TaxTMI Updates e-Newsletter
Jul 15,2023

Garnishee notice - recovery proceedings under proviso to Section 78 of the WBGST Act, 2017 - pendency of appeal and effect on recovery - stay of recovery on deposit - direction for expeditious disposal of appeal

Garnishee notice - recovery proceedings under proviso to Section 78 of the WBGST Act, 2017 - pendency of appeal and effect on recovery - stay of recovery on deposit - Validity of the impugned garnishee notice issued on 13th February, 2023 as a step for recovery of interest during the pendency of the appeal and the appropriate interim relief. - HELD THAT: - The Court noted that the department had recorded reasons for invoking the proviso to Section 78 of the WBGST Act, 2017 for initiating recovery during the pendency of the appeal. The Court refrained from adjudicating the merits or legality of those recorded reasons, observing only that the reasons were placed on record. In the interest of balance and without determining the substantive validity of the recovery action, the Court granted an interim stay of the impugned garnishee order on specified conditions. The petitioner was directed to deposit 20% of the claimed interest within seven days as a condition for the stay. The Court also directed the Appellate Authority to decide the pending appeal expeditiously, preferably within six weeks from communication of the order. Finally, the Court clarified that further recovery of the claimed amount shall depend upon the final outcome of the appeal and be governed by law and in the manner prescribed by law.

Impugned garnishee notice stayed on condition that the petitioner deposits 20% of the claimed interest within seven days; appellate authority directed to dispose of the appeal preferably within six weeks; further recovery to depend on final outcome of the appeal.

Final Conclusion: Writ petition disposed by granting a conditional stay of the garnishee order on payment of 20% of the claimed interest within seven days and directing expeditious disposal of the appeal (preferably within six weeks); further recovery to be governed by the final decision in the appeal.

Pre-arrest bail - anticipatory bail under Section 438 Cr.P.C. - economic offence involving alleged tax fraud and fake invoices - documentary evidence as basis of prosecution - cooperation with investigation - custodial interrogation - conditions of bail

Pre-arrest bail - anticipatory bail under Section 438 Cr.P.C. - cooperation with investigation - documentary evidence as basis of prosecution - economic offence involving alleged tax fraud and fake invoices - custodial interrogation - conditions of bail - Whether the interim pre-arrest bail granted to the petitioner should be made absolute in view of the materials on record and the conduct of the petitioner during investigation. - HELD THAT: - The Court examined the case diary and the record of investigation. Although the offences alleged relate to serious economic fraud involving claimed input tax credit on the basis of allegedly fake invoices and the investigation remains ongoing, the petitioner had appeared before the Investigating Officer on multiple occasions, produced documents called for under process, and cooperated with the investigation. The prosecution/IO had recorded incriminating material and contended that custodial interrogation may be necessary; nonetheless, the prosecution case is founded primarily on documentary evidence. Balancing the seriousness of the allegations and the stage of investigation against the petitioner's consistent cooperation and the documentary nature of the case, the Court concluded that custodial remand was not imperative at this stage. The Court therefore exercised its discretion under the anticipatory bail provision to make the interim order absolute while imposing measures to secure attendance for further investigation and to prevent interference with witnesses or the investigation.

Interim pre-arrest bail dated 22.02.2023 is made absolute subject to conditions that the petitioner remain available for interrogation as directed and refrain from inducing, threatening or promising any person acquainted with the facts of the case.

Final Conclusion: The anticipatory bail granted earlier is confirmed as absolute with conditions to ensure continued cooperation in investigation and to prevent tampering with evidence; the anticipatory bail application is disposed of and the case diary returned.

Input tax credit for consumer funded jobs - ITC on capital goods used for creating infrastructure (plant and machinery) - Reversal and apportionment of ITC under Section 17(2) read with Rules 42 and 43 - Definition of 'plant and machinery' in Explanation to Section 17 - Blocked credit for construction of immovable property under Section 17(5)(c) and (d)

Input tax credit for consumer funded jobs - Blocked credit for construction of immovable property under Section 17(5)(c) and (d) - ITC for inputs and input services used in undertaking consumer funded jobs is not available to the applicant. - HELD THAT: - The Authority examined the nature of supplies and the use of inputs and found that the assets and inputs deployed in performing consumer funded jobs vest with the applicant and are part of the infrastructure necessary for the principal supply of electricity transmission and distribution. The applicant itself admitted that such inputs (cables, sub stations, transformers etc.) are inputs for its principal supply of electricity transmission and distribution and are not connected with the ancillary taxable services listed by the applicant. Having regard to the exclusion of works/ goods used for construction of immovable property (other than plant and machinery) from ITC under the blocked credit provisions, and the settled meaning of plant and machinery in the Explanation to Section 17, the Authority held that the inputs used in creating infrastructure for electricity transmission/distribution do not qualify for ITC. The Authority also noted the existing Government circular distinguishing exempt transmission/distribution services from certain taxable ancillary services, and that the question of that circular was the subject of pending litigation, but proceeded on the record before it to conclude non eligibility. [Paras 8, 9, 16]

Not eligible to claim ITC on inputs and input services used in consumer funded jobs.

ITC on capital goods used for creating infrastructure (plant and machinery) - Definition of 'plant and machinery' in Explanation to Section 17 - Blocked credit for construction of immovable property under Section 17(5)(d) - ITC for capital goods used in undertaking consumer funded jobs (creating infrastructure for electricity distribution) is not available to the applicant. - HELD THAT: - The Authority considered the applicant's contention that transformers, RMUs, networks and similar infrastructure qualify as plant and machinery. Applying the Explanation to Section 17, which confines 'plant and machinery' to apparatus, equipment and machinery fixed to earth by foundation or structural support and used for making outward supplies, the Authority found that the immovable property created by the applicant in these consumer funded jobs does not fall within the category of plant and machinery for the purposes of claiming ITC. Consequently, goods and services used in construction of such immovable property are subject to the blocked credit provisions and ITC on capital goods in respect of those works is denied. The Authority referred to a consistent advance ruling of another State AAR on similar facts and relied upon the factual admissions in the applicant's filings to reach its conclusion. [Paras 8, 9, 15, 16]

Not eligible to claim ITC on capital goods used in creating infrastructure for electricity distribution.

Reversal and apportionment of ITC under Section 17(2) read with Rules 42 and 43 - Questions on reversal/apportionment of ITC under Section 17(2) read with Rules 42 and 43 are not relevant as ITC itself is held to be not available. - HELD THAT: - Because the Authority concluded that the applicant is not eligible to claim ITC on inputs, input services and capital goods used in consumer funded jobs, the consequential questions whether any portion of such ITC would require reversal or apportionment under Section 17(2) and the applicable Rules were rendered academic. The Authority therefore declined to undertake any computation or direction on reversal/apportionment. [Paras 9]

Not relevant in view of the findings that ITC is not available.

Final Conclusion: The Authority rules that the applicant is not eligible to claim input tax credit on inputs, input services or capital goods used in consumer funded jobs for creating infrastructure for electricity distribution; consequential questions of reversal or apportionment of ITC are rendered not relevant.

Input Tax Credit - consideration - book adjustment / netting off of receivables and payables - payment entered in books of account as time of supply - Section 16(2) second proviso - reversal for non-payment of consideration - supply - distinct persons / distinct persons by virtue of multiple GSTINs - Schedule I - supply between related or distinct persons even if without consideration - place of supply and inter-state/intra-state determination where goods delivered to third party on direction of another

Input Tax Credit - consideration - book adjustment / netting off of receivables and payables - Section 16(2) second proviso - reversal for non-payment of consideration - payment entered in books of account as time of supply - Netting off of receivables/payables by one GSTIN on behalf of another GSTIN of the same company or by way of book adjustment with a supplier constitutes payment for purposes of entitlement to input tax credit under the second proviso to Section 16(2) of the CGST Act. - HELD THAT: - The authority examined the definition of "consideration" which includes any payment "in money or otherwise" and noted that entries in books of account are recognised modes of payment under the time of supply provisions (Sections 12 and 13 explanations). The second proviso to Section 16(2) conditions ITC on payment of the amount towards value of supply with tax within 180 days but does not prescribe a particular mode. Accounting and set off principles (including the concept of book accounts and offset where legally enforceable rights to set off exist) support that reduction of book debt or netting off is a form of payment/consideration when accepted by the payee and reflected in the parties' statements and books. Accordingly, payment effected by netting off/ book adjustments satisfies the proviso and permits retention of ITC subject to other statutory conditions and rules (Sections 16, 17, 18 and relevant rules). [Paras 7]

Yes; book adjustment/netting off qualifies as payment and, when all other conditions are met, ITC is admissible.

Supply - distinct persons / distinct persons by virtue of multiple GSTINs - Schedule I - supply between related or distinct persons even if without consideration - place of supply and inter-state/intra-state determination where goods delivered to third party on direction of another - Whether book adjustments/settlement of dues between GSTINs of the same company or payment by Head Office give rise to a supply between those GSTINs. - HELD THAT: - For the enumerated scenarios (paras 4.2.1 to 4.2.5 and 4.2.7 to 4.2.8) the authority held that settlement by another GSTIN or the Head Office is a mere transaction in money and does not create any separate supply under Section 7; there is no underlying new supply beyond the original supplies received by the respective GSTINs. However, the authority identified a materially different factual situation in the sixth scenario (para 4.2.6) where old gold supplied by a franchisee is settled by the applicant arranging delivery of new gold ornaments of equal value from a distinct person to the franchisee. In that situation there are two distinct supplies: (i) old gold from franchisee to applicant, and (ii) supply of new ornaments from the distinct person to the franchisee directed by the applicant. Such transactions fall within the scope of supply and attract GST with place and nature of tax to be determined under IGST provisions (Sections 7, 8 and 10 of the IGST Act) as explained. [Paras 8]

Generally no supply arises from mere book adjustments or Head Office payment; but the specific fact pattern described in para 4.2.6 constitutes separate taxable supplies and will attract GST as applicable.

Final Conclusion: The Authority ruled that netting off/payments by book adjustment between GSTINs of the same entity or between recipient and supplier satisfies the payment requirement in the second proviso to Section 16(2) and allows retention of ITC subject to statutory conditions; ordinarily such settlements do not themselves constitute a supply between GSTINs, except where the factual arrangement (as in para 4.2.6) effectively results in separate supplies, which will be taxable and require determination of place and nature of supply under the IGST provisions.

Works contract - Composite supply - Mixed supply - Advance ruling admissibility - Exemption under Notification No. 12/2017 as amended by Notification No. 32/2017 - Concessional rate under Notification No. 24/2017 (Item (vi) of SI No. 3 of Notification No. 11/2017) - Time of supply

Works contract - Composite supply - Schedule II treatment of works contracts - Nature of services rendered by CoPT under the MoU for reconstruction of the North Jetty. - HELD THAT: - The MoU requires CoPT to execute construction works including demolition and reconstruction of an immovable jetty and to engage contractors for execution. Section 2(119) defines 'works contract' to include contracts for building, construction, completion, erection, installation, fitting out, repair, maintenance, renovation or alteration of any immovable property where transfer of property in goods is involved. Item 6(a) of Schedule II treats composite supply of works contracts as supply of services. Applying these provisions to the terms of the MoU, the activity undertaken by the applicant for construction of the jetty falls within the definition of 'works contract' and is to be treated as a supply of services. [Paras 7]

The activity undertaken by the applicant for construction of the jetty is a 'Works Contract' and is treated as a supply of services.

Exemption under Notification No. 12/2017 as amended by 32/2017 - Government Entity - Condition of consideration being received as grant - Whether CoPT, as a Government Entity, can claim exemption under Notification No.12/2017 as amended by Notification No.32/2017 for supplies to the Indian Navy. - HELD THAT: - The inserted entry (Sl. No. 9C) in Notification No.12/2017 provides nil rate where (inter alia) the supplier is a 'Government Entity', the recipient is the Central/State/Local Government (or specified person) and the consideration is received in the form of grants from such government. CoPT qualifies as a 'Government Entity' and the Indian Navy is a Central Government recipient, satisfying the supplier and recipient conditions. However, the MoU and supporting documents do not demonstrate that consideration for the services is received by CoPT in the form of grants from the Central Government. The absence of the fourth condition is fatal to claiming the exemption under the cited entry. [Paras 7]

The service provided by the applicant to the Indian Navy is not eligible for exemption under Sl. No. 9C of Notification No.12/2017 as inserted by Notification No.32/2017 because the consideration is not shown to be received in the form of grants.

Concessional rate under Notification No. 24/2017 (Item (vi) of SI No.3 of Notification No.11/2017) - Works contract supplied to Central Government - Temporal applicability linked to time of supply - Omission of entry by Notification No.03/2022 - Whether CoPT is eligible for the reduced rate (12%) for the works contract services provided to the Indian Navy and the temporal scope of that concession. - HELD THAT: - The amended entry (Item (vi) of SI No.3 of Notification No.11/2017) grants a concessional combined rate (12%) for composite supply of works contracts provided to the Central Government where the works are civil structures meant predominantly for non-commercial public use; an explanation excludes activities undertaken by the government in its capacity as a public authority from the term 'business'. The reconstruction of the jetty for the Indian Navy is a works contract supplied to the Central Government for use in public authority activities and thus falls within the scope of the concessional entry. However, that concessional entry was omitted by Notification No.03/2022 effective 18.07.2022. Consequently, the concessional 12% rate applies only to supplies for which the time of supply (as per Sections 13 and 14) falls between 21.09.2017 and 17.07.2022; supplies with time of supply on or after 18.07.2022 are taxable at the general rate (18%). [Paras 7]

The applicant is entitled to the concessional 12% GST for supplies whose time of supply falls between 21.09.2017 and 17.07.2022; supplies on or after 18.07.2022 are taxable at 18% due to omission of the concessional entry.

Advance ruling admissibility - Binding effect limited to applicant and jurisdictional officer - Admissibility of questions seeking ruling on taxability of contractors/sub-contractors and claim for refund (Questions 4, 5 and 6). - HELD THAT: - Section 95/97/103 restrict advance rulings to matters relating to supplies undertaken or proposed to be undertaken by the applicant and makes such rulings binding only on the applicant and its jurisdictional officer. Questions 4 and 5 seek clarity on taxability of supplies made by contractors/sub-contractors to CoPT; those transactions are not supplies undertaken by the applicant and a ruling would not bind the suppliers or their officers. Question 6 seeks entitlement to claim refund of excess tax paid, which is not a matter enumerated in Section 97(2). Accordingly, these questions fall outside the scope of admissible advance-ruling subjects. [Paras 7]

No ruling given on Questions 4 and 5 as they are not admissible; no ruling given on Question 6 as it is not covered by Section 97(2).

Final Conclusion: The Authority rules that (i) the activity under the MoU is a 'works contract' and treated as a supply of services; (ii) exemption under Notification No.12/2017 as amended by 32/2017 is not available because consideration is not received as a grant; (iii) the concessional 12% rate applies only for supplies whose time of supply falls between 21.09.2017 and 17.07.2022, and supplies on or after 18.07.2022 attract 18%; and (iv) questions concerning contractors/sub-contractors and refund entitlement are not admissible for advance ruling and therefore no ruling is given on them.

Eligibility for input tax credit - Time of supply of services and tax invoice - Reverse charge liability for renting of motor vehicles to a body corporate irrespective of supplier's registration - Scope and admissibility of advance ruling applications - Exemption for pure services / composite supplies to government entities (admissibility question)

Scope and admissibility of advance ruling applications - Advance ruling cannot be given on taxability of inward supplies received by the applicant where the question does not relate to a supply undertaken or proposed to be undertaken by the applicant. - HELD THAT: - The Authority examined the definition of 'advance ruling' and the subjects enumerated in Section 97(2) and observed that an advance ruling is available only in relation to supplies of goods or services being undertaken or proposed to be undertaken by the applicant and on matters specified in Section 97(2). A recipient seeking a ruling on the taxability of its inward supplies does not bring the supplier or the supplier's jurisdictional officer within the binding scope of the ruling. Consequently the question on whether pure services or composite supplies (with goods component not exceeding 25%) provided by contractors to KSEBL are exempt was not admissible for an advance ruling and no ruling on that question could be given. [Paras 7]

Question on exemption of services supplied to KSEBL is not admissible for advance ruling and no ruling is given.

Eligibility for input tax credit - Apportionment and restrictions under Section 17 and Rules 42/43 - KSEBL is eligible to avail input tax credit on inward supplies used for Deposit Works, subject to the conditions and restrictions of Sections 16 and 17 of the CGST Act and Rules 42 and 43 of the CGST Rules. - HELD THAT: - The Authority considered Sections 16 and 17 which prescribe eligibility and conditions for taking input tax credit and the apportionment/reversal mechanics, together with Rules 42 and 43 which provide the formulae where inputs/input services/capital goods are partly used for taxable and partly for exempt supplies. It noted that the outward supply of Deposit Works by KSEBL is taxable; therefore tax paid on inputs, input services and capital goods used or intended to be used for providing those services is available as credit, subject to possession of prescribed tax documents, supplier furnishing details, receipt of goods/services, payment of tax to government, timely return filing and the other statutory conditions and restricted apportionment under Section 17 and the Rules. [Paras 7]

For all three Deposit Work scenarios, KSEBL may claim input tax credit subject to the conditions and restrictions of Sections 16 and 17 read with Rules 42 and 43.

Reverse charge liability for renting of motor vehicles to a body corporate irrespective of supplier's registration - KSEBL, being a body corporate, is liable to pay GST under reverse charge for renting of motor vehicles provided by any person other than a body corporate, irrespective of whether the supplier is registered. - HELD THAT: - The Authority examined Notification No. 13/2017 (as amended) which notifies services on which tax is payable on reverse charge and noted the insertion/amendments relating to renting of motor vehicles where the supplier is any person other than a body corporate and does not issue an invoice charging the specified rate. Since KSEBL is a body corporate, the entry applies and the liability to discharge tax under reverse charge arises on the recipient (KSEBL) for such motor vehicle renting services irrespective of the supplier's registration status. [Paras 7]

KSEBL is liable to pay GST under reverse charge for renting of passenger motor vehicles received from persons other than a body corporate, irrespective of the supplier's registration.

Time of supply of services and tax invoice - Treatment of advance receipts and receipt voucher issuance - Tax invoice for Deposit Works must be issued within 30 days from date of supply; advance payments must be evidenced by receipt vouchers and the tax on advances be discharged when received and reported in returns. - HELD THAT: - The Authority applied Section 31(2) read with Rule 47 which prescribe that, for taxable services, a tax invoice be issued within thirty days from the date of supply. It further applied Section 13(2)(a) and the explanation thereto to hold that to the extent covered by an advance payment the supply is deemed made and the time of supply for that portion is the month in which payment is received. Consequently the supplier (KSEBL) must issue a receipt voucher on receipt of advance payment (Section 31(3)(d) read with Rule 50), discharge applicable tax through the monthly return (GSTR-3B) for the month of receipt, and report the advance in GSTR-1 (Table 11) for adjustment when the final invoice is issued. [Paras 7]

KSEBL shall issue tax invoices for Deposit Works within 30 days of supply; for advance payments it shall issue receipt vouchers, pay tax in the month of receipt and report the same in returns as prescribed.

Final Conclusion: The Authority declined to rule on the exemption question as inadmissible for advance ruling; held that input tax credit on Deposit Works is available to KSEBL subject to statutory conditions and apportionment rules; held KSEBL liable to reverse charge on specified rent a cab services received from non body corporate persons irrespective of supplier registration; and clarified the timing and documentary requirements for issuing invoices and accounting for advance receipts in Deposit Works.

Advance ruling - joint venture / association of persons as a distinct person - supplier and recipient of supply - supply between distinct persons / constituents - consideration as essential for supply (except Schedule I) - related persons and Schedule I - supply without consideration - educational services exempt under Notification No. 12/2017 - professional, technical and business services taxable under Notification No. 11/2017 - financial services - extending deposits under Heading 9971 (exempt)

Advance ruling - joint venture / association of persons as a distinct person - supplier and recipient of supply - Admissibility of a ruling on who is the recipient of service vis-a -vis the applicant in the proposed joint venture - HELD THAT: - The Authority held that the proposed educational project will be executed by the joint venture (an unincorporated association/AOP) which, once constituted, is a distinct "person" separate from its constituent members. An advance ruling under the Act is limited to questions in respect of supplies being undertaken or proposed to be undertaken by the applicant. Since the supply in question (operation of the educational institution and supply of educational services to students) is to be undertaken by the joint venture and not by the applicant in its individual capacity, the question concerning the recipient of service vis-a -vis the applicant does not fall within the scope of clauses of section 97(2) and is not admissible for advance ruling. [Paras 11, 12]

No ruling can be given as the question is not within the scope of advance ruling in respect of supplies undertaken or proposed to be undertaken by the applicant.

Advance ruling - supply by the joint venture to students - educational services exempt under Notification No. 12/2017 - Admissibility of a ruling on whether amounts paid by students to the jointly operated educational institution would be liable to GST - HELD THAT: - The Authority found that the supply of educational services to students is to be made by the joint venture (the educational institution) and not by the applicant. As the question does not concern a supply undertaken or proposed to be undertaken by the applicant, it falls outside the matters on which an advance ruling may be given under section 97(2). Consequently, no ruling on the GST liability of fees paid by students to the institution could be rendered in this application. [Paras 12, 19, 32]

No ruling can be given since the question is not in relation to supplies undertaken or proposed to be undertaken by the applicant.

Supply between distinct persons / constituents - supplier and recipient of supply - professional, technical and business services taxable under Notification No. 11/2017 - Whether the applicant's share of revenue drawn from the jointly operated educational institution is liable to GST - HELD THAT: - The Authority concluded that the educational institution (the joint venture) is a separate person which receives educational services from the applicant (input services provided by the applicant for running the institution). The portion of revenue paid by the joint venture to the applicant in respect of the applicant's services constitutes consideration received by the applicant from one person to another and therefore amounts to a supply under section 7. Such services supplied by the applicant fall under Heading 9983 (other professional, technical and business services) and are taxable at the rates specified in Notification No.11/2017 (subject to applicable CGST/SGST). [Paras 13, 14, 15, 19, 20]

Yes. The service supplied by the applicant to the educational institution (the joint venture) is liable to GST as per Notification No.11/2017.

Related persons and Schedule I - supply without consideration - financial services - extending deposits under Heading 9971 (exempt) - consideration as essential for supply (except Schedule I) - Whether the interest free refundable deposit made by the applicant to CECPL is liable to GST - HELD THAT: - Although the deposit is interest free and repayable (thus lacking monetary consideration), the applicant and CECPL are treated as "related persons" because together they control the joint venture. Supplies between related or distinct persons made in the course or furtherance of business are treated as supply under Schedule I even when made without consideration. The activity of extending a deposit falls within the financial services classification (Heading 9971). However, such services by way of extending deposits, insofar as the consideration is represented by interest, are covered by the exemption in Notification No.12/2017. The Authority therefore treated the transaction as a supply (per Schedule I and related person rules) but held it exempt under the applicable notification. [Paras 21, 26, 28, 29, 31]

The interest free refundable deposit constitutes a supply under the Act but is exempt from GST under the relevant entry in Notification No.12/2017 (Heading 9971).

Advance ruling - Admissibility of a ruling on who is the recipient of service vis-a -vis CECPL and on liability of CECPL's share of revenue - HELD THAT: - The Authority observed that questions directed to determine the recipient vis a vis CECPL and the GST liability of CECPL's share of revenue do not concern supplies undertaken or proposed to be undertaken by the applicant (the applicant is not the supplier in relation to those specific questions). Under section 95/97 the advance ruling sought by the applicant cannot address supplies that are not those of the applicant; accordingly such questions are outside the Authority's jurisdiction in this application. [Paras 12, 32]

No ruling can be given for those questions as they are not in relation to supplies undertaken or proposed to be undertaken by the applicant.

Final Conclusion: The Authority declined to rule on questions that concern supplies to or by the joint venture (the educational institution) because those supplies are not undertaken or proposed to be undertaken by the applicant in its individual capacity. It held that the applicant's share of revenue received from the joint venture for services supplied by the applicant to the educational institution is a taxable supply (Notification No.11/2017), whereas the proposed interest free refundable deposit, though constituting a supply between related persons, is exempt under Notification No.12/2017.

Section 10(46) of the Income Tax Act, 1961 - remand for fresh consideration - notification dated 24.12.2020 - personal hearing - speaking order - interim non-application of adverse order

Section 10(46) of the Income Tax Act, 1961 - remand for fresh consideration - notification dated 24.12.2020 - Application filed by the petitioner seeking benefit under Section 10(46) for the Assessment Years 2019-20 to 2023-24 remitted to the concerned authority for fresh decision. - HELD THAT: - The writ petition was disposed by directing the concerned authority to decide the petitioner's application dated 06.04.2021, which seeks extension of the benefit reflected in the notification dated 24.12.2020, in respect of the Assessment Years specified in that application. The court did not adjudicate the merits of entitlement under Section 10(46) of the Income Tax Act, 1961 but mandated fresh consideration in light of the notification cited and the judgments referred to in the order. The decision is to be rendered after the authority examines the application on record and applies the relevant legal principles to the AYs 2019-20 to 2023-24. [Paras 8]

Application remitted to the concerned authority for fresh disposal within six weeks of receipt of the judgment, with liberty to the authority to decide on merits.

Personal hearing - speaking order - interim non-application of adverse order - Procedural directions relating to hearing, form of the order to be passed, and interim protection against adverse effect of any decision. - HELD THAT: - The court directed that the concerned authority shall accord a personal hearing to the authorised representative of the petitioner, with notice indicating date, time and venue; the hearing may be conducted via video conferencing. The authority is required to pass a speaking order, bearing in mind the judgments referred to in the petition and the notification dated 24.12.2020. Further, the court provided interim protection by directing that any decision adverse to the petitioner's interest shall not be given effect to for eight weeks from the date such decision is rendered, thereby affording the petitioner time to seek appropriate remedy if aggrieved. [Paras 8, 10]

Directions issued for personal hearing and speaking order; any adverse decision shall not be given effect to for eight weeks from its date.

Final Conclusion: Writ petition disposed by directing the concerned authority to decide the petitioner's application for benefit under Section 10(46) for AYs 2019-20 to 2023-24 within six weeks, after affording a personal hearing and by passing a speaking order; any adverse decision shall not be given effect to for eight weeks, and the petitioner retains liberty to pursue appropriate remedies.

Revision u/s 264 - validity of Reopening of assessment u/s 147 - notice u/s 148 was validly served - As per the High Court judgment [2023 (1) TMI 1269 - ALLAHABAD HIGH COURT] the argument raised by the petitioner has no legs to stand as the findings recorded by the Assessing Authority was not put to challenge by the Assessee before any Forum and raising of plea before this Court u/a 226 of the Constitution of India is not maintainable as the findings recorded by the Assessing Authority was never challenged before the Appellate/Revisional Forum - HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. Special leave petition is accordingly dismissed.

All pending applications are disposed of.

Rectification for mistake apparent from the record - limitation under Section 245D(6B) - exclusion of time spent pursuing an alternate remedy from limitation - consent recorded in an order - incontestability of judicial record regarding concessions

Limitation under Section 245D(6B) - exclusion of time spent pursuing an alternate remedy from limitation - Whether the rectification application under Section 245D(6B) was barred by limitation. - HELD THAT: - The Commission found that the order under Section 245D(4) was passed on 20.09.2016 and that the six month period for filing a rectification application accordingly ran up to 31.03.2017. The Department filed a writ petition on 10.02.2017 which was dismissed on 21.06.2018. Applying the principle that time spent pursuing an alternate remedy may be excluded from the period of limitation (as applied by the Commission with reference to the Apex Court's decision in M.P. Steel), the Commission excluded the period 10.02.2017 to 21.06.2018 and calculated the time available for filing the rectification application as from 01.10.2016 to 09.02.2017 (four months and nine days) and from 22.06.2018 to 21.07.2018 (51 days). The rectification application was filed on 22.11.2018, which the Commission held was beyond the six month period and therefore barred by limitation. This court found no error in the Commission's limitation conclusion and recorded agreement with the computation and the application of the exclusion principle to the facts of the case. [Paras 3, 4]

The rectification application was barred by limitation and the Commission did not err in rejecting it.

Final Conclusion: The petition is dismissed; the High Court upholds the Commission's rejection of the rectification application as time barred, while noting an open question (not decided) whether the asserted non consent recorded in the Commission's order would amount to a "mistake apparent from the record" capable of rectification in a proper case.

Commercial expediency - deductibility of interest under Section 36(1)(iii) - revenue neutrality - consistency in tax treatment

Commercial expediency - consistency in tax treatment - deductibility of interest under Section 36(1)(iii) - Whether the respondent/assessee was required to re-establish commercial expediency in AY 2015-16 for a loan taken in and about AY 2005-06 where interest had been consistently allowed in earlier years - HELD THAT: - The Court observed that the loan in question was availed in and about AY 2005-06 and that interest paid had been allowed as deductible expenditure by the revenue consistently for AYs 2005-06 to 2011-12. The tribunal and the CIT(A) reversed the assessing officer's later disallowances for subsequent years. Having regard to that consistent treatment and the prior acceptance by the revenue when the loan was first taken and in subsequent years, the Court held that the assessee was not required to re-demonstrate commercial expediency in each subsequent year including AY 2015-16. The assessing officer's insistence on fresh proof of commercial expediency for the year under appeal ignored the prior course of treatment and was therefore unsustainable. [Paras 15, 16]

The requirement to demonstrate commercial expediency anew for AY 2015-16 was rejected; prior acceptance and consistent allowance obviated the need for re-demonstration.

Revenue neutrality - deductibility of interest under Section 36(1)(iii) - Whether allowing the interest deduction in the hands of the partnership firm would cause loss of revenue to the revenue - HELD THAT: - The Court considered the practical tax effect of disallowing interest in the hands of the partnership firm and concluded that such disallowance would not result in loss to the revenue because any disallowance at the firm level would correspondingly lead to allowance in the hands of the partners. The revenue's contention that allowing interest to the firm would cause revenue loss was therefore negatived on the basis of revenue neutrality. [Paras 15, 17]

Allowing the interest deduction in the hands of the partnership firm was held to be revenue neutral; there would be no loss to the revenue.

Final Conclusion: The Court declined to interfere with the Tribunal's decision for AY 2015-16, upholding the CIT(A) and dismissing the revenue's appeal; the delay applications were condoned and the appeal is closed.

Permanent Establishment - Article 5(5) of the India Singapore DTAA - 183 days threshold for services forming a Permanent Establishment - connection with the exploration, exploitation or extraction of mineral oils - operation of section 44BB in relation to services connected with exploration of mineral oils

Permanent Establishment - Article 5(5) of the India Singapore DTAA - 183 days threshold for services forming a Permanent Establishment - connection with the exploration, exploitation or extraction of mineral oils - operation of section 44BB in relation to services connected with exploration of mineral oils - Whether the period of more than 183 days for deeming a non-resident to have a Permanent Establishment in India begins from the date the drilling rig entered the contracting state to undergo upgrades/positioning or from the date on which actual drilling operations commenced - HELD THAT: - The Court upheld the factual and legal conclusion that the time for counting the 183 day threshold begins when the rig entered the contracting state and commenced activities preparatory to performing the contract for GSPC (fabrication, upgradation, positioning and enabling operations), rather than only from the date on which active drilling commenced. The minutes of the meeting dated 27 April 2010 and the bill of entry showing arrival in April 2010 establish that the rig was in India for the purpose of rendering services or facilities in connection with exploration/exploitation of mineral oils. The Court accepted the ITAT's reasoning that preparatory operations carried out in India to make the rig suitable to perform the contracted activities cannot be isolated from the subsequent drilling for the purpose of determining whether an enterprise provided services in the contracting state in connection with mineral oil operations for more than 183 days. Consequently, the presence and preparatory work from April 2010 satisfied the Article 5(5) criterion and rendered the assessee taxable under the regime applicable to such services, including the operation of section 44BB as engaged in previous years. [Paras 12, 13]

Count of days commences from the date the rig entered India and began preparatory/upgradation/positioning operations (April 2010); therefore a PE existed and the ITAT's order upholding that conclusion is affirmed.

Final Conclusion: No substantial question of law arises; the High Court dismissed the appeal and affirmed the ITAT's conclusion that the assessee had a Permanent Establishment in India from the date the rig entered and underwent preparatory operations, thereby satisfying the Article 5(5) >183 days criterion for AY 2011 12.

Validity of order under Section 148A(d) - Issuance of notice under Section 148 - Requirement of providing break-up of transactions reported under Section 285BA(1) - Duty to accord personal hearing and de novo re-examination by Assessing Officer

Validity of order under Section 148A(d) - Issuance of notice under Section 148 - Impugned order dated 15.04.2023 under Section 148A(d) and consequential notice dated 16.04.2023 issued under Section 148 were set aside and matter remitted for fresh consideration. - HELD THAT: - The Court found that the Assessing Officer had given short shrift to the reply filed by the petitioner to the Section 148A(b) notice. Having regard to the explanation and material placed on record by the petitioner and the acceptance by counsel for respondents that no counter-affidavit was necessary, the Court concluded that the proper course was to require a fresh, de novo examination rather than sustain the impugned order and notice. On this basis the order under Section 148A(d) and the consequential notice under Section 148 were set aside and the matter was remitted to the AO for re examination and fresh decision-making. [Paras 4, 5, 10, 13, 14]

Order dated 15.04.2023 under Section 148A(d) and notice dated 16.04.2023 under Section 148 set aside; AO directed to carry out de novo exercise.

Requirement of providing break-up of transactions reported under Section 285BA(1) - Duty to accord personal hearing and de novo re-examination by Assessing Officer - AO directed to furnish break-up of the specified transactions reported under Section 285BA(1) and to issue notice for personal hearing before proceeding further. - HELD THAT: - The Court noted that the petitioner had specifically sought details and break-up of the high value entries reported under Section 285BA(1), contending error at the information extraction or reporting level and asserting prejudice from absence of particulars. In view of the petitioner's response and the respondents' concession that the AO should re examine the matter, the Court ordered that before any further action the AO must supply the detailed break up of the transactions amounting to the figure identified by the AO as reportable under Section 285BA(1). The AO was also directed to issue notice indicating date and time and to accord personal hearing to the petitioner or his authorised representative as part of the de novo exercise. [Paras 10, 12, 13, 14, 15]

AO to furnish detailed break-up of the reportable transactions under Section 285BA(1) and to issue notice for personal hearing before proceeding further.

Final Conclusion: Writ petition disposed by setting aside the impugned Section 148A(d) order and the consequent Section 148 notice for AY 2019-20; matter remitted to the Assessing Officer for a de novo reconsideration, with directions to furnish the break-up of transactions reported under Section 285BA(1) and to accord personal hearing to the petitioner or his authorised representative.

Reliance on a tentative inquiry commission report for making income additions - Requirement of independent evidence by the Assessing Officer to make additions for under invoicing - Distinction between a trader and a miner in tax inquiries relating to export under invoicing - Finality of declared export value accepted by Customs and its bearing on income tax additions

Reliance on a tentative inquiry commission report for making income additions - Requirement of independent evidence by the Assessing Officer to make additions for under invoicing - Distinction between a trader and a miner in tax inquiries relating to export under invoicing - Finality of declared export value accepted by Customs and its bearing on income tax additions - Whether the addition made by the Assessing Officer on account of alleged under invoicing of export sales could be sustained where it was founded solely on the Justice M.B. Shah Commission report without independent evidence and where the assessee is a trader whose declared export value was accepted by Customs. - HELD THAT: - The Tribunal accepted the view that the Shah Commission's report was a tentative/investigative document which itself contemplated further verification and investigation by enforcement agencies and the Income tax Department, and therefore could not, by itself, constitute conclusive proof to compute undisclosed sales. The Assessing Officer had not collected independent evidence demonstrating that the assessee had under invoiced exports; instead the addition was made on the basis of the Commission's report without applying independent mind or pointing to defects in the assessee's accounts. The Commissioner (Appeals) correctly noted that the assessee was a trader (not a miner), had purchased royalty paid iron ore from the open market, sold at arm's length, and that the declared export value was accepted by Customs (with export duty paid), circumstances which, together with the absence of independent evidentiary material, precluded sustaining the addition. The Tribunal followed the ratio of the Gujarat High Court in Raw Mining and Industries Pvt. Ltd., holding that a tentative inquiry report cannot be equated to a decree and cannot substitute for primary evidence required to justify additions; consequently the addition based solely on that report was liable to be deleted. The Tribunal found no infirmity in the Commissioner (Appeals)'s approach and declined to interfere. [Paras 8, 9]

The addition made by the Assessing Officer on account of alleged under invoicing was deleted; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s deletion of the addition for under invoicing for AY 2010-11, holding that the Assessing Officer could not sustain the addition solely on the basis of the tentative Shah Commission report in the absence of independent evidence and noting the assessee was a trader whose declared export values were accepted by Customs; Revenue's appeal dismissed.

Taxation of undisclosed receipts (on-money) - estimation of income by applying a percentage to on-money receipts - profit element of on-money as the taxable quantum - application of binding precedent in estimation of additions

Taxation of undisclosed receipts (on-money) - estimation of income by applying a percentage to on-money receipts - profit element of on-money as the taxable quantum - application of binding precedent in estimation of additions - Addition in respect of on-money receipts shall be estimated at 15% of the undisclosed on-money receipt of Rs. 1,32,70,000/-. - HELD THAT: - The Tribunal considered the facts that during survey proceedings the assessee admitted undisclosed on-money receipts aggregating Rs. 1,32,70,000/- and that the AO had made an addition of the entire amount while the CIT(A) restricted the addition to 20% of the net profit of the undisclosed receipt. The Tribunal noted the assessee's plea that only the profit element of the on-money, and not the entire receipt, ought to be taxed and found that a co-ordinate decision of the Hon'ble High Court in Jay Builder vs. ACIT had sustained a Tribunal order limiting additions to 15% of on-money receipts on identical facts. Respectfully following that jurisdictional precedent, the Tribunal quashed the CIT(A)'s order to the extent it directed a different estimate and directed the AO to compute the addition at 15% of the admitted on-money receipts of Rs. 1,32,70,000/-. The Tribunal therefore applied the legal principle that where undisclosed on-money receipts are admitted, the taxable profit element may be estimated by applying an appropriate percentage, and on the facts and precedent before it 15% was held to be the appropriate rate. [Paras 5]

Appeal partly allowed and the matter remitted to the AO to compute addition at 15% of the on-money receipts of Rs. 1,32,70,000/-.

Final Conclusion: The Tribunal allowed the appeal in part, directing the Assessing Officer to estimate the addition at 15% of the admitted undisclosed on-money receipts for Assessment Year 2020-21, following the cited jurisdictional precedent.

Deduction under section 80-IA - Section 80IA(7) - audit report with return as condition for deduction - Rule 12(2) - requirement to furnish audit report electronically with return - mandatory filing of audit report/Form 10CCB with return - beneficial deduction - liberal construction - distinction between exemption and deduction provisions - precedential effect of Wipro Ltd. on filing requirements for exemption provisions

Deduction under section 80-IA - Section 80IA(7) - audit report with return as condition for deduction - Rule 12(2) - requirement to furnish audit report electronically with return - mandatory filing of audit report/Form 10CCB with return - beneficial deduction - liberal construction - precedential effect of Wipro Ltd. on filing requirements for exemption provisions - distinction between exemption and deduction provisions - Whether the claim for deduction under section 80-IA can be denied because Form 10CCB was not e-filed with the return within the prescribed due date - HELD THAT: - The Tribunal examined whether the failure to e-file Form 10CCB with the original return within the due date disentitles the assessee to deduction under section 80-IA. The CIT(A) had followed a literal reading of Rule 12(2) and section 80IA(7) to hold filing the audit report with the return mandatory and dismissed the appeal. The Tribunal, however, applied the principle that provisions granting tax incentives or deductions should be given a liberal construction. It distinguished the Supreme Court decision in Wipro Ltd. (which dealt with exemption provisions and factual circumstances involving withdrawal of an exemption in a revised return) as resting on different statutory language and facts and therefore not directly applicable. The Tribunal noted that the assessee had filed Form 10CCB on 11-10-2018 and the return was processed by CPC on 04-02-2019, so the audit report was on record before finalisation of assessment. Reliance was placed on precedents and reasoning that, where the substantive conditions for the deduction are satisfied and the audit certificate is placed on record before completion of assessment, a purely procedural lapse in e-filing the certificate with the original return should not defeat a beneficial deduction. Having regard to the distinction between exemption and deduction provisions and the object of section 80-IA as an incentive provision, the Tribunal concluded that denial of the deduction for the procedural lapse was not warranted on the facts of this case. [Paras 4, 6, 7, 8]

The disallowance of deduction under section 80-IA on the ground of late filing of Form 10CCB is not justified on the facts; the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal: the denial of the section 80-IA deduction for late e-filing of Form 10CCB was set aside and the assessee's claim was accepted on the stated facts.

Taxability of commission paid to non-resident for services rendered outside India - Obligation to deduct tax at source under Section 195 of the Income Tax Act, 1961 - Disallowance of expenditure under Section 40(a)(ia) for failure to deduct TDS - Scope of Explanation to Section 9(1)(i) regarding operations carried out in India - Application of the ratio in CIT vs. Toshoku Ltd. regarding non-resident commission agents

Taxability of commission paid to non-resident for services rendered outside India - Obligation to deduct tax at source under Section 195 of the Income Tax Act, 1961 - Disallowance of expenditure under Section 40(a)(ia) for failure to deduct TDS - Application of the ratio in CIT vs. Toshoku Ltd. regarding non-resident commission agents - Whether commission paid to non-resident foreign agents for services rendered outside India, without deduction of tax at source, is taxable in India and disallowable under Section 40(a)(ia), and whether Revenue's additions should be sustained. - HELD THAT: - The Tribunal relied on the ratio of the Hon'ble Supreme Court in CIT vs. Toshoku Ltd., which held that a commission agent who does not carry out any business operation in India and acts as a selling agent outside India does not have income that either accrued or arose in India; receipt in India of sale proceeds remitted by foreign purchasers does not amount to an operation carried out by the non-resident in India as contemplated by the Explanation to Section 9(1)(i). Applying that principle to the facts, the Tribunal concluded that the commission amounts earned by the non-resident for services rendered outside India could not be deemed to be income accruing or arising in India. Consequently, the obligation to deduct tax under Section 195 did not render the expenditure disallowable under Section 40(a)(ia). The Tribunal affirmed the Coordinate Bench's earlier decision in the assessee's own case and found no reason to deviate from the Supreme Court precedent; accordingly the Revenue's additions were not sustained. [Paras 5, 6, 8]

The disallowance of foreign commission under Section 40(a)(ia) and the related addition were deleted; Revenue's appeals are dismissed.

Final Conclusion: Relying on the Supreme Court's decision in CIT vs. Toshoku Ltd. and the Coordinate Bench's precedent in the assessee's own case, the Tribunal held that commissions paid to non-resident agents for services rendered outside India do not accrue or arise in India and therefore are not disallowable for failure to deduct TDS; all three Revenue appeals for A.Y. 2012-13, 2013-14 and 2014-15 are dismissed.

Capital expenditure vs revenue expenditure - principle of mutuality - deduction under section 80P(2)(d) - scope of assessment vis-a -vis return of income - condonation of delay

Capital expenditure vs revenue expenditure - principle of mutuality - Addition of Rs. 65,000 on account of fencing of boundary wall treated as capital expenditure was deleted. - HELD THAT: - The tribunal found that the assessee is a co operative housing society functioning on the principle of mutuality and not carrying on business for profit. The fencing of the boundary wall was held to be of a non enduring nature, liable to natural wear and tear and therefore not a capital expenditure. The Assessing Officer made the addition after observing the amount debited in the income and expenditure account, and no satisfactory explanation had been placed on record during scrutiny; however, on merits the tribunal concluded the expenditure was revenue in nature and directed deletion of the addition. [Paras 4, 5]

Addition of Rs. 65,000 held not to be capital expenditure and deleted.

Deduction under section 80P(2)(d) - scope of assessment vis-a -vis return of income - Addition of Rs. 2,72,502 by invoking disallowance under section 80P(2)(d) was deleted because the deduction was not claimed in the return and the AO exceeded the scope of assessment. - HELD THAT: - The tribunal observed that the claim for deduction under section 80P(2)(d) did not originate in the return of income; the assessee had not claimed such deduction. The Assessing Officer therefore could not, in the assessment, proceed to disallow or treat interest as ineligible under that provision when the matter was not within the scope of the return. Given that the first appellate authority had not addressed the merits, the tribunal on review directed deletion of the addition on the ground that the AO travelled beyond the scope of the return. [Paras 6]

Addition of Rs. 2,72,502 set aside and deleted as beyond the scope of assessment when no deduction under section 80P(2)(d) was claimed.

Final Conclusion: The delay in filing the appeal was condoned and, on merits, both additions-Rs. 65,000 (fencing) and Rs. 2,72,502 (interest treated under section 80P(2)(d))-were deleted and the appeal was allowed.

Accrual of income - advance tax liability - interest under section 234C - effect of registration on transfer of immovable property - advance payment versus sale consideration - Transfer of Property Act, 1882 - transfer by registration

Accrual of income - advance tax liability - interest under section 234C - advance payment versus sale consideration - effect of registration on transfer of immovable property - Liability to pay advance tax and consequent interest under section 234C in respect of capital gains arising from sale of immovable property. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that, as a matter of law and fact, the capital gain accrued only upon completion of the registered transfer on 19/12/2013. Although a pay order dated 14/12/2013 was purchased and cleared on 16/12/2013, that payment constituted an advance receipt/liability until the legal transfer by registration was effected. Applying the principle that advance tax liability arises on accrual of income, and recognising that under the Transfer of Property Act the ownership of immovable property passes by valid registration, the Tribunal held that no income had accrued to the assessee on or before 15/12/2013 and therefore no instalment of advance tax was exigible on that date. Consequently, imposition of interest under section 234C on the basis of the earlier pay order was not warranted. [Paras 3, 4]

No liability to pay advance tax instalment on or before 15/12/2013; interest under section 234C not leviable; CIT(A) order upheld.

Final Conclusion: Revenue's appeal dismissed; order of the CIT(A) annulling the section 154 rectification and holding that advance tax liability (and interest under section 234C) did not arise on or before 15/12/2013 is upheld for A.Y.2014-15.

Revisional jurisdiction under section 263 - No addition in completed/unabated assessments without incriminating material unearthed on search - Assessment under section 153A where no incriminating material was found - Limitation for exercise of revisional power where reassessment arose from earlier reopening - Pr. CIT exceeding jurisdiction under section 263

No addition in completed/unabated assessments without incriminating material unearthed on search - Assessment under section 153A where no incriminating material was found - Sustainability of the Pr. CIT's order under section 263 setting aside the A.O.'s assessment framed under section 153A/143(3) when no incriminating material was seized during search - HELD THAT: - The Tribunal found on the record that the original assessment pursuant to reopening under section 147/143(3) had determined income and that, after search, the A.O. framed assessment under section 153A/143(3) at the same income i.e. no addition was made. There was no material on record to show any incriminating material for A.Y. 2015-16 was found or seized during the search. Applying the legal principle affirmed by the Hon'ble Supreme Court that in absence of incriminating material unearthed during search the A.O. cannot make additions in respect of completed/unabated assessments, the Tribunal concluded that the A.O. could not have made any addition on which the Pr. CIT relied in invoking revisional jurisdiction. Consequently the Pr. CIT's assumption of jurisdiction and setting aside of the 153A/143(3) order on that basis was unsustainable. [Paras 8, 9, 10]

The Pr. CIT's order under section 263 insofar as it set aside the A.O.'s 153A/143(3) assessment on account of alleged failure to make necessary enquiries is unsustainable and is set aside.

Revisional jurisdiction under section 263 - Limitation for exercise of revisional power where reassessment arose from earlier reopening - Pr. CIT exceeding jurisdiction under section 263 - Whether the Pr. CIT could validly invoke section 263 to revise the reassessment instead of revising the earlier assessment and whether limitation precluded such revision - HELD THAT: - The Tribunal noted that where the reassessment arose from an earlier reopening, the proper course for the Commissioner was to revise the earlier assessment order if he considered there were failures of inquiry in that original assessment. Reliance was placed on the principle in Alagendran that the period of limitation for invoking section 263 runs from the date of the order of assessment (and not from the date of reassessment) where the subject matter of revision related to the original assessment. In the present case the window to revise the original order under section 263 had lapsed. Therefore the Pr. CIT, by attempting to revise the 153A/143(3) order instead of the original assessment and beyond the permissible period for revisional action, had exceeded his jurisdiction. [Paras 11, 12]

Pr. CIT exceeded jurisdiction in invoking section 263; the remedy of revising the original assessment was no longer available as the period of limitation had expired.

Final Conclusion: The appeal is allowed: the order of the Pr. CIT dated 10.02.2022 passed under section 263 is set aside and the A.O.'s assessment order dated 29.12.2019 under section 153A/143(3) is restored.

Disallowance under Section 14A read with Rule 8D - no disallowance where no exempt income earned - disallowance cannot exceed actual exempt income - verification of amount of exempt income

Disallowance under Section 14A read with Rule 8D - no disallowance where no exempt income earned - disallowance cannot exceed actual exempt income - verification of amount of exempt income - Whether the addition made under section 14A read with Rule 8D is sustainable where negligible or no exempt income is shown, and if sustainble, whether the disallowance must be restricted to the actual exempt income earned. - HELD THAT: - The Tribunal considered the settled legal position that Section 14A read with Rule 8D cannot be invoked to make a disallowance where no exempt income was earned during the relevant year. Applying that principle and following higher court and coordinate-bench authorities, the Tribunal held that in cases where no exempt income is earned, disallowance u/s 14A r.w. Rule 8D is not permissible. Where some exempt income is in fact shown, any disallowance under Section 14A must be restricted to the amount of actual exempt income. In the present case the assessee admitted an inadvertent disclosure of exempt income of Rs. 2,990, and therefore the Tribunal set aside the earlier disallowance and directed that the disallowance under Section 14A r.w. Rule 8D be restricted to the actual exempt income disclosed (Rs. 2,990). The Tribunal relied on the ratio of the Supreme Court and precedent of coordinate benches to reach this conclusion and directed verification/limitation of the disallowance to the actual exempt income. [Paras 8, 9]

The disallowance under Section 14A r.w. Rule 8D is not sustainable beyond the actual exempt income; the disallowance is restricted to the exempt income of Rs. 2,990 and the orders of the AO and CIT(A) are set aside to that extent.

Final Conclusion: Appeal partly allowed; disallowance under Section 14A read with Rule 8D set aside insofar as it exceeds the actual exempt income and directed to be restricted to Rs. 2,990 for Assessment Year 2014-2015.

Penalty under Section 271(1)(b) of the Income Tax Act, 1961 - non-compliance of notices issued under Section 142(1) - sufficient cause for non-compliance with statutory notices - faceless appellate proceedings and consideration of earlier physical hearing submissions

Penalty under Section 271(1)(b) of the Income Tax Act, 1961 - sufficient cause for non-compliance with statutory notices - non-compliance of notices issued under Section 142(1) - faceless appellate proceedings and consideration of earlier physical hearing submissions - Whether penalty under Section 271(1)(b) could be sustained for alleged non-compliance with notices issued under Section 142(1), having regard to the assessee's asserted reasonable cause and the appellate record. - HELD THAT: - The Tribunal examined the material placed on record and the written submissions of the assessee showing that during the period June 2016 to November 2016 there were criminal proceedings (FIRs) against the company's directors, anticipatory bail applications, arrests and consequent litigation in High Courts. The assessee produced copies of replies and earlier submissions made before the local CIT(A) during physical hearings and evidence of the criminal proceedings. The Assessing Officer proceeded to levy penalty for non-compliance without granting further time despite the assessee's explanation that its representatives and accounting staff were unavailable due to the company's acute liquidity crisis and the directors being embroiled in criminal litigation. The Tribunal found that the faceless appellate order incorrectly recorded non-cooperation by the assessee, whereas documentary evidence established that the assessee had participated in appellate proceedings and had filed detailed replies. On the merits, having regard to the nature and timing of the criminal proceedings and the supporting documents, the Tribunal accepted that the assessee had plausible and sufficient reasons for non-compliance with the notices and that the imposition of penalty was not justified. [Paras 7, 8]

Penalty imposed under Section 271(1)(b) set aside and directed to be deleted.

Final Conclusion: The appeal is allowed; the penalty of Rs. 50,000 levied under Section 271(1)(b) for non-compliance with notices is deleted as the assessee established sufficient cause and had filed submissions which were not properly considered in the faceless appellate order.

Presence of counsel during statutory interrogation - presence within sight but beyond hearing distance - protection against coercion during interrogation - no active role or consultation by counsel during interrogation - interrogation under Section 108 of the Customs Act, 1962

Presence of counsel during statutory interrogation - presence within sight but beyond hearing distance - protection against coercion during interrogation - no active role or consultation by counsel during interrogation - interrogation under Section 108 of the Customs Act, 1962 - Petitioners are entitled to have their advocate present during interrogation under Section 108 of the Customs Act, 1962, provided the advocate remains within visible range but beyond hearing distance and does not participate or consult during the interrogation. - HELD THAT: - The Court observed that earlier Three-Judge authority in Poolpandi rejected a broad right to have counsel participate in interrogation where the lawyer assumed an active role. Distinguishing that decision, the Court affirmed the limited direction given in subsequent precedents permitting an advocate to be present within sight but beyond hearing distance so as to ensure that no coercive methods are used. The Court emphasised that such presence does not permit the lawyer to have consultations or an active participatory role during interrogation; the lawyer's role is solely to observe from a distance to guard against coercion. Applying those principles to the petition, the interim order granting this relief was held to have effectively disposed of the petition and the identical limited protective direction was confirmed.

The petition was allowed to the extent that the petitioners' advocate shall be permitted to be present during interrogation within visible range but beyond hearing distance, without any active role or consultations, and the writ petition was disposed of.

Final Conclusion: The interim order granting the limited protective relief - permitting the petitioners' counsel to be present during interrogation within sight but beyond hearing distance and without any participatory role - disposes of the petition; nothing further survives.

Condonation of delay - finality of findings of fact - interference by appellate court in concurrent findings of fact - identical-issue dismissal as precedent

Condonation of delay - Application for condonation of delay - HELD THAT: - The Court exercised its discretion to condone the delay in filing the appeal. The order records that delay is condoned without further elaboration and the matter proceeded to hearing on merits.

Delay in preferring the appeal was condoned.

Finality of findings of fact - interference by appellate court in concurrent findings of fact - identical-issue dismissal as precedent - Whether the impugned order calls for interference by this Court - HELD THAT: - The Court found that the dispute was concluded by concurrent findings of fact recorded by the authorities below and noted that an identical issue in Civil Appeal No. 1999/2023 had been dismissed by this Court on 27.03.2023. In view of those factual findings and the decision in the identical matter, the Court declined to disturb the impugned order and held that no interference was warranted.

The appeal is dismissed; the impugned order is not interfered with.

Final Conclusion: Delay was condoned and, relying on concurrent findings of fact below and the dismissal of an identical appeal, the Supreme Court dismissed the appeal and declined to interfere with the impugned order.

Jurisdiction to adjudicate under Section 28(4) - limitation period under Section 28(9) - Board's instruction to keep SCNs pending under Section 28(9A)(c) - effect of Canon India on DRI officers as not being "proper officer"

Board's instruction to keep SCNs pending under Section 28(9A)(c) - effect of Canon India on DRI officers as not being "proper officer" - Whether the Board's directives of 17 March 2021 and 16 April 2021 operated to keep in abeyance SCNs issued by jurisdictional Customs Commissionerates rather than SCNs originally issued by DRI officers. - HELD THAT: - The Court examined the Board communications and the Supreme Court's decision in Canon India which held that officers of the DRI are not "proper officer(s)" for issuing SCNs under Section 28. The Board's 17 March 2021 instruction expressly addressed SCNs issued by DRI and directed that the particular SCN against Anil Aggarwal be kept pending; paragraph 4 of that instruction permitted fresh SCNs to be issued by jurisdictional Commissionerates. The 16 April 2021 instruction advised, as a matter of abundant caution, that where DRI had issued original SCNs the same may be re-issued by Deputy/Assistant Commissioners of the port of import, and that further action would be governed by the 17 March directive. The Court held that these communications were therefore directed to situations where the original SCN emanated from the DRI and were not intended to place in abeyance SCNs which were issued by competent Customs authorities post those directives. The Board's instructions thus cannot be read to fetter the jurisdiction of Customs Commissionerates to proceed where the SCN was originally issued by Customs itself. [Paras 7, 8, 13, 14]

The Board's directives applied to SCNs originally issued by DRI officers and did not operate to keep in abeyance SCNs lawfully issued by jurisdictional Customs Commissionerates.

Limitation period under Section 28(9) - jurisdiction to adjudicate under Section 28(4) - Whether proceedings on the impugned SCNs survive after the expiry of the time-period prescribed by Section 28(9) where the Board's instructions are inapplicable. - HELD THAT: - Section 28(4) provides a five-year window from the relevant date to issue notices, with subsection (9) prescribing that determination of amount in cases under sub section (4) be completed within one year from the date of the notice, subject to a single one year extension under the proviso. The Finance Act, 2018 amendment removed the words "where it is possible to do so", giving the one year period a mandatory character. Since the impugned SCNs were issued by Customs Commissionerates after the Board's directives and those directives do not apply to such SCNs, there was no operative reason under Section 28(9A)(c) to defer computation of limitation. As the maximum period under Section 28(9) has expired in the facts of these petitions, the proceedings could not be validly continued and hence do not survive. [Paras 10, 11, 12, 15]

Because Section 28(9)'s statutory period expired and the Board's instructions did not apply to these Customs issued SCNs, the proceedings could not be lawfully continued and have abated.

Jurisdiction to adjudicate under Section 28(4) - limitation period under Section 28(9) - Whether quashing of the impugned SCNs is warranted. - HELD THAT: - Having concluded that the Board's instructions did not justify keeping these SCNs pending and that the statutory timeline under Section 28(9) expired, the Court found no jurisdictional or legal basis for further adjudication of the SCNs in question. The consequence of expiry of the extended statutory period is that the proceedings are deemed concluded; accordingly, the impugned show cause notices could not be allowed to stand. [Paras 15, 16]

The impugned show cause notices are quashed and set aside.

Final Conclusion: Writ petitions allowed; the Court held that the Board's March and April 2021 communications applied to SCNs originally issued by DRI and did not suspend or extend the limitation under Section 28(9) for SCNs issued by jurisdictional Customs Commissionerates, and consequently the impugned SCNs (issued in 2021) stood quashed as the statutory period for finalisation had expired.

Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. - adequacy of Chartered Accountant's certificate for sanction of refund - evidentiary sufficiency of statutory auditor/CA certificate - burden on Revenue to rebut a CA certificate

Adequacy of Chartered Accountant's certificate for sanction of refund - evidentiary sufficiency of statutory auditor/CA certificate - burden on Revenue to rebut a CA certificate - Whether the Chartered Accountant's certificate (stating verification of books for April-June 2011) was sufficient to support sanction of the SAD refund which included Bills of Entry from February-March 2011, and whether the Department discharged its burden to rebut that certificate. - HELD THAT: - The adjudicating authority examined the Chartered Accountant's certificate and held it to be in accordance with the Board Circular governing such certifications. The Commissioner (Appeals) accepted the submission that, in ordinary accounting practice, books of account covering a stated period also encompass earlier entries for past periods unless the Revenue proves that specific amounts relating to the earlier period were not reflected; the Revenue produced no figures or evidence to demonstrate any omission or misstatement. Apart from asserting that the CA certificate did not cover February-March 2011, the Department did not adduce material to discredit the certificate or show that the certified accounting records excluded the Bills of Entry in question. In the absence of any such rebuttal, the CA/statutory auditor certificate remained unchallenged and sufficient to sustain the refund sanction. [Paras 6, 7, 8, 9, 10]

The CA certificate was adequate to support sanction of the refund and the Department failed to rebut it; the appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Department's appeal, holding that the Chartered Accountant's certificate complied with the applicable Board Circular and, in absence of any evidence from the Revenue to the contrary, was sufficient to sustain the sanction of the SAD refund.

Principles of natural justice - right to cross-examination in quasi judicial proceedings - limitation under Section 28 of the Customs Act and voluntary payment/adjustment beyond five years - transaction value in high seas sale - confiscation under Section 111(m) of the Customs Act

Principles of natural justice - right to cross-examination in quasi judicial proceedings - voluntary payment/adjustment beyond five years - Whether the adjudicating authority violated principles of natural justice by not affording personal hearing and opportunity to cross examine persons whose statements were relied upon, and whether the matter requires remand for de novo adjudication. - HELD THAT: - The Tribunal found that the Commissioner's impugned order did not afford Appellants (Shri Dinesh Sharma, Shri Dharmesh Vador and M/s Govindji Gopalji & Sons) an opportunity to be heard in a manner they sought, and that the case against them rested heavily on statements recorded during investigation. While the Commissioner relied on authorities holding that cross examination is not an absolute right in customs adjudication, the Tribunal observed that those precedents did not address cases where statements and alleged voluntary payments post expiry of limitation were central to the case and where voluntariness and the circumstances of payments required examination. Applying the settled proposition that parties should be given a fair opportunity to comment on material relied upon and in view of the specific factual matrix (imports many years earlier and payments claimed to be voluntary), the Tribunal held that these appellants ought to be allowed to defend their case and to cross examine persons whose statements the revenue intends to rely upon. Accordingly, the appeals were allowed and the matter remanded to the original authority for de novo consideration after affording the appellants hearing and opportunity for cross examination; the Tribunal also noted that any question whether a payment was truly voluntary must be examined afresh. [Paras 4, 5]

Appeals of Shri Dinesh Sharma, Shri Dharmesh Vador and M/s Govindji Gopalji & Sons allowed; matters remanded to original authority for de novo adjudication after giving opportunity of hearing and to cross examine persons whose statements are relied upon.

Transaction value in high seas sale - application of admitted transaction evidence to valuation - Whether the transaction value for the two cranes purchased on high seas by A.K. Mani (M/s AKM Enterprises) should be accepted as Rs. 1.25 crore (reflecting refund admitted in his statement) and whether the impugned order against him should be set aside. - HELD THAT: - The Tribunal examined the statement of Shri A. K. Mani recorded during investigation in which he described the purchase, the payments made (initially Rs. 2 crore) and the subsequent refund of Rs. 75 lakhs by the seller, leaving an actual payment of Rs. 1.25 crore. The Tribunal observed that the entire factual statement as made by the buyer should be taken into account when determining transaction value in a high seas sale context. Applying that principle to the material on record, the Tribunal held that the correct transaction value for the two cranes should be taken as Rs. 1.25 crore, which is lower than the value declared on the bills of entry. Taking note that the appellant may challenge declared values in further proceedings but having regard to the admitted facts in his statement, the Tribunal set aside the impugned order insofar as it related to A.K. Mani and allowed his appeal. [Paras 4, 5]

Appeal of A.K. Mani (M/s AKM Enterprises) allowed; impugned order set aside in his respect and transaction value accepted on the basis of his statement.

Final Conclusion: The Tribunal allowed appeals of Shri Dinesh Sharma, Shri Dharmesh Vador and M/s Govindji Gopalji & Sons and remanded their matters to the original authority for de novo adjudication after affording opportunity of hearing and to cross examine persons whose statements the revenue proposes to rely upon; the appeal of A.K. Mani was allowed on the basis that his admitted net payment (after refund) constitutes the transaction value for the two high seas purchases.

Condonation of delay - Statutory right to appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - Limitation period and proviso permitting extension by fifteen days - Sufficient cause test for condonation - Appellate Tribunal's jurisdiction to condone delay

Condonation of delay - Sufficient cause test for condonation - Limitation period and proviso permitting extension by fifteen days - Application for condonation of 14 days' delay in filing the appeal under Section 61(2) proviso of the Insolvency and Bankruptcy Code, 2016 was dismissed for want of sufficient cause. - HELD THAT: - The Tribunal noted that Section 61(2) provides a 30-day period to file an appeal and the proviso permits the Tribunal to allow an additional period not exceeding fifteen days if satisfied that there was sufficient cause for the delay. The appellant, a government agency, became aware of the impugned order on 04.02.2023 and therefore had about 28 days within the primary limitation period to collect requisite material. The appellant, however, allowed the 30-day period to expire and sought condonation only on the 15th day available under the proviso, attributing the delay to time taken in collecting papers from regional offices. The Tribunal observed that the information was otherwise available on departmental websites and that the appellant displayed laxity in pursuing the matter within the statutory period. On this factual record the Tribunal was not satisfied that a sufficient cause had been shown to justify exercise of its discretion under the proviso and therefore dismissed the condonation application. As a consequence, the appeal remained not duly constituted and was dismissed. [Paras 4, 5, 6, 7, 8]

Condonation application dismissed for failure to demonstrate sufficient cause; appeal dismissed as not duly constituted.

Final Conclusion: The application for condonation of delay was refused for want of sufficient cause; accordingly the appeal was held not to be duly constituted and dismissed.

Liability for service tax on mark up/differential freight - distinction between acting as principal and acting as intermediary - application of section 73(3) and section 73(4) of the Finance Act, 1994 - penalty under section 78(1) - requirement of suppression - invocation of section 80 to remit penalty under sections 77(1) and 77(2)

Liability for service tax on mark up/differential freight - distinction between acting as principal and acting as intermediary - Demand of service tax on mark up on ocean freight, container detention charges and toll taxes set aside - HELD THAT: - The Tribunal's earlier decision holding that buying and selling of cargo space by freight forwarders who act on a principal to principal basis does not amount to rendering a taxable service was accepted. The Court relied on the CBEC circular and Division Bench precedents which distinguish cases where the freight forwarder merely acts as an intermediary from cases where the freight forwarder contracts and bears the risk on his own account; where the latter obtains, the profit from sale/purchase of space is not subject to service tax. Applying that reasoning, the demand of service tax on mark up on ocean freight, container detention charges and toll taxes was held not leviable and therefore set aside. [Paras 10, 13, 14]

Demand of service tax on mark up on ocean freight, container detention charges and toll taxes is set aside.

Application of section 73(3) and section 73(4) of the Finance Act, 1994 - Show cause notice invalid to the extent of service tax that the appellant had not disputed and had already paid; section 73(4) not applicable as intention not established - HELD THAT: - The Court accepted the appellant's plea that service tax amounts which were not disputed and had been paid with interest fall within section 73(3) and consequently the show cause notice is invalid to that extent. The Court further held that section 73(4) is inapplicable because the impugned order did not establish intention on the part of the appellant, but only omissions; therefore enhanced consequences under section 73(4) were not attracted. [Paras 10, 13]

Demand raised in the show cause notice is set aside to the extent covered by section 73(3); section 73(4) held not attracted.

Penalty under section 78(1) - requirement of suppression - Penalty under section 78 of the Finance Act set aside as suppression not proved - HELD THAT: - On the facts and in light of the Tribunal's finding that suppression was not established, the Court set aside the penalty imposed under section 78(1). The decision follows the conclusion that the requisite mens rea or suppression necessary to sustain a penalty under section 78 was not made out. [Paras 10, 13]

Penalty under section 78 is set aside for want of proof of suppression.

Invocation of section 80 to remit penalty under sections 77(1) and 77(2) - Penalties under sections 77(1) and 77(2) set aside by invoking section 80 of the Finance Act - HELD THAT: - The Court invoked section 80 to relieve the appellant from the penalties imposed under sections 77(1) and 77(2), accepting the Tribunal's approach to remit those penalties given the circumstances of the case and the assessment of culpability. [Paras 10, 13]

Penalties under sections 77(1) and 77(2) are set aside by invoking section 80.

Disposition of departmental appeals - Appeals filed by the department challenging the adjudicating order dismissed - HELD THAT: - Having accepted the Tribunal's earlier order and the legal reasoning that transactions in question did not attract service tax where the assessee acted as principal, the departmental appeals seeking modification of the adjudicating order were dismissed. [Paras 12, 14]

Departmental appeals are dismissed.

Final Conclusion: The appeal by the assessee is partly allowed: demands relating to mark up on ocean freight, container detention charges and toll taxes are set aside; amounts paid and not disputed are covered by section 73(3) and corresponding show cause notice is invalid to that extent; section 73(4) not attracted; penalties under section 78 and under sections 77(1)/77(2) are set aside (the latter by invoking section 80). Departmental appeals are dismissed.

Exemption for services in relation to transmission and distribution of electricity under Notification No.45/2010-ST - taxability of Erection, Commissioning and Installation services (ECIS) - taxability of Management, Maintenance and Repair services supplied to distribution companies - consequential quashing of demand and penalties where exemption applies - reliance on coordinate bench precedent to determine exemption

Exemption for services in relation to transmission and distribution of electricity under Notification No.45/2010-ST - taxability of Erection, Commissioning and Installation services (ECIS) - taxability of Management, Maintenance and Repair services supplied to distribution companies - reliance on coordinate bench precedent to determine exemption - Services provided by the appellant to the electricity distribution company during the specified periods are exempted from service tax under Notification No.45/2010-ST and therefore not taxable as ECIS or Management, Maintenance & Repair services for the periods in question. - HELD THAT: - The Tribunal applied the precedent of the Coordinate Bench in Shri Ganesh Enterprises which held that Notification No.45/2010-ST grants immunity from service tax in respect of any taxable service provided in relation to transmission and distribution of electricity for the period up to 26/02/2010. The facts show the appellant rendered erection/commissioning, repair and maintenance services to APSPDCL, a distribution company conducting transmission and distribution functions. In view of the Notification's immunity and the coordinate bench decision, the service tax liability asserted in the show cause notice for the periods 01.04.2005 to 31.03.2007 and 01.04.2005 to 31.03.2010 is eclipsed and cannot be sustained.

The demand for service tax as to ECIS and Management, Maintenance & Repair services for the stated periods is set aside and the appeal is allowed on this ground.

Consequential quashing of demand and penalties where exemption applies - effect of exemption on penalties and related proceedings - Consequences flowing from the exemption, including confirmed demands, interest and penalties, are to be set aside and the appellant entitled to consequential relief in accordance with law. - HELD THAT: - The Commissioner (Appeals) had allowed abatement for material component under ECIS and set aside penalty under section 76. The Tribunal, following the coordinate bench holding that the services fall within the immunity granted by Notification No.45/2010-ST, set aside the impugned adjudication order in its entirety and allowed the appeal. As the primary tax liability is negated by the immunity, the ancillary confirmations of demand, interest and penalties cannot survive and must be quashed, with the appellant granted consequential benefits in law.

Confirmed demands, interest and penalties arising from the adjudication are set aside consequentially; appellant entitled to benefits in accordance with law.

Final Conclusion: Appeal allowed. The Tribunal set aside the adjudication by applying the immunity under Notification No.45/2010-ST (as applied by a Coordinate Bench) to services rendered to the electricity distribution company for the stated periods, with the result that the asserted tax demands and attendant penalties are quashed and the appellant is entitled to consequential relief.

Validity of pre-deposit made by debit to electronic credit ledger (DRC-03) under Section 35F of the Central Excise Act - Admissibility and registration of an appeal where pre-deposit mode is challenged - Effect of repeal and saving clause on transitional CENVAT credits (Section 174) - Prospective application of administrative Circulars affecting payment modalities

Validity of pre-deposit made by debit to electronic credit ledger (DRC-03) under Section 35F of the Central Excise Act - Prospective application of administrative Circulars affecting payment modalities - Pre-deposits made by debiting electronic credit ledgers (DRC-03) comply with the requirement of Section 35F of the Central Excise Act and the later-issued CBIC Circular cannot be applied retrospectively to invalidate pre-deposits already made. - HELD THAT: - The Tribunal held that the fundamental object of pre-deposit-preventing frivolous appeals by imposing a financial burden-does not mandate that the funds must be from cash rather than from an accrued credit balance, particularly where such credit (CENVAT) existed prior to the transition to GST. The Tribunal noted that prior practice and judicial decisions permitted debiting CENVAT credit for pre-deposit when the Central Excise and Finance Acts were in force, and Section 174(1)(f) of the CGST Act preserves rights and liabilities for proceedings instituted after commencement of the CGST Act as if repeal/amendment had not occurred. The Circular relied on by the Department was issued after filing of these appeals and, applying the principle that beneficial instructions may be retrospective but oppressive ones operate prospectively, the Tribunal ruled that the Circular cannot invalidate pre-deposits already made. The Tribunal also observed that a now-deleted provision of the CGST regime had been interpreted as restricting use of provisional credits, but that deletion and the statutory saving clause support treating transitional CENVAT credits as available for pre-deposit in these appeals. [Paras 6, 7, 8, 9]

Pre-deposits effected by debiting the electronic credit ledger (DRC-03) are in compliance with Section 35F and the CBIC Circular of 28.10.2022 cannot be given retrospective effect to invalidate those pre-deposits.

Admissibility and registration of an appeal where pre-deposit mode is challenged - Rejection or amendment of memorandum of appeal under Rule 11 of CESTAT (Procedure) Rules, 1982 - Admission and registration of the appeals by the Registry does not preclude the Tribunal from examining the legality of the mode of pre-deposit; registration is valid where pre-deposit complies with Section 35F. - HELD THAT: - The Tribunal analysed Rule 11 of the CESTAT (Procedure) Rules, 1982 and observed that while administrative officers may return defective memoranda, acceptance or rejection on admissibility requires judicial action by the Bench. Rule 11(1) allows acceptance of defective memoranda on sufficient cause, and read with the statutory requirement of pre-deposit, the Bench retains jurisdiction to decide fitness for hearing even after an appeal is provisionally admitted and assigned a number. Applying that approach, and having found the pre-deposit mode compliant with Section 35F, the Tribunal held that registration by the Registry was valid and the appeals could be admitted for hearing. [Paras 3, 4, 9]

Registration and admission of the appeals by the Registry are valid and do not bar the Tribunal from deciding the maintainability; having found the pre-deposit compliant, the appeals are admitted for hearing.

Effect of repeal and saving clause on transitional CENVAT credits (Section 174) - Section 174(1)(f) of the CGST Act preserves the position of transitional CENVAT credits for proceedings instituted after commencement of the CGST Act, permitting reliance on credits existing immediately before transition for purposes of pre-deposit under the erstwhile law. - HELD THAT: - The Tribunal relied on the saving provision in Section 174 to reason that proceedings instituted after the CGST Act commenced continue to be governed by the pre-existing Central Excise/Finance Act regime as if the CGST Act had not come into force. Consequently, CENVAT credits available as on 30.06.2017 and treated as existing on 01.07.2017 for transition purposes must be regarded as available for making pre-deposits under the former statutory framework. This statutory deeming supports acceptance of pre-deposits made by debit to the electronic credit ledger that records transited credits. [Paras 5, 8]

The saving clause in Section 174 preserves the availability of transitional CENVAT credits for appeals governed by the pre-GST statutory regime and supports the validity of pre-deposits made from those credits.

Final Conclusion: The Tribunal held that pre-deposits made by debiting electronic credit ledgers (DRC-03) satisfied the pre-deposit requirement under Section 35F of the Central Excise Act, registration of the appeals by the Registry was valid, and the CBIC Circular issued after filing cannot be given retrospective effect to invalidate those pre-deposits; the appeals are admitted for hearing.

Liability for service tax where an agent collects tax on behalf of the principal and fails to remit it to the exchequer - application of Section 73A(2) and (3) regarding retention of collected service tax by agent - classification of receipts as Business Auxiliary Service versus Steamer Agent Service - distinction between commission income and trading profit for service tax liability - remand for fresh consideration and principles of natural justice

Liability for service tax where an agent collects tax on behalf of the principal and fails to remit it to the exchequer - application of Section 73A(2) and (3) regarding retention of collected service tax by agent - interest and penalty on confirmed demand - Validity of confirmed service tax demand in respect of service tax collected on behalf of principals and retained by the appellant - HELD THAT: - The Tribunal found that the appellant acted as an agent and collected service tax from clients. Once collected, such amounts were required to be remitted to the exchequer or, if returned to the principal, supported by evidence. The appellant failed to produce documentary proof that the service tax collected was remitted to the principals; further, records showed that a sum (Rs 15,75,182/-) remained as 'payable' to principals even years after the show-cause notice. That fact, together with the appellant's practice of not demonstrating proper remittance, led the Tribunal to conclude that the appellant had contravened the statutory provisions governing retention of collected service tax. The Tribunal therefore confirmed the demand with interest and penalty as upheld by the Adjudicating Authority. [Paras 4]

Appeal dismissed insofar as the confirmed demand of Rs 38,53,951/- (service tax collected on behalf of principals for 2006-07 to 2009-10) is concerned.

Classification of receipts as Business Auxiliary Service versus Steamer Agent Service - distinction between commission income and trading profit for service tax liability - remand for fresh consideration and principles of natural justice - Whether the confirmed demand in respect of commission/steamer agency receipts (characterised as Business Auxiliary Service) was correctly sustained - HELD THAT: - The appellant contested the demand on two principal grounds: that a substantial part of the amounts characterised as commission were in fact trading profits (difference on sale of cargo space) and not subject to service tax, and that the services rendered fell under Steamer Agent Services rather than Business Auxiliary Service. The appellant, however, was unable to place documentary evidence before the Tribunal to substantiate either contention. In the interest of justice the Tribunal did not decide the merits on the present record but remanded this issue to the Adjudicating Authority to permit the appellant to produce documentary evidence; the Adjudicating Authority was directed to apply principles of natural justice and to conclude proceedings within four months. [Paras 6]

Confirmed demand of Rs 31,18,142/- (commission/Business Auxiliary Service for 2005-06 to 2009-10) is remanded to the Adjudicating Authority for fresh adjudication in accordance with law.

Final Conclusion: The appeal is dismissed insofar as the demand relating to service tax collected on behalf of principals (2006-07 to 2009-10) is confirmed; the demand relating to commission/steamer agency receipts (2005-06 to 2009-10) is remanded to the Adjudicating Authority for fresh consideration with directions to admit documentary evidence and conclude within four months (matter noted as pertaining to 2004-05 to 2009-10).

Finality of litigation - res judicata - nemo debet bis vexari - no reopening of earlier judgments on the basis of a subsequent overruling - second review impermissible - refund of education cess - overruling by later bench cannot unsettle past final orders

Refund of education cess - overruling by later bench cannot unsettle past final orders - finality of litigation - Whether recoveries of education cess refunded pursuant to an earlier binding Supreme Court judgment (SRD Nutrients) can be made after that judgment was overruled by a later decision (Unicorn Industries). - HELD THAT: - The Court affirmed the High Court's conclusion that where an assessee obtained refund of education cess pursuant to a Supreme Court judgment which was binding and had attained finality between the parties, a subsequent decision of this Court overruling that earlier precedent cannot be used to reopen or compel recovery of amounts already finally refunded. The Court relied on the imperatives of finality, the maxims embodied in res judicata and nemo debet bis vexari, and the Explanation to Order XLVII Rule 1 CPC to hold that past orders which had become final on the basis of the earlier precedent could not be disturbed merely because that precedent was later overruled. Allowing recoveries in such circumstances would defeat public policy by leaving litigation perpetually open and vexing parties a second time.

The High Court's answer that the assessee is not liable to return the refunded education cess was upheld.

No reopening of earlier judgments on the basis of a subsequent overruling - second review impermissible - Whether the reference made on 27.09.2021 to a larger Bench (seeking to revisit the overruled SRD Nutrients decision) was necessary or permissible. - HELD THAT: - The Court held that the miscellaneous application filed to refer the overruled SRD Nutrients decision to a larger Bench was misconceived. Once a review petition had been dismissed, seeking to reopen the earlier decision by filing a fresh miscellaneous application amounted in substance to a second review, which is impermissible under the procedural law. Further, invoking a subsequent overruling to reopen judgments that had attained finality is barred by the Explanation to Order XLVII Rule 1 CPC and by the need for an end to litigation. Consequently, the reference order was unnecessary.

The reference to a larger Bench was held unnecessary and impermissible.

Final Conclusion: Special Leave Petitions dismissed; pending applications, if any, disposed of.

Eligibility for CENVAT credit - Welding electrodes as capital goods - Welding electrodes as inputs - Liberal interpretation of 'in the manufacture of goods' - Precedential effect of High Court Division Bench judgment

Eligibility for CENVAT credit - Welding electrodes as capital goods - Welding electrodes as inputs - Liberal interpretation of 'in the manufacture of goods' - Welding electrodes used for repair and maintenance of plant and machinery (and other welding work) are eligible for CENVAT credit both as capital goods and as inputs. - HELD THAT: - The Court applied and followed the Division Bench judgment in Hindustan Zinc Ltd. which construed the scope of goods eligible for MODVAT/CENVAT credit liberally. Relying on the reasoning that items which are integrally connected with and necessary for the manufacturing process fall within the expression 'in the manufacture of goods', the Court rejected the narrower approach taken in JP Rewa Plant's case. The Division Bench held that welding electrodes, when used for repair and maintenance of plant and machinery (and for other welding work in the factory), qualify for credit either as capital goods or as inputs, and that the assessee was entitled to the credit as availed. Having regard to that precedent and its finality for these parties, the present appeals were allowed in terms of that judgment and the orders below were set aside. [Paras 8, 9]

Appeals allowed by applying the Division Bench's reasoning that welding electrodes used in repair and maintenance qualify for CENVAT credit as capital goods and as inputs; impugned orders set aside.

Final Conclusion: The appeals are allowed in terms of the Division Bench judgment in Hindustan Zinc Ltd.; welding electrodes used for repair and maintenance of plant and machinery are held eligible for CENVAT credit both as capital goods and as inputs and the impugned proceedings are quashed.

Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - excisable goods - Fourth Schedule to the Central Excise Act, 1944 - eligibility for amnesty under legacy scheme - interpretation of notation '.....' in tariff schedule as indicating non-leviability of duty

Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - excisable goods - Fourth Schedule to the Central Excise Act, 1944 - eligibility for amnesty under legacy scheme - Whether the petitioner is eligible to avail the amnesty/dispute resolution benefits under the SVLDR Scheme despite having a manufactured product listed in the Fourth Schedule to the Central Excise Act, 1944. - HELD THAT: - The Court examined Section 125(1)(h) of the Finance Act, 2019 which excludes declarations in respect of excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. The expression 'excisable goods' must be read as referring only to goods on which central excise duty is leviable. The Court relied on the explanatory Circular of 27 August 2019 which clarified that the Scheme excludes goods that are still subject to levy of Central Excise. The Fourth Schedule entry for the petitioner's product (Process Oil, sub-heading 2710 1990) bears the notation '.....', and the additional notes to the Fourth Schedule explain that this notation denotes that central excise duty is not leviable on such goods. Consequently, although Process Oil appears in the Fourth Schedule, it is not an 'excisable good' in the sense of goods subject to levy of central excise duty. The Department's interpretation that mere listing in the Fourth Schedule renders the product ineligible under Section 125(1)(h) was therefore erroneous. The Court held that the petitioner's SVLDR applications were wrongly rejected on that basis and required fresh consideration by the Department. [Paras 7, 9, 11, 13, 14]

The rejection of the petitioner's applications under the SVLDR Scheme on the ground that the product falls within the Fourth Schedule was quashed; the Department's interpretation of Section 125(1)(h) was held to be incorrect and the petitioner is eligible for consideration under the Scheme.

Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - reasoned order and hearing on amnesty applications - What relief should follow after finding the Department's rejection to be based on erroneous interpretation. - HELD THAT: - Having held the Department's interpretation to be incorrect and its orders rejecting the SVLDR applications unsustainable, the Court directed the Department to process the petitioner's amnesty applications afresh. The Department was directed to afford the petitioner a hearing after giving at least one week's notice and to pass a reasoned order on the applications within four weeks of that hearing, and in any event on or before 17 April 2023, with communication of the order within one week thereafter. No other directions were considered necessary. [Paras 14, 15]

The impugned orders dated 26 December 2019 and similar orders rejecting the SVLDR applications are quashed; the Department is directed to rehear and decide the applications by a reasoned order within the specified timeframe.

Final Conclusion: The Court held that exclusion in Section 125(1)(h) applies only to goods on which central excise duty is leviable; Process Oil, though listed in the Fourth Schedule with the notation '.....' (denoting duty not leviable), is not excluded and the Department's rejections were quashed. The Department is directed to grant a hearing and dispose of the petitioner's SVLDR applications by a reasoned order within the prescribed timetable.

Cenvat credit entitlement - Corroborative evidence versus conclusive evidence - Admissibility and evidentiary weight of certificates issued by excise/tax authorities - Reliability of Information Collection Centre (ICC) records - Reliance on statements of transporters and necessity of cross-examination - Appellate appreciation of evidence

Cenvat credit entitlement - Admissibility and evidentiary weight of certificates issued by excise/tax authorities - Entitlement of the assessee to Cenvat credit where a certificate issued by the Excise and Taxation Officer certifies receipt of goods on disputed invoices. - HELD THAT: - The Tribunal relied on a certificate issued by the Excise and Taxation Officer, Ludhiana, certifying that the assessee had received the material on each of the disputed invoices; the certificate was verified and not challenged by the department. The High Court accepted that once such an official certificate of receipt issued by the tax authority is produced and stands unchallenged, the assessee cannot be denied the benefit of Cenvat credit. The adjudicating authority's own observations noting corroborative material (sales tax assessment certifying receipt, proof of payment through banking channels, central excise records of production and clearance, and a CBI report corroborating manufacture and genuine export) further supported entitlement to credit. Applying appellate scrutiny, the Tribunal's conclusion that the assessee was entitled to Cenvat credit on those invoices was upheld as based on proper appreciation of evidence.

Assessee entitled to Cenvat credit on the disputed invoices; Tribunal's allowance of credit upheld.

Corroborative evidence versus conclusive evidence - Reliability of Information Collection Centre (ICC) records - Significance and weight of ICC records and circumstantial material in denying Cenvat credit. - HELD THAT: - The adjudicating authority had characterized ICC records as corroborative rather than conclusive proof of non-entry of goods into the State. The Tribunal and High Court endorsed this view, observing that ICC records at best provide corroboration and cannot, in isolation, conclusively establish that inputs were not received by the assessee. Where independent official certification and other corroborative material exist, ICC entries do not suffice to negate the assessee's claim for credit.

ICC records treated as corroborative evidence only and insufficient by themselves to deny Cenvat credit.

Reliance on statements of transporters and necessity of cross-examination - Whether statements of transporters, relied upon to deny Cenvat credit, could be accepted without granting the assessee an opportunity for cross-examination. - HELD THAT: - The Tribunal found, and the High Court agreed, that statements attributed to transporter representatives (e.g., denial of having transported goods) were relied upon by the department to disallow certain credits. The assessee had sought cross-examination of those witnesses, which was not allowed. In the circumstances, the Tribunal held such statements to be inconclusive and not admissible to deny credit. The High Court endorsed the principle that adverse reliance on extra-judicial statements requires an opportunity for cross-examination; absent that, such statements lack probative value.

Transporters' statements not relied upon to deny credit where cross-examination was not permitted; demands based solely on such statements were set aside.

Appellate appreciation of evidence - Validity of Tribunal's partial confirmation of demand on the ground that vehicles mentioned in certain invoices were not capable of transporting the goods in question. - HELD THAT: - While the Tribunal set aside substantial parts of the demand for lack of reliable evidence to deny credit, it confirmed a residual demand on the specific factual finding that the vehicle described in the invoices was not capable of transporting the goods (it was not a tanker). The High Court examined the Tribunal's appreciation of the evidence and found no error in declining to disturb that specific finding. The Court concluded that the Tribunal had applied proper evidentiary scrutiny and reached a permissible conclusion on that limited point.

Tribunal's confirmation of the limited demand on the ground of vehicle incapacity upheld.

Final Conclusion: The High Court found no substantial question of law and declined to interfere with the Tribunal's order which allowed the assessee's appeal in part and dismissed the department's appeal; the revenue's appeal is dismissed.

Valuation of packaged confectionery on MRP basis under Section 4A versus transaction value under Section 4 - exemption from retail sale price requirement for packages below specified net weight under Rule 34(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - effect of amendment to definition of "net quantity" in Rule 2(j) of SWM (PC) Rules, 1977 on valuation - liability under Section 11D where duty was not in fact collected from the buyer

Valuation of packaged confectionery on MRP basis under Section 4A versus transaction value under Section 4 - exemption from retail sale price requirement for packages below specified net weight under Rule 34(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Valuation of sugar confectionery packed in wholesale packs (eg. 500 grams) composed of individual pieces each weighing less than 10 grams is governed by Section 4 and not by Section 4A of the Central Excise Act, 1944. - HELD THAT: - The Tribunal applied the ratio of the appellant's own case as approved by the Supreme Court, holding that for purpose of assessment the relevant unit is the individual confectionery piece and not the wholesale outer pack. Where individual pieces are below the specified net weight threshold, Rule 34(b) of the SWM (PC) Rules, 1977 exempts such packages from the requirement to affix retail sale price; consequently Section 4A (MRP-based valuation) does not apply. The Tribunal rejected the Revenue's reliance on the substitution of Rule 2(j) (definition of "net quantity") as affecting that principle, noting that Rule 34(b) - which displaces the requirement to print retail sale price for goods below the stated weight - remained applicable and the Supreme Court's precedent therefore remains binding and determinative on identical facts.

Valuation is to be determined under Section 4 and not under Section 4A; the impugned demand based on Section 4A is unsustainable.

Liability under Section 11D where duty was not in fact collected from the buyer - Demand confirmed under Section 11D cannot be sustained where the assessee did not in fact collect the differential duty from buyers. - HELD THAT: - Section 11D applies to amounts actually collected from buyers as representing duty of excise and not paid to the exchequer. The Tribunal found that although invoices showed duty under Section 4A, the assessee issued credit notes for the differential amount and thus the amount was not collected. The duty was also paid under protest and the credit notes ensured non-collection; therefore the statutory precondition for invoking Section 11D - collection of duty from the buyer - was absent and the confirmation of demand under that provision was not tenable.

The demand confirmed under Section 11D is not sustainable and is set aside.

Final Conclusion: The impugned order is set aside; the Revenue's appeal is dismissed and the assessee's appeal is allowed, following the binding precedent that individual confectionery pieces below the specified weight attract valuation under Section 4 and that Section 11D does not apply where the duty was not collected from buyers.

Place of removal and liability to pay central excise duty on stock located outside the factory - warehouse as defined under the Central Excise Rules, 2002 being premises registered under the relevant rule - presumption cannot substitute an allegation in the show cause notice

Place of removal and liability to pay central excise duty on stock located outside the factory - warehouse as defined under the Central Excise Rules, 2002 being premises registered under the relevant rule - presumption cannot substitute an allegation in the show cause notice - Whether the stock of finished goods lying in an outside godown could be treated as lying in a warehouse and thereby attract excise duty on the date the exemption ceased - HELD THAT: - The Tribunal held that the Commissioner (Appeals) erred in treating the appellant's outside godown as a warehouse for purposes of excise liability. The order under appeal relied on Rule 4(1) of the Central Excise Rules, 2002 which treats duty as payable in the factory or in a warehouse on the date of removal, and on an expanded definition of 'place of removal' to include warehouses or godowns. However, a warehouse under the 2002 Rules is a place registered under the applicable rule, and the appellant specifically stated that the outside premises were not registered as a warehouse. Crucially, the show cause notice did not allege that the goods were lying in a warehouse nor did it challenge the nature of the outside premises; instead the Commissioner (Appeals) drew a presumption equating the godown with a warehouse. The appellate order also criticised the appellant for not proving the date of transfer from the factory, but the Tribunal observed that the show cause notice proceeded on the footing that the goods were in the outside godown prior to the relevant date and did not make the absence of transfer-date proof a ground. For these reasons the factual and legal foundation for treating the godown as a warehouse was found unsustainable and the appellate finding was set aside. [Paras 5, 9, 10, 11]

The order of the Commissioner (Appeals) dated July 30, 2020 is set aside and the appeal is allowed.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order upholding duty on stocks in an outside godown, holding that the godown could not be treated as a warehouse in the absence of registration and where the show cause notice contained no allegation to that effect; appeal allowed.

Exemption under Notification No. 3/2004-CE dated 08.01.2004 - exemption for goods used in water treatment for power plants - treatment of water (demineralization) as activity qualifying for exemption - documentary proof by certificate of competent authority

Exemption under Notification No. 3/2004-CE dated 08.01.2004 - exemption for goods used in water treatment for power plants - treatment of water (demineralization) as activity qualifying for exemption - documentary proof by certificate of competent authority - Whether the appellant was entitled to clear transmission line stringing accessories without payment of duty by availing Notification No. 3/2004-CE dated 08.01.2004 for supply to the Barsingsar Thermal Power Project - HELD THAT: - The Tribunal examined certificates produced by the appellant, including one of the District Collector & Magistrate, Bikaner, and a certificate issued by the Project Head, Barsingsar Project. Those certificates established that the goods cleared by the appellant were to be used for demineralization and treatment of water and thereafter for utilization in the Thermal Power Plant for generation of electricity. The Tribunal concluded that the use of the goods for treatment of water falls within the scope of the exemption conferred by Notification No. 3/2004-CE dated 08.01.2004. On that basis the Revenue's contention that the exemption was only available for setting up of a water supply plant and not for a power plant was not accepted. Having accepted the documentary proof and its legal effect, the Tribunal held that duty could not be demanded. [Paras 6, 7, 8]

Benefit of Notification No. 3/2004-CE dated 08.01.2004 applies to the clearances in question; the demand of duty is not sustainable and is set aside.

Final Conclusion: Appeal allowed; impugned order set aside and demand of duty (with interest) quashed, with consequential relief to the appellant if any.

Charge/encumbrance on property - auction purchaser on 'as is where is' basis - priority of secured creditor under SARFAESI Act vis-a -vis State's statutory charge - attachment under Maharashtra Land Revenue Code and proclamation under MLR Rules - requirement of sale-certificate and disclosure of encumbrances under Security Interest (Enforcement) Rules, 2002 - effect of non-registration with Central Registry / CERSAI post Chapter IV A of SARFAESI Act

Charge/encumbrance on property - attachment under Maharashtra Land Revenue Code and proclamation under MLR Rules - Validity and subsistence of the Sales Tax Department's attachment dated 11 August, 2017 over the property. - HELD THAT: - The Court found that the attachment dated 11 August, 2017 was made pursuant to the provisions of the Maharashtra Land Revenue Code read with Section 34 of the MVAT Act and Rule 11 of the 1967 Rules, was not challenged by the debtor, and in the hands of the secured creditor the property stood as attached by the Sales Tax Department (paras 41-44). The Division Bench's earlier quashing of a letter asserting first charge did not amount to setting aside the attachment; rather it recognised the secured creditor's right to a first charge while leaving the statutory attachment subsisting (paras 44-46). On these facts the attachment was held valid and subsisting (paras 43, 66). [Paras 41, 43, 44, 45, 66]

The attachment dated 11 August, 2017 is valid and subsisting.

Auction purchaser on 'as is where is' basis - requirement of sale-certificate and disclosure of encumbrances under Security Interest (Enforcement) Rules, 2002 - Whether petitioners nos. 1 and 2 purchased the property free of encumbrances or with notice of the Sales Tax Department's charge, and consequent liability to discharge the sales tax dues. - HELD THAT: - The auction proclamation and bid confirmation expressly disclosed the Sales Tax Department's encumbrance and made the sale on 'as is where is', 'as is what is' and 'whatever is there is' basis; the sale certificate did not state that the property was sold free from encumbrances known to the secured creditor (paras 14, 46-49). Under the Security Interest (Enforcement) Rules the authorised officer must disclose known encumbrances and the sale-certificate must state whether the sale is free of encumbrances; here the disclosure and terms put the purchasers on notice and they took the property with that encumbrance (paras 46-50, 48-49). The Court applied the doctrine of caveat emptor and relevant authority that an auction purchaser who buys on such terms takes the property with its obligations and liabilities (paras 50-56). [Paras 48, 49, 50, 54, 56]

Petitioners nos. 1 and 2 purchased an encumbered property with notice of the Sales Tax Department's charge and are liable to discharge the sales tax dues to obtain a clear title.

Priority of secured creditor under SARFAESI Act vis-a -vis State's statutory charge - effect of non-registration with Central Registry / CERSAI post Chapter IV A of SARFAESI Act - Whether the Division Bench order of 10 January 2020 or principles under SARFAESI/central registration extinguished the Sales Tax Department's charge or precluded its enforcement against purchasers. - HELD THAT: - The Court held that the Division Bench order of 10 January 2020 recognised the secured creditor's entitlement to a first charge but did not extinguish the Sales Tax Department's charge (paras 44-46). The Full Bench authority (Jalgaon) establishes that post 24 January 2020 registration with the Central Registry affects priority, but where attachment and proclamation were made prior to that date the department may claim priority provided the attachment/proclamation complied with the MLR Rules (paras 61-65). In the present case attachment predated those changes, was properly made and proclaimed in accordance with the MLRC/1967 Rules, and therefore the Sales Tax Department's charge continued to operate despite recognition of petitioner No. 3's preferential right to sale proceeds (paras 61-65). Petitioner No. 3 cannot adopt inconsistent positions to assert extinguishment (para 65). [Paras 44, 45, 61, 64, 65]

The Division Bench order did not extinguish the statutory charge; non-registration with Central Registry does not negate a valid pre existing attachment, and the Sales Tax Department's charge remains enforceable in this case.

Charge/encumbrance on property - auction purchaser on 'as is where is' basis - Whether petitioners' reliance on earlier Division Bench observations (ASREC) and on absence of CERSAI registration absolves them of liability. - HELD THAT: - The Court rejected the petitioners' reliance on paragraph 21 of ASREC insofar as it suggested registration was unnecessary, noting that the Full Bench in Jalgaon has examined and overruled that aspect and clarified the legal position regarding Chapter IV A and registration (paras 60-64). Even had registration been absent, the attachment made and proclaimed prior to the relevant amendments, and the purchasers' express notice of encumbrance, prevent the purchasers from escaping liability (paras 62-66). [Paras 60, 62, 63, 65]

The petitioners cannot rely on ASREC paragraph 21 or absence of CERSAI registration to avoid liability; the Full Bench's analysis governs and the sales tax charge subsists.

Final Conclusion: The petition is rejected. The Court holds that the Sales Tax Department's attachment dated 11 August, 2017 is valid and subsisting; the auction purchasers bought the property with constructive and actual notice of that encumbrance by virtue of the auction disclosures and sale-certificate, and therefore are liable to discharge the sales tax dues to obtain a clear title. Recognition of the secured creditor's preferential right to sale proceeds did not extinguish the statutory charge in the circumstances of this case.

Principles of natural justice (audi alteram partem) - expert committee report as an aid and not a substitute for adjudication - non delegation of core adjudicatory functions by the Tribunal - official notice doctrine (duty to disclose materials relied upon)

Principles of natural justice (audi alteram partem) - official notice doctrine (duty to disclose materials relied upon) - Whether the NGT violated the principles of natural justice by adopting the expert Committee's reports and recommendations without giving the affected parties a reasonable opportunity to peruse, object to and be heard in relation to those reports. - HELD THAT: - The Court found that the expert Committee's reports and recommendations were uploaded on the NGT website on 15.01.2022 and the impugned order adopting those recommendations was passed on 18.01.2022, without giving the appellant respondents a reasonable opportunity to examine the reports or to file objections. Applying the official notice doctrine and settled authorities, the Court held that when an adjudicatory forum intends to rely upon materials coming to its knowledge (including expert committee reports), those materials must be disclosed to the parties against whom they are to be used and an opportunity must be afforded to explain, rebut or supplement the material. The NGT's failure to disclose the reports and to afford an opportunity to the respondents amounted to a breach of the principles of natural justice. [Paras 11, 16, 18]

The impugned order is set aside on the ground of non compliance with the principles of natural justice and the matter is remanded to the NGT for reconsideration from the stage of the expert Committee's recommendations, permitting the appellants to file objections and be heard.

Expert committee report as an aid and not a substitute for adjudication - non delegation of core adjudicatory functions by the Tribunal - Whether the NGT could treat the expert Committee's recommendations as binding and thereby abdicate its adjudicatory role. - HELD THAT: - The Court reiterated that expert committees appointed by an adjudicatory forum serve only to assist the forum in fact finding and are not a substitute for judicial determination. Reliance on Sanghar Zuber Ismail and Kantha Vibhag precedents, the Court observed that the NGT cannot delegate its adjudicatory functions to administrative or expert committees; it must apply its mind to the substantive grounds and render its own decision. Consequently, the NGT's wholesale acceptance of the Committee's recommendations without independent adjudication was improper. The Court emphasised that while expert reports may inform the Tribunal, the Tribunal must adjudicate the objections and apply legal tests itself. [Paras 12, 13, 16]

The Court held that the expert Committee's recommendations are only advisory; the NGT must independently adjudicate and cannot abdicate its jurisdiction, and therefore the matter must be reconsidered by the NGT in accordance with this principle.

Final Conclusion: The appeals are allowed: the impugned NGT order is set aside for breach of natural justice and for treating the expert Committee's recommendations as determinative; the matters are remanded to the NGT to consider the expert reports afresh after permitting the appellants to file objections and after the NGT conducts independent adjudication in accordance with law.