TaxTMI Updates e-Newsletter
Jul 12,2024

Refund of IGST paid on export - automatic processing of export refund claims - risk alert by Director General of Data Analytics & Risk Management - reconsideration of refund claim on available portal documents - permitting submission of additional documents - time bound adjudication of refund applications

Refund of IGST paid on export - automatic processing of export refund claims - reconsideration of refund claim on available portal documents - Order rejecting the refund claim for March 2023 on the ground that supporting documents were not uploaded was set aside and the matter remanded for reconsideration. - HELD THAT: - The court found that the impugned order recorded only the absence of uploaded supporting documents as the reason for rejection, whereas export refunds are processed automatically on the basis of documents available on the portal such as shipping bills and invoices. Given that the petitioner's refund claims for April-May 2023 were processed and sanctioned, and that relevant documents were present on the portal, the matter could not be left on the single ground stated in the impugned order. The rejection was therefore set aside and the 1st respondent directed to reconsider the refund application taking into account documents already available on the portal. The court permitted the petitioner to furnish any additional documents to assist the process and required the 1st respondent to pass orders upon reconsideration within a stipulated period. [Paras 5, 6]

Impugned order dated 05.06.2023 set aside; refund claim remanded to the 1st respondent for reconsideration with liberty to the petitioner to file additional documents and with direction to decide within two months.

Risk alert by Director General of Data Analytics & Risk Management - permitting submission of additional documents - time bound adjudication of refund applications - Respondents 2 and 3 were directed to coordinate with the 1st respondent in relation to the risk alert and procedural directions were issued to ensure reconsideration and time bound disposal. - HELD THAT: - The court recognized that the rejection was connected to a risk alert raised by the Director General of Data Analytics & Risk Management (DGRAM). To facilitate effective reconsideration, respondents 2 and 3 were directed to coordinate with the 1st respondent regarding the risk alert. The 1st respondent was further directed to take into account documents available on the portal and to permit the petitioner to submit any additional documents. A specific two month timeline from receipt of the order was imposed for passing of a fresh decision to ensure expeditious resolution. [Paras 6]

Directions issued for coordination by respondents 2 and 3 with the 1st respondent; 1st respondent to consider portal documents, permit additional filings, and decide the application within two months.

Final Conclusion: The writ petition was allowed by setting aside the rejection order dated 05.06.2023 and remanding the refund claim for March 2023 to the 1st respondent for reconsideration in light of documents on the portal, with respondents 2 and 3 directed to coordinate and the 1st respondent ordered to permit additional documents and decide the claim within two months; petition disposed without costs.

Mens rea for evasion of tax - typographical error in e-way bill - imposition of penalty under Section 129 of Goods and Services Tax Act, 2017 - adverse inference based on mere suspicion, surmise and conjecture - entertainment of writ under Article 226 of the Constitution due to absence of Tribunal

Mens rea for evasion of tax - typographical error in e-way bill - imposition of penalty under Section 129 of Goods and Services Tax Act, 2017 - adverse inference based on mere suspicion, surmise and conjecture - Quashment of the penalty/impugned order under Section 129(3) of the GST Act for Assessment Year 2019-20 on the ground that discrepancy in dates between Tax Invoice and E-way Bill was a bona fide typographical error and did not establish mens rea to evade tax. - HELD THAT: - The Court found that the only material against the petitioner was a discrepancy in dates on the Tax Invoice and the E-way Bill, which was a bona fide typographical error and a minor mistake by the person generating the documents. Relying on the principle that mens rea to evade tax is essential for imposition of penalty, the Court held that a minor typographical error, without further material indicating intent to evade tax, cannot sustain a finding of fraudulent transaction or justify penalty under Section 129. The Court further observed that both seller and purchaser had active GST registrations (as borne out by documents placed on record and not disputed by respondents), and that the selling dealer's use of a flat as an office address, without cogent material, could not attract adverse inference. Findings against the petitioner were held to be based on surmise and conjecture and therefore unsupportable in law. In consequence, the impugned order was set aside and refund directed of any amount deposited pursuant to that order. [Paras 10, 11, 12, 13, 14]

Impugned order under Section 129(3) quashed; writ petition allowed; any amount deposited to be refunded within one month.

Final Conclusion: The High Court allowed the writ under Article 226, set aside the impugned order for Assessment Year 2019-20, holding that a typographical date error on the E-way Bill/Tax Invoice did not establish mens rea to evade tax and that adverse inferences based on surmise were impermissible; any amounts deposited pursuant to the order are to be refunded within one month.

Quashing of assessment order - remand for fresh adjudication - opportunity of being heard - treatment of order as addendum to show cause notice - interest under Section 50 of the respective GST Enactments - Assessment Year 2017-2018

Quashing of assessment order - remand for fresh adjudication - opportunity of being heard - treatment of order as addendum to show cause notice - interest under Section 50 of the respective GST Enactments - Impugned assessment order dated 07.06.2022 set aside and matter remitted for fresh adjudication after giving the petitioner an opportunity of being heard; impugned order to be treated as an addendum to the preceding show cause notice and petitioner directed to file a reply within 30 days. - HELD THAT: - The Court found it appropriate to grant relief by quashing the impugned order dated 07.06.2022 and remitting the matter to the respondent for fresh consideration on merits. The remand directs the respondent to afford the petitioner an opportunity of hearing before passing a fresh order. The impugned order is to be treated as an addendum to the show cause notice that preceded it, and the petitioner is to file a reply to that show cause notice within 30 days from receipt of a copy of this order. The Court noted that the petitioner has already paid the tax and that the present dispute pertains only to interest levied under the GST enactments; accordingly no additional condition was imposed on the petitioner at this stage. The respondent remains at liberty to pass appropriate orders on merits and in accordance with law after complying with the direction to hear the petitioner. [Paras 8]

Impugned order quashed; matter remitted to respondent for fresh adjudication after hearing; impugned order to be treated as addendum to the show cause notice; petitioner to file reply within 30 days; no further condition imposed since tax paid and dispute limited to interest.

Final Conclusion: Writ petition disposed by quashing the impugned order dated 07.06.2022 and remitting the matter for fresh adjudication after hearing; petitioner directed to file reply within 30 days; no costs.

Input tax credit reconciliation - Form GSTR-3B vs FORM GSTR-2A discrepancies - requirement of supplier/CA/CMA certificate with UDIN for verification of ITC - application of Board Circular No.183/15/2022-GST to ongoing proceedings for FY 2017-18 - remand for fresh adjudication in light of new administrative instructions

Input tax credit reconciliation - Form GSTR-3B vs FORM GSTR-2A discrepancies - application of Board Circular No.183/15/2022-GST to ongoing proceedings for FY 2017-18 - Impugned assessment order confirming demand on account of differences between ITC claimed in FORM GSTR-3B and auto-populated ITC in FORM GSTR-2A was set aside and the matter remitted for fresh consideration in light of the Board Circular. - HELD THAT: - The Court noted that the assessment arose from variations between ITC claimed in FORM GSTR-3B and that appearing in FORM GSTR-2A. After the impugned order was passed, the Board issued Circular No.183/15/2022-GST dated 27.12.2022 prescribing procedures for verification of ITC, including obtaining supplier certificates or CA/CMA certificates with UDIN where discrepancies exceed prescribed thresholds, and limiting applicability to ongoing proceedings for FY 2017-18 and 2018-19. Relying on earlier decisions in which similar assessment orders were set aside and remitted, the Court found it appropriate to set aside the impugned order and remit the matter to the assessing authority to apply the Circular to the facts of the case. The Court expressly permitted the petitioner to make additional submissions and to produce the certificate contemplated by the Circular, and directed the assessing authority to undertake the exercise within the stipulated time.

Impugned Order-In-Original set aside; matter remitted to respondent for fresh adjudication applying the Board Circular and permitting petitioner to file additional submissions and the requisite certificate.

Final Conclusion: Writ petition disposed by setting aside the assessment order and remitting the matter to the assessing authority to pass fresh orders applying Board Circular No.183/15/2022-GST to the facts of AY 2017-2018; petitioner permitted to file additional submissions and certificate; exercise to be completed within 60 days.

Condonation of delay - applicability of Section 5 of the Limitation Act - exclusion of Limitation Act by special statute - power of appellate authority to extend limitation - writ jurisdiction under Article 226 of the Constitution - alternate statutory remedy

Condonation of delay - applicability of Section 5 of the Limitation Act - power of appellate authority to extend limitation - exclusion of Limitation Act by special statute - Whether Section 5 of the Limitation Act could be invoked to condone delay in filing an appeal under Section 107 of the Bihar GST Act beyond the further one-month period expressly provided by that provision. - HELD THAT: - The Court examined the scheme of Section 107 of the Bihar Goods and Services Tax Act, 2017 which prescribes a three-month period for filing an appeal and permits an application for condonation of delay within a further period of one month. Applying the binding principles from the cited Supreme Court precedents, the Court held that the applicability of Section 5 of the Limitation Act depends on the statutory scheme: where the special statute prescribes a primary period and also specifies a further period for condonation, that scheme manifests exclusion of Section 5. The Court distinguished decisions permitting Section 5 where the special law left the further period unspecified or conferred broad power to condone for sufficient cause. Having regard to the language and scheme of Section 107, and by reference to the authorities discussed (including Hongo India, Hukumdev Narayan Yadav, New India Assurance, Superintending Engineer/Dehar Power House Circle and Assistant Commissioner (CT) LTU), the Court found no basis to apply Section 5 to extend the limitation beyond the aggregate period contemplated by Section 107. The Division Bench decision of the Calcutta High Court adopting the contrary view was respectfully disagreed with. [Paras 12, 13, 14, 15, 16]

Section 5 of the Limitation Act cannot be invoked to further extend the time for filing the appeal under Section 107 of the BGST Act beyond the period provided; the appellate authority has no power to condone delay beyond the statutory scheme in the present case.

Writ jurisdiction under Article 226 of the Constitution - alternate statutory remedy - Whether the High Court should exercise its writ jurisdiction under Article 226 to entertain the petition challenging rejection of the appeal as barred by limitation. - HELD THAT: - The Court noted the existence of alternate statutory remedies and the availability of a special notification extending filing time subject to conditions, which the petitioner did not avail. Observing that writ jurisdiction is not to be used to circumvent the statutory limitation scheme or as a substitute for available remedies, the Court emphasized that extraordinary relief under Article 226 should not be granted where alternate remedies exist and the petitioner has not been diligent in availing them. Applying these principles to the facts, the Court found no justification to invoke Article 226 to permit the late appeal. [Paras 18, 19, 20, 21]

Writ jurisdiction under Article 226 will not be exercised to relieve the petitioner from delay where statutory remedies were available and not availed of; the petition is therefore dismissed.

Final Conclusion: The writ petition is dismissed: Section 5 of the Limitation Act does not apply to permit further extension of time for the appeal under Section 107 of the BGST Act in the circumstances, and the High Court will not exercise Article 226 to override the statutory limitation where alternate remedies existed and were not pursued.

Failure to consider statutory reply - remand for fresh consideration - right to personal hearing and opportunity to produce documents - reverse charge mechanism liability - common place of business versus common management

Failure to consider statutory reply - common place of business versus common management - remand for fresh consideration - Tax proposal alleging circular trading and unlawful availment of ITC on account of common place of business was not finally adjudicated and is remanded for reconsideration after taking the petitioner's reply and documents into account. - HELD THAT: - The petitioner had filed a detailed reply dated 24.10.2023 denying common management with particulars of partners of the other entity and enclosing the rental agreement and registration certificates. The High Court examined the impugned order and found that these documents and the petitioner's submissions were not considered in confirming the tax proposal on the sole basis of common use of premises. Since the material reply and annexures were not taken into account, the impugned order cannot be sustained on this point and the matter requires fresh consideration by the authority after affording the petitioner an opportunity to produce or supplement documents and to be heard. [Paras 5, 6]

Impugned order set aside insofar as the circular trading/ITC allegation is concerned; matter remanded for reconsideration with opportunity to file additional documents and for a hearing.

Failure to consider statutory reply - reverse charge mechanism liability - remand for fresh consideration - right to personal hearing and opportunity to produce documents - Tax proposal in relation to alleged liability under reverse charge for professional charges was not finally adjudicated and is remanded for reconsideration after taking the petitioner's reply and payment particulars into account. - HELD THAT: - The petitioner had specifically explained that portions of the professional charges related to TNVAT and to an IGST invoice, and quantified the net reverse charge liability which it states was discharged. The Court found that this explanation and the particulars of payment were not considered in the impugned order, which nonetheless confirmed the entire tax proposal. Because the impugned order disregarded the petitioner's submissions on the reverse charge liability, the Court required the authority to reconsider the issue on merits after allowing the petitioner to submit any further documents and to be afforded a personal hearing. [Paras 5, 6]

Impugned order set aside insofar as the reverse charge/professional charges allegation is concerned; matter remanded for reconsideration with opportunity to file additional documents and for a hearing.

Final Conclusion: Impugned order dated 29.12.2023 set aside; both defects remanded for fresh consideration after taking into account the petitioner's earlier reply and documents, permitting submission of additional documents within two weeks and directing the authority to afford a reasonable opportunity including personal hearing and to pass a fresh order within three months.

Challenge to assessment orders - statutory appeal under Section 107 of the TNGST Act, 2017 - jurisdictional validity of assessment proceedings - admission of tax liability and part payment - pre-deposit requirement for statutory appeal - invocation of extended limitation under Section 74 of the TNGST Act, 2017

Challenge to assessment orders - statutory appeal under Section 107 of the TNGST Act, 2017 - jurisdictional validity of assessment proceedings - Maintaining writ petitions under Article 226 against assessment orders where a statutory appeal is available. - HELD THAT: - The High Court found no merit in entertaining writ petitions under Article 226 challenging the impugned assessment orders for the stated assessment years because the petitioner has an alternative statutory remedy. The Court directed that grievances against the assessment orders must be agitated by filing a statutory appeal under Section 107 of the TNGST Act, 2017, rather than by invoking writ jurisdiction. The decision disposes of the petitions without adjudicating the merits of the assessments or the contentions regarding jurisdictional infirmity, leaving those matters to be considered in the statutory appellate forum.

Writ petitions dismissed with liberty to file a statutory appeal under Section 107 of the TNGST Act, 2017 within 30 days.

Pre-deposit requirement for statutory appeal - admission of tax liability and part payment - Relief from the mandatory pre-deposit condition for filing the statutory appeal. - HELD THAT: - The Court exercised its discretion to relax the pre-deposit requirement applicable to filing the statutory appeal. The mandatory requirement of pre-deposit was waived on the condition that the petitioner had already paid 10% or more of the tax for the respective assessment years during the course of inspection. The waiver is limited to that circumstance and the petitioner was given 30 days from receipt of the order to file the statutory appeal.

Pre-deposit requirement waived if the petitioner has already paid 10% or more of the tax for the respective assessment years during inspection; appeal to be filed within 30 days.

Final Conclusion: Writ petitions dismissed for want of appropriate remedy; petitioner permitted to file statutory appeals under Section 107 of the TNGST Act, 2017 within 30 days from receipt of the order, with the pre-deposit requirement waived where the petitioner has already paid 10% or more of the tax during inspection.

Order beyond the scope of the show cause notice - treating impugned order as a show cause notice - right to file a fresh reply and personal hearing before final adjudication - fresh adjudication on receipt of statutory reply within a stipulated time - setting aside assessment order and lifting of bank attachment

Order beyond the scope of the show cause notice - treating impugned order as a show cause notice - Impugned assessment order dated 09.11.2023 travelled beyond the scope of the show cause notice and is to be treated as a show cause notice. - HELD THAT: - The Court compared the terms of the show cause notice dated 20.10.2023 with the content of the impugned order dated 09.11.2023 and found a disparity between the liability proposed in the notice and the confirmed tax proposal in the order. In view of that disparity the Court accepted the petitioner's contention that the order exceeded the scope of the original notice. The High Court therefore treated the impugned order itself as a show cause notice, enabling the petitioner to address the extended ground before final adjudication. [Paras 4]

Impugned order treated as a show cause notice.

Right to file a fresh reply and personal hearing before final adjudication - fresh adjudication on receipt of statutory reply within a stipulated time - setting aside assessment order and lifting of bank attachment - Procedural relief: petitioner permitted to submit reply; respondent to afford reasonable opportunity including personal hearing and to pass fresh order within three months; bank attachment is lifted. - HELD THAT: - Following the determination that the impugned order must be treated as a show cause notice, the Court directed that the petitioner be permitted to submit a reply within three weeks from receipt of this order. Upon receipt of that reply the respondent is required to provide a reasonable opportunity, including a personal hearing, and thereafter to issue a fresh order within three months from receipt of the reply. Because the assessment order has been set aside for this purpose, the Court directed that the existing bank attachment be raised. These directions effectuate the petitioner's entitlement to a fair opportunity to be heard before final tax liability is confirmed. [Paras 5, 6]

Petitioner to file reply within three weeks; respondent to provide hearing and fresh order within three months; bank attachment lifted.

Final Conclusion: Writ petition disposed of by treating the impugned order as a show cause notice, granting the petitioner a time-bound opportunity to reply and personal hearing, directing fresh adjudication within three months thereafter, and lifting the bank attachment; no order as to costs.

Order passed against a deceased person is non est in law - Legal heirs/legal representatives' right to notice - Proceedings against successor-in-interest under statutory provision for liability of successor

Order passed against a deceased person is non est in law - Impugned demand order confirmed against the deceased dealer is invalid and liable to be set aside. - HELD THAT: - The Court finds on the admitted fact that the dealer died on 11.10.2017 and that the impugned order was passed in the name of the deceased. An order passed against a dead person is nonest in law. Consequently, the confirmation of demand in the name of the deceased cannot stand and is quashed. [Paras 9, 10, 11]

Impugned order set aside as being passed against a deceased person.

Legal heirs/legal representatives' right to notice - Proceedings against successor-in-interest under statutory provision for liability of successor - Whether respondents must issue fresh notice to the legal heirs/representatives and proceed appropriately, and whether the department may proceed under the statutory provision if successor carries on the business. - HELD THAT: - The Court directed that, because the impugned order was passed against the deceased, the respondents shall issue a common notice to the petitioner representing the other legal heirs/legal representatives within 30 days from receipt of a copy of the order. The respondents are to thereafter proceed in accordance with law if it is found that the petitioner (or any successor) is carrying on the business of the deceased. The Court noted that if the successor is carrying on the business, remedy lies for the Department to proceed under the statutory provision dealing with liability of successors. [Paras 10, 11]

Respondents directed to issue notice to legal heirs and thereafter proceed in accordance with law; departmental proceedings against a successor may be initiated under the relevant statutory provision if the successor is carrying on the business.

Final Conclusion: The writ petition is allowed to the extent that the demand order confirmed against the deceased is quashed; respondents are directed to issue a common notice to the petitioner representing other legal heirs within 30 days and thereafter proceed in accordance with law, including initiating proceedings under the statutory provision if a successor is carrying on the deceased's business.

Delegation of powers by Commissioner to Proper Officer - Designation of Proper Officer under Section 5(1) and Notification No.4 of 2017 - Definition of "Adjudicating Authority" under the TNGST Act - Validity of show cause notice - Statutory remedy of appeal under Section 107

Delegation of powers by Commissioner to Proper Officer - Designation of Proper Officer under Section 5(1) and Notification No.4 of 2017 - Definition of "Adjudicating Authority" under the TNGST Act - Validity of delegation by the Commissioner to the third respondent to pass the impugned orders - HELD THAT: - The court rejected the petitioner's contention that the Commissioner had no authority to delegate the power to the third respondent. The scheme of the GST enactment contemplates that assessments be completed by a 'proper Officer' and the Commissioner may designate officers as proper Officers as defined in Section 2(91) of the TNGST Act. Consequently, delegation made by the Commissioner by Notification No.4 of 2017 issued under Section 5(1) of the TNGST Act, appointing proper Officers, was held to be proper and valid. The challenge based on the exclusion of the Commissioner, Revisional Authority, Authority for Advance Ruling or Appellate Authority for Advance Ruling from the definition of 'Adjudicating Authority' did not render the delegation invalid in law. [Paras 4]

Delegation in terms of Notification No.4 of 2017 designating proper Officers is valid; challenge on this ground rejected and found to be without merit.

Validity of show cause notice - Statutory remedy of appeal under Section 107 - Challenge to the propriety of the show cause notice - HELD THAT: - The court declined to adjudicate the challenge to the show cause notice, observing that such issues are to be decided by the Appellate Authority. The petitioner was reminded of the availability of the statutory remedy under Section 107 of the respective GST enactments and was granted liberty to file a statutory appeal. The court therefore left the question of the notice's propriety open for determination in the appellate process. [Paras 5]

Challenge to the show cause notice left open for decision before the Appellate Authority; petitioner granted liberty to file a statutory appeal within 30 days from receipt of a copy of the order.

Final Conclusion: Writ petitions dismissed. The delegation by the Commissioner to designate proper Officers under Notification No.4 of 2017 is held valid; the challenge to the show cause notice is left to the appellate forum with liberty granted to the petitioner to file an appeal within 30 days. No costs.

Statutory appeal - pre-deposit of disputed tax - entertainment and disposal of appeal on merits - laches and delay in filing writ petition - opportunity to be heard before disposal

Pre-deposit of disputed tax - statutory appeal - Liberty to file statutory appeal subject to pre-deposit of 25% of disputed tax within 30 days - HELD THAT: - The High Court, while noting the petitioner's challenge to the impugned order dated 08.05.2023 for Assessment Year 2019-2020 and the petitioner's contention that its reply dated 15.12.2022 was not considered, granted the petitioner a limited remedy rather than dismissing the writ on grounds of delay. The Court afforded the petitioner liberty to file the prescribed statutory appeal before the Appellate Authority on condition that the petitioner makes a pre-deposit of 25% of the disputed tax within 30 days from receipt of the copy of the order. The Court imposed the pre-deposit as a condition precedent to the entertain ment of the appeal and required that both the pre-deposit and filing occur within the specified 30 day period. [Paras 8]

Petitioner permitted to file statutory appeal subject to pre-depositing 25% of the disputed tax within 30 days from receipt of the order.

Entertainment and disposal of appeal on merits - opportunity to be heard before disposal - laches and delay in filing writ petition - Appellate Authority to entertain and dispose of the appeal on merits within six months, provided pre-deposit and filing conditions are complied with - HELD THAT: - The Court directed that, upon compliance with the pre-deposit and filing requirement, the Appellate Authority shall admit and decide the appeal on merits and in accordance with law. The Court prescribed a timeline, requesting that the appeal be disposed of expeditiously and preferably within six months from the date of receipt of a copy of the order, and expressly recorded that the petitioner shall be heard before final disposal. Although the respondent urged dismissal on account of latches and relied on precedents, the Court chose to grant the procedural avenue of appeal rather than finally adjudicate delay or the substantive correctness of the impugned order. [Paras 9, 10]

Subject to compliance with the pre-deposit and filing within 30 days, the Appellate Authority shall entertain and dispose of the appeal on merits, preferably within six months, after hearing the petitioner.

Final Conclusion: Writ petition disposed by granting petitioner liberty to file the statutory appeal against the impugned order for Assessment Year 2019-2020, subject to pre-deposit of 25% of the disputed tax within 30 days; upon such compliance the Appellate Authority is directed to entertain and decide the appeal on merits, preferably within six months.

Violation of principles of natural justice - non-application of mind - remittal for fresh consideration - deposit condition for interim relief - treatment of order as addendum to show cause notice

Violation of principles of natural justice - non-application of mind - Whether the impugned Order-in-Original dated 12.02.2024 should be set aside on the ground that the earlier decision to drop part of the demand was reversed without application of mind and in violation of principles of natural justice. - HELD THAT: - The petitioner complained of violation of principles of natural justice. The Court observed that the petitioner failed to respond to subsequent notices, but also noted that the impugned order confirmed amounts which had earlier been dropped by the respondent, indicating possible non-application of mind on that aspect. In those circumstances the Court concluded that the impugned order could not be allowed to stand without fresh consideration and accordingly set aside the order to ensure the matter is reconsidered on merits and in accordance with law. [Paras 7, 8, 9]

Impugned order set aside for non-application of mind and possible breach of natural justice; matter remitted for fresh consideration.

Remittal for fresh consideration - deposit condition for interim relief - treatment of order as addendum to show cause notice - Terms on which the matter is remitted for fresh adjudication and the interim conditions to be complied with by the petitioner. - HELD THAT: - The Court directed that the matter be remitted to the respondent to pass a fresh order on merits and in accordance with law. The petitioner was required to deposit 10% of the balance disputed tax of Rs. 3,61,036/- within 30 days from receipt of the order; upon filing a reply to the Show Cause Notice and the addendum (the set-aside impugned order to be treated as addendum), and deposit of the 10% amount within the stipulated period, the respondent shall pass a fresh order on merits. The petitioner was given 30 days to file the reply to the Show Cause Notice and addendum. [Paras 9, 10, 11]

Case remitted for fresh adjudication subject to petitioner depositing 10% of the disputed tax within 30 days and filing reply to the Show Cause Notice and addendum; respondent to pass fresh order thereafter.

Final Conclusion: Writ petition disposed by setting aside the impugned Order-in-Original dated 12.02.2024 and remitting the matter to the respondent for fresh adjudication on merits in accordance with law, subject to the petitioner depositing 10% of the disputed tax and filing a reply within 30 days; no costs.

Local authority - exemption from tax for local authorities - statutory appeal under Section 107 of the CGST Act, 2017 - liberty to file delayed statutory appeal - consideration of appeal on merits

Statutory appeal under Section 107 of the CGST Act, 2017 - liberty to file delayed statutory appeal - consideration of appeal on merits - Petitioner granted liberty to file an appeal against the impugned order before the competent appellate authority despite the expiry of statutory time. - HELD THAT: - The Court observed that the petitioner ought to have filed the statutory appeal under Section 107 of the CGST Act, 2017 before the Additional Commissioner of Central Tax and Central Excise (Appeal), Trichy and that the time for filing the appeal had already expired. Exercising its supervisory jurisdiction in the writ petition, the Court declined to adjudicate the substantive claim in the writ and instead disposed of the petition by permitting the petitioner to institute the statutory appeal within a limited period. The appellate authority is directed to consider and dispose of the appeal on merits and in accordance with law. [Paras 5, 6]

Writ petition disposed by granting liberty to file the delayed statutory appeal within 15 days; the appeal to be considered and disposed of on merits and in accordance with law.

Local authority - exemption from tax for local authorities - Claim of exemption as a local body under the relevant notification not adjudicated and left for determination in the statutory appeal. - HELD THAT: - The petitioner asserted entitlement to exemption from service tax as a local body under the relevant notification read with Articles 243G and 243W of the Constitution and relied on earlier decisions of this Court in similar matters. The Court expressly refrained from delineating on the merits of that claim in this writ petition, leaving the question of entitlement to be examined afresh by the statutory appellate authority upon admission of the appeal. [Paras 3, 4, 5]

Substantive claim of exemption reserved for determination by the appellate authority in the appeal; not decided in the writ.

Final Conclusion: Writ petition disposed by permitting the petitioner to file the statutory appeal under Section 107 of the CGST Act, 2017 within 15 days from receipt of the order; the appellate authority to consider the appeal on merits and in accordance with law, while the substantive claim of exemption by the local authority remains to be determined in that appeal.

Remand for fresh consideration - quash and remand - deposit condition for interim relief - opportunity to file reply and personal hearing - treatment of order as addendum to show cause notice - time-bound disposal of reassessment proceedings - alternative remedy and limitation not an absolute bar to equitable relief

Alternative remedy and limitation not an absolute bar to equitable relief - Whether the writ petition is liable to be dismissed on the ground of existence of alternate remedy under Section 107 or on limitation. - HELD THAT: - The Court considered the respondent's contention that an alternate remedy under the statutory appellate scheme and the delay in filing the writ petition would mandate dismissal. After hearing both sides and perusal of the record, the Court did not accept that those contentions required outright dismissal of the petition. Instead, taking into account the petitioner's stated inability to furnish materials occasioned by intervening circumstances and the nature of the dispute, the Court exercised its discretionary jurisdiction to set aside the impugned order and remit the matter for fresh consideration rather than dismissing the writ on the preliminary grounds urged by the respondent. [Paras 6, 7, 9]

Contentions of alternate remedy and limitation were not allowed to result in dismissal; petition was entertained and the matter remanded for fresh consideration.

Remand for fresh consideration - quash and remand - deposit condition for interim relief - opportunity to file reply and personal hearing - treatment of order as addendum to show cause notice - time-bound disposal of reassessment proceedings - Terms on which the impugned order is set aside and the matter is remitted to the respondent for fresh adjudication. - HELD THAT: - The Court set aside the impugned order dated 30.12.2023 and remitted the matter to the respondent for fresh consideration. The impugned order was to be treated as an addendum to the original show cause notice in Form DRC-01 dated 29.09.2023. As a condition for grant of the remand, the petitioner was directed to deposit 10% of the disputed tax into the Government account from its Electronic Cash Register within 30 days of receipt of this order. The petitioner was afforded an opportunity to file a comprehensive reply along with all evidence it wished to rely on and to seek personal hearings; the respondent was permitted to extend time as may be appropriate. The respondent was expected to complete the entire reconsideration proceedings within six months from receipt of the copy of the order. [Paras 9, 10]

Impugned order quashed and remitted to the respondent for fresh adjudication on the stated terms: deposit of 10% within 30 days, filing of reply and evidence, and completion within six months; impugned order to stand as addendum to show cause notice.

Final Conclusion: Writ petition disposed of by quashing the impugned order and remitting the matter to the respondent for fresh adjudication on specified conditions (10% deposit within 30 days, opportunity to file reply and evidence, and completion within six months); no costs.

Opportunity to be heard - quashing of impugned order - fresh opportunity to reply to show cause notice - deposit of a portion of disputed tax as pre-condition - treatment of quashed order as addendum to show cause notice - direction to pass a speaking order on merits

Quashing of impugned order - opportunity to be heard - deposit of a portion of disputed tax as pre-condition - The impugned recovery order dated 26.12.2023 was quashed and the petitioner was granted a fresh opportunity to reply to the show cause notice subject to depositing 10% of the disputed tax confirmed in the impugned order. - HELD THAT: - The Court found that the dispute arose from an incorrect entry in Form GSTR-3B and noted the petitioner's plea of being a small enterprise and unaware of earlier notices. While the respondent emphasised non-cooperation and returned service, the Court exercised its discretion to afford a further chance to be heard. As a balancing measure, the Court imposed a conditional requirement that the petitioner deposit 10% of the disputed tax amount before availing the fresh opportunity. The impugned order was therefore set aside to enable reconsideration after compliance with this condition. [Paras 6]

Impugned order quashed; fresh opportunity granted to the petitioner to reply to the show cause notice on deposit of 10% of the disputed tax.

Fresh opportunity to reply to show cause notice - treatment of quashed order as addendum to show cause notice - direction to pass a speaking order on merits - The respondent was directed to treat the quashed impugned order as an addendum to the existing show cause notice and to pass a speaking order on merits within three months after the petitioner files a reply and is heard. - HELD THAT: - The Court required the petitioner to file a reply to the show cause notice in DRC 01 (Ref.No.ZD330823176794Y dated 30.08.2023) and to treat the quashed order as an addendum thereto. On fulfillment of the pre-condition, the respondent must consider the matter afresh, afford the petitioner a hearing, and record reasons in a speaking order. The time-frame for disposal is three months from receipt of a copy of the Court's order, ensuring adjudication on merits rather than summary recovery. [Paras 7, 8]

Respondent to consider the matter afresh, treating the quashed order as addendum, hear the petitioner and pass a speaking order on merits within three months.

Final Conclusion: The writ petition is disposed of by quashing the impugned recovery order and directing fresh adjudication: the petitioner may file a reply (treating the quashed order as addendum) and shall deposit 10% of the disputed tax as a pre-condition; thereafter the respondent must hear the petitioner and pass a speaking order on merits within three months.

Unexplained expenditure u/s 69C - typographical error in the audit report - reliance on subsequently filed affidavits - appreciation of evidence and remand proceedings - conduct of the assessee and concealment revealed during search

The High Court's judgment reversing the ITAT and CIT(A) orders on the basis of affidavits was quashed and set aside; the ITAT order and the Assessment Order upholding the additions as unexplained expenditure u/s 69C are restored and the appeal is allowed by SC [2023 (5) TMI 371 - SC ORDER]

HELD THAT:- Miscellaneous Application is dismissed, both on the ground of delay as also on merits.

Pending application(s), if any, stands disposed of.

Classification of payments as commission or brokerage for TDS purposes - deduction of tax at source under section 194H - principal-to-principal relationship - principal-to-agent relationship - inventory risk of distributor - link between payment to distributor and distributor's subsequent sales - liability under section 201(1) and 201(1A)

HELD THAT:- In view of the dismissal of identical matter in “The Commissioner of Income Tax (TDS) Bengaluru vs. M/s Acer India Pvt. Ltd.[2024 (3) TMI 621 - SC ORDER] instant Special Leave Petition is dismissed as being covered by the above-mentioned decision.

Pending application(s), if any, shall also stand disposed of.

Revision under Section 263 - errorous and prejudicial to the interests of revenue - reassessment under Section 143(3) invalid if revision quashed - hybrid system of accounting - mercantile system of accounting - taxation of hypothetical income versus receipt - late payment surcharge / interest on debtors - taxable on receipt - precedential effect of prior assessments and consistency of revenue view

Revision under Section 263 - reassessment under Section 143(3) invalid if revision quashed - Validity of the proceedings under Section 263 and the consequent reassessment made under Section 143(3) after the revision order was quashed - HELD THAT: - The Court held that once the order under Section 263 was quashed, the subsequent reassessment passed by the Assessing Officer could not stand because the opinion formed by the Assessing Officer (which gave rise to the revision) was not sustained. The power to revise under Section 263 vests in the Principal Commissioner only when the prescribed stipulations are satisfied; absence of such satisfaction renders any consequent order of reassessment invalid. Therefore the Tribunal's quashing of the revisionary proceedings was legally sustainable. [Paras 10]

Tribunal's quashing of the revision under Section 263 upheld; the reassessment founded on the quashed revision is invalid.

Hybrid system of accounting - mercantile system of accounting - taxation of hypothetical income versus receipt - late payment surcharge / interest on debtors - taxable on receipt - precedential effect of prior assessments and consistency of revenue view - Whether accounting for late payment surcharge/interest on debtors on cash basis by an assessee maintaining mercantile books results in taxable accrual under Section 145 - HELD THAT: - The Court accepted the Tribunal's conclusion that the amounts in question (surcharge/interest) constituted hypothetical income until actually received and therefore were not properly brought to tax merely by book entries under a mercantile system. The Court relied on the principle that income which may never materialize should not be made the subject of tax; prior judicial decisions treating such items as taxable only on receipt were noted. Further, where a consistent view favourable to the assessee had been allowed to persist across assessment years, the Revenue could not be permitted to change its stance without convincing reasons. Having found no infirmity in the Tribunal's appraisal of these factual and legal aspects, the Court declined to disturb the Tribunal's decision. [Paras 11, 12]

Tribunal's allowance of the assessee's appeal on the treatment of surcharge/interest as taxable on receipt (and not as accrual under mercantile accounting) is upheld.

Final Conclusion: The appeal filed by the Department is dismissed; the Income Tax Appellate Tribunal's order quashing the revision under Section 263 and upholding the assessee's treatment of late payment surcharge/interest on debtors on cash basis is affirmed. No costs.

Faceless assessment scheme under Section 151A - faceless issuance of notice by NFAC/National Faceless Assessment Centre - jurisdictional allocation through automated allocation - exclusion of concurrent jurisdiction between FAO and JAO - invalidity of notices issued by JAO after implementation of the Scheme

Faceless assessment scheme under Section 151A - faceless issuance of notice by NFAC/National Faceless Assessment Centre - invalidity of notices issued by JAO after implementation of the Scheme - jurisdictional allocation through automated allocation - exclusion of concurrent jurisdiction between FAO and JAO - Validity of notices and orders issued by the Jurisdictional Assessing Officer (JAO) under section 148A(b)/section 148A(d)/section 148 for AY 2017-18 after notification dated 29 March, 2022 under Section 151A. - HELD THAT: - The Court, following the co-ordinate Division Bench decision in Hexaware Technologies Ltd., held that the Scheme notified under Section 151A on 29 March, 2022 provides for faceless issuance of notices and automated allocation of jurisdiction. The Scheme assigns specific jurisdiction to the faceless authority (FAO/NFAC) for issuance of notices under Section 148 and for proceedings under Section 147 through automated allocation, thereby excluding concurrent jurisdiction of the JAO. The phrase in the Scheme referring to applicability "to the extent provided in Section 144B" relates to making assessment or reassessment and does not limit the Scheme's provision that notices under Section 148 shall be issued through automated allocation in a faceless manner. Acceptance of Revenue's contrary argument would render clause 3(b) of the Scheme otiose and frustrate the statutory scheme. In the facts of this case the impugned notices and order were issued by the JAO and, therefore, lacked jurisdiction and were illegal and invalid under the Scheme implemented pursuant to Section 151A. [Paras 5, 6, 7]

Impugned notices dated 28 March, 2024 and 24 April, 2024 and the order dated 24 April, 2024 issued by the JAO are illegal and invalid and are quashed.

Final Conclusion: Writ petition allowed; the notices and order issued by the Jurisdictional Assessing Officer for AY 2017-18 are quashed as being contrary to the faceless scheme implemented under Section 151A (notification dated 29 March, 2022); other challenges left open. No costs.

Anticipatory bail - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - willful failure to furnish foreign assets - sanction for prosecution - cooperation with investigation as bail condition

Anticipatory bail - willful failure to furnish foreign assets - sanction for prosecution - cooperation with investigation as bail condition - Grant of anticipatory bail to the applicant in connection with complaint under Sections 50 and 51 of the Black Money Act, 2015 (case No.5575/2021). - HELD THAT: - The Court heard rival contentions and materials including the allegation that the applicant, an Indian resident, was director of a foreign company and had not disclosed foreign bank accounts and related income in his returns, and that sanction for prosecution had been accorded. The applicant contested applicability of the Black Money Act to earlier years, reliance on corporate separateness, asserted non-retrospective operation of the Act and that the foreign accounts had been closed prior to the Act coming into force. Having considered the submissions and the record, the Court exercised its discretion to grant anticipatory bail. The Court imposed conditions to secure the investigation and ensure attendance: furnishing of bond and surety, cooperation with the Income Tax Department, availability for interrogation, prohibition on influencing witnesses, and restrictions on travel including surrender of passport, together with a prohibition against committing similar offences. The order records the Court's inclination to grant anticipatory bail and prescribes specific bail conditions to balance the interests of investigation and liberty. [Paras 14, 15, 16]

Anticipatory bail allowed; on arrest or surrender the applicant shall be released on bail on furnishing a personal bond with a solvent surety and subject to conditions including cooperation with investigation, availability for interrogation, non-interference with witnesses, surrender of passport and seeking permission before leaving India, and abstention from committing similar offences.

Final Conclusion: The application for anticipatory bail is allowed and the applicant is directed to be released on bail upon arrest or surrender subject to the specified bond, surety and conditions aimed at securing cooperation with the Income Tax Department and the conduct of the investigation.

Liability to deduct tax at source under Section 194H - agency relationship between assessee and franchisee/distributor - income/profit component in payments received by distributors from third parties - binding effect of Supreme Court decision in Civil Appeal No. 7257/2011 (Bharti Cellular Ltd.)

Liability to deduct tax at source under Section 194H - agency relationship between assessee and franchisee/distributor - income/profit component in payments received by distributors from third parties - Assessee is not liable to deduct tax at source under Section 194H on the income/profit component in payments received by distributors/franchisees from third parties or on sale/transfer of prepaid coupons/starter-kits. - HELD THAT: - The High Court, on admission, applied the authoritative decision of the Supreme Court in Civil Appeal No. 7257/2011 dated 28.02.2024. The Supreme Court held that where amounts received by distributors/franchisees from third parties, including proceeds from sale or transfer of prepaid coupons or starter-kits, comprise an income/profit component, the payer-assessees (cellular service providers) are not under a legal obligation to deduct tax at source under Section 194H. The Court therefore concluded that Section 194H is not attracted to the facts and circumstances of such arrangements and set aside contrary High Court decisions while dismissing appeals preferred by the Revenue.

Appeal disposed of in view of the Supreme Court's ruling that Section 194H does not apply to the payments in question; nothing survives for adjudication.

Final Conclusion: The appeal by the Revenue is disposed of in view of the Supreme Court judgment in Civil Appeal No. 7257/2011 dated 28.02.2024 holding that Section 194H is not applicable to the income/profit component of payments received by distributors/franchisees; accordingly nothing survives for adjudication.

Deemed income on cash repayment of loan in absence of borrowal on hundi - effect of revised return filed after notice under section 143(2) on assessment - appellate scrutiny of documentary evidence and confirmations furnished before assessing authority

Deemed income on cash repayment of loan in absence of borrowal on hundi - appellate scrutiny of documentary evidence and confirmations furnished before assessing authority - Addition made by assessing officer treating cash repayments as deemed income under Section 69D was deleted. - HELD THAT: - The Tribunal found no evidence that the repayments arose from borrowal on hundi or that the statutory deeming provision could be invoked. The loans in question were earlier-year opening balances and involved close relatives (wife and daughter); confirmations and statements of loan were produced by the assessee during assessment proceedings but were not considered by the lower authorities. The Assessing Officer's computation also contained an arithmetical discrepancy as his own table indicated a lower aggregate. On these facts and in the absence of material to establish borrowal on hundi or repayment otherwise than in the course contemplated by the provision, the addition under the deeming provision could not be sustained and was deleted. [Paras 10]

Addition of Rs.12,04,971/- under Section 69D deleted.

Effect of revised return filed after notice under section 143(2) on assessment - acceptance of revised return for computation where revised income already offered - Addition of Rs.1,12,000 made by assessing officer despite revised return disclosing the sum was deleted and the revised return accepted for computation. - HELD THAT: - The Tribunal noted that the assessee had filed a revised return after the notice under Section 143(2) disclosing the higher income from house property. The Assessing Officer ignored the revised return and computed income on the original return, thereby making an addition of the amount already offered in the revised return. Since the amount had been offered to tax in the revised return, it could not be treated as an unexplained addition; the revised return was directed to be accepted for computation of taxable income. [Paras 11]

Addition of Rs.1,12,000 deleted and revised return accepted for computation.

Final Conclusion: Both additions sustained by the Assessing Officer and confirmed by the CIT(A) were set aside; the appeal is allowed and the assessment order is modified by deleting the additions and accepting the revised return for computation.

Ex-parte order - reasonable cause for non-appearance - setting aside ex-parte order - opportunity of hearing - failure to adjudicate ground of appeal - remand for fresh consideration

Ex-parte order - reasonable cause for non-appearance - opportunity of hearing - setting aside ex-parte order - Ex parte order passed by CIT(A)/NFAC in respect of A.Y. 2017-18 set aside and matter remitted for fresh adjudication after affording opportunity of hearing. - HELD THAT: - The Tribunal found that the appellate authority issued multiple notices (including during the pandemic) but the assessee's counsel originally engaged suffered a family tragedy and ill health, supported by an affidavit, and the assessee thereafter appointed new authorised representative who furnished the records. On the totality of these facts the Tribunal held there was reasonable cause for non appearance and that the ex parte order was therefore unsustainable. Without deciding the merits, the Tribunal directed the CIT(A)/NFAC to decide the appeal afresh on facts and law after giving the assessee a reasonable opportunity of hearing and warned that the assessee should not seek further adjournments; the appeal was allowed (statistical). [Paras 10, 11]

Ex parte order set aside; appeal remitted to CIT(A)/NFAC for fresh decision after providing reasonable opportunity of hearing; appeal allowed for statistical purposes.

Failure to adjudicate ground of appeal - remand for fresh consideration - opportunity of hearing - Ground relating to disallowance of VAT, CGST and SGST (pertaining to A.Y. 2018-19 but paid during the year) was not adjudicated by CIT(A)/NFAC in A.Y. 2019-20 appeal and is remitted for fresh adjudication. - HELD THAT: - While confirming a separate disallowance (employees' PF) on authority, the CIT(A)/NFAC omitted to decide the ground raised by the assessee concerning the disallowance of tax dues for A.Y. 2018-19 that were paid during the year. The Tribunal held that omission to adjudicate that ground amounted to a serious error in the ex parte order. Accordingly, without addressing the merits, the matter was remitted to the CIT(A)/NFAC to decide that specific ground after affording a reasonable opportunity of hearing to the assessee, with directions to proceed in accordance with law and to expect the assessee to respond without seeking adjournments. [Paras 16, 17]

Issue remitted to CIT(A)/NFAC for fresh adjudication after providing reasonable opportunity of hearing; appeal allowed for statistical purposes to that extent.

Final Conclusion: Both appeals allowed for statistical purposes: in A.Y. 2017-18 the ex parte order of the first appellate authority is set aside and the matter is remitted for fresh decision after hearing the assessee; in A.Y. 2019-20 the appeal is remitted insofar as the CIT(A)/NFAC failed to decide the ground on disallowance of VAT/CGST/SGST (A.Y. 2018-19) and is directed to decide it afresh after affording a reasonable opportunity of hearing.

Recharacterisation of cash gift as unexplained cash credit under section 68 of the Income-tax Act, 1961 - duty of appellate authority to decide appeal on merits and apply mind under Section 251 of the Act - dismissal for non-prosecution - onus on assessee to substantiate genuineness of gift

Duty of appellate authority to decide appeal on merits and apply mind under Section 251 of the Act - dismissal for non-prosecution - Validity of CIT(A)'s dismissal of the appeal for non prosecution - HELD THAT: - The Tribunal held that although opportunities had been afforded, the CIT(A) erred in summarily dismissing the appeal for non prosecution without applying his mind to the substantive controversy arising from the assessment order. Relying on the statutory scheme embodied in the provisions governing appellate disposal and authoritative precedent, the Tribunal observed that once an appeal is preferred before the CIT(A), he is obliged to consider and decide the issues arising from the impugned order and cannot refuse disposal on merits merely because the appellant did not actively prosecute the appeal. Accordingly, the CIT(A)'s order of dismissal was set aside and the matter was directed to be disposed of on merits after affording the assessee a reasonable opportunity to be heard. [Paras 9, 10, 11]

CIT(A)'s dismissal for non prosecution quashed; matter remitted to CIT(A) to dispose of the appeal on merits after affording opportunity to the assessee.

Recharacterisation of cash gift as unexplained cash credit under section 68 of the Income-tax Act, 1961 - onus on assessee to substantiate genuineness of gift - Whether the cash gift of Rs.5,00,000 received from the father was rightly treated as unexplained cash credit under section 68 - HELD THAT: - The Tribunal did not adjudicate the substantive correctness of the addition. The assessing officer had rejected the assessee's documentary proof (confirmation of the donor, capital account and balance sheets), noting absence of corroborative documents such as the donor's returns or bank statements and that the confirmation was undated; the matter was contested before the CIT(A) but the appeal was dismissed for non prosecution. Given the impermissibility of summary dismissal, the Tribunal directed that the CIT(A) shall afford the assessee a reasonable opportunity to substantiate the claimed gift with documentary evidence and thereafter decide the issue on merits. Thus, the question of recharacterisation under section 68 is remitted for fresh consideration and adjudication by the CIT(A). [Paras 3, 4, 10]

Substantive issue of treating the cash gift as unexplained cash credit under section 68 is not finally decided and is remitted to the CIT(A) for fresh adjudication on merits after opportunity to the assessee.

Final Conclusion: The Tribunal set aside the CIT(A)'s dismissal for non prosecution and remitted the appeal to the CIT(A) to decide the merits (including the correctness of the addition under section 68 relating to the alleged cash gift) after affording the assessee a reasonable opportunity to be heard and to produce supporting evidence.

Condonation of delay - Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 - Unexplained money under section 69A of the Income tax Act - CBDT Instruction No.03/2017 - treatment of cash deposits during demonetisation for senior citizens - Preponderance of human probabilities - Discretion of the Assessing Officer in treating unexplained investments

Condonation of delay - Whether the delay of 37 days in filing the appeal should be condoned - HELD THAT: - The Tribunal considered the assessee's explanation supported by affidavit and medical particulars, the fact that communications were received by an email account which the elderly assessee did not manage actively, and the absence of deliberate or lackadaisical conduct. The Departmental Representative did not press substantial objection. Having regard to the totality of the facts and the principle that sufficient cause is to be liberally construed to further substantial justice, the Tribunal found the delay to be attributable to sufficient and reasonable cause and exercised discretion to condone the delay. [Paras 2, 4]

Delay of 37 days in filing the appeal condoned.

Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 - Whether documents produced before the Tribunal (bank certificate, past returns, ITR acknowledgements, medical certificates) should be admitted as additional evidence - HELD THAT: - The Tribunal examined why the documents were not placed before the AO/CIT(A) and accepted the explanation that they were obtained only after the appellate order. Finding that the documents bore directly on the core controversy and had a strong bearing on adjudication, the Tribunal held that they merited admission under Rule 29, notwithstanding the Departmental Representative's objection. [Paras 9, 11]

Additional evidence admitted.

Unexplained money under section 69A of the Income tax Act - CBDT Instruction No.03/2017 - treatment of cash deposits during demonetisation for senior citizens - Preponderance of human probabilities - Discretion of the Assessing Officer in treating unexplained investments - Whether the addition of Rs. 10 lakh made by the AO under section 69A is sustainable - HELD THAT: - The Tribunal confined its enquiry in light of CBDT Instruction No.03/2017 which treats cash deposits up to Rs.5 lakh (for individuals above 70 years without business income) as explainable from past savings absent adverse material. Considering the assessee's long practice as a medical practitioner, consistent filing of returns showing substantial past incomes, her advanced age and personal circumstances, the admitted operation of her bank locker on the date of deposit (certificate produced and admitted), and the cash flow evidence showing net available cash from withdrawals, the Tribunal found that the AO ought to have exercised discretion in view of the peculiar facts. Applying the principle of preponderance of human probabilities and having admitted the additional evidence, the Tribunal was not persuaded to sustain the addition. The Tribunal therefore vacated the addition made under section 69A. [Paras 19, 20, 21, 22, 23]

Addition of Rs. 10 lakh under section 69A vacated; appeal allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, admitted the additional evidence, and on merits vacated the addition of Rs. 10 lakh made under section 69A for A.Y. 2017-18, allowing the assessee's appeal.

Reopening of assessment under Section 147/148 - reason to believe - first proviso to Section 147 - failure to disclose fully and truly - borrowed satisfaction - accommodation entries / shell companies - rational nexus between material and formation of belief of escapement - verification of information received from investigation wing - assessing officer's jurisdictional limits in reopening

Reopening of assessment under Section 147/148 - reason to believe - first proviso to Section 147 - failure to disclose fully and truly - borrowed satisfaction - verification of information received from investigation wing - rational nexus between material and formation of belief of escapement - Validity of reopening the assessment for AY 2012-13 - HELD THAT: - The Tribunal held that reopening after more than four years was invalid because the Assessing Officer's reasons were based on vague information from the Investigation Wing without correlating or verifying that material with the assessee's records. The reasons recorded merely alleged that the assessee was a beneficiary of accommodation entries but did not identify the source, nature of entries, or any failure by the assessee to disclose material facts. The first proviso to Section 147 is therefore attracted where the original assessment was completed under section 143(3) and there is no allegation of non-disclosure of material facts. The Tribunal applied the established principle that 'reason to believe' must have a rational connection to the escapement and cannot rest on suspicion, rumour or borrowed satisfaction; absent such relevant material the Assessing Officer acted without jurisdiction in issuing notice under section 148. Reliance was placed on settled authorities to the effect that the statutory condition precedent for reopening must be founded on material bearing on escapement and not on unverified information. [Paras 5]

Reopening held invalid and proceedings under section 147/148 quashed

Accommodation entries / shell companies - assessing officer's jurisdictional limits in reopening - verification of creditor's identity and creditworthiness - Validity on merits of addition treating unsecured loans as bogus - HELD THAT: - On merits the Tribunal found that the assessee had furnished documentary evidence to establish the identity, creditworthiness and genuineness of the creditor and loan transactions - including audited accounts, director list, loan confirmations, bank statements, the creditor's reply to notice under section 133(6) and the creditor's own assessment order. The creditor's assessment for AY 2012-13 did not record any addition on account of unaccounted receipts, thereby supporting the genuineness of the transactions. The Assessing Officer made additions solely on the basis of information from the investigation wing without engaging with or displacing the documentary evidence produced by the assessee. In those circumstances the additions were unwarranted. [Paras 6]

Additions held unsustainable and quashed on merits

Final Conclusion: The Tribunal allowed the appeal: the reopening for AY 2012-13 was invalid for lack of lawful 'reason to believe' and the addition treating unsecured loans as bogus was unsustainable on the documentary record; the assessment is quashed.

Section 148 notice time-barred - limitation for reopening assessment - quashing of notice and consequential proceedings

Section 148 notice time-barred - limitation for reopening assessment - quashing of notice and consequential proceedings - Validity of the notice issued under section 148 for assessment year 2013-14 dated 27/28 March 2021 - HELD THAT: - The Tribunal, following the decisions of the Hon'ble Jurisdictional High Court of Orissa which applied the reasoning of the Supreme Court, held that the notice issued under section 148 on 27/28 March 2021 in respect of assessment year 2013-14 was time barred. The Tribunal accepted the assessee's submissions and the High Court precedents addressing the limitation for reopening assessments and, accordingly, concluded that the impugned notice and all consequential proceedings and orders could not be sustained and required quashing. [Paras 6, 7]

Notice under section 148 held time barred; the notice and consequential proceedings and orders quashed and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding the reopening notice issued under section 148 for AY 2013-14 to be time barred and quashed the notice and all consequential proceedings and orders.

Charitable purpose under Section 2(15) - trade, commerce or business - nominal mark up versus significantly above cost test - quantified limit in proviso to Section 2(15) - statutory authorities/public functions prima facie excluded but subject to scrutiny - annual scrutiny of receipts to ascertain breach of quantitative limit - remand for fresh examination and opportunity of hearing

Charitable purpose under Section 2(15) - trade, commerce or business - nominal mark up versus significantly above cost test - quantified limit in proviso to Section 2(15) - remand for fresh examination and opportunity of hearing - Whether the assessee's activities fall within charitable purpose or constitute trade, commerce or business and whether the proviso to Section 2(15) is breached, requiring re examination in light of the Supreme Court's observations in AUDA. - HELD THAT: - The Tribunal found that the question whether the assessee (a development authority) is engaged in trade, commerce or business or is advancing a general public utility must be examined in accordance with the tests and guidelines laid down by the Hon'ble Supreme Court in ACIT(E) v. Ahmedabad Urban Development Authority. Those conclusions require scrutiny of whether amounts charged are on cost basis or only a nominal mark up, or are markedly/significantly higher than cost, and, if so, whether the quantified limit in the proviso to Section 2(15) for the relevant year is exceeded. Although the CIT(A) had decided in favour of the assessee relying on earlier orders, the Tribunal observed that the authorities below have not applied the AUDA criteria and detailed scrutiny on record. Accordingly, the Tribunal remitted the matter to the Assessing Officer to re examine the nature of the activities, apply the AUDA tests, determine whether receipts are significantly above cost (and hence commercial), verify compliance with the proviso to Section 2(15), and pass a reasoned order after granting the assessee an opportunity of hearing and considering evidence filed before the AO. [Paras 7, 8, 9, 10]

Remitted to the Assessing Officer for fresh consideration and reasoned disposal strictly in accordance with the AUDA observations; Revenue's appeals allowed for statistical purposes.

Final Conclusion: The Tribunal allowed the Revenue's appeals for statistical purposes by remitting the question of whether the assessee's receipts/activities are charitable or commercial to the Assessing Officer for fresh adjudication in light of the Supreme Court's AUDA guidelines, with directions to afford hearing and consider evidence.

Jurisdiction under Section 263 of the Income tax Act - change of opinion - Dominant use test for classification of assets for rate of depreciation - Depreciation allowance for mixed use block of plant and machinery - Application of the principle in CIT v. Gupta Global Exim (P.) Ltd.

Jurisdiction under Section 263 of the Income tax Act - change of opinion - Validity and extent of the Pr. CIT's order under Section 263 directing restriction of depreciation to 15% on the block of plant and machinery. - HELD THAT: - The Pr. CIT initiated action under Section 263 on the basis that the assessing officer had allowed depreciation @30% on the entire block of plant and machinery despite the assessee's principal business being construction and only a small proportion of revenue arising from hiring. The Tribunal examined the material and the direction issued by the Pr. CIT. While recognising that certain assets in the block were employed in construction and others for hiring, the Tribunal held that the Pr. CIT's blanket direction to limit depreciation to 15% on the entire block was not warranted. By reference to the facts on record and the principle that the correctness of an assessment cannot be displaced merely by a change of opinion, the Tribunal modified the Pr. CIT's order to the extent that allowance of higher depreciation cannot be disallowed across the board without identifying the character and use of individual assets. [Paras 7]

Pr. CIT's order under Section 263 was modified - the blanket reduction to 15% on the entire block was set aside and limited to assets not used for hiring.

Dominant use test for classification of assets for rate of depreciation - Depreciation allowance for mixed use block of plant and machinery - Application of the principle in CIT v. Gupta Global Exim (P.) Ltd. - Whether higher rate of depreciation (@30%) is allowable on assets in a mixed use block when those assets are used for vehicle hiring, notwithstanding the relatively small share of hiring income in total revenue. - HELD THAT: - The Tribunal applied the reasoning in CIT v. Gupta Global Exim (P.) Ltd. and held that accrual of income alone is not the determinative factor; rather the purpose or dominant use to which an asset is put governs its classification for depreciation. The list of assets showed some items objectively used for construction and others for hiring. Following the Supreme Court's principle, the Tribunal concluded that assets actually used for the business of hiring are entitled to the higher rate of depreciation irrespective of the proportion of income from hiring. Accordingly, the AO was directed to allow the higher rate of depreciation on those assets which are used in the hiring business; assets used for construction only would attract the appropriate lower rate. [Paras 7]

Higher rate of depreciation is allowable on individual assets determined to be used for hiring; AO to identify dominant use of each asset and allow depreciation accordingly.

Final Conclusion: Appeal partly allowed: the Pr. CIT's order under Section 263 is modified - the AO is directed to allow higher rate of depreciation on those assets found to be used for vehicle hiring (applying the dominant use test and the principle in Gupta Global Exim), and the blanket restriction of depreciation to 15% on the entire block is set aside.

Unexplained investment - On-money payment/cash consideration - Application of Settlement Commission/Interim Board of Settlement - Burden of proof in unexplained credits - Section 69 of the Income Tax Act - Section 115BBE - enhanced tax rate applicability - Assessment under section 153C

Unexplained investment - On-money payment/cash consideration - Application of Settlement Commission/Interim Board of Settlement - Section 69 of the Income Tax Act - Burden of proof in unexplained credits - Whether the differential cash consideration for purchase of land constituted unexplained investment taxable in the hands of the society or was paid by its office-bearers out of their undisclosed income and hence not taxable in the hands of the society - HELD THAT: - The Tribunal examined the seized sale deed, the mobile image found from an office-bearer's device, the settlement applications and cash-flow statements filed by the two trustees and the interim order of the Interim Board of Settlement (IBS). The IBS recorded that the society had no income to pay for the purchase and accepted that the office-bearers had applied their undisclosed income for the land purchase; it also noted that if office-bearers paid from their own sources and did not claim reimbursement, it would not be an undisclosed investment of the society. The Tribunal observed that the CIT(A)'s direction to examine applicability of sections 271D/271E itself indicates acceptance that funds were sourced from the trustees, and that the seized working showing on-money corroborates the trustees' claim. The Tribunal held that (a) there was no record suggesting unaccounted income of the society itself; (b) the IBS accepted capitalization of the trustees' disclosed amounts and considered utilization for the land purchase; and (c) revenue did not controvert the IBS finding with contrary material. On this basis, and applying the evidentiary material before it, the Tribunal concluded the cash differential was sourced from the trustees and therefore could not be treated as unexplained investment of the society under section 69. [Paras 15]

Addition under section 69 in the hands of the society is deleted; ground allowed.

Section 115BBE - enhanced tax rate applicability - Assessment under section 153C - Whether the amended higher rate under section 115BBE (60%) as substituted by the Taxation Laws (Second Amendment) Act, 2016 applies to the assessment year(s) in question - HELD THAT: - The Tribunal treated this ground as consequential to the primary finding on source of funds. Because the Tribunal allowed deletion of the addition in the hands of the society, tax computation under section 115BBE was not required to be adjudicated. The Tribunal expressly recorded that the consequential ground need not be decided. [Paras 16]

Consequential issue on applicability/quantification under section 115BBE not adjudicated.

Final Conclusion: Both appeals are partly allowed: the addition made under section 69 in the hands of the society is deleted on the finding that the differential cash payment for the land was sourced from the trustees and was accepted by the Interim Board of Settlement; the consequential issue regarding tax rate under section 115BBE was not adjudicated.

Confiscation of seized goods - proof of foreign origin - hearsay evidence inadmissible without corroboration - burden shifting upon production of invoices - penalty under Section 112(b) of the Customs Act, 1962

Confiscation of seized goods - proof of foreign origin - hearsay evidence inadmissible without corroboration - Seized gold bars were not shown to be of foreign origin or smuggled and therefore were not liable to confiscation. - HELD THAT: - The Tribunal examined the material relied upon by the Revenue - the appellant's two statements, the alleged supplier's account as told to the appellant, and call detail records. The first statement recorded an account that the gold was smuggled and markings erased, but that account was based on what the appellant said he was told by the supplier; accordingly it amounted to hearsay. Hearsay evidence cannot prove the fact of smuggling unless corroborated by substantive evidence. The Revenue failed to produce testimony or other direct evidence from the alleged supplier (Sri Bablu) or from the alleged recipient (Sri Pramod), and did not otherwise bring evidence establishing illegal import or erasure of foreign markings. The call records showing travel between cities did not prove foreign origin or illegal import. Conversely, the appellant produced two purchase invoices and bank transaction entries, the genuineness of which the Revenue did not dispute; on that basis the appellant discharged his initial onus of showing ownership and purchase. Thereafter the burden rested on the Revenue to show that the invoices did not relate to the seized gold, which it failed to do. In these circumstances the conclusions in the adjudication and appellate orders rested on presumptions and uncorroborated statements rather than substantive evidence and therefore could not sustain confiscation. [Paras 11, 12, 13, 14, 15]

Confiscation cannot be sustained; seized gold not proved to be smuggled or of foreign origin.

Penalty under Section 112(b) of the Customs Act, 1962 - burden shifting upon production of invoices - The penalty imposed under Section 112(b) was set aside as it depended on the finding of confiscation which the Tribunal found unsustainable. - HELD THAT: - The Tribunal held that once confiscation is not established on the facts and evidence, the consequential imposition of penalty under Section 112(b) cannot stand. Because the Revenue did not discharge the requisite burden to prove smuggling or that the invoices were unrelated to the seized gold, the foundational finding required to sustain the penalty was absent, and the penalty was therefore liable to be quashed. [Paras 15]

Penalty under Section 112(b) set aside as consequential on the quashing of confiscation.

Final Conclusion: Appeal allowed; confiscation set aside for want of substantive corroborative evidence of smuggling and foreign origin, and consequential penalty under Section 112(b) quashed; appellant entitled to consequential relief.

Provisional assessment under section 18 - power to recover duty under section 28 - principles of natural justice - fraud and collusion vitiating proceedings - confiscation and penalty contingent on final assessment - verification under international trade agreement certification

Provisional assessment under section 18 - power to recover duty under section 28 - confiscation and penalty contingent on final assessment - Validity of invoking Section 28 to demand differential duty (and consequential confiscation/penalty) where Bills of Entry were provisionally assessed under Section 18 - HELD THAT: - The Tribunal held that Section 28 is a remedial power to review and recover duty only after assessment is finalised; where assessment remains provisional under Section 18, initiation of demand proceedings under Section 28 is legally impermissible. The statutory scheme contemplates that the "relevant date" for issuance of a Section 28 notice in cases provisionally assessed arises only after final assessment/adjustment. Consequently, a demand-cum-show-cause issued under Section 28 prior to finalisation of provisional assessments is premature and without jurisdiction. The Tribunal relied on the scheme of the Act and consistent decisions of higher and coordinate courts which held that confiscation, penalty or interest premised on short-levy cannot be invoked until final assessment is rendered and the requisite legal threshold for Section 28 is crossed. [Paras 4, 5, 7, 8]

Demand under Section 28 (and attendant confiscation/penalty consequences) premised on provisionally assessed Bills of Entry is not maintainable; impugned demand set aside.

Principles of natural justice - provisional assessment under section 18 - Whether adjudication ex parte without granting a reasonable and definite opportunity to pursue Settlement Commission or to make submissions violated principles of natural justice - HELD THAT: - The Tribunal observed that procedural fairness requires that appellants be afforded a reasonable opportunity to demonstrate attempts to pursue alternate remedies such as settlement and to test the probative value of co-noticees' statements before a decision resulting in confiscation and penalties is taken. Where a party had sought time to approach the Settlement Commission and had made a pre-deposit, the adjudicating authority should have required proof of bona fide steps within a definite timeline rather than proceed on presumption of delay. Natural justice was thus not satisfied where the matter was adjudicated ex parte without affording a meaningful, time-bound opportunity to pursue settlement or to challenge inculpatory material relied upon by revenue. [Paras 6]

Adjudication in the circumstances offended principles of natural justice; the ex parte decision could not be sustained.

Fraud and collusion vitiating proceedings - verification under international trade agreement certification - power to recover duty under section 28 - Whether alleged fraud, collusion or admissions recorded (including statements under Section 108) justified bypassing finalisation of provisional assessment and invoking Section 28 immediately - HELD THAT: - The Tribunal accepted that proven fraud can vitiate proceedings, but emphasized that revenue bears the onus to establish undervaluation by legally acceptable means and that admissions or alleged incriminating material relied upon must be tested in accordance with law. Where declared values were supported by certificates under an international trade agreement (e.g., Indo-Sri Lanka FTA) and revenue did not undertake the prescribed verification with the foreign authority, the allegation of fraud could not be sustained to justify a premature Section 28 notice. In parts of the case where no direct evidence challenged declared values, the proper course was to finalise provisional assessment first and then, if required, invoke recovery provisions. Hence judgments relied upon by revenue on fraud were held not to be applicable on these facts. [Paras 7, 8]

Allegations of fraud/collusion did not justify issuing a Section 28 notice before finalisation of provisional assessments; reliance on unverified certificates and untested admissions rendered the premature invocation of Section 28 unsound.

Final Conclusion: The impugned adjudication is set aside: demands under Section 28, confiscation and penalties sustained on that basis fail; appellants entitled to consequential relief and refund/adjustment of deposits as per law; appeals allowed.

Classification as parts of Heading 8517 - populated printed circuit boards as parts by application of Section Note 2(b) to Section XVI - General Rules of Interpretation Rule 1 and Rule 2(a) - essential character test - composite machine and Section Note 3 to Section XVI - proprietary modular cards and inability to function independently - distinction between Network Interface Cards and proprietary line/OTN cards

Classification as parts of Heading 8517 - populated printed circuit boards as parts by application of Section Note 2(b) to Section XVI - proprietary modular cards and inability to function independently - distinction between Network Interface Cards and proprietary line/OTN cards - General Rules of Interpretation Rule 2(a) - essential character - Section Note 3 to Section XVI - composite machine - Subject transponder, muxponder and optical splitter cards imported for use in ZTE ZXONE 8000 are classifiable as parts under CTI 8517 70 90 and not as complete apparatus under CTI 8517 62 90. - HELD THAT: - The Tribunal determined the classification issue by applying statutory notes, HSN Explanatory Notes and prior authoritative decisions. The subject cards are populated PCBs designed to be slotted into dedicated proprietary slots of the optical transport network (OTN) chassis and derive power and intelligence from the main equipment; they cannot function independently or with other vendors' chassis. Populated PCBs are specifically recognised as parts by Section Note 2(b) to Section XVI and by HSN Explanatory Notes; consequently Sub heading 8517 70 (which expressly identifies populated, loaded or stuffed printed circuit boards) is the apt classification. The Tribunal applied the twin tests previously articulated in Vodafone Idea (no separate identifiable function; incapable of operating independently) and found both satisfied by the subject cards, aligning the case with earlier Tribunal decisions (including Reliance Jio and Ciena Communications) which classified similar OTN/DWDM cards as parts under 8517 70. The Principal Commissioner's reliance on GRI Rule 2(a) (essential character) was rejected because the cards lack the capacity to function as complete apparatus on their own and were not imported as a collective finished machine; Rule 2(a) therefore cannot convert incomplete populated PCBs into complete machines for classification. Reliance on Section Note 3 to treat the main equipment as a composite machine was also held to be misplaced because the main equipment does not consist of two or more distinct machines performing complementary or alternative functions. The Tribunal further rejected the analogy to Network Interface Cards (NICs): NICs perform translation functions enabling a complete computer to attach to a network and possess separate identifiable functions, whereas the subject proprietary cards are integral, non interchangeable modules essential to operation of the specific OTN chassis and thus differ from NICs for classification purposes. In view of these reasons and consistent authority, the subject cards are classifiable as parts under CTI 8517 70 90.

Impugned order classifying the cards under CTI 8517 62 90 set aside; cards held classifiable under CTI 8517 70 90 as parts.

Final Conclusion: The appeal is allowed: the transponder, muxponder and optical splitter cards are parts (populated PCBs) of the OTN equipment and are classifiable under CTI 8517 70 90; the Principal Commissioner's classification under CTI 8517 62 90, and the consequent demand, is set aside.

Maintainability of Section 9 application - threshold debt under Section 4 - computation of claim including interest - binding effect of judicial admission and decree on quantum

Maintainability of Section 9 application - threshold debt under Section 4 - computation of claim including interest - binding effect of judicial admission and decree on quantum - Whether the application under Section 9 of the Insolvency and Bankruptcy Code is maintainable having regard to the threshold of Rs. 1 crore when interest admitted in prior suit and decreed at 18% reduces the recoverable amount below the statutory threshold. - HELD THAT: - The Appellate Tribunal examined the quantum claim in light of the respondent's own statements in the prior suit and the decree passed by the High Court. The respondent had, in his examination-in-chief, admitted receipt of part payment and stated the balance as comprising a principal and interest calculated at 18% per annum; the High Court granted interest at 18% per annum in its decree. Given that the respondent had itself claimed and obtained interest at 18%, it was not permissible for him to assert a higher rate of 24% for computing the claim under Section 9. Applying the rate and amounts as admitted and decreed, the remaining recoverable sum falls short of the Rs. 1 crore threshold prescribed by Section 4; accordingly the Section 9 application is not maintainable. The Tribunal accepted the appellant's charted calculation based on the admitted/decreed interest and set aside the impugned admission order on that ground, while leaving open the IRP's statutory remedies. [Paras 11, 12]

Application under Section 9 is not maintainable because, on the basis of the respondent's admission and the High Court decree awarding interest at 18% p.a., the claim falls below the Rs. 1 crore threshold; impugned order set aside.

Final Conclusion: The appeal is allowed; the order admitting the Section 9 application is set aside as the claim, when computed in accordance with the respondent's admission and the decree (interest at 18% p.a.), does not meet the Rs. 1 crore threshold. The IRP may file appropriate applications for his dues before the Adjudicating Authority in accordance with law.

Date of default - Section 10A suspension and proviso barring applications for defaults during the period - fresh defaults as independent events constituting separate defaults - amendment of pleadings/Form 1 in proceedings under Section 7 - adjudicating authority's limited role to determine existence of debt and default - admission of debt and default in pleadings

Maintainability of fresh Section 7 petition despite prior dismissal - Maintainability of the appeal and of filing a fresh Section 7 petition after this Tribunal had granted liberty to file a fresh application. - HELD THAT: - This Tribunal had earlier dismissed the first appeal but expressly granted liberty to the financial creditor to file a fresh Section 7 application and stated it would not express any view on merits. The Tribunal held that the prior dismissal of the earlier application did not preclude the Appellant from filing a fresh petition complying with that liberty. The fresh petition corrected earlier technical errors and therefore the appeal is maintainable on this ground. (See paras 22 and 30.) [Paras 22, 30]

Appeal maintainable; prior dismissal did not bar filing of a fresh Section 7 petition when liberty had been granted and the fresh petition complies with that direction.

Admission of debt and default in pleadings - adjudicating authority's limited role to determine existence of debt and default - Effect of the corporate debtor's admissions and the standard for admission under Section 7. - HELD THAT: - The corporate debtor, through its counter affidavit, admitted borrowing and defaulting post September 2020 and expressly stated that admission of the Section 7 application would be beneficial. The Tribunal reiterated that the Adjudicating Authority's role under Section 7 is confined to satisfaction as to existence of debt and default, and once satisfied there is little discretion to refuse admission. Given the respondent's admissions and documentary record, the condition for admission under Section 7 is fulfilled. (See paras 23 and 25-26.) [Paras 23, 25, 26]

The admitted debt and default satisfy the Section 7 threshold; the Adjudicating Authority should admit the application once debt and default are established.

Section 10A suspension and proviso barring applications for defaults during the period - fresh defaults as independent events constituting separate defaults - Whether a fresh Section 7 petition is barred by Section 10A when it relies on defaults occurring after the Section 10A suspension period. - HELD THAT: - Section 10A barred initiation of CIRP for defaults occurring during the specified suspension period; however, the proviso does not extinguish the debt and does not bar actions based on defaults that occur after the suspension period. The Tribunal found material (statement of account) showing defaults continued beyond the Section 10A period and that each missed instalment under the loan agreement constitutes a fresh, independent default. In such circumstances, a petition based on defaults occurring after the suspension period is not barred by Section 10A and is maintainable. The Tribunal relied on precedents interpreting Section 10A and on the contractual clause treating each instalment default as a separate event. (See paras 27-28 and 29.) [Paras 27, 28, 29]

Section 10A does not bar a petition based on fresh defaults occurring after the suspension period; the fresh defaults alleged here make the Section 7 petition maintainable.

Amendment of pleadings/Form 1 in proceedings under Section 7 - date of default - Permissibility of amending the date of default in a Section 7 petition or filing a fresh petition correcting the date of default. - HELD THAT: - The Tribunal observed that there is no bar to amending pleadings or filing additional documents in a Section 7 application where material supports a different date of default; it referred to the principle that pleadings in Form 1 may be amended (as in Dena Bank) and to authorities treating each EMI default as a fresh cause of action. The Tribunal rejected the Adjudicating Authority's reliance on Ramesh Kymal (concerned with Section 9) as not determinative here, and held that correcting the date to reflect fresh defaults outside the Section 10A period is permissible where supported by account records. (See paras 24, 26 and 27-28.) [Paras 24, 26, 27]

Amendment or correction of the date of default in a Section 7 petition is permissible where supported by material showing fresh defaults; such corrections do not defeat maintainability.

Final Conclusion: The appeal is allowed. The Impugned Order dated 08.05.2023 is set aside. The Section 7 application filed by the financial creditor is admitted and the Adjudicating Authority is directed to take up the matter within 10 days to initiate the Corporate Insolvency Resolution Process in accordance with the IBC; no order as to costs.

Interference with High Court orders - Effect of acquittal in predicate offence - Condonation of delay

Interference with High Court orders - Effect of acquittal in predicate offence - Whether the Supreme Court should interfere with the High Court's orders in view of the respondent's acquittal in the predicate offence. - HELD THAT: - The Court noted that it was not inclined to interfere with the impugned orders of the High Court. The reasoning given emphasises that interference was unwarranted particularly because the respondent had already been acquitted in the predicate offence, which undercuts the basis for upsetting the High Court's decision. On this basis the Special Leave Petitions were dismissed.

Special Leave Petitions dismissed and the impugned High Court orders left undisturbed.

Condonation of delay - Condonation of delay in filing the Special Leave Petitions. - HELD THAT: - The Court recorded that the delay was condoned. No further reasoning on delay was provided, the order simply notes that delay in filing was excused before addressing the merits.

Delay condoned.

Final Conclusion: Delay in filing was condoned and, on the merits, the Supreme Court declined to interfere with the High Court's orders and dismissed the Special Leave Petitions in view of the respondent's acquittal in the predicate offence; pending applications stand disposed of.

Interference with impugned judgment - dismissal of special leave petition - initiation of proceedings under the Prevention of Money Laundering Act, 2002 - no bar on subsequent prosecution under statutory provisions

Interference with impugned judgment - dismissal of special leave petition - Whether the Court should interfere with the impugned judgment in the special leave petition. - HELD THAT: - The Court, upon hearing counsel, declined to interfere with the impugned judgment and found no ground to grant relief in the special leave petition. No further reasons are recorded in the order beyond the Court's unwillingness to disturb the impugned decision.

Special leave petition dismissed; the impugned judgment is not interfered with.

Initiation of proceedings under the Prevention of Money Laundering Act, 2002 - no bar on subsequent prosecution under statutory provisions - Whether the impugned judgment operates as a bar to the Directorate of Enforcement initiating proceedings under the Prevention of Money Laundering Act, 2002. - HELD THAT: - The Court expressly clarified that its dismissal of the special leave petition does not preclude the Directorate of Enforcement from subsequently initiating appropriate proceedings in accordance with the PMLA, 2002. The clarification leaves open the statutory rights and procedures available to the Enforcement Directorate to take action under the Act.

Clarification that the impugned judgment will not prevent the Directorate of Enforcement from initiating PMLA proceedings in accordance with law.

Final Conclusion: SLP dismissed; clarification issued that the dismissal does not bar the Directorate of Enforcement from initiating appropriate proceedings under the Prevention of Money Laundering Act, 2002; pending applications disposed of.

Interim bail on medical grounds - discretionary power to grant bail under the proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002 - 'sick' or 'infirm' threshold for medical bail - specialised or sustained treatment not available in jail - dietary requirements post bariatric surgery - fundamental right to adequate medical treatment in custody

Interim bail on medical grounds - 'sick' or 'infirm' threshold for medical bail - specialised or sustained treatment not available in jail - dietary requirements post bariatric surgery - Entitlement of the petitioner to interim bail on medical grounds in light of post bariatric surgery multi morbidities and the ability of jail facilities to provide required care and diet - HELD THAT: - The Court analysed medical records including the Jail Medical Status Report, the AIIMS Medical Board report dated 14.06.2024 and the treating hospital prescription dated 21.06.2024 and found that the petitioner is an operated case of bariatric sleeve gastrectomy with multiple comorbidities and episodic blood streaked vomiting. The determinative question was whether the petitioner's condition is such that adequate, specialised or sustained treatment and strict dietary regimen necessary for recovery cannot be provided in the jail healthcare facility. Applying established principles that bail on medical grounds is discretionary and available where the ailment is of a gravity or requires specialised care not available in custody, the Court concluded that the petitioner's post operative dietary and monitoring needs (including minute to minute monitoring and emergency response) cannot be met in the present jail set up and that providing home cooked food on a sustained basis poses practical difficulties. The Court noted that the petitioner's medical condition could impede recovery if the prescribed diet is not provided and that there was no material to suggest risk of interference with investigation by granting limited interim bail. [Paras 13, 14, 20, 21]

Interim bail on medical grounds is warranted as the petitioner's post surgical medical and dietary needs cannot presently be met in jail; the petitioner is entitled to release for a limited period.

Discretionary power to grant bail under the proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002 - conditions of interim bail - fundamental right to adequate medical treatment in custody - Terms and duration of interim bail to be granted on medical grounds - HELD THAT: - Balancing the petitioner's medical needs against the investigational interests, the Court exercised its discretionary power under the proviso to Section 45(1) PMLA and ordered interim bail for six weeks from the date of release. The Court imposed standard protective conditions to secure attendance and prevent tampering with evidence, including furnishing personal bond with surety, appearance as and when directed, provision and maintenance of a working mobile number for the investigating officer, informing IO and Court of any change of address, surrender of passport, prohibition on leaving the country, and non interference with prosecution witnesses or evidence. The Court also clarified that no further relief shall be granted on the same grounds in the present application. [Paras 22]

Interim bail granted for six weeks subject to specified conditions (bond with surety, appearance, contact and travel restrictions, non interference and other standard conditions).

Final Conclusion: The petition for interim bail on medical grounds is allowed for six weeks: the Court found that the petitioner's post bariatric surgical condition and prescribed dietary and monitoring needs cannot be met in the jail presently, and granted limited interim bail subject to specified protective conditions.

Proceeds of crime - scheduled offence - offence of money-laundering - attachment of property involved in money-laundering - dependency of PMLA proceedings on existence of scheduled offence

Proceeds of crime - scheduled offence - offence of money-laundering - dependency of PMLA proceedings on existence of scheduled offence - Whether acquittal of the accused in the predicate scheduled offence and quashing of the related criminal proceedings extinguish attachment and other proceedings under the PMLA, 2002. - HELD THAT: - The Court examined the definition of "proceeds of crime" and the offence of money-laundering under the PMLA, 2002, and relied on authoritative precedents holding that an offence under Section 3 is dependent on illegal gain derived from criminal activity relating to a scheduled offence. If the scheduled offence is finally discharged, quashed or the accused acquitted, the foundational predicate for treating any property as "proceeds of crime" ceases to exist and consequential PMLA proceedings cannot survive. Applying these principles to the facts, the Trial Court had acquitted the principal accused in the scheduled offence and this Court subsequently quashed the ECIR and related proceedings; therefore the attachment and confirmation orders premised on the existence of proceeds of crime had lost their foundation and were unsustainable. The Court invoked the legal principle that removal of the foundational predicate collapses consequential proceedings under the PMLA and set aside the Appellate Tribunal's order confirming the provisional attachment. [Paras 26, 33, 40, 41, 44]

Acquittal/quashing of the scheduled offence extinguishes the basis for PMLA proceedings; the confirmation order and provisional attachment are quashed.

Attachment of property involved in money-laundering - dependency of PMLA proceedings on existence of scheduled offence - Whether adjudication of the appeals should be deferred because the Supreme Court had a pending matter on the survival of PMLA proceedings upon acquittal in a scheduled offence. - HELD THAT: - The respondent sought deferment citing a pending Supreme Court proceeding. The Court held that pendency of a Special Leave Petition does not ipso facto stay adjudication of similar matters in the High Court, particularly where the legal position is no longer res integra in light of binding precedents. Relying on the principle that High Courts must decide cases on the law as it stands and not await unresolved references or review petitions unless specifically directed, the Court refused to defer hearing and proceeded to decide the appeals on merits. [Paras 22, 42]

No deferment; the appeals were adjudicated notwithstanding the pending Supreme Court matter.

Final Conclusion: The appeals are allowed; the Appellate Tribunal's order dated 09.03.2015 is set aside and the confirmation order dated 04.02.2011 together with the provisional attachment order dated 09.09.2010 in ECIR/7/DZ/2008 are quashed.

Rebate of service tax/refund under Notification No.41/2012-ST - legitimacy of exports and illicitly sourced goods - Ex turpi causa non oritur actio - public purpose of export incentive under Section 93A - forum/maintainability - appeal before CESTAT versus revision under Section 35EE

Rebate of service tax/refund under Notification No.41/2012-ST - legitimacy of exports and illicitly sourced goods - public purpose of export incentive under Section 93A - Entitlement to rebate/refund of service tax claimed under Notification No.41/2012-ST in respect of exports made from garnets sourced from allegedly illegally mined beach sand. - HELD THAT: - The Court held that export incentives under Notification No.41/2012-ST and the public interest object of Section 93A are intended to incentivise legitimate exports only. Where exported goods are proceeds of illegal activity (here, mining and transport contrary to the State G.O.), the claimant cannot be granted rebate of service tax on services used for that export. The Court applied the principle Ex turpi causa non oritur actio to hold that export incentives should not enure to a party deriving benefit from illegal mining and illicit transport. The fact that Customs had not initiated punitive proceedings or had processed shipping bills did not, ipso facto, entitle the petitioner to the rebate; legitimacy of the exports and source of goods were determinative for the rebate claim and, on the facts found by the Original and Appellate Authorities, the petitioner's claims were rightly rejected. [Paras 32, 33, 34, 35, 36]

Rebate/refund claims in respect of the listed periods were rightly denied because the exports were found to be from illegally mined/transported beach sand and therefore not eligible for incentive.

Legitimacy of exports and illicitly sourced goods - Ex turpi causa non oritur actio - Applicability of the CESTAT decision in V.V. Minerals to the petitioner's case. - HELD THAT: - Although the CESTAT in V.V. Minerals set aside a rejection where the Revenue did not show contravention of the Finance Act or the Notification, the High Court distinguished that decision on the peculiar facts of this case. The Court observed that here the same person (the Managing Director) was the proprietor of the concern engaged in alleged illicit mining and the corporate veil could be pierced to show that the perpetrator of the illegal activity and the exporter were effectively the same. For that reason the Tribunal's reasoning was not held to be applicable to the petitioner's facts and did not afford entitlement to rebate. [Paras 29, 30, 31, 32]

The V.V. Minerals decision was not applied to grant relief because the facts showed the exporter and the perpetrator of the alleged illegal mining were the same person.

Forum/maintainability - appeal before CESTAT versus revision under Section 35EE - Maintainability of petitioner's approach to the Revisional Authority instead of filing appeal before the CESTAT. - HELD THAT: - The Court recorded that the petitioner had invoked revision under Section 35EE instead of pursuing the statutory appellate remedy before the CESTAT under the proviso to Section 86 of the Finance Act. The Court noted that the petitioner had approached the Revisional Authority and that the Revisional Authority had decided on merits. Given the lateness of proceedings and the factual findings against the petitioner, the High Court declined to remit the matter to the alternate forum and treated the writ petitions as liable to be dismissed. The judgment therefore addresses maintainability but, on the facts and in exercise of discretion, does not order relegation to the CESTAT. [Paras 16, 17, 37, 38]

Petitioner had approached the wrong forum; having considered the matter and found no merit, the Court dismissed the writ petitions rather than directing a forum change.

Final Conclusion: The writ petitions are dismissed. The Court upheld the denial of rebate/refund for the stated periods on the ground that the exports were illegitimate (proceeds of illegal mining/transport) and thus ineligible for incentives under Notification No.41/2012 ST; the decision in V.V. Minerals was distinguished on the facts; and the petitioner's invocation of the Revisional Authority in place of the CESTAT did not afford relief.

Levy of service tax on composite/indivisible works contracts - Temporal application of definition of Works Contract Services from 01.06.2007 - Non-applicability of service tax to builders/promoters for construction of residential projects prior to 01.07.2010 - Classification of composite contracts under Works Contract Services for periods prior to 01.07.2012 - Clarificatory effect of Board Circular No.108/02/2009 on liability of promoters/developers - Application of Larsen & Toubro precedent

Temporal application of definition of Works Contract Services from 01.06.2007 - Levy of service tax on composite/indivisible works contracts - Application of Larsen & Toubro precedent - Demand of service tax in respect of composite/indivisible contracts for the period up to 01.06.2007 cannot be sustained. - HELD THAT: - The Tribunal applied the principle in Larsen & Toubro that, prior to introduction of a specific charging provision for works contracts, composite indivisible contracts involving both material supply and services could not be subjected to service tax. The definition of Works Contract Services came into force with effect from 01.06.2007; accordingly demands for periods before that date based on classification as works contract or as construction services are not maintainable. On this basis the demand relating to the earlier part of the assessed period was set aside. [Paras 10]

Demand for the period up to 01.06.2007 set aside.

Non-applicability of service tax to builders/promoters for construction of residential projects prior to 01.07.2010 - Clarificatory effect of Board Circular No.108/02/2009 on liability of promoters/developers - Demand of service tax against a promoter/developer/builder for construction of residential projects prior to 01.07.2010 cannot be sustained. - HELD THAT: - The Tribunal relied on Board Circular No.108/02/2009 and preceding Tribunal decisions (notably Krishna Homes and the appellant's sister concern) holding that promoters/developers who engaged contractors were not liable to pay service tax for construction of residential complexes prior to the statutory explanation added w.e.f. 01.07.2010. Applying those precedents and the Board's clarificatory position, the impugned demand in respect of construction of residential projects for the period before 01.07.2010 was held unsustainable and set aside. [Paras 11]

Demand against promoter/developer/builder for residential construction prior to 01.07.2010 set aside.

Classification of composite contracts under Works Contract Services for periods prior to 01.07.2012 - Levy of service tax on composite/indivisible works contracts - Demand raised under Commercial or Industrial Construction Services and Construction of Residential Services for composite contracts prior to 01.07.2012 cannot be sustained and, insofar as composite contracts are concerned, any demand would lie only under Works Contract Services. - HELD THAT: - The Tribunal followed its earlier decisions (Real Value Promoters; Jain Housing) and the subsequent affirmation at the Apex Court level that where contracts are composite in nature the levy cannot be sustained under CICS/CCS/RCS for the period prior to 01.07.2012; such composite contracts are to be examined in the context of Works Contract Services. Consequent to that legal position, demands framed under the construction service heads for composite contracts were held unsustainable and were set aside. [Paras 12]

Demand under CICS/CCS/RCS for composite contracts prior to 01.07.2012 set aside; such contracts fall to be considered under Works Contract Services.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the service tax, interest and penalties demanded against the appellant for the period 2004-05 to 2008-09 cannot be sustained for the reasons stated above, with consequential reliefs, if any.

Construction of Complex Service - Works Contract Services - composite contract - liability of promoter/developer/builder prior to 01.07.2010 - Board s Circular No.108/02/2009-ST dated 29.01.2009

Construction of Complex Service - composite contract - liability of promoter/developer/builder prior to 01.07.2010 - Board s Circular No.108/02/2009-ST dated 29.01.2009 - Works Contract Services - Sustainability of the demand of service tax, interest and penalty for the period June 2009 to June 2010 against the appellant-promoter/developer/builder - HELD THAT: - The Tribunal applied the Board s Circular dated 29.01.2009 and its earlier decision in the appellant s own case to hold that a promoter/developer/builder is not liable to pay service tax for construction of residential complexes for the period prior to 01.07.2010. The Tribunal further noted that where the contracts are composite in nature the tax demand cannot be sustained under the head of Construction of Complex Service (or Commercial/Industrial Construction Services) and, insofar as composite contracts are concerned, any tax liability for the activity could only be examined under Works Contract Services. Relying on the decisions in Real Value Promoters Pvt. Ltd. and those following it (including Jain Housing and Construction Ltd.), and on the Board circular and the Tribunal s prior order in the appellant s case, the bench found no ground to take a different view and therefore held that the demand, interest and penalty for June 2009 to June 2010 could not be sustained. [Paras 7, 8, 9]

The demand of service tax, interest and penalty for the period June 2009 to June 2010 is set aside; the impugned order is modified and the appeal is allowed with consequential reliefs.

Final Conclusion: The appeal is allowed: the demand of service tax, interest and the penalty under Section 78 for the period June 2009 to June 2010 is set aside, following the Board s Circular dated 29.01.2009 and Tribunal precedent on composite contracts and promoter/developer liability prior to 01.07.2010.

Exemption for services to the United Nations and specified international organisations - Exemption under Notification No. 16/2002-ST and Notification No. 25/2012-ST - Exemption for services to educational institutions under mega-exemption notification - SEZ ab-initio exemption and procedural conditions for authorisation and Form A series - Place of provision of services and non-applicability of service tax to Jammu & Kashmir - Extended period of limitation under section 73(1) - requirement of positive act, collusion or wilful suppression - Penalties under sections 77 & 78 - necessity of evidence of deliberate suppression or intent to evade - Self-assessment regime and onus of correct tax disclosure

Exemption for services to the United Nations and specified international organisations - Exemption under Notification No. 16/2002-ST and Notification No. 25/2012-ST - Entitlement to exemption for services provided to UN agencies (UNDP, UNICEF, UN Women, UN AIDS, UNODC, UNOPS) - HELD THAT: - The Tribunal examined Notification No.16/2002-ST (pre-01.07.2012) and Notification No.25/2012-ST (mega exemption) and the scope of the United Nations (Privileges and Immunities) Act, 1947. It held that the United Nations and its representatives/offices (including Funds, Programmes, Departments, Offices and other UN entities operating in India) are covered by the exemption granted to the United Nations under the notifications. The reference to section 3 of the 1947 Act and the concept of 'specified international organisations' is distinct and does not limit the exemption available to the United Nations itself. The Tribunal therefore accepted that services rendered to the named UN agencies qualify for exemption under the applicable notifications and set aside the demand insofar as those services are concerned. [Paras 7]

Demand set aside in respect of services provided to the specified UN agencies under the exemption notifications.

Exemption for services to educational institutions under mega-exemption notification - Exemption under Notification No. 25/2012-ST - Whether cleaning/housekeeping services rendered to specified educational institutions are exempt - HELD THAT: - The Tribunal construed clause 9(b)(iii) of Notification No.25/2012-ST and held that cleaning/housekeeping services provided to the listed educational institutions (IIT Patna, AIIMS Patna & The Heritage School, Gurugram) during 2014-15 fall within the exemption for services provided to educational institutions. On that basis the Tribunal set aside the demand relating to those services. [Paras 10]

Demand set aside in respect of housekeeping/cleaning services provided to the identified educational institutions for 2014-15.

Place of provision of services and non-applicability of service tax to Jammu & Kashmir - Claim of non-taxability for services allegedly provided in the State of Jammu & Kashmir - HELD THAT: - The Tribunal noted that levy of service tax extended to the whole of India except Jammu & Kashmir, but emphasised that whether particular services were provided in J&K is a question of fact requiring corroborative evidence. The adjudicating authority had record of the claim but the appellant had not produced sufficient documentary proof before the adjudicating authority. Consequently, the Tribunal remanded the issue for fresh consideration and directed the adjudicating authority to give the appellant opportunity to produce evidence to substantiate the territorial claim. [Paras 8]

Issue remanded for fresh adjudication with opportunity to the appellant to submit corroborative evidence.

SEZ ab-initio exemption and procedural conditions for authorisation and Form A series - Claim of exemption for services provided to SEZ units under Notification No.40/2012-ST and related procedure (Notification No.12/2013 for ab-initio exemption) - HELD THAT: - The Tribunal examined the SEZ exemption framework and the procedural conditions for ab-initio exemption (approval by Approval Committee, Form A-1/A-2/A-3 procedure). It observed that the adjudicating authority found no evidence on record of compliance with the prescribed procedure, but the appellant contended that documents exist. Given the procedural nature and absence of adjudicated documentary proof, the Tribunal remanded the issue to the adjudicating authority to allow the appellant to produce corroborative documents and decide afresh in accordance with the prescribed procedure. [Paras 9]

Remanded to adjudicating authority for fresh adjudication after permitting appellant to produce documentary evidence of compliance with SEZ exemption procedure.

Extended period of limitation under section 73(1) - requirement of positive act, collusion or wilful suppression - Penalties under sections 77 & 78 - necessity of evidence of deliberate suppression or intent to evade - Self-assessment regime and onus of correct tax disclosure - Validity of invoking extended period and imposition of penalties under sections 77 & 78 in respect of the disputed demand - HELD THAT: - The Tribunal reviewed the grounds needed to invoke the extended period (collusion, wilful mis-statement, suppression, contravention with intent to evade) and found no evidence of a positive act of suppression or malafide on the part of the appellant. It relied on precedent and reasoning that mere filing of returns under self-assessment, or disagreement with audit findings, does not establish intent to evade. In absence of proof of deliberate suppression, the Tribunal upheld the adjudicating authority's decision to drop invocation of the extended period and to not impose penalties under sections 77 & 78. [Paras 11]

Extended period not invoked and penalties under sections 77 & 78 not sustained; impugned dropping of those penalties upheld.

Final Conclusion: The departmental appeal is dismissed. The appellant's appeal is partly allowed: demands in respect of services to specified UN agencies and to the identified educational institutions are set aside; claims relating to services rendered in Jammu & Kashmir and supplies to SEZ units are remanded to the adjudicating authority for fresh consideration on production of corroborative evidence; interest and penalties to be recalculated in light of the adjudicated outcome.

Business auxiliary service - production of goods on behalf of the client - service tax liability with effect from 16.06.2005 - SSI exemption under Notification No.6/2005-ST - cum-tax value - remand for quantification - waiver of penalties under Section 80 of the Finance Act, 1994 - GTA service abatement

Business auxiliary service - production of goods on behalf of the client - service tax liability with effect from 16.06.2005 - Liability to service tax on seasoning of timber for the period prior to 16.06.2005 - HELD THAT: - The Tribunal examined the definition of business auxiliary service and the amendment which made certain activities, including production of goods on behalf of the client, taxable with effect from 16.06.2005. It held that seasoning of timber was brought within the amended entry only w.e.f. 16.06.2005 and that the Commissioner (Appeals) erred in confirming service-tax demand for the period 10.09.2004 to 16.06.2005. The Tribunal accepted that seasoning only reduced moisture content and did not amount to a chargeable activity under the pre-amendment definition, and therefore the demand confirmed for the earlier period was wrongly sustained; the appellant would be entitled to reduction of demand and refund to the extent excess tax had been paid for that period. [Paras 8]

Demand confirmed for the period 10.09.2004 to 16.06.2005 set aside; entitlement to reduction/refund indicated.

Remand for quantification - SSI exemption under Notification No.6/2005-ST - cum-tax value - GTA service abatement - waiver of penalties under Section 80 of the Finance Act, 1994 - Quantification of service-tax demand from 16.06.2005 onward, applicability of SSI exemption and cum-tax benefit, adjustment of GTA deposit, and treatment of penalties - HELD THAT: - The Tribunal directed remand to the original authority to quantify the service-tax demand commencing 16.06.2005 when the relevant definition was amended. On quantification the authority is to examine eligibility for the SSI exemption under Notification No.6/2005-ST and to extend the cum-tax value benefit because the adjudicating authority had relied on amounts taken from the assessee's balance-sheet/accounts. The Tribunal further directed that the excess amount deposited in respect of GTA service which the Commissioner (Appeals) had dropped should be adjusted while arriving at the final demand. In view of the circumstances and the existence of reasonable grounds for non-payment, the Tribunal waived penalties under Section 77 and Section 78 by invoking the waiver of penalties under Section 80 of the Finance Act, 1994. [Paras 9]

Matter remanded for fresh quantification from 16.06.2005 with directions to consider SSI exemption and cum-tax benefit, adjust the dropped GTA deposit, and apply Section 80 to waive penalties; appeal disposed by remand.

Final Conclusion: The Tribunal set aside the demand confirmed for 10.09.2004 to 16.06.2005, remanded the matter to the original authority to quantify service-tax liability w.e.f. 16.06.2005, to consider SSI exemption and cum-tax benefit, to adjust the GTA deposit, and directed waiver of penalties under Section 80; appeal disposed of by remand.

Reverse charge mechanism - service tax liability on security agency services - service tax liability on commission to directors - distinction between salary and consultancy - service tax liability on manpower supply services - service tax liability on legal consultancy services - service tax liability on goods transport agency services

Reverse charge mechanism - service tax liability on security agency services - Confirmation of service tax demand on security agency services under the reverse charge mechanism - HELD THAT: - The appellant admitted receipt of security agency services and its reply to the show cause notice acknowledged liability. The adjudicating authority held that non-receipt of a supplier's invoice or a contention that invoices were not properly passed is not a valid excuse for non-payment where liability under the reverse charge mechanism arises. In the absence of any documentary evidence from the appellant to contradict its admission or to show a legal basis for exemption, the original finding confirming the demand was upheld. [Paras 7, 10]

Demand confirmed and upheld.

Reverse charge mechanism - service tax liability on commission to directors - distinction between salary and consultancy - Confirmation of service tax demand on commission/amounts paid to directors as liable under reverse charge where not shown to be salary - HELD THAT: - The adjudication found that the appellant failed to produce documents proving that payments to directors were salaries rather than consideration for advisory or consultancy services. The authority noted that a limited company is expected to make relevant disclosures to auditors and that the audit grouping had attained finality; no evidence was furnished to rebut that. Since Notification-based liability arises only when a director renders consultancy/advisory services and the appellant did not establish that the amounts were salary, the demand was confirmed. [Paras 8]

Demand confirmed and upheld.

Service tax liability on manpower supply services - reverse charge mechanism - Confirmation of service tax demand on manpower supply services treating supplied persons as contractors rather than employees - HELD THAT: - The adjudicator disbelieved the appellant's assertion that persons were employees paid hourly for production-related work, noting anomalous salary reductions and finding the explanation to be an afterthought to avoid tax. On that basis the persons were treated as contract manpower suppliers, attracting service tax under the reverse charge mechanism. No documentary evidence was produced to counter the finding, and the demand was confirmed. [Paras 9]

Demand confirmed and upheld.

Service tax liability on legal consultancy services - reverse charge mechanism - Disposition of service tax demands in respect of legal fees: earlier demand dropped in one show cause notice; demand in subsequent show cause notice confirmed - HELD THAT: - In the adjudication of the first show cause notice the demand on legal fees was dropped after considering the appellant's reply that payments related to renewal/inspection/boiler deposits and were not for advice or consultancy. However, in relation to the subsequent show cause notice the authority held that non-payment on the ground that the provider did not demand service tax was not a valid defense. Applying the Notification providing for recipient liability, the adjudicator confirmed the service tax demand on legal services in the latter proceedings in the absence of supporting statements of payment or other evidence excusing liability. [Paras 3, 7, 11]

Earlier demand on legal fees dropped; demand in subsequent show cause notice confirmed and upheld.

Service tax liability on goods transport agency services - reverse charge mechanism - Confirmation of service tax demand on GTA services including short payment of education cess - HELD THAT: - The appellant did not respond substantively to the allegation of non-payment/short payment in respect of GTA services. Applying the Notification making the recipient liable, the adjudicator confirmed the unpaid service tax and short-paid cess. No material was placed to rebut the charge; consequently the finding was sustained. [Paras 12]

Demand confirmed and upheld.

Final Conclusion: All demands confirmed in the impugned orders, except the earlier dropped demand on legal fees in the first adjudication; in view of absence of rebutting evidence the tribunal upheld the orders under challenge and dismissed the appeal.

Summary order. Special Leave Petitions dismissed; delay condoned; pending application disposed of.

Reverse charge mechanism - service tax demand - penalty under Section 78 - willful mis-statement - fraud - exemption under the service tax regime - re-appreciation of evidence

Reverse charge mechanism - service tax demand - re-appreciation of evidence - The demand of service tax amounting to Rs.25,16,900/- was affirmed. - HELD THAT: - The Tribunal re-appreciated the material, in particular Annexure-B to the Chartered Accountant's certificate, and found that labour charges comprised two parts-payments to contractors and payments to locally hired workers-thereby upholding the findings recorded by the adjudicating authority. On this factual re-appreciation the Tribunal affirmed the demand. The Court found that a substantial question of law arose but declined to disturb the Tribunal's conclusion affirming the service tax demand.

Demand for service tax of Rs.25,16,900/- affirmed.

Penalty under Section 78 - willful mis-statement - fraud - exemption under the service tax regime - reverse charge mechanism - The penalty imposed under Section 78 was set aside. - HELD THAT: - The Court applied the settled principle that mere use of expressions such as 'fraud' or 'willful mis-statement' is insufficient to attract penal provisions unless the adjudicating authority records facts showing how the statement was willful with intent to evade tax. On the material before it, nothing was brought on record to demonstrate willfulness or intent. Further, the assessee's activities had remained exempt under the earlier service tax regime and the reverse charge mechanism for manpower supply became operative only from July 1, 2012, which militated against a finding of deliberate evasion. In view of these considerations the adjudicatory finding invoking Section 78 could not be sustained.

Penalty under Section 78 set aside.

Final Conclusion: The appeal is partly allowed: the Tribunal's order affirming the service tax demand is upheld, while the penalty imposed under Section 78 is quashed; the application for stay is closed.

Refund of excess duty paid - liability to pay enhanced rate of duty despite contractual denial clause - denial clause in contract - liquidated damages and assessable value - department not liable for contractual penalties imposed by purchaser

Refund of excess duty paid - liability to pay enhanced rate of duty despite contractual denial clause - denial clause in contract - Refund claim arising from payment of duty at enhanced rate where the purchaser (Railways) refused to reimburse enhanced duty under a denial clause in the contract - HELD THAT: - The appellant paid duty at the enhanced rate and claimed refund when the Railways, relying on a denial clause in the contract, refused to reimburse the increased duty. The Tribunal accepted that the contract placed the obligation on the Railways not to pay the enhanced rate, but held that liability to pay central excise at the enhanced rate rests on the manufacturer irrespective of private contractual arrangements. Since the appellant had rightly discharged duty at the enhanced rate, the adjudicating and appellate authorities correctly refused the refund of the excess on the ground that the contractual denial of reimbursement by the Railways does not render the Department liable to refund the duty so paid. [Paras 5]

Rejection of the refund claim of Rs.35,12,486/- on account of non-reimbursement by the Railways of enhanced duty is proper and upheld.

Liquidated damages and assessable value - department not liable for contractual penalties imposed by purchaser - Refund claim based on reduction of transaction value by liquidated damages/penalty imposed by the purchaser (Railways) - HELD THAT: - The appellant sought refund by contending that payment of liquidated damages by reason of delay in supply reduced the transaction value and therefore the duty payable. The Tribunal found that the Department is not a party to the contractual relationship that gave rise to the penalty and is not connected with the supplier's delay; consequently, the imposition or payment of liquidated damages by the manufacturer cannot be treated as reducing the assessable value for central excise purposes in dealings with the Department. The appellate authority therefore correctly rejected the claimed adjustment and refund. [Paras 5]

Rejection of the refund claim of Rs.10,93,900/- on account of liquidated damages is proper and upheld.

Final Conclusion: The impugned order is upheld; the appeal is rejected. Refunds claimed for the two contested heads (enhanced duty reimbursement and adjustment for liquidated damages) have been rightly denied; the portion of the refund already allowed remains unaffected.

Transaction value - assessable value - additional consideration - Planned Order in System - extended period - penalty

Transaction value - assessable value - additional consideration - Planned Order in System - Pool lifting charges collected from dealers are includible in the assessable value of motor vehicles. - HELD THAT: - The Tribunal affirmed the Commissioner's conclusion that pool lifting charges are levied only with reference to vehicles lifted from the pool and are therefore connected with the sale of those additional vehicles. The Planned Order in System (POS) made dealers liable to pay such charges when they purchased vehicles over and above their initial indent; the charges were raised by debit notes and received by the appellant over and above the invoice transaction value. Applying the statutory definition of 'transaction value' under Section 4, which includes amounts the buyer is liable to pay 'by reason of, or in connection with the sale', the Tribunal held that the pool lifting charges constitute additional consideration flowing to the seller and must be included in the transaction/assessable value. The Tribunal rejected the appellants' contention that such charges were independent transactions or mere compensation for a service not connected with sale, and found the case-law relied upon by the appellants inapplicable to the facts. [Paras 11, 12, 13]

Pool lifting charges are includible in the assessable value of the motor vehicles.

Extended period - penalty - Invocation of the extended period of limitation and imposition of penalty were not sustainable. - HELD THAT: - The Tribunal found that the Department had long access to the appellant's records and had issued show cause notices and conducted audits over the years; there was no satisfactory basis to hold that the appellant had suppressed material facts or acted with requisite mens rea to justify extended period invocation or penalty. The Tribunal emphasised settled law requiring culpable conduct for penalty and concluded that the department's delay in discovering the issue during prior scrutiny could not be attributed to the appellant. Accordingly, the Tribunal held that extended period could not be invoked and the penalty could not be sustained, while leaving the confirmed duty limited to the normal period and subject to interest as applicable. [Paras 15, 16]

Extended period is not invokable and penalty is set aside; duty confirmed only for the normal period with applicable interest.

Final Conclusion: Tribunal upholds inclusion of pool lifting charges in the transaction/assessable value for the period in dispute but restricts recovery to the normal period and sets aside the penalty; interest remains payable on the duty confirmed for the normal period.

Definition of "manufacture" including labeling or re labeling - labeling or re labeling as manufacture only with value addition - Third Schedule Entry No.100 and Entry No.100A - prospective effect of statutory amendment - construction of the word "automobile" for tariff purposes - invocation of extended period and levy of penalty

Construction of the word "automobile" for tariff purposes - Third Schedule Entry No.100 and Entry No.100A - prospective effect of statutory amendment - Whether the imported filters affixed with labels amounted to parts of "automobiles" under Entry No.100 of the Third Schedule and liable to excise duty for the periods in dispute - HELD THAT: - The Tribunal accepted the Larger Bench conclusion that the word "automobile" is not defined in the Central Excise Acts and therefore definitions in other statutes (Motor Vehicles Act, Air Act) are not to be imported for tariff construction; reference to dictionaries and common parlance is appropriate. The insertion of Entry No.100A w.e.f. 29.04.2010 demonstrates that parts, components and assemblies of earth moving machines were not intended to be covered by Entry No.100 prior to that amendment. Consequently the demand of duty in respect of the period prior to 29.04.2010 could not be sustained, while liability from 29.04.2010 onwards is sustainable (and it is recorded that duty was paid from that date). The Tribunal therefore dismissed the Departmental appeal insofar as it sought to sustain pre 29.04.2010 demand and upheld that duty liability applies prospectively from the date the schedule was amended. [Paras 9, 10]

Demand for period prior to 29.04.2010 set aside; demand from 29.04.2010 sustainable

Definition of "manufacture" including labeling or re labeling - labeling or re labeling as manufacture only with value addition - Whether the appellants' activity of affixing labels/relabeling amounted to "manufacture" attracting excise duty - HELD THAT: - The Tribunal noted the statutory definition of "manufacture" which includes labeling/re labeling of goods specified in the Third Schedule, but accepted that labeling or re labeling would amount to manufacture only where there is value addition. In the facts of the case and having regard to the exclusion of earth moving equipment parts from Entry No.100 prior to the amendment, the allegation of deemed manufacture for the pre 29.04.2010 period was unsustainable. For the post amendment period, liability was sustained subject to verification of amounts paid. [Paras 3, 9, 10]

Labeling did not attract duty for the period prior to 29.04.2010; post 29.04.2010 liability sustained subject to verification

Invocation of extended period and levy of penalty - Whether the extended period could be invoked and penalties imposed on the appellant company and its Director (Finance) - HELD THAT: - Given the genuine legal controversy on construction of the Third Schedule, the amendment timeline and the Larger Bench decision in favour of the appellants on the core issue, the Tribunal found that invocation of the extended period and the imposition of penalties were not sustainable. The penalties and the extended period demand relating to the pre 29.04.2010 period were therefore set aside. [Paras 10, 11]

Penalties and extended period demand set aside

Verification of correctness of duty paid - remand for limited verification - Verification of correctness of duty paid by the appellants w.e.f. 29.04.2010 - HELD THAT: - The Tribunal partially allowed one appeal by remanding the matter to the Original Authority to verify the correctness of duty paid by the appellants with effect from 29.04.2010. The remand is for factual and quantification verification of payments made consequent to the Tribunal's acceptance that liability arises from the amendment date. [Paras 11]

Matter remitted to Original Authority for verification of duty paid w.e.f. 29.04.2010

Final Conclusion: The Departmental appeal challenging the rejection of demand prior to 29.04.2010 is dismissed; demands and penalties insofar as they relate to the period prior to 29.04.2010 are set aside; liability from 29.04.2010 is sustained (appellants have paid duty from that date) and one appeal is remitted for verification of correctness of duty paid w.e.f. 29.04.2010.

Refund of accumulated Cenvat credit of Education Cess and SHE Cess - vested right to Cenvat credit - eligible duties under Section 140 of the CGST Act, 2017 - refund under Section 142(3) and Section 142(8) of the CGST Act, 2017 - overriding effect of the CGST Act on limitation under Section 11B of the Central Excise Act, 1944 - effect of carrying forward in Form GST TRAN-1 and subsequent reversal of credit

Refund of accumulated Cenvat credit of Education Cess and SHE Cess - vested right to Cenvat credit - eligible duties under Section 140 of the CGST Act, 2017 - effect of carrying forward in Form GST TRAN-1 and subsequent reversal of credit - Appellant is eligible for refund of the balance of Cenvat credit pertaining to Education Cess and SHE Cess lying as on 30-06-2017. - HELD THAT: - The Tribunal held that the accumulated cenvat credit of Education Cess and SHE Cess existing on 30-06-2017 constituted a vested right and that, in a series of precedents of this Tribunal and a Division Bench, such balances are refundable where they could not be utilised on the appointed day. The Tribunal rejected the Commissioner (Appeals) finding that such balances did not qualify as 'eligible duties' for transition, noting the appellant itself had reversed the credit and that the amendment to Explanation 1 & 2 of Section 140 had not been notified. The Tribunal also found the Commissioner's reliance on the fact of initial carrying forward in Form GST TRAN-1 misconceived, as the subsequent reversal restored the balances and the position was analogous to earlier decisions (including the Division Bench view in NU Vista Ltd. and the Tribunal's order in Bharat Heavy Electricals Ltd.) allowing refund in comparable circumstances. [Paras 7, 8]

Refund of the balances under the head Education Cess and SHE Cess as on 30-06-2017 is allowable.

Limitation under Section 11B of the Central Excise Act, 1944 - overriding effect of Section 142(3) of the CGST Act, 2017 - refund under Section 142(3) and Section 142(8) of the CGST Act, 2017 - The refund claim is not barred by the one-year limitation under Section 11B of the Central Excise Act, 1944. - HELD THAT: - The Tribunal applied the language of Section 142(3) and Section 142(8)(b) of the CGST Act, 2017, which provide that claims for refund of amounts of Cenvat credit shall be disposed of in accordance with existing law but paid in cash notwithstanding anything to the contrary in the existing law other than subsection (2) of Section 11B. The Tribunal followed earlier decisions of this Tribunal (including Jai Mateshwaari Steels) holding that the one-year limitation in Section 11B does not apply to refund claims governed by Section 142(3) in view of the overriding effect of the CGST Act, and accordingly held the appellant's refund filed after one year was not time-barred. [Paras 9]

Limitation under Section 11B does not bar the refund claim; the claim is maintainable despite being filed after one year.

Final Conclusion: Impugned order set aside; appeal allowed and refund claim for the Education Cess and SHE Cess balances as on 30-06-2017 is held allowable, and the one-year limitation under Section 11B does not apply, subject to consequential reliefs in accordance with law.

Excisability of goods - marketability - acquiescence and estoppel in tax appeals - double taxation - valuation of assessable value - penalty under Rule 25 Central Excise Rules, 2002 - interest on delayed payment of duty

Excisability of goods - marketability - acquiescence and estoppel in tax appeals - Whether the appellant could raise for the first time before the Tribunal the contention that copper anode moulds were non-excisable for want of marketability - HELD THAT: - The Tribunal declined to permit the appellant to raise the mixed question of fact and law on marketability at the appellate stage where the appellant had earlier cleared the moulds on payment of duty and had not made marketability an issue in the show cause notice or before the original authority. The power to admit new questions is discretionary, and the Tribunal may refuse to entertain points kept back without cogent reason where such conduct prejudices the revenue and prevents the original authority from gathering and testing evidentiary material. The appellant's initial acquiescence and duty payment put the Revenue at a disadvantage by obviating the need to collect empirical evidence and include excisability in the SCN; permitting the plea now would effectively require fresh proceedings. In these circumstances the Tribunal rejected the appellant's marketability/excisability contention as not permissible at this stage. [Paras 5]

The plea that copper anode moulds are non-excisable for want of marketability is not permitted to be raised at this stage and is rejected.

Double taxation - valuation of assessable value - Whether the department can be said to have levied excise duty twice by charging duty on moulds and subsequently on copper anodes - HELD THAT: - The Tribunal held that there was no impermissible double taxation on the same excisable product. The duty paid on moulds (capital goods) and the duty on subsequently manufactured copper anodes are taxes on two distinct excisable items; thus levy on both does not constitute double taxation of the same subject-matter. The reasoning observed that statutory schemes such as MODVAT/CENVAT deal with cascading by way of credit but do not prohibit levy on distinct taxable events; prior judicial authorities accept that double taxation, where legislatively sanctioned, may be legal. On these legal principles the appellant's contention of impermissible double taxation failed. [Paras 6]

The claim of double taxation is rejected; levy on moulds and on the anodes are on distinct taxable subjects and not unlawful double taxation.

Valuation of assessable value - Whether the assessable value of copper anode moulds should be fixed at the value determined by the Tribunal for copper anodes for the period in question - HELD THAT: - The Tribunal accepted that the composition and CAS-4 value submitted combined anodes and moulds and noted its earlier Final Order which fixed the assessable value of copper anodes for July 2001 to March 2002 at Rs.94,446 per MT. Given the combined valuation and the finding that the composition of anode and mould was the same, the Tribunal held that the moulds' assessable value may be taken at the previously determined Rs.94,446 per MT and directed reworking of duty and interest accordingly. [Paras 7]

Assessable value of copper anode moulds is fixed at Rs.94,446 per MT for the period July 2001 to March 2002; duty and interest to be reworked on that basis.

Penalty under Rule 25 Central Excise Rules, 2002 - interest on delayed payment of duty - Whether penalty under Rule 25 should be sustained and whether interest is payable - HELD THAT: - The Tribunal found that the adjudication did not establish intent to evade duty; the adjudicating authority imposed penalty while noting complexity in valuation and took a lenient view. In that backdrop, the Tribunal set aside the penalty under Rule 25. However, statutory interest on delayed payment of duty was held to be mandatorily leviable irrespective of intention; precedents establish that interest accrues on short or delayed payment and is not negated by lack of deceit. Consequently interest liability remains and must be recalculated per the reassessed duty. [Paras 8]

Penalty under Rule 25 is set aside; interest on delayed payment of duty is leviable and must be recalculated on the duty as reworked.

Final Conclusion: Appeal disposed by upholding the impugned order subject to modification: assessable value of copper anode moulds fixed at Rs.94,446 per MT for July 2001 to March 2002 with duty and interest to be reworked, penalty under Rule 25 set aside; appellant eligible for consequential relief in law.

Entitlement to cash refund under section 142(3) of the CGST Act - characterisation of Countervailing Duty and Special Additional Duty as duties payable under the existing law - disposal of refund claims in accordance with the provisions of the existing law - examination of unjust enrichment as a condition precedent to refund - inapplicability of section 142(6)(a) where claim is granted under section 142(3) - availability of CENVAT credit under the CENVAT Credit Rules, 2004 and effect of repeal - scope of transitional provisions not restricted to CENVAT credit taken prior to the appointed day

Entitlement to cash refund under section 142(3) of the CGST Act - disposal of refund claims in accordance with the provisions of the existing law - Shakti Pumps was entitled to cash refund of CENVAT credit in respect of CVD and SAD paid after 01.07.2017 under section 142(3) of the CGST Act. - HELD THAT: - The Tribunal held that claims for refund of any amount of CENVAT credit paid under the existing law must be disposed of in accordance with the provisions of the existing law and any amount eventually accruing is to be paid in cash under section 142(3). Applying these transitional provisions, and having regard to the established entitlement to CENVAT credit under the CENVAT Credit Rules, 2004 prior to repeal, the Commissioner (Appeals) did not err in directing refund in cash. The Tribunal relied on consistent decisions of larger and Division Benches (including the Larger Bench in Bosch Electrical) that a claimant who paid CVD/SAD post implementation of GST to regularise conditional imports under Advance Authorisation may claim refund under section 142(3). The department's challenge to the Commissioner (Appeals) order was therefore rejected and the appeal dismissed. [Paras 34, 36, 66]

Claim for cash refund of CENVAT credit of CVD and SAD allowed under section 142(3); departmental appeal dismissed.

Characterisation of Countervailing Duty and Special Additional Duty as duties payable under the existing law - existing law - CVD and SAD paid by Shakti Pumps on account of non-fulfilment of Advance Authorisation obligations were duties paid under the existing law. - HELD THAT: - The Tribunal rejected the Department's contention that such payments were not duties under the existing law. It observed that absent the Advance Authorisation concession the importer would have been liable to pay CVD and SAD under the Tariff and Customs law; the AA merely deferred or exempted payment subject to conditions. Non-fulfilment of conditions revived the liability to pay those duties, and such payments fall within the ambit of 'existing law' as defined in section 2(48) of the CGST Act; hence they are amenable to disposal and refund under transitional provisions. [Paras 35, 41]

CVD and SAD are duties payable under the existing law and therefore fall within the scope of section 142 transitional provisions.

Examination of unjust enrichment as a condition precedent to refund - inapplicability of section 142(6)(a) where claim is granted under section 142(3) - The grant of refund under section 142(3) is subject to verification of unjust enrichment; section 142(6)(a) was not the operative provision for the Commissioner (Appeals) order. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) correctly conditioned the refund on verification of unjust enrichment by the sanctioning officer. It observed that reference to section 142(6)(a) in the Commissioner (Appeals) order was a mistaken citation, since the refund was granted under section 142(3); nonetheless, the requirement to examine unjust enrichment applies under section 142(3) and, in this case, the sanctioning authority performed that verification and sanctioned refund on that basis. [Paras 51, 52]

Refund allowed subject to verification of unjust enrichment; section 142(6)(a) was not the applicable provision for the Commissioner (Appeals) order.

Availability of CENVAT credit under the CENVAT Credit Rules, 2004 and effect of repeal - disallowance of belated transitional credit under section 140 does not preclude refund under section 142(3) - Non-availability of CENVAT credit post-01.07.2017 (by way of carry-forward or TRAN-1) did not preclude Shakti Pumps from claiming refund under section 142(3); repeal of the Excise Act/CENVAT Rules did not defeat a refund claim adjudicated under the existing law. - HELD THAT: - The Tribunal accepted that the CENVAT Credit Rules ceased to operate upon repeal, and that the assessee could not take the amount into electronic credit ledger where statutory conditions for transition were not met. Nevertheless, section 142(3) mandates disposal of refund claims in accordance with existing law and payment in cash where due. The Tribunal rejected the Department's argument that the absence of an express clause in the AA notification permitting CENVAT credit upon default prevents refund, noting that the 2004 Credit Rules already prescribed entitlement and that the show cause notice never alleged non-compliance with those Rules. It further held that the Department could not raise this compliance point for the first time on appeal. [Paras 36, 43, 54]

Failure to obtain or carry forward transitional credit does not bar a refund under section 142(3) where entitlement under existing law is established and unjust enrichment is addressed.

Scope of transitional provisions not restricted to CENVAT credit taken prior to the appointed day - relevant precedents of the Tribunal including Larger Bench in Bosch Electrical - Section 142(3) is not restricted to CENVAT credit already taken prior to the appointed day; claims may be adjudicated under section 142(3) even where payment/regularisation occurred after the appointed day. - HELD THAT: - The Tribunal rejected the Department's submission that transitional provisions apply only where CENVAT credit was taken prior to 30.06.2017. It relied on the Larger Bench decision in Bosch Electrical and subsequent Division Bench and Full Bench authorities which held that where duty or service tax governed by existing law was paid after the appointed day to regularise conditional imports, refund of the corresponding CENVAT credit can yet be claimed and disposed of under section 142(3) in accordance with existing law. Contrasting single-member contrary orders, the Tribunal followed the Larger Bench and consistent precedents. [Paras 55, 57]

Section 142(3) is not confined to credits taken before the appointed day; refund claims arising from payments after the appointed day can be considered under section 142(3) in accordance with existing law.

Final Conclusion: The departmental appeal was dismissed. The Tribunal upheld the Commissioner (Appeals) order granting cash refund of CENVAT credit in respect of CVD and SAD paid to regularise conditional imports under Advance Authorisation, holding that such duties fall within the 'existing law' and that refund under section 142(3) of the CGST Act is permissible subject to verification of unjust enrichment.

Standing offer / rate contract not amounting to sale or agreement to sell - inter state sale occasioning movement of goods under section 3(a) of the Central Sales Tax Act - branch transfer / stock transfer versus inter state sale - appropriation / earmarking of goods at depot as the point of sale

Standing offer / rate contract not amounting to sale or agreement to sell - The Running Contract dated 28.11.2008 is a standing offer / rate contract and does not itself constitute a sale or an agreement to sell. - HELD THAT: - The Court examined the terms of the Running Contract and authorities on standing offers and rate contracts, concluding that the contract only fixed prices and maximum eligible quantities and did not obligate the subsidiaries to purchase nor the appellant to supply. Reliance on treatises and precedents established that a standing offer becomes a binding sale only upon acceptance by an order/indent; absent specified quantities, earmarking or an obligation to purchase, the Running Contract is merely a continuing offer. The contract therefore neither conveyed property nor constituted an agreement to sell, but operated as a rate/standing offer under which separate contracts arose only when indents were placed and accepted. [Paras 23, 24]

Running Contract is a standing offer / rate contract and not a contract of sale or an agreement to sell.

Inter state sale occasioning movement of goods under section 3(a) of the Central Sales Tax Act - branch transfer / stock transfer versus inter state sale - appropriation / earmarking of goods at depot as the point of sale - The movement of explosives from the Nagpur manufacturing unit to the appellant's depots in Jharkhand and West Bengal is a branch transfer / stock transfer and not an inter state sale occasioned by the Running Contract. - HELD THAT: - On the material facts the Court found that goods were transported at the appellant's freight and risk, quantities in the Running Contract were indicative and not fixed, subsidiaries were not exclusively obliged to purchase from the appellant, and appropriation/earmarking for particular sales occurred only at the depots. There was no one to one correlation between consignments dispatched from Nagpur and supplies from the depots. Applying authorities on standing offers and stock transfers, the Court held that the inter state movement was for stocking depots and that actual sales occurred subsequently on indents placed at those depots; consequently the movement was not occasioned by a sale within the meaning of section 3(a) of the CST Act. [Paras 15, 43]

Transfers to the depots are branch/stock transfers and do not amount to inter state sales under section 3(a) of the CST Act.

Final Conclusion: The order of the Maharashtra Sales Tax Tribunal dated 26.09.2017 is set aside; the appeal is allowed on the basis that the Running Contract was a standing offer/rate contract and the movements to the appellant's depots were stock/branch transfers, not inter state sales.

Order XXI Rule 90 CPC - Writ jurisdiction under Article 226 - Mandatory notice period for auction under the Revenue Code (Section 194) - Confirmation and possession post-sale under the Revenue Code (Sections 208 & 212) - Material irregularity versus illegality in public auctions - Jurisdiction of appellate authority under Section 247 of the Maharashtra Land Revenue Code - Remedy under Section 210 for setting aside sale by deposit - Judicial review of administrative action-illegality, irrationality and procedural impropriety - Fairness, transparency and rule of law in State-conducted public auctions

Order XXI Rule 90 CPC - Writ jurisdiction under Article 226 - Whether the tests and dual conditions under Order XXI Rule 90 CPC apply mandatorily to writ proceedings under Article 226 - HELD THAT: - The Court held that proceedings under Article 226 are distinct from ordinary execution proceedings and are not bound to follow the procedural code of execution embodied in Order XXI CPC. In consequence, the dual preconditions in Order XXI Rule 90 (that a material irregularity or fraud be shown and that such irregularity or fraud occasion substantial injury) are not to be mandatorily imported into a writ petition challenging State revenue auction proceedings. The Explanation to Section 141 CPC and earlier precedents establish that writ courts exercise extraordinary constitutional jurisdiction and may adopt their own procedures; therefore a writ court need not be confined to the narrow yardstick of Order XXI Rule 90 when examining State-conducted auctions for illegality, arbitrariness or breach of mandatory statutory requirements. The Court further emphasised that judicial review of administrative action focuses on illegality, irrationality and procedural impropriety rather than applying Order XXI Rule 90 as a straitjacket. (See paras. 34, 36, 37, 39-56) [Paras 52, 53, 54, 55, 56]

Order XXI Rule 90 CPC is not mandatorily applicable to writ proceedings under Article 226; the writ court may examine State-conducted auction proceedings on grounds of illegality, arbitrariness and procedural impropriety.

Mandatory notice period for auction under the Revenue Code (Section 194) - Confirmation and possession post-sale under the Revenue Code (Sections 208 & 212) - Material irregularity versus illegality in public auctions - Whether the auction and consequential acts (confirmation, sale certificate, possession) in the present case complied with mandatory provisions of the Revenue Code and whether such non-compliance amounted to mere irregularity or to illegality nullifying the sale - HELD THAT: - On the facts the Court found multiple mandatory breaches of the Revenue Code: the auction occurred before expiry of the statutory 30-day period from the latest notice (Section 194), the sale certificate was issued on the date of auction before proper confirmation (Sections 208 and 212), and possession was handed over prior to lawful confirmation and realisation of proceeds. An objection (from IFCI) was not properly placed before the confirming authority. These lapses were held to be more than mere irregularities; they amounted to gross illegality going to the root of the process and rendered the impugned sale susceptible to writ scrutiny. The Court distinguished the protective function of Order XXI Rule 90 in execution sales from the supervising role of a writ court over State auctions and underlined that where mandatory statutory requirements are flagrantly violated, the action is arbitrary and ultra vires and cannot be saved merely by invoking the Rule 90 test applicable to court sales. (See paras. 56-66, 58-64) [Paras 62, 63, 64, 65, 66]

The auction, confirmation and handing over of possession breached mandatory provisions of the Revenue Code and constituted gross illegality rather than a mere irregularity; writ scrutiny was therefore justified.

Remedy under Section 210 for setting aside sale by deposit - Jurisdiction of appellate authority under Section 247 of the Maharashtra Land Revenue Code - Whether the Additional Commissioner had jurisdiction under Section 247 to decide the appeals filed and whether the remedy under Section 210 was available or rendered illusory - HELD THAT: - The Court analysed Section 210 (deposit remedy) and observed that the statutory deposit remedy presupposes a live sale process in which the Collector can act within the prescribed period. Here, because a sale certificate had already been issued and possession given before confirmation, the practical efficacy of Section 210 was rendered illusory for the parties (and did not encompass a secured creditor like respondent No. 6 who did not claim title by prior acquisition). The Court held that once the sale certificate was issued and the purchaser placed in possession, the appropriate remedy lay under the appellate framework of Section 247. Even if jurisdictional objections to the Additional Commissioner were arguable, allowing a challenge that would revive an earlier illegal confirmation by the Collector would be counterproductive; accordingly the High Court rightly did not disturb the Additional Commissioner's order remanding the matter for fresh adjudication. (See paras. 68-74) [Paras 70, 71, 72, 73, 74]

The remedy under Section 210 was rendered illusory by issuance of the sale certificate and possession; the appeals appropriately proceeded under the appellate route (Section 247), and the Additional Commissioner's order remanding the matter could not be upset in a manner that would revive an illegal prior confirmation.

Judicial review of administrative action-illegality, irrationality and procedural impropriety - Fairness, transparency and rule of law in State-conducted public auctions - What relief, if any, should be moulded by the Court in the circumstances where the High Court's order was upheld but substantial equities arose from the appellant's long possession and investment - HELD THAT: - While the Supreme Court found no error in the High Court's rejection of the appellant's writ petitions, it exercised its discretionary power to mould relief in order to do substantial justice. Taking into account the appellant's long possession and the industrial unit established (employment and investments), the Court directed a composite settlement: the appellant was given an opportunity to make a full-and-final payment to respondent No. 6 (ARCIL) within six months, failing which competent authorities would take possession and re-auction. The Court further ordered that upon compliance the pending contempt proceedings would stand terminated. The order thereby balanced vindication of statutory propriety and protection of legitimate expectations and investments by imposing a time bound monetary settlement as an alternative to undoing long-standing possession. (See paras. 75-79) [Paras 75, 76, 77, 78, 79]

While affirming the High Court, the Court moulded relief: appellant allowed to preserve the plant and title only on depositing the specified sum with ARCIL within six months; failure to do so will lead to takeover and fresh auction; deposit will terminate contempt proceedings.

Final Conclusion: The Supreme Court held that Order XXI Rule 90 CPC does not bind writ courts under Article 226 and that writ review of State-conducted revenue auctions proceeds on principles of illegality, irrationality and procedural impropriety. On the facts the auction, confirmation and possession violated mandatory provisions of the Maharashtra Land Revenue Code and amounted to gross illegality. The High Court's dismissal of the appellant's writ petitions was upheld, but the Court moulded relief: the appellant may preserve its industrial unit by depositing the directed sum with ARCIL within six months, failing which possession will be taken and the property re-auctioned; on deposit, pending contempt proceedings will stand terminated.

Commercial purpose - dominant intention / profit nexus test - definition of "consumer" under Section 2(1)(d) of the Consumer Protection Act - onus to prove purchase for commercial purpose rests on seller/opponent - defect / deficiency in quality or standard under Section 2(1)(f) - unfair trade practice - non-disclosure of material information about safety features

Commercial purpose - dominant intention / profit nexus test - definition of "consumer" under Section 2(1)(d) of the Consumer Protection Act - onus to prove purchase for commercial purpose rests on seller/opponent - Whether purchase of a vehicle by a company for use/personal use of its directors amounts to purchase for a "commercial purpose" excluding the company from the definition of "consumer". - HELD THAT: - The Court held that whether a purchase is for a "commercial purpose" is a question of fact to be determined on the facts and circumstances of each case and ordinarily requires a close and direct nexus with profit-generating activity. The dominant intention or purpose behind the transaction is decisive; identity of the purchaser or value of the transaction is not conclusive. Where the complainant-company specifically asserted that the vehicle was purchased as a perquisite for its whole-time director and there was no material to show any linkage of the purchase with profit-generating activity of the company, the opponent-seller could not succeed in displacing the complainant's allegation by mere presumption or by asking for tax forms. The onus to prove that the purchase was for a commercial purpose lies on the seller/opponent and in the absence of material establishing such nexus, the vehicle remained within the ambit of the definition of "consumer" as pleaded by the complainant-company. [Paras 16, 17, 29]

Purchase of vehicle by a company for the personal use of its director is not ipso facto a purchase for a "commercial purpose"; the seller bears the onus of proving a profit generating nexus and, on the facts of CA No. 353/2008 and C.A. Nos.19536-19537/2017, the complaints were maintainable.

Defect / deficiency in quality or standard under Section 2(1)(f) - unfair trade practice - non-disclosure of material information about safety features - Whether non-deployment of airbags in the accident and non-disclosure in promotional material/owner's manual constituted a defect/deficiency and an unfair trade practice. - HELD THAT: - The Court affirmed the National Commission's finding that non-deployment of the airbags in the accident, read with the absence of disclosure in the owner's manual about the predetermined triggering levels, amounted to a defect in quality/standard and a deficiency in service. Highlighting airbags and safety features in promotion without disclosing material limitations as to when airbags will deploy amounted to an unfair and deceptive trade practice because the seller alone knew the triggering thresholds. Having considered the available evidence, photographs, expert reports and the failure of the appellants to produce the relevant owner's manual for 2002, the Court found no reason to interfere with the National Commission's conclusions on defect and unfair trade practice and its award of compensation on those heads. [Paras 24, 34, 36, 37]

Non-deployment of airbags and non-disclosure of material information about their functioning constituted a defect/deficiency and an unfair trade practice; the National Commission's award on these findings is upheld.

Balance of equity in relief - compensatory refund in lieu of replacement / buyback - What relief should be granted in CA No. 353/2008 where the National Commission directed refund and return of the vehicle but the seller had earlier offered repurchase and the complainant continued to use the vehicle for many years. - HELD THAT: - The Court noted that the appellant had earlier offered to repurchase the vehicle at stated market/book values and that the complainant thereafter retained and used the car for a prolonged period. Applying equitable considerations and balancing the parties' conduct and earlier offers, the Court concluded that permitting the complainant to retain the car while awarding a reduced compensatory refund would meet the interests of justice. The Court therefore adjusted the relief awarded by the National Commission to reflect the earlier repurchase offer and subsequent long-term retention by the complainant. [Paras 23, 40]

Respondent permitted to retain the vehicle; appellant directed to refund a reduced sum (as ordered) - the appeal in CA No. 353/2008 is partly allowed to the extent of substituting the adjusted refund.

Final Conclusion: The appeals contesting maintainability based on alleged "commercial purpose" were rejected: whether a company's purchase for a director is commercial depends on dominant intention and profit nexus, and the seller bears the onus of proof. Findings of defect and unfair trade practice for non-deployment and non-disclosure regarding airbags are affirmed. CA No. 353/2008 is partly allowed on equitable grounds by reducing the refund and permitting retention of the car; the other appeals are dismissed.

Admissibility of an insufficiently stamped instrument - duty to impound under section 33 of the Karnataka Stamp Act, 1957 - inadmissibility of instruments not duly stamped under section 34 of the Karnataka Stamp Act, 1957 - bar on questioning admission of an instrument under section 35 of the Karnataka Stamp Act, 1957 (operative only after judicial determination) - revision remedy under section 58 of the Karnataka Stamp Act, 1957 - inherent power of the court preserved by section 151 of the Code of Civil Procedure to prevent abuse of process and do justice

Admissibility of an insufficiently stamped instrument - inadmissibility of instruments not duly stamped under section 34 of the Karnataka Stamp Act, 1957 - duty to impound under section 33 of the Karnataka Stamp Act, 1957 - Whether the trial court was obliged to apply judicial mind to the question of admissibility of the GPA and could impound or refuse to admit an insufficiently stamped instrument even in the absence of any formal objection by the other party. - HELD THAT: - Sections 33 and 34 cast an obligation on the presiding officer to examine instruments produced before the court and to impound or refuse to admit instruments which are not duly stamped. The court cannot mechanically mark and admit a document without applying judicial mind to its admissibility under the Stamp Act. The presiding officer is competent to examine and act upon the question of sufficient stamping even if no party objects, because the statutory duty to impound and the prohibition on admitting unstamped or insufficiently stamped instruments is independent of party-objection. If the court admits a document only after a judicial determination of admissibility, section 35 thereafter bars questioning that admission; but where there has been no judicial determination, section 35 is not attracted and the court remains duty-bound to act under sections 33 and 34. [Paras 14]

The trial court was obliged to apply judicial mind to the admissibility of the GPA and could revisit impounding/admissibility under the Stamp Act where no judicial determination had earlier been made.

Bar on questioning admission of an instrument under section 35 of the Karnataka Stamp Act, 1957 (operative only after judicial determination) - revision remedy under section 58 of the Karnataka Stamp Act, 1957 - inherent power of the court preserved by section 151 of the Code of Civil Procedure to prevent abuse of process and do justice - Whether, having been marked and admitted in evidence without objection, the admission of the GPA could be recalled or reconsidered by the trial court in exercise of its inherent power under section 151 CPC, and whether section 35 or section 58 of the Stamp Act precluded such exercise. - HELD THAT: - Section 35 operates to bar questioning of admission only where an instrument has in fact been admitted in evidence following a judicial determination; the statutory scheme contemplates that the court must decide admissibility when the document is tendered. Where the record shows that the document was marked without application of judicial mind and therefore no judicial determination occurred, section 35 does not bar the court from going behind the marking. In such circumstances the trial court may invoke its inherent power under section 151 CPC to recall or revisit the admission to prevent abuse of process or to do justice. Section 58, which empowers revision in certain circumstances, is directed to orders admitting an instrument as duly stamped or as not requiring a stamp; it is not attracted where the court has not recorded a decision that the instrument is duly stamped or not requiring a stamp. Consequently, the existence of section 58 does not oust the trial court's power to act under section 151 CPC where no prior judicial determination of admissibility was made. [Paras 10, 18, 19, 20]

Where an instrument was marked without judicial determination, the trial court validly exercised its inherent power under section 151 CPC to revisit the admission; section 35 did not bar such action and section 58 was not applicable.

Final Conclusion: The appeal is allowed: the High Court order setting aside the trial court's exercise of inherent power was set aside and the trial court's order recalling/revisiting the admission of the insufficiently stamped GPA is restored; section 35 cannot be invoked where no judicial determination of admissibility was made and section 58 is not attracted in such circumstances.

Maintainability of writ under Article 32 - jurisdictional remedy under Article 226 - vires of State levy of border tax - All-India Tourist Vehicles (Authorisation of Permit) Rules, 2023 - interim relief and undertaking - status of taxes already recovered

Maintainability of writ under Article 32 - jurisdictional remedy under Article 226 - Whether this Court should adjudicate the merits of the challenge to State levies in petitions filed under Article 32 instead of the petitioners approaching their respective High Courts under Article 226. - HELD THAT: - The Court declined to go into the merits of the challenges to the State levies at this stage, observing that the fundamental question is whether the levies fall within powers exercised by States under Entries 56 and 57 of List II and that the State enactments and rules themselves are not under challenge before this Court. The petitioners were held to have the primary recourse of approaching their jurisdictional High Courts to challenge the respective State provisions. Consequently the Court disposed of the petitions without entering into merits and granted liberty to the petitioners to seek appropriate reliefs before the High Courts. [Paras 9, 10, 11]

Petitions under Article 32 disposed without adjudication on merits; petitioners granted liberty to approach jurisdictional High Courts under Article 226.

Vires of State levy of border tax - All-India Tourist Vehicles (Authorisation of Permit) Rules, 2023 - Whether the levy and realization of Border Tax/Authorization Fee by State Governments is precluded by or inconsistent with the Rules, 2023 framed for All-India Tourist Vehicles. - HELD THAT: - The Court expressly did not decide the substantive question of whether State levies are inconsistent with or barred by the Rules, 2023. It noted that the Rules, 2023 superseded the 2021 Rules and were intended to make inter-State movement seamless and to provide for revenue sharing, but refrained from pronouncing on the validity or invalidity of State enactments or levies. The Court observed that because State enactments, rules and regulations are not presently under challenge before it, it cannot declare such demands bad in law and left the correctness of the levies to be adjudicated by the High Courts when the State provisions are challenged there. [Paras 4, 5, 9, 11]

Substantive question as to vires of State levies left undecided and to be adjudicated by the High Courts; no interference with ongoing State realisations.

Status of taxes already recovered - interim relief and undertaking - What is the treatment of Border Tax/Authorization Fee already recovered and the effect of interim orders passed by this Court? - HELD THAT: - The Court held that tax amounts already recovered by the States would remain subject to the final outcome of proceedings that petitioners may initiate before the High Courts. As to the period during which this Court's interim orders operated, petitioners were required to give undertakings before the High Courts that, in the event of unsuccessful challenges, they would make good the demands which were stayed for the period in which the stay was enjoyed. [Paras 6, 12]

Amounts already recovered to be governed by the final orders of the High Courts; petitioners to give undertakings regarding stayed periods when seeking relief before High Courts.

Final Conclusion: The batch of petitions was disposed of without entering into the merits: the Supreme Court declined to invalidate or interfere with State realisations of Border Tax/Authorization Fee, granted liberty to the petitioners to challenge the State enactments/rules before their jurisdictional High Courts, and directed that taxes already recovered shall be subject to the outcome of such High Court proceedings, with petitioners required to give undertakings concerning interim stays.

Vicarious liability of directors - liability for offence under the Negotiable Instruments Act, 1881 - operation and scope of Section 141 of the Negotiable Instruments Act - quashing of criminal proceedings under Section 482 Cr.P.C. - necessary averments in complaint to fasten criminal liability - strict construction of penal provisions - burden on director to produce sterling incontrovertible evidence to obtain quashing

Operation and scope of Section 141 of the Negotiable Instruments Act - necessary averments in complaint to fasten criminal liability - Complaint contains sufficient averments to fasten vicarious liability on the petitioner as a Director under Section 141 read with Section 138 of the NI Act. - HELD THAT: - The Court examined the complaint and held that it contains averments that the petitioner, along with other Directors, was jointly and severally responsible and in-charge of the conduct of business and the management of the accused company. Applying the settled principles that merely holding the office of Director is not by itself sufficient, the Court found that the complaint in this case pleads the requisite facts to bring the petitioner within the ambit of Section 141. The Court relied on the established line of authority emphasising that Section 141 must be strictly construed but that a complainant must make specific averments to show who was in charge of the company's affairs; where such averments are present, the process will not be quashed at the threshold absent sterling and incontrovertible material to the contrary. [Paras 10]

Complaint sufficiently pleads that the petitioner was in charge of and responsible for the conduct of the business of the company and therefore may be proceeded against under Section 141 read with Section 138.

Quashing of criminal proceedings under Section 482 Cr.P.C. - burden on director to produce sterling incontrovertible evidence to obtain quashing - strict construction of penal provisions - Resignation alleged by the petitioner does not preclude proceedings because she was a Director at the time of dishonour and no incontrovertible material was produced to justify quashing. - HELD THAT: - The petitioner relied on an internal communication of resignation with effect from 06.03.2020; however, the cheque was dishonoured on 15.04.2019, when the petitioner was admittedly a Director. The Court observed that the resignation was not shown to have been communicated to the Registrar of Companies and, in any event, does not avail the petitioner because she was a Director at the relevant time. Further, in view of the settled principle that a Director seeking quashing must place sterling and incontrovertible material to show non-involvement, the mere assertion of being a 'sleeping director' and an internal resignation communication without decisive proof was held insufficient to quash the process. [Paras 10, 11]

The resignation and the petitioner's contentions do not disentitle proceedings; no grounds for quashing under Section 482 Cr.P.C. are made out.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the complaint contains the necessary averments to proceed against the petitioner under Section 141 read with Section 138 of the Negotiable Instruments Act and no incontrovertible material was placed to justify quashing.