidiary, the assessee demonstrated available own funds (share capital and reserves and surplus) sufficient to meet the deposit. The Tribunal followed the jurisdictional High Court's principle that where own funds sufficient for the investment/advance are available, a presumption arises that such funds were applied and no disallowance under section 36(1)(iii) arises. In view of the finding that the zero coupon debentures were consideration (not an investment) and that sufficient own funds existed for the security deposit, the pro rata disallowance was not sustainable. [Paras 13, 16, 18, 20]

Disallowance under section 36(1)(iii) deleted in respect of zero coupon debentures and interest free advances to the subsidiary; assessee's grounds allowed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal: the section 56(2)(viib) addition was deleted; the section 36(1)(iii) disallowance was deleted with respect to the zero coupon debentures and the interest free security deposit (found to be met from own funds), with consequential appeals and penalty/interest issues disposed as premature or consequential.

Duty forgone on raw materials - Debit of duty credit scrips under SFIS - Exemption under Notification No. 34/2006-CE - Discharge of duty liability under proviso to Section 3 of the Central Excise Act, 1944 - Proviso to Section 5A of the Central Excise Act, 1944 - Scope of show cause notice and adjudicatory limits

Scope of show cause notice and adjudicatory limits - Proviso to Section 5A of the Central Excise Act, 1944 - Whether the Tribunal exceeded the scope of the dispute by relying upon the proviso to Section 5A when that contention was not raised by the Department in the show cause notice or earlier orders - HELD THAT: - The High Court found that the controversy before the Tribunal was confined to whether debiting duty credit scrips issued under SFIS on clearance of finished goods from an EOU to DTA amounted to payment of duty or entitlement to exemption under Notification No. 34/2006-CE, and whether such debit discharged duty liability as contemplated in the proviso to Section 3 of the Central Excise Act. The Tribunal, however, relied upon the proviso to Section 5A of the Central Excise Act, 1944 - a contention that was not raised by the Revenue in the show cause notice, in the adjudicating orders below, or before the Tribunal. The Court held that it is settled law that a tribunal must not travel beyond the scope of the relief and the case made out in the show cause notice, and that the Tribunal thereby exceeded its jurisdiction in upholding the duty demand on the basis of the unpleaded proviso to Section 5A. [Paras 5]

The Tribunal's reliance on the proviso to Section 5A, not raised by the Department, was impermissible; that portion of the impugned order is quashed and set aside.

Debit of duty credit scrips under SFIS - Duty forgone on raw materials - Exemption under Notification No. 34/2006-CE - Discharge of duty liability under proviso to Section 3 of the Central Excise Act, 1944 - Whether duty foregone on raw materials used in manufacture of finished goods cleared into DTA by debiting SFIS duty credit scrips is recoverable, and the proper forum to decide that question - HELD THAT: - The Court did not decide the substantive question on whether debiting SFIS scrips constitutes discharge of duty liability or entitlement to exemption under Notification No. 34/2006-CE on the merits. Instead, having found that the Tribunal exceeded the scope of the dispute by invoking an unpleaded proviso, the High Court quashed the part of the Tribunal's order that opposed the appellant's claim and remitted the matter to the CESTAT for fresh consideration confined to the issues properly raised. The remand directs the CESTAT to decide afresh the dispute limited to whether debiting of the scrips effects payment or exemption as pleaded, within the period specified by the Court. [Paras 6, 7]

Matter remitted to the CESTAT for fresh adjudication on the merits of whether debiting SFIS scrips discharges duty or attracts exemption under Notification No. 34/2006-CE; the impugned order is quashed insofar as it sustained the duty demand, and the Tribunal is directed to dispose the matter before 31st December 2024.

Final Conclusion: The High Court quashed and set aside that part of the CESTAT order which sustained the duty demand based on a contention not raised in the show cause notice, and remitted the dispute to the CESTAT to decide afresh - within the period specified - the question whether debiting SFIS duty credit scrips on clearance from EOU to DTA discharges duty liability or attracts exemption under Notification No. 34/2006-CE for the period September 2008 to May 2009.

Proof of export - Letter of Undertaking (LUT) - self-sealing and self-certification procedure - nexus between removal and export - rejection of proof of exports - penalty under Rule 25 of the Central Excise Rules, 2002 - revision under Section 35EE of the Central Excise Act, 1944

Proof of export - nexus between removal and export - Letter of Undertaking (LUT) - Whether the authorities rightly rejected the proof of exports and concluded that the petitioner failed to establish nexus between goods cleared under ARE-1s (LUT removals) and the goods shown in shipping documents. - HELD THAT: - The Court concurred with the factual findings of the authorities that the descriptions and documents produced by the petitioner did not tally with the corresponding ARE-1s. Specific contradictions were noted between descriptions in ARE-1s (for example, "super deluxe stripe bucket 16 WL") and the shipping bills, mate receipts and forwarder's documents (for example, "heavy duty plastic bucket 15 L"). The authorities therefore legitimately concluded that the petitioner failed to demonstrate that goods removed under self-sealing/self-certification under LUT were the same goods exported as per the shipping documents. On the record, the mismatch in descriptions and lack of correlation between ARE-1s and shipping bills justified rejection of the proofs of export and the consequent demand.

The rejection of proof of exports and the finding that the petitioner failed to prove nexus between goods cleared under ARE-1s and goods exported is upheld.

Rejection of proof of exports - penalty under Rule 25 of the Central Excise Rules, 2002 - Whether the certificate produced by the exporter (Toyop) explaining the discrepancy in descriptions could cure the defects in the proof of export and negate the demand and penalty. - HELD THAT: - The Court accepted the view of the authorities in declining to rely on the certificate issued by the exporter to reconcile the discrepancies. The certificate-stating that Toyop had purchased buckets from the petitioner to fulfil an order for UNHCR-did not supply the requisite documentary nexus between the ARE-1s and the shipping documents, nor did it dispel the inconsistencies in the cargo descriptions across official export papers. Given that the statutory scheme for LUT removals demands clear proof that the exact goods removed were exported, the mere certificate from the alleged buyer was insufficient to overturn the findings or the consequent demand and penalty imposition under the Rules.

The certificate furnished by the exporter was rightly not accepted as sufficient to cure documentary discrepancies; the demand and penalty stood recorded and sustained.

Final Conclusion: The High Court found no merit in the petition; it concurred with the authorities that the proofs of export did not establish nexus between goods cleared under ARE-1s and those shown in shipping documents, and the petitioner's reliance on the exporter's certificate was insufficient; the petition is dismissed.

Rejection of transaction value without valid reasons - transaction value as basis for customs valuation - non-compliance with Valuation (Determination of Value of Imported Goods) Rules - selective adoption of NIDB data - pick and choose approach in valuation - enhancement of assessable value without sanction of law

Stay of operation of order-in-appeal - Application for stay of operation of the Commissioner (Appeals) order. - HELD THAT: - The Tribunal examined the Revenue's petition for stay of the Commissioner (Appeals)'s order. On a prima facie reading the impugned order did not appear illegal or without jurisdiction. The stay petition was characterised as routine, mechanical and devoid of merit. Accordingly, the application for stay was rejected.

Stay application rejected.

Transaction value as basis for customs valuation - non-compliance with Valuation (Determination of Value of Imported Goods) Rules - selective adoption of NIDB data - pick and choose approach in valuation - enhancement of assessable value without sanction of law - Validity of the enhancement of assessable value by the assessing officer based on selective NIDB data and without following valuation procedure. - HELD THAT: - The Tribunal, following an earlier Bench decision on similar facts, found that the assessing officer rejected the declared transaction value without valid reasons and did not follow the statutory procedure under the Valuation Rules. The Department had adopted NIDB data selectively and did not provide or rely upon a comprehensive dataset, resulting in a pick-and-choose approach rather than an objective valuation exercise. There was no material on record to show that the declared invoice values did not represent the price actually paid, or that buyer and seller were related, or that any additional payments were made. In these circumstances the enhancement lacked legal sanction and was contrary to the principle that transaction value is the primary basis for valuation unless established otherwise under the Rules. Applying that reasoning, the Tribunal found no ground to interfere with the Commissioner (Appeals)'s order setting aside the enhancement.

Revenue's appeal dismissed; impugned enhancements set aside and assessment to be at declared invoice values as held by Commissioner (Appeals).

Final Conclusion: The Tribunal refused the Revenue's stay application and, following precedent and the Commissioner (Appeals)'s reasoning, dismissed the Revenue's appeal on merits holding that enhancement of assessable value by selective reliance on NIDB data and without following valuation procedure was unsustainable; the impugned order upholding assessment at declared invoice values is affirmed.

Operational debt - default - pre-existing dispute - notice of dispute - corporate insolvency resolution process - assignment of lease and effect of NOC

Operational debt - default - Rent claimed by the lessor qualifies as an operational debt and the Corporate Debtor had committed default which was due and payable exceeding the statutory threshold. - HELD THAT: - Applying the test in Mobilox, the Tribunal examined whether (i) there was an operational debt exceeding the prescribed threshold, and (ii) documentary evidence showed the debt was due and unpaid. The Adjudicating Authority and this Tribunal found that notices and Part-IV of the Section 8 demand disclosed arrears of rent, interest and user/occupation charges and that the Operational Creditor had consistently pressed for payment with no contemporaneous contention by the Corporate Debtor prior to the demand notice. These facts satisfy the first two limbs of the Mobilox test and establish that default had occurred and the debt was due and payable. [Paras 12, 13, 16, 27]

Rent dues fall within the definition of operational debt and the Corporate Debtor defaulted in payment which was due and payable above the threshold.

Pre-existing dispute - notice of dispute - No real and substantial pre-existing dispute existed which would disentitle the Operational Creditor to maintain the Section 9 application. - HELD THAT: - The Tribunal applied the Mobilox principle that a pre-existing dispute must be a plausible contention requiring further investigation and not a feeble or spurious defence. Although the Corporate Debtor did not reply to the Section 8 notice, it could still establish a pre-existing dispute in pleadings. The Tribunal considered the email of 18.01.2018, the belated legal notice of 22.10.2019 (served after the demand notice), the mediation application which became a 'Non-Starter' on 13.08.2019, and commercial suits filed after the Section 9 application. Clause 9.1 of the lease placed conversion costs on the lessee. The email and subsequent notices were held to be insufficient to show a genuine pre-existing dispute; the legal notice and suits post-dated the demand and were treated as after-thoughts. Consequently, the third limb of Mobilox was not satisfied for a bar on admission. [Paras 22, 23, 24, 25, 26]

There was no pre-existing dispute or notice of dispute that would require rejection of the Section 9 application.

Assignment of lease and effect of NOC - The assignment of the use of premises to a sister concern and the NOC issued for registration/service tax purposes did not absolve HFPL of its liabilities as lessee or preclude Section 9 proceedings against HFPL. - HELD THAT: - The Tribunal examined the NOC relied on by the Corporate Debtor and noted that the document permitted HBI (sister concern) to use the premises for service tax registration purposes but did not alter the contractual status of HFPL as lessee. Correspondence, termination notices addressed to HFPL, the legal notice issued by HFPL and the commercial suit filed by HFPL demonstrated that HFPL remained the lessee and party responsible under the lease. Thus, the assignment claim and NOC did not create a ground to dismiss the Section 9 application. [Paras 17, 18]

Assignment/NOC did not negate HFPL's status as lessee or its liability; Section 9 against HFPL was maintainable.

Corporate insolvency resolution process - Admission of the Section 9 application and initiation of CIRP against the Corporate Debtor was legally sustainable and the interim stay was vacated; consequential directions were given. - HELD THAT: - Having concluded that an operational debt existed, that default had occurred and that no pre-existing dispute barred the claim, the Tribunal found no error in the Adjudicating Authority's admission order. The interim protection granted earlier by the Tribunal was vacated. The Registry was directed to refund the amount deposited pursuant to the interim order and the Interim Resolution Professional was directed to constitute the Committee of Creditors and proceed with CIRP in accordance with law. [Paras 26, 27]

The Adjudicating Authority's order admitting the Section 9 application and initiating CIRP is affirmed; interim stay vacated and consequential directions issued.

Final Conclusion: The appeal is dismissed. The Tribunal affirms admission of the Section 9 application and initiation of CIRP against the Corporate Debtor, vacates the interim stay, directs refund of the deposited amount and directs the IRP to constitute the CoC and proceed as per law.

Continuation of excluded securities after approval of a resolution plan - Discharge of guarantor by approval of a resolution plan - Involuntary act of principal debtor does not ipso facto discharge guarantor - Inapplicability of Section 134 of the Indian Contract Act to discharge guarantor by operation of resolution plan - Enforceability of corporate guarantee invoked prior to CIRP - Interpretation and effect of specific clauses of a resolution plan on third party securities - Claim under a guarantor's limitation clause in guarantee instrument (threshold clause)

Continuation of excluded securities after approval of a resolution plan - Discharge of guarantor by approval of a resolution plan - Involuntary act of principal debtor does not ipso facto discharge guarantor - Enforceability of corporate guarantee invoked prior to CIRP - Interpretation and effect of specific clauses of a resolution plan on third party securities - Whether approval of the Resolution Plan in the CIRP of the principal borrower extinguished the corporate guarantee given by the corporate debtor - HELD THAT: - The Tribunal held that approval of the Resolution Plan does not ipso facto discharge the guarantor and that excluded securities, including the corporate guarantee dated 10.08.2016, continue to subsist. The court relied on the terms of the Resolution Plan (which expressly treated certain securities as "Excluded Securities" and contained provisions stating such securities "shall continue to survive") and on binding Supreme Court authority (including Lalit Kumar Jain) establishing that an involuntary discharge of the principal debtor by operation of law does not automatically absolve a guarantor. The appellate record (appeal decided on 11.03.2022) was held to have already set aside the Adjudicating Authority's contrary observations that excluded securities would be subsumed, and this Court affirmed that view. Consequently, the Adjudicating Authority's admission of the Section 7 application against the corporate guarantor was held to be without infirmity. [Paras 7, 8, 21, 25, 26]

The corporate guarantee survives approval of the Resolution Plan and the Section 7 claim against the corporate guarantor was maintainable.

Inapplicability of Section 134 of the Indian Contract Act to discharge guarantor by operation of resolution plan - Involuntary act of principal debtor does not ipso facto discharge guarantor - Whether Section 134 of the Indian Contract Act operated to discharge the corporate guarantor by reason of the principal borrower's Resolution Plan - HELD THAT: - The court agreed with the Adjudicating Authority that Section 134 applies when a creditor and the principal debtor execute a contract or take an act which has the legal consequence of discharging the principal debtor without the guarantor's consent. Here the alleged change arose by operation of law on approval of the Resolution Plan, not by a contract between creditor and principal debtor executed in derogation of the surety's rights. Further, Supreme Court precedent was held to indicate that involuntary discharge of the principal borrower does not absolve the surety. Therefore Section 134 was held not attracted to the facts. [Paras 26, 27]

Section 134 of the Indian Contract Act does not operate to discharge the corporate guarantor on account of approval of the Resolution Plan.

Claim under a guarantor's limitation clause in guarantee instrument (threshold clause) - Enforceability of corporate guarantee invoked prior to CIRP - Whether Clause 33 of the corporate guarantee (providing that the guarantee would fall off if borrower's outstanding fell below a threshold) operated to terminate the guarantee in the present case - HELD THAT: - The Court rejected the belated plea based on Clause 33 raised by the appellant in an additional affidavit. On the record the debt due and payable to the bank at the time of invocation (and as admitted in the insolvency proceedings) exceeded the threshold, and the Resolution Plan did not, in substance, reduce the admitted debt below the threshold. The Tribunal therefore found no basis to hold that Clause 33 had been triggered to terminate the guarantee, and also noted the procedural objection to raising the ground belatedly. [Paras 28, 29, 31, 33]

Clause 33 did not operate to terminate the corporate guarantee in the facts of this case; the contention was rejected.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's admission of the Section 7 application against the corporate guarantor is upheld: the corporate guarantee invoked prior to CIRP survives approval of the Resolution Plan, Section 134 of the Contract Act is inapplicable to discharge the guarantor on these facts, and the Clause 33 threshold contention is rejected.

Validity of Section 7 petition and initiation of CIRP - existence of financial debt and default - novation and effect of subsequent settlement on antecedent loan agreements - legal consequence of restoration of struck off company - enforceability of settlement agreement as mechanism for realisation

Validity of Section 7 petition and initiation of CIRP - existence of financial debt and default - Respondent No. 1 was entitled to file the Section 7 petition and the Adjudicating Authority rightly initiated CIRP against the Corporate Debtor. - HELD THAT: - The Tribunal found that the rupee term loan and foreign currency loan assigned by registered assignment deeds in favour of Respondent No. 1 remained valid and that there were continuous acknowledgements of debt by the Corporate Debtor in its balance sheets. The amount of default exceeded the threshold under the Code and therefore the statutory requirements for a Section 7 petition were satisfied. The Appellant's contention that no debt or default existed was held to be unsustainable in view of the assignment deeds, historical loan documentation and continuous acknowledgements of liability. Consequently, the petition under Section 7 could not be rejected on the ground urged by the Appellant. [Paras 31, 34]

Section 7 petition was valid; initiation of CIRP was justified.

Novation and effect of subsequent settlement on antecedent loan agreements - Section 62 Indian Contract Act - substitution of contract - The settlement agreement dated 27.08.2019 did not operate as a novation that extinguished the antecedent loan agreements or assignment deeds. - HELD THAT: - The Tribunal examined requisites of novation and observed that the settlement agreement related solely to disposal of mortgaged properties as a mechanism to realise dues and did not contain specific clauses evidencing an intention to substitute or extinguish the earlier loan agreements or assignment deeds. On the facts and circumstances, and by reference to authorities applying Section 62, the Tribunal found no material alteration or independent contractual force in the settlement that would supersede the original contracts. The Appellant's unilateral cancellation of the settlement agreement was therefore not a ground to hold that the original debt and default ceased to exist. [Paras 25, 28, 29, 30, 33]

Settlement agreement was not a novation; antecedent loan agreements and assignment deeds continued to subsist.

Legal consequence of restoration of struck off company - enforceability of settlement agreement as mechanism for realisation - Restoration of Respondent No. 1's name validated its prior actions and did not render the settlement agreement void. - HELD THAT: - The Tribunal noted that Respondent No. 1 had been struck off but its name was restored by the Tribunal in appeal with the operative effect that the name stands restored as if it had not been struck off. That restoration carries the consequence that actions taken by the company, including execution of the settlement agreement, remain valid. On that basis, the Appellant's contention that the settlement was void for want of legal existence of Respondent No. 1 at the time of execution was rejected. [Paras 26, 27, 32]

Restoration operates retrospectively; the settlement agreement and respondent's capacity to enforce agreements are unaffected.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's initiation of CIRP under Section 7 was affirmed: the assigned loans and defaults subsisted, the settlement did not amount to novation extinguishing antecedent debt, and restoration of Respondent No. 1 validated its contractual actions.

Debt and default - financial debt - admission under Section 7 of the IBC - threshold limit under Section 4 of the IBC - summary jurisdiction of the Adjudicating Authority - proof of financial debt without a written contract - natural justice - effective opportunity to be heard - reliance on documentary evidence including Form-26AS and ledgers

Natural justice - effective opportunity to be heard - Whether the impugned admission order was vitiated for want of compliance with principles of natural justice by reason of the Corporate Debtor being set ex parte. - HELD THAT: - The Tribunal examined the attendance record and notices placed on record and found that the Corporate Debtor repeatedly failed to appear on multiple listed dates despite service and paper publication of notice. The Appellant's explanation of a family bereavement did not justify absence on numerous occasions nor explain why other directors did not appear. The Tribunal further noted contemporaneous prosecution of related criminal proceedings where the Appellant acknowledged the Section 7 proceedings. In these circumstances the Adjudicating Authority afforded adequate opportunity and the ex parte admission was not a miscarriage of natural justice. [Paras 11, 12]

The impugned order is not vitiated for violation of natural justice; adequate opportunity was given and the Corporate Debtor's absence did not render the admission invalid.

Debt and default - admission under Section 7 of the IBC - threshold limit under Section 4 of the IBC - summary jurisdiction of the Adjudicating Authority - Whether the Adjudicating Authority correctly admitted the Section 7 application by finding existence of debt and default above the statutory threshold. - HELD THAT: - Applying the settled principle that the Adjudicating Authority in a Section 7 proceeding must only be satisfied that a default has occurred and that the amount in default exceeds the statutory threshold, the Tribunal examined the impugned order and the documents relied upon by the Financial Creditor. The Adjudicating Authority recorded that it had perused ledgers, Form-26AS, bank statements, audited financials and working for default and concluded that debt and default were proved. Given the Corporate Debtor's ex parte stance and the material before the Adjudicating Authority, the Tribunal found no error in the satisfaction of the prerequisites for admission and observed that on summary jurisdiction the AA was entitled to admit the petition when satisfied of debt and default. [Paras 13, 14, 23, 24]

The Section 7 application was rightly admitted; the Adjudicating Authority correctly found debt and default above the threshold and did not err in admitting the Corporate Debtor into CIRP.

Proof of financial debt without a written contract - reliance on documentary evidence including Form-26AS and ledgers - Whether a written financial contract was a pre-condition to establish financial debt and whether the documents produced (including Form-26AS, ledgers and audited financials) sufficed to prove debt and the rate of interest. - HELD THAT: - The Tribunal observed that the Corporate Debtor had admitted receipt of loans on an oral understanding and that interest rates varied; it relied on the Financial Creditor's ledger, Form-26AS entries and audited statements which recorded the creditor and interest payments. The Tribunal referred to precedents (distinguishing authorities relied upon by the Appellant) and held that a written financial contract is not the only basis to prove financial debt; other relevant documents can establish disbursement, interest and default. The Form-26AS entry indicating interest calculated at the contested rate was noted as corroborative evidence and, in absence of contrary material produced by the Appellant, justified the Adjudicating Authority's conclusions on quantum and rate. [Paras 17, 18, 21, 22]

Written contract is not a mandatory pre-condition; the material produced (ledgers, Form-26AS, audited financials) sufficed to establish financial debt, the incidence of default and the claimed interest component.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's admission of the Section 7 petition; the Corporate Debtor's ex parte admission did not breach natural justice and the Financial Creditor had, on the material before the Adjudicating Authority, proved debt and default above the statutory threshold so that CIRP proceedings were rightly initiated.

Clean slate principle in insolvency sale - grant of fresh electricity connection without payment of corporate debtor's pre CIRP dues - jurisdiction of the tribunal under Section 60(5) of the Insolvency and Bankruptcy Code to adjudicate disputes arising out of insolvency/liquidation - overriding effect of the Insolvency and Bankruptcy Code over inconsistent statutory provisions - effect of 'as is where is / no recourse' sale clauses vis a vis statutory scheme of the Code

Grant of fresh electricity connection without payment of corporate debtor's pre CIRP dues - clean slate principle in insolvency sale - waterfall mechanism under the Code - Successful auction purchaser is not liable to pay pre CIRP electricity arrears of the corporate debtor as a condition for grant of a fresh electricity connection. - HELD THAT: - The Tribunal held that the purchaser of assets in liquidation cannot be saddled with the corporate debtor's past electricity arrears for the purpose of obtaining a new connection. Reliance was placed on this Tribunal's decision in Chinar Steel Segments Centre Pvt. Ltd., and the Supreme Court precedents cited therein (including Tata Power and Paschimanchal), which establish that a distribution licensee cannot insist on payment of arrears falling on the corporate debtor outside the insolvency resolution mechanism and waterfall prescribed by the Code. The Tribunal distinguished authorities in which different statutory schemes applied (e.g., sales under SARFAESI) and noted the overriding effect of the Code in respect of claims that arise out of or in relation to insolvency/liquidation. Accordingly, the successful auction purchaser must comply with conditions for a fresh connection but cannot be compelled to pay the corporate debtor's extinguished pre CIRP electricity dues as a pre condition for energisation. [Paras 15, 16, 17, 18]

Direction issued to energise/permit fresh electricity connection after payment of charges for new connection but without insisting on payment of the corporate debtor's pre CIRP electricity arrears.

Effect of 'as is where is / no recourse' sale clauses vis a vis statutory scheme of the Code - overriding effect of the Insolvency and Bankruptcy Code over inconsistent statutory provisions - A sale certificate clause purporting to place past liabilities (including electricity dues) on the successful bidder cannot override the statutory scheme of the Code which governs treatment of the corporate debtor's liabilities. - HELD THAT: - The Adjudicating Authority had relied on the sale certificate's 'as is where is / no recourse' clause to fasten electricity arrears on the purchaser. The Tribunal found this approach incompatible with the Code's scheme: clauses in sale documents cannot defeat the Code's mechanism for discharge and payment of claims arising out of insolvency/liquidation. The Tribunal observed that authorities dealing with different statutes (for example, SARFAESI) which reached contrary results are distinguishable and in any event do not negate the primacy of the Code where it applies. Therefore, the sale certificate's stipulation cannot be allowed to bypass the statutory protections afforded by the Code. [Paras 9, 10, 19, 20]

The Adjudicating Authority's reliance on the sale certificate clause to reject the appellant's application was held to be erroneous and set aside.

Final Conclusion: The appeal is allowed; the impugned order dismissing the application is set aside. The auction purchaser is entitled to grant of a fresh electricity connection after compliance with requirements for a new connection, but without payment of the corporate debtor's pre CIRP electricity arrears, and sale certificate clauses cannot override the Code's scheme.

Valuation of taxable services - Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - Section 67 of the Finance Act, 1994 - reimbursable expenditure - ultra vires - prospective effect of legislative amendment - maintainability of writ under Article 226 - jurisdictional vires

Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - Section 67 of the Finance Act, 1994 - valuation of taxable services - reimbursable expenditure - ultra vires - prospective effect of legislative amendment - Validity of show cause notice seeking service tax on unbilled revenue/additional expenses (treated as reimbursable expenditure) for period prior to the amendment of Section 67 - HELD THAT: - The Court applied the ratio of the Hon'ble Supreme Court in Intercontinental Consultants and Technocrates Pvt. Ltd., which held that Rule 5(1) brings reimbursable expenses within 'gross amount charged' but that such subordinate legislation cannot extend valuation beyond what Section 67 authorises. Section 67 requires valuation to be the gross amount charged 'for such' taxable services, and amounts not calculated for providing the taxable service cannot be included. The Legislature later amended Section 67 (with effect from 14/May/2015) to include reimbursable expenditure; that amendment is substantive and prospective. Since the show cause notice pertains to a period prior to the amendment, the impugned demand premised on Rule 5(1) is contrary to the law declared by the Supreme Court and thus without jurisdiction. [Paras 11, 12, 13]

Impugned show cause notice based on Rule 5(1) for the pre-amendment period is not tenable and is without jurisdiction.

Maintainability of writ under Article 226 - jurisdictional vires - Whether the petition under Article 226 is maintainable challenging the show cause notice - HELD THAT: - The respondent's contention that the petition is not maintainable because the proper course is to reply to the show cause notice was considered in the light of the ruling that the notice itself is contrary to law. Where the impugned notice is without jurisdiction as it relies on a rule held to overreach Section 67 for the relevant period, prerogative relief under Article 226 is appropriate. Consequently the writ petition is maintainable and relief can be granted to quash the notice. [Paras 13, 14]

Writ petition under Article 226 is maintainable; the impugned show cause notice is quashed and set aside.

Final Conclusion: The petition succeeds: the show cause notice dated 31st October 2017, issued for the period prior to the amendment of Section 67 and founded on Rule 5(1), is quashed as without jurisdiction; the writ under Article 226 is maintainable and is allowed.

Cenvat credit reversal for services to SEZ - Retrospective operation of Rule 6(6A) of the Cenvat Credit Rules - Benefit of retrospective amendment must be given effect - Pure question of law may be raised at any stage

Pure question of law may be raised at any stage - A plea raising a pure question of law can be urged for the first time at the appellate stage without further factual enquiry. - HELD THAT: - The Tribunal accepted that a pure question of law, which does not require further adjudication of disputed facts, may be raised at any stage of the proceedings. The reasoning relied on the principle recognised by the Apex Court in State of Madras Vs K.M. Rajagopalan that pure legal questions are entertainable at any point provided they do not call for additional fact-finding. Applying that principle, the Tribunal held that the appellant's reliance on a retrospective statutory/legal provision was a legal plea properly raised on appeal and not an afterthought requiring remand for evidence. [Paras 5]

The new legal plea on appeal was entertainable as a pure question of law.

Retrospective operation of Rule 6(6A) of the Cenvat Credit Rules - Cenvat credit reversal for services to SEZ - Benefit of retrospective amendment must be given effect - Whether introduction of Rule 6(6A) by Notification No.3/2011-CE(NT) with retrospective effect from 10/02/2006 precluded reversal of Cenvat credit in respect of taxable services supplied to SEZ without payment of tax. - HELD THAT: - The Tribunal examined the departmental communication (D.O.F. No 334/1/2012-TRU dated March 16, 2012) which stated that Rule 6(6A), introduced by Notification No.3/2011-CE(NT) dated 01/03/2011, is to be given effect from February 10, 2006, and that this retrospective effect neutralises past demands for reversal of credit in respect of services provided to SEZs. Applying that communication and the retrospective intent of the amendment, the Tribunal concluded that Cenvat credit was not required to be reversed for taxable services provided to SEZs without payment of service tax for the periods in question. The Tribunal found that the Commissioner (Appeals) erred in refusing to apply the retrospective benefit on the ground that the plea had not been taken before the adjudicating authority, and set aside the impugned order accordingly. [Paras 5, 6]

Rule 6(6A) operates retrospectively from 10/02/2006 and, therefore, Cenvat credit need not be reversed for taxable services supplied to SEZs for the periods in dispute; the impugned order is set aside.

Final Conclusion: The impugned appellate order is set aside and the appeal is allowed; the appellant is entitled to consequential relief in law on account of the retrospective operation of Rule 6(6A) relieving reversal of Cenvat credit for services supplied to SEZs.

Infructuous appeal - cenvat credit reversal - refund claim consequent to de novo adjudication - de novo adjudication - direction to decide pending appeal on merits

Infructuous appeal - cenvat credit reversal - Whether the present appeal against disallowance of cenvat credit is rendered infructuous by reason of the appellant having reversed the credit and the demand in respect of which the credit formed part being dropped. - HELD THAT: - The appellant had availed cenvat credit relating to service tax paid for services received in the period 01.01.2003 to 09.09.2004, subsequently reversed that credit on 31.08.2010 under protest and later filed a refund claim after the de novo adjudication by the Commissioner dropped the demand. The adjudicating authority had earlier confirmed a demand which included the said credit, but the de novo order of 29.12.2017 dropped the demand. As the subject-matter of this appeal (recovery/demand in respect of the credit) has been concluded by the de novo order and the appellant has sought refund, the Tribunal found that the present appeal has become infructuous and there is no purpose in further adjudicating this appeal. [Paras 6]

Appeal is disposed of as infructuous.

Refund claim consequent to de novo adjudication - direction to decide pending appeal on merits - Whether the pending appeal before the Commissioner(Appeals) against rejection of the refund claim should be decided on merits. - HELD THAT: - The appellant filed a refund claim for the amount of credit reversed, which was rejected by the adjudicating authority as premature on the ground that an appeal was pending before the Tribunal. The Tribunal observed that since the de novo proceedings resulted in dropping the demand that gave rise to the credit dispute, the proper remedy is adjudication of the refund claim. The Tribunal therefore directed that the pending appeal before the Commissioner(Appeals) relating to the refund claim be decided on merit, rather than permitting procedural pendency before the Tribunal to preclude refund adjudication. [Paras 6]

Directed the learned Commissioner(Appeals) to decide the pending appeal relating to the refund claim on merits.

Final Conclusion: The appeal was disposed of as infructuous in view of the de novo order dropping the demand; the Tribunal directed the Commissioner(Appeals) to decide the appellant's pending appeal against rejection of the refund claim on merits.

Refund of unutilised PLA balance - PLA deposit treated as advance/deposit and not as duty - limitation under Section 11B not applicable to unspent PLA balance - procedure for withdrawal/refund under Central Excise Rules (Rule 9(1A) / Rule 173G(1A)) - doctrine of unjust enrichment not to be applied to unutilised PLA balance

Refund of unutilised PLA balance - PLA deposit treated as advance/deposit and not as duty - limitation under Section 11B not applicable to unspent PLA balance - doctrine of unjust enrichment not to be applied to unutilised PLA balance - procedure for withdrawal/refund under Central Excise Rules (Rule 9(1A) / Rule 173G(1A)) - Whether the refund of unutilised balance lying in Personal Ledger Account (PLA) is governed by Section 11B of the Central Excise Act (and thereby time barred) or is to be treated as a deposit refundable under rules and not hit by the limitation in Section 11B. - HELD THAT: - The Tribunal held that an amount deposited in PLA is an advance deposit for future payment of duty and does not become duty unless and until it is appropriated by debit for payment of excise duty. Consequently, an unspent PLA balance retains the character of a deposit belonging to the depositor and is not extinguished as duty. The decision of the Apex Court in Modipon Ltd. was examined and distinguished: Modipon does not hold that any amount lying in PLA is central excise duty, and therefore that decision was not applicable on facts where the balance remained unutilised. The Tribunal relied on earlier consistent decisions of this forum (including Huhtamaki India Ltd., Jay Shree Tea & Industries Ltd., Navdeep Packaging Industries and Bijalimoni Tea Estate) and the Board clarification that unutilised PLA amounts are refundable, to conclude that limitation under Section 11B (which governs refund of duty) does not apply to refund of unspent PLA balance. The rule based procedure for withdrawal/refund under the Central Excise Rules (referred to in the impugned orders) governs such refunds and the doctrine of unjust enrichment is inapplicable to genuine unutilised deposits. On this basis the Commissioner (Appeals) was found to have misapplied Modipon and erred in holding the refund time barred.

Impugned order set aside; refund of the appellant's unutilised PLA balance allowed as a deposit not governed by Section 11B, with consequential relief as applicable.

Final Conclusion: The appeal is allowed. The Tribunal holds that unutilised PLA balance is an advance deposit (not duty), refund of such balance is not barred by limitation under Section 11B and is governed by the refund/withdrawal procedure under the Central Excise Rules; the impugned order denying refund on limitation grounds is set aside and the refund is allowed with consequential relief, if any.

Admissibility of statements under Section 9D of the Central Excise Act - Mandatory right to cross examination for statements relied upon in adjudication - Burden on Revenue to prove non receipt/diversion of inputs for denial of CENVAT credit - Insufficiency of uncorroborated third party statements and loose papers to sustain fraud allegations - Validity of denial of CENVAT credit where inputs are recorded, consumed and final products cleared on payment of duty

Admissibility of statements under Section 9D of the Central Excise Act - Mandatory right to cross examination for statements relied upon in adjudication - Whether statements of third parties not subjected to cross examination in terms of Section 9D could be relied upon to deny CENVAT credit - HELD THAT: - The Tribunal held that Section 9D requires that statements relied upon in proceedings (other than a Court) be treated in parity with court proceedings so far as practicable, including examination in chief and cross examination, for them to be admissible. The adjudicating authority did not permit cross examination of certain witnesses whose statements formed the core of the investigation. Consequently those statements could not be treated as admissible evidence for confirming demand. The failure to allow cross examination amounted to breach of principles of natural justice and deprived the department of cogent, admissible testimony on which to base a finding of fraudulent availment of credit. [Paras 4]

Statements not subjected to cross examination under Section 9D could not be relied upon; such reliance vitiates the adjudication.

Burden on Revenue to prove non receipt/diversion of inputs for denial of CENVAT credit - Validity of denial of CENVAT credit where inputs are recorded, consumed and final products cleared on payment of duty - Whether Revenue proved non receipt/diversion of inputs and fraudulent availment of CENVAT credit on the facts and evidence produced - HELD THAT: - The Tribunal found that aside from third party statements and some loose papers, Revenue produced no direct documentary or corroborative evidence showing that the inputs covered by duty paying invoices were not received, were diverted to re rolling mills, or were substituted by non dutiable local scrap. The assessee had contemporaneous statutory records (stock/Form IV and purchase registers), showed consumption of inputs in production and clearance of final products on payment of duty, and payments were made through banking channels. Revenue failed to identify alleged recipient re rolling units, to produce trip sheets/logs or drivers' statements to corroborate transporter assertions, or to trace any cash flow allegedly returned to the assessee. Merely discreditable or retracted third party statements and uncorroborated loose notes could not discharge the burden of proving non receipt or diversion beyond reasonable doubt. [Paras 4]

Revenue failed to prove non receipt/diversion of inputs; denial of CENVAT credit on the available evidence was unsustainable and the demand could not be sustained.

Insufficiency of uncorroborated third party statements and loose papers to sustain fraud allegations - Whether loose papers, private notebooks and uncorroborated third party records can by themselves sustain a finding of fraudulent availment of credit - HELD THAT: - The Tribunal reiterated established principles that demands based solely on private diaries, loose handwritten papers or third party statements lacking corroboration are inadequate to uphold allegations of fraud. It observed that such material, absent independent corroborative evidence (production capacity, raw material consumption, seizures, trip sheets, authenticated records), may at best raise suspicion but cannot substitute legally reliable proof. The impugned adjudication placed reliance on such uncorroborated material and consequently the demand could not be maintained. [Paras 4]

Uncorroborated loose papers and third party statements cannot, by themselves, sustain a finding of fraudulent availment of CENVAT credit.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeals: statements not cross examined under Section 9D were inadmissible, Revenue failed to prove non receipt or diversion of inputs by cogent and corroborative evidence, and uncorroborated third party documents/loose papers could not sustain the demand; consequential relief was granted to the appellants.

Application of Rule 8 of the Central Excise Valuation Rules in cases of captive consumption - transaction value under Rule 4 vis-a -vis captive-consumption valuation - sequential application of Central Excise Valuation Rules - burden of proof on undervaluation - extended period invoked for suppression with intent to evade duty

Application of Rule 8 of the Central Excise Valuation Rules in cases of captive consumption - transaction value under Rule 4 vis-a -vis captive-consumption valuation - sequential application of Central Excise Valuation Rules - Assessable value is not to be determined under Rule 8 where part of the production is sold to independent buyers; Rule 4 applies or is to be preferred where both rules could be read to apply. - HELD THAT: - The Tribunal followed the Larger Bench view in Ispat Industries Ltd. that Rule 8 applies only where the entire production of a commodity is captively consumed and therefore cannot be pressed into application where some clearances are to independent buyers. The Tribunal accepted that where both Rule 4 and Rule 8 might be invoked, a sequential and purposive reading requires preference to Rule 4 so as to remain consistent with Section 4 of the Central Excise Act. Applying these principles to the facts, and noting undisputed clearances to independent buyers, the Tribunal held Rule 8 inapplicable and that the transaction value approach under Rule 4 deserves acceptance. [Paras 7]

Rule 8 does not apply; valuation under Rule 4 is to be preferred/accepted.

Burden of proof on undervaluation - extended period invoked for suppression with intent to evade duty - The departmental demand of differential duty, interest and penalties was not sustainable for lack of evidence of undervaluation. - HELD THAT: - The Tribunal observed that although the department alleged undervaluation by non-application of Rule 8, it did not produce comparative cost details or market price evidence to demonstrate that the prices adopted were false or understated. In absence of such material and having held Rule 8 inapplicable on legal grounds, the demand, interest and penalties premised on undervaluation and suppression could not be sustained. The impugned order was therefore set aside. [Paras 7, 8]

Demand of duty, interest and penalties set aside for want of proof and on the legal finding that Rule 8 is inapplicable.

Final Conclusion: The Tribunal allowed the appeal, set aside the demand of differential duty, interest and penalties for the period 2006-07 to 2009-10, holding that Rule 8 is inapplicable where part of production is sold to independent buyers and that there was no evidentiary basis to sustain the allegation of undervaluation.

Option to elect between competing fiscal benefits - interpretation of overlapping definitions of "Inputs" and "Capital Goods" - principle of extending the more beneficial concession to the assessee - concurrent entitlement to exemption notification and Cenvat credit - cash refund of pre-GST Cenvat credit under Section 142(3) of the CGST Act read with Section 11B of the Central Excise Act

Interpretation of overlapping definitions of "Inputs" and "Capital Goods" - option to elect between competing fiscal benefits - principle of extending the more beneficial concession to the assessee - Whether the appellant was entitled to claim Cenvat credit on spare parts which fall within both the amended definition of "Inputs" (capital goods up to Rs.10,000 per piece) and the definition of "Capital Goods", and whether the appellant could elect treatment as capital goods so as to claim Cenvat credit without forfeiting the benefit of exemption notification No.30/2004-CE. - HELD THAT: - The Tribunal found that the 01.03.2016 amendment inserted capital goods of value up to Rs.10,000 per piece into the definition of "Inputs" but did not exclude them from the definition of "Capital Goods". Consequently, the spare parts in question are covered simultaneously as "Inputs" and as "Capital Goods". Applying the settled principle that when two benefits are available the more beneficial provision may be availed by the assessee, the Tribunal held that the assessee has the option to treat such items as capital goods and claim Cenvat credit. The Tribunal relied on precedents establishing that when alternative fiscal concessions are equally applicable the assessee may elect the more favourable one, and that specific or advantageous treatment should be extended to the assessee where both descriptions apply. The Tribunal accepted the appellant's precautionary approach in seeking clarification and filing for credit, and concluded that claiming Cenvat credit as capital goods does not, by itself, conflict with the conditions of notification No.30/2004-CE so as to disentitle the appellant to the exemption. [Paras 4]

The appellant is entitled to claim Cenvat credit on the spare parts by treating them as capital goods (despite their inclusion within the amended definition of "Inputs"), and the appellant had the option to elect such treatment.

Concurrent entitlement to exemption notification and Cenvat credit - cash refund of pre-GST Cenvat credit under Section 142(3) of the CGST Act read with Section 11B - Whether, having been held entitled to Cenvat credit on the spare parts as capital goods, the appellant was also entitled to the cash refund of such credit in terms of Section 142(3) of the CGST Act read with Section 11B of the Central Excise Act. - HELD THAT: - Having accepted that the appellant could validly claim Cenvat credit on the spare parts by treating them as capital goods without violating the exemption notification, the Tribunal held that the corollary relief of cash refund is available. The Tribunal observed that with the introduction of GST the pre-existing Cenvat credit, where admissible, is capable of being refunded in cash under Section 142(3) of the CGST Act read with Section 11B of the Central Excise Act, and that this consequential remedy follows from the primary finding of entitlement to the credit. [Paras 4, 5]

The appellant is entitled to the consequential cash refund of the admissible Cenvat credit in terms of Section 142(3) of the CGST Act read with Section 11B of the Central Excise Act.

Final Conclusion: Impugned orders rejecting the refund/credit claims were set aside; appeals allowed and the appellant granted entitlement to claim Cenvat credit on the spare parts as capital goods and to receive the consequential cash refund in accordance with law.

Cenvat credit entitlement - rectification of invoices by supplier - rectification of Bills of Entry by Customs - verification of receipt of goods - remand for verification of claim by adjudicating authority

Cenvat credit entitlement - rectification of invoices by supplier - Entitlement to Cenvat credit in respect of three supplier invoices initially showing wrong address but subsequently rectified and certified by the supplier. - HELD THAT: - The Tribunal found that the only defect in respect of these three invoices was the incorrect address initially mentioned by the supplier. The supplier subsequently rectified the invoices and furnished a certificate of rectification, which the appellant placed on record and which the Tribunal verified. There was no allegation that the goods were not received by the factory or that any other unit had availed the credit. In those circumstances the defect was treated as a rectifiable, bona fide mistake by the supplier and did not disentitle the appellant from taking Cenvat credit. [Paras 6]

Appellant entitled to take Cenvat credit on the three supplier invoices (S.No. 1 to 3 as per show cause notice).

Cenvat credit entitlement - rectification of Bills of Entry by Customs - Entitlement to Cenvat credit in respect of two Bills of Entry which were rectified by the Customs authorities. - HELD THAT: - The Tribunal noted that, of the three Bills of Entry in question, two had been rectified by the Customs authorities themselves and the corrected entries were placed on record and verified. Since the Customs rectification corrected the defect in the documents, the appellant could legitimately claim Cenvat credit in respect of those imports. [Paras 7]

Appellant entitled to take Cenvat credit on the two rectified Bills of Entry (S.No. 4 and 5 as per show cause notice).

Cenvat credit entitlement - verification of receipt of goods - remand for verification of claim by adjudicating authority - Whether entitlement to Cenvat credit on the remaining Bill of Entry showing the Head Office as consignee requires verification whether the Head Office has availed the credit. - HELD THAT: - The Tribunal observed that the Bill of Entry (No. 683232 dated 29.01.2014) recorded the Head Office as the consignee. The appellant asserted that the Head Office had not availed the Cenvat credit and that the goods were received at the appellant's factory and recorded in stock registers. The Tribunal held that this factual contention needed verification by the adjudicating authority: if the Head Office had not availed the credit, the appellant would be entitled to claim it. Consequently the matter was remitted for the adjudicating authority to verify from the Head Office whether Cenvat credit had been taken on that Bill of Entry. [Paras 8, 9]

Matter remanded to adjudicating authority to verify whether the Head Office availed Cenvat credit on the Bill of Entry; if not, appellant is entitled to the credit.

Final Conclusion: Appeal allowed in part: Cenvat credit granted on five of the six documents after verification/rectification; the sixth Bill of Entry remitted for verification with direction that if the Head Office has not availed credit the appellant shall be allowed the same; no penalty imposed.

Time bar - extended period of limitation - suppression of facts - revenue neutrality - CENVAT credit on capital goods removed as such - reversal under Rule 3(5), (5A) & (5B) of CENVAT Credit Rules, 2004 - recovery under Rule 14 of CENVAT Credit Rules, 2004

Time bar - extended period of limitation - suppression of facts - revenue neutrality - CENVAT credit on capital goods removed as such - Whether the demand was barred by limitation and whether extended period of limitation could be invoked - HELD THAT: - The Tribunal confined disposal to the question of limitation. The records show the capital goods were removed on payment of duty and that transaction was reflected in the assessee's ER-1 return. The audit raised the issue in 2010, but the show cause notice was issued on 24.06.2013, beyond the normal limitation period. The shortfall claimed by the department represented CENVAT credit available to the recipient unit, indicating revenue neutrality. On these facts the Tribunal found no suppression of facts or fraudulent intention by the appellant to evade duty. In consequence, the requirements for invoking the extended period were not satisfied and the demand was held to be time-barred. [Paras 4, 5]

Demand set aside as barred by limitation; appeal allowed.

Final Conclusion: The impugned demand was quashed on limitation grounds because the department had knowledge of the transaction (reflected in ER-1 and raised in audit) and there was no suppression or intent to evade duty; the Tribunal did not decide the merits on Rule 3/Rule 14 applicability.

Refund of excess tax collected and deposited - issuance of C Form declarations - ultimate burden of tax and unjust enrichment - buyer entitled to refund where tax burden was borne by buyer - processing of refund claim within a fixed time frame

Refund of excess tax collected and deposited - issuance of C Form declarations - ultimate burden of tax and unjust enrichment - buyer entitled to refund where tax burden was borne by buyer - Entitlement of the petitioner to refund of the excess CST paid for purchases made without C Form declarations but for which C Forms were belatedly issued - HELD THAT: - The Court held that where C Form declarations are subsequently issued and the buyer (petitioner) had borne the ultimate burden of the tax, the buyer is entitled to refund of the excess tax collected and deposited. The decision relies on the reasoning in J.K. Cement Ltd. (as approved by the Supreme Court) that a refund cannot be allowed to the seller where doing so would result in unjust enrichment of the seller who had collected the tax from the buyer. Given that the petitioner produced invoices and the belated C Forms and that the State did not dispute in principle the liability to refund, the petitioner must be permitted to claim refund of the differential between the higher rate charged and the concessional rate applicable against C Forms. [Paras 10]

Petitioner is entitled to refund of the excess tax for the periods 2017-18 and 2018-19 upon verification of the submitted C Forms.

Processing of refund claim within a fixed time frame - refund of interest paid by seller on delayed tax - Obligation of the tax authorities to process the petitioner's refund application and the scope of refund to include interest paid by the seller and charged to the petitioner - HELD THAT: - Applying the directions in J.K. Cement Ltd. and the subsequent acceptance of that approach by the Supreme Court in the reported proceedings, the Court directed the respondents to consider and decide the petitioner's refund application after verification of the C Forms and to grant refund with statutory interest. The Court also held that the interest amount paid by the seller (and debited to the petitioner) is recoverable and shall be considered in the refund exercise. The respondents were required to complete verification and pass orders on the refund and interest claims within twelve weeks from receipt of a copy of the order. [Paras 11]

Respondents to process the refund application and grant refund and interest after verification of C Forms within twelve weeks.

Final Conclusion: The petition succeeds insofar as the petitioner is entitled to refund of the excess CST paid for 2017-18 and 2018-19 (on production and verification of belated C Forms) and to the interest claimed; the respondents are directed to process and decide the refund and interest claims within twelve weeks from receipt of this order.