TaxTMI Updates e-Newsletter
Jul 27,2022

Summary order. Notice issued returnable in two weeks and the impugned judgment is stayed until the next date of hearing.

Bail - undertaking - deposit as condition for bail - recording of undertaking - grant of bail subject to trial court's terms

Bail - deposit as condition for bail - undertaking - grant of bail subject to trial court's terms - Grant of bail on the appellant's undertaking to deposit specified sums and subject to terms to the satisfaction of the trial Court. - HELD THAT: - The Supreme Court recorded the appellant's undertaking that an initial deposit (already made) has been increased to the stated amount and that further deposits will be made in two tranches of the specified sums within the prescribed periods. The undertaking was taken on record by the Court. Subject to compliance with that undertaking, and to such other terms and conditions as the trial Court may stipulate (in addition to earlier stipulations), bail was granted to the appellant. The order makes compliance with the recorded undertaking and the trial Court's terms a condition precedent to the continuance of bail.

Bail granted on the appellant's recorded undertaking to make the specified deposits and on such additional terms as the trial Court may require.

Final Conclusion: The appeal is disposed of by grant of bail, conditional upon the appellant's recorded undertaking to deposit the specified amounts within the stated timeframes and compliance with any further terms to the satisfaction of the trial Court.

Validity of E-way bill for Over Dimensional Cargo (ODC) - extension of E-way bill validity for ODC vehicles - detention and seizure of goods in absence of proper E-way bill validity - obligation of GSTN portal to capture vehicle-type data for E-way bill issuance - interim release of seized goods subject to deposit

Validity of E-way bill for Over Dimensional Cargo (ODC) - extension of E-way bill validity for ODC vehicles - detention and seizure of goods in absence of proper E-way bill validity - The E-way bill issued on 25.03.2022 remained valid on 02.04.2022 for the vehicle described as an Over Dimensional Cargo (ODC), and goods should not have been detained or seized on that basis. - HELD THAT: - The Court accepted the uncontested factual description that the vehicle in question was a 22-wheel Tata Signa qualifying as an ODC which exceeds dimensional limits under the Motor Vehicles Rules. Relying on the language of the UP GST Rules, in particular the rule governing period of validity of E-way bills which provides extended validity for ODCs, the Court held that the E-way bill issued on 25.03.2022 was valid on 02.04.2022 when the vehicle was stopped. The Court observed that a subsequent application for a fresh E-way bill made during the subsistence of the original E-way bill did not negate the validity of the original E-way bill. In consequence, detention or seizure of the goods on the ground of invalid E-way bill could not be sustained where the vehicle qualified as ODC and the extended validity applied. The Court further noted that the GSTN portal did not permit feeding the vehicle as 'ODC' while obtaining the E-way bill, which impeded correct electronic recognition of the extended validity. [Paras 3, 4]

Goods should not have been detained or seized as the E-way bill of 25.03.2022 was valid on 02.04.2022 for the ODC vehicle; inability of the GSTN portal to record 'ODC' was noted.

Interim release of seized goods subject to deposit - Seized goods were ordered to be released to the petitioner on interim terms. - HELD THAT: - The Court directed interim release of the seized goods in favour of the petitioner subject to deposit of 25% of the disputed demand of penalty under the impugned order dated 13.04.2022. The order provides that any amount already deposited by the petitioner shall be adjusted towards the deposit required by this order. This relief was granted while adjudicatory proceedings continue, reflecting a provisional balancing of interests between the revenue and the petitioner. [Paras 7]

Seized goods to be released on deposit of 25% of the disputed penalty demand, with prior deposits to be adjusted.

Obligation of GSTN portal to capture vehicle-type data for E-way bill issuance - obligation to consider feasibility of adding portal field for vehicle type - The GSTN authority was directed to examine the feasibility of providing an additional field in the E-way bill online form to capture vehicle type (e.g., normal or ODC) to ensure correct validity printing and tracking. - HELD THAT: - Observing that the portal does not presently allow the description 'ODC' to be fed while obtaining an E-way bill, the Court directed the GSTN authority to consider adding an additional field to capture vehicle type so that validity can be appropriately printed and movement can be accurately tracked by software. The Court explained that this measure would reduce disputes between revenue authorities and transporters regarding validity periods, since current validity calculations assume 100 km per day for ordinary vehicles but provide extended validity (based on 20 km per day) for ODCs, a distinction that requires prior disclosure and electronic capture to operate effectively. [Paras 4, 8, 9]

GSTN to consider feasibility of adding an additional field in the E-way bill form to capture vehicle type (normal/ODC) to allow correct validity computation and improved tracking.

Impleadment of GSTN as party and issuance of notice - GSTN authority was ordered to be impleaded as respondent no.5 and served with notice. - HELD THAT: - On oral prayer, the Court directed impleadment of the GSTN authority as respondent no.5 and directed service of notice on the GSTN's counsel, thereby bringing the electronic portal authority into the litigation so that it can respond to the portal-related issues raised in the petition. [Paras 1]

GSTN impleaded as respondent no.5 and notice to be served on its counsel.

Final Conclusion: Petition entertained despite absence of Tribunal; GSTN impleaded and directed to respond; interim relief granted releasing seized goods on specified deposit; Court recognised that an E-way bill issued on 25.03.2022 was valid on 02.04.2022 for the described ODC vehicle and directed GSTN to consider adding a vehicle-type field to the portal to obviate future disputes.

Refund of unutilised input tax credit - zero rated supplies/turnover - annual return filing - remand for de novo consideration - personal hearing before adverse order - reasoned order requirement

Annual return filing - zero rated supplies/turnover - refund of unutilised input tax credit - remand for de novo consideration - Whether the appeals rejecting refund claims should be quashed and remanded for fresh consideration in view of filed annual returns showing zero rated supplies - HELD THAT: - The petitioner claimed refund of unutilised input tax credit for April 2018 to March 2019 and contended that zero rated supplies, omitted from monthly returns due to a clerical error, were reported in the annual return filed on 24 March 2021. The appellate authority's orders dated 25 August 2021 rejected the appeals on the ground that zero rated turnover was not reflected in the returns. The Court accepted that the annual returns have been filed and observed that it is not clear whether the appellate authority considered those annual returns. In view of the uncertainty and the petitioner's undertaking to supply copies of the annual returns to the authority, the Court quashed the impugned orders and remanded the matters for de novo consideration so that the appellate authority may examine the annual returns and decide afresh. [Paras 5, 6]

Impugned 11 orders dated 25th August, 2021 quashed and matters remanded to respondent No.4 for de novo consideration after receipt of annual returns.

Personal hearing before adverse order - reasoned order requirement - Procedural directions to be followed by the appellate authority while deciding the remanded appeals - HELD THAT: - The Court directed that respondent No.4 shall dispose of the appeals within four weeks of receiving the copies of the annual returns. Further, if the appellate authority proposes to pass an order adverse to the petitioner, a personal hearing must be granted with at least seven working days' advance notice. Any final order passed on remand must be a reasoned order. The Court expressly refrained from making any observation on the merits of the refund claims. [Paras 6, 7]

Appellate authority to decide appeals within four weeks of receipt of annual returns; if proposing adverse order, grant personal hearing with seven working days' notice; final order to be reasoned.

Final Conclusion: The High Court quashed the eleven impugned appellate orders dated 25th August, 2021 and remanded the matters to the appellate authority for de novo consideration in light of the annual returns; the authority must decide the appeals within four weeks of receiving the annual returns, afford a personal hearing with seven working days' notice before making any adverse order, and pass a reasoned order; no observations were made on the merits.

Value of taxable supply under Section 15 - Inclusion under Section 15(2)(b) - amount supplier is liable to pay - Free of cost goods supplied by recipient not includible in supplier's value - Contractual liability as determinative of valuation - Scope of supply and Schedule I supplies without consideration - Precedential application of service tax era decisions to pari materia GST provisions

Value of taxable supply under Section 15 - Inclusion under Section 15(2)(b) - amount supplier is liable to pay - Free of cost goods supplied by recipient not includible in supplier's value - Contractual liability as determinative of valuation - Whether the value of diesel filled free of cost by the service recipient is to be included in the value of the GTA (freight) charged by the applicant for the purposes of the GST Act - HELD THAT: - The Authority examined the contractual terms and found that fuel (diesel) is expressly in the scope of the service recipient and not the contractual liability of the applicant; the freight is fixed and expressly excludes fuel, and the applicant has no obligation or liability to pay for the diesel or to account for its value. Section 15(2)(b) applies to amounts which the supplier is liable to pay but which have been incurred by the recipient; it is triggered only where contractual liability to pay rests on the supplier. Given that the liability for diesel is not vested in the applicant, the diesel provided free of cost cannot be treated as consideration or included in the transaction value of the GTA service. The Authority relied on Board Circular No.47/27/2018 GST and prior judicial and advance ruling decisions (including service tax era decisions applied to pari materia provisions) to support the view that free of cost goods provided by the recipient are not includible where the supplier has no liability. The Authority also noted that inclusion would be impracticable where the supplier is not privy to the cost of diesel and observed the revenue neutral character of the transaction given the recipient's entitlement to input tax credit. Accordingly, under the facts and conditions of the draft transport agreement submitted, the value of FOC diesel is not includible in the value of the GTA service.

The value of diesel filled free of cost by the service recipient is not includable in the value of the GTA (freight) charged by the applicant, subject to the conditions set out in the draft transport agreement incorporated in the ruling.

Final Conclusion: Advance Ruling answered: on the facts and contractual terms furnished, free of cost diesel supplied by the service recipient is not to be included in the taxable value of the GTA service charged by the applicant under the GST Act.

Supply - Restaurant service - Outdoor catering - Temporary staffing services - Composite supply of goods as part of service - Condition of non-availment of input tax credit - Classification under Notification No. 11/2017 (Rate)

Supply - Temporary staffing services - Classification under Notification No. 11/2017 (Rate) - Classification of the service supplied by the applicant (running and maintenance of plant canteen at NTPC) for GST purposes. - HELD THAT: - On the facts of the Service Purchase Order and the Bill of Quantity the applicant supplies its own personnel (manager, cooks, clerks, bearers, cleaners) on its payroll to perform the running and maintenance of the canteen; the employees remain under the direct supervision of the recipient while being on the applicant's payroll and the applicant specifies pay and benefits. The Authority found this arrangement to be a supply of manpower in the course of business and, having regard to the explanatory notes, classifiable as temporary staffing services under heading 998514 rather than as a supply of restaurant or outdoor catering service. The Authority therefore treated the core service component (supply of staff for canteen operations) as temporary staffing services. [Paras 2]

The service of supplying staff for running and maintenance of the canteen is classifiable as 'Temporary staffing services' under heading 998514.

Classification under Notification No. 11/2017 (Rate) - Temporary staffing services - Rate of GST applicable on the consideration received from NTPC for running and maintenance of the canteen. - HELD THAT: - Having classified the supply as temporary staffing services under heading 998514, the Authority applied the relevant entry in Notification No. 11/2017 (Rate). Entry at Sl. No. 23(iii) covering 'Support services other than (i) and (ii)' was held to be applicable, attracting the standard rate for such support services. Accordingly, the consideration received from NTPC for the supply of manpower/services is taxable at the rate specified for that heading. [Paras 3]

The consideration received from NTPC for the canteen contract is taxable as temporary staffing services at 18% GST (9% CGST + 9% SGST).

Restaurant service - Composite supply of goods as part of service - Condition of non-availment of input tax credit - Classification under Notification No. 11/2017 (Rate) - Classification and rate applicable to the consideration recovered from persons procuring food at the canteen (sale of food items to employees/workers/others). - HELD THAT: - Clause (b) of entry 6 of Schedule II treats supply of food as part of a service when supplied for consideration. The explanatory notes to heading 9963 include services provided in canteens and similar establishments. The canteen at NTPC is not a 'specified premises' nor is the supply event based or occasional, so it does not fall within the 'outdoor catering' definition. Accordingly, sales of food items to procurers at the canteen fall within 'restaurant service' as defined and are covered by Sl. No. 7(ii) of Notification No. 11/2017 (Rate). The concessional rate under that entry applies subject to the condition that input tax credit on goods and services used in supplying the service has not been taken. [Paras 4]

Sales of food items to employees/workers/others at the canteen are classifiable as 'restaurant service' under heading 9963 and attract GST at 5% (2.5% CGST + 2.5% SGST), subject to the condition of non availment of input tax credit.

Temporary staffing services - Restaurant service - Classification under Notification No. 11/2017 (Rate) - Overall nature of services supplied and the applicable rates where both supply of manpower and sale of food arise under the same contract. - HELD THAT: - The Authority distinguished the distinct components: (a) the contractual supply of personnel to run and maintain the canteen is a supply of temporary staffing services (heading 998514) and taxable at 18% GST; and (b) the sale of articles for human consumption to canteen users is a supply classifiable as restaurant service (heading 996333/9963) and taxable at 5% GST, subject to the statutory condition regarding input tax credit. The ruling treats these as separate taxable components arising from the contractual arrangement and gives the applicable classification and rates for each. [Paras 5, 6]

The correct characterization is: manpower supply - temporary staffing services (998514) at 18% GST; sale of food to procurers - restaurant service (9963/996333) at 5% GST (condition of non availment of input tax credit applies).

Final Conclusion: The Authority ruled that the contract contains two distinct taxable components: the supply of personnel to run the plant canteen is temporary staffing services (heading 998514) taxable at 18% GST, while the sale of food to canteen users is a 'restaurant service' (heading 9963/996333) taxable at 5% GST, the latter being subject to the condition that input tax credit on goods and services used in supplying the service has not been availed.

Classification of goods - classification as sweetmeats under Tariff Item 2106 90 99 - classification as dairy product consisting of natural milk constituents under Heading 0404 - sugar confectionery and residual entry 'others' - Chapter Note 6 to Chapter 21 - inclusion of misthans/mithai irrespective of ingredients - prospective effect of an advance ruling

Classification of goods - classification as sweetmeats under Tariff Item 2106 90 99 - classification as dairy product consisting of natural milk constituents under Heading 0404 - sugar confectionery and residual entry 'others' - Chapter Note 6 to Chapter 21 - inclusion of misthans/mithai irrespective of ingredients - Whether the product 'Anna Malai Mithai' is classifiable under Tariff Heading 2106 as a sweetmeat or under Heading 0404 as a dairy product - HELD THAT: - The Authority examined the product composition and marketing and rejected classification under Chapter 04 as a product of natural milk constituents because the formulation and final product (skimmed milk powder, whey powder, sugar, emulsifiers and flavours in a semi liquid sachet form) do not fit within the scope of natural dairy products under Chapter 04 (finding recorded at 5.4). Chapter 17 (sugar confectionery) was considered and the Authority concluded that the product is not a chewing gum, jelly, boiled sweet, toffee or similar item and does not fall within the family of sugar confectionery; the residual 'others' entry in Chapter 17 could not appropriately extend to traditional Indian sweets prepared and presented as mithai (5.6-5.9). The Authority placed particular reliance on Chapter Note 6 to Chapter 21 which expressly includes sweet meats commonly known as 'misthan' or 'mithai' under Tariff item 2106 90 99 irrespective of the nature of their ingredients (5.12). Applying that note to the product description, the Authority held that the item is an edible preparation falling within Chapter 21 and, as it has no specific sub heading elsewhere in that chapter, it properly falls to be classified under the residual entry 2106 90 99 as a 'sweetmeat' (5.11-5.13). The laboratory certificate submitted by the applicant was treated as a circumspect declaration and not determinative for classification (5.2). The ruling was declared effective prospectively (6.1). [Paras 5, 6]

The product 'Anna Malai Mithai' is classifiable under Chapter Heading 2106 90 99 as a 'sweetmeat' and not under Heading 0404.

Final Conclusion: The Advance Ruling: 'Anna Malai Mithai' is classifiable as a sweetmeat under Tariff Item 2106 90 99; classification under Heading 0404 is rejected. The ruling operates prospectively and does not entitle the applicant to refunds for past tax paid.

Exemption for services by way of giving on hire to a State Transport Undertaking - Interpretation of "giving on hire" to include renting of vehicles - Taxability of renting/hiring of motor vehicles - Definition of "State Transport Undertaking" under the Motor Vehicles Act, 1988 - Consequences of exemption on rate of tax and availability of input tax credit

Exemption for services by way of giving on hire to a State Transport Undertaking - Interpretation of "giving on hire" to include renting of vehicles - Definition of "State Transport Undertaking" under the Motor Vehicles Act, 1988 - Taxability of renting/hiring of motor vehicles - Supply of services by the applicant to AICTSL, BCLL and JCTSL is exempt from GST under Entry No. 22 of Notification No. 12/2017 - Central Tax (Rate). - HELD THAT: - The agreements show the applicant supplies buses, operates and maintains them while the clients set routes and collect fares; the applicant is paid hire charges per effective kilometre. The companies (AICTSL, BCLL, JCTSL) are established as state government companies in the ROC documents and thus fall within the meaning of "State Transport Undertaking" as per clause (42) of section 2 of the Motor Vehicles Act, 1988. Entry No. 22 of Notification No. 12/2017 exempts services by way of giving on hire to a State Transport Undertaking a motor vehicle meant to carry more than twelve passengers. The Board Circular No. 164/20/2021-GST dated 06.10.2021 clarifies, on GST Council recommendation, that the expression "giving on hire" in that entry includes renting of vehicles. On a joint reading of the contractual terms, the statutory definition and the notification read with the circular, the supply made by the applicant falls within the exemption and is therefore not taxable under GST. [Paras 7, 8]

Supply to AICTSL, BCLL and JCTSL is covered by Entry No. 22 of Notification No. 12/2017 and is exempt from GST.

Consequences of exemption on rate of tax and availability of input tax credit - Questions on applicable rate of tax and admissibility of input tax credit are rendered redundant once the supply is held to be exempt. - HELD THAT: - Because the supply has been held exempt under the notification and the Board circular clarifying the scope of the exemption, there is no need to determine a rate of tax. Similarly, entitlement to input tax credit is ancillary to taxability; having found the outward supply exempt, the questions on rate and admissibility of input tax credit do not require adjudication. [Paras 8]

Rate and input tax credit questions are redundant and need not be decided.

Final Conclusion: The Authority rules that the services provided by M/s Maa Associates to AICTSL, BCLL and JCTSL (state government companies as per ROC) constitute "giving on hire" of motor vehicles meant to carry more than twelve passengers and are exempt under Entry No. 22 of Notification No. 12/2017-the Board circular clarifying that "giving on hire" includes renting applies-consequently, questions on rate and input tax credit are redundant.

Composite supply - Principal supply - Supply of goods versus supply of services - Health care services exemption under Notification No. 12/2017 Central Tax (Rate)

Composite supply - Supply of goods versus supply of services - Principal supply - Administration of COVID-19 vaccination by hospitals is a composite supply and the principal supply is the sale of the vaccine. - HELD THAT: - The transaction of vaccinating a beneficiary involves both the transfer of vaccine doses (goods) and the act of administering the vaccine by technically qualified personnel (service). The components are intrinsically connected, naturally bundled and supplied in conjunction with each other such that the recipient views the transaction as a single package. Determination of the principal supply depends on the normal practice and recipient's dominant intention; in the present case the primary objective of the recipient is receipt of the vaccine (choice of vaccine) and therefore the supply of the vaccine is the predominant element. The service of administration is ancillary to that principal supply. Accordingly the overall transaction falls within the definition of composite supply and is to be taxed according to the rate applicable to the principal supply.

The administration of COVID-19 vaccination by hospitals constitutes a composite supply with the sale of vaccine as the principal supply.

Health care services exemption under Notification No. 12/2017 Central Tax (Rate) - Supply of goods versus supply of services - Administration of COVID-19 vaccine by clinical establishments does not qualify as exempt 'health care services' under Notification No. 12/2017 where the transaction is predominantly a sale of vaccine. - HELD THAT: - Notification No. 12/2017 exempts services by way of diagnosis, treatment or care by a clinical establishment or authorised medical practitioner. Although the applicant is a clinical establishment and the vaccination process involves medical consultation and observation, the dominant intention of the recipient in the instant transactions is to obtain the vaccine (a supply of goods). The receipt of vaccine is not comparable to inpatient healthcare services covered by the exemption. Since the composite transaction is predominantly a sale of goods, it cannot be treated as an exempt healthcare service under the notification.

The administration of COVID-19 vaccination by clinical establishments in the facts of this case is not covered by the 'health care services' exemption under Notification No. 12/2017.

Composite supply - Health care services exemption under Notification No. 12/2017 Central Tax (Rate) - The composite transaction of vaccine supply and its administration is taxable and not exempt under the GST Act; the applicable rate is that of the principal supply (sale of vaccine). - HELD THAT: - Having held that the overall transaction is a composite supply with the sale of vaccine as the principal supply, the taxability of the total supply follows the rate applicable to that principal supply. The service element of administering the vaccine is ancillary and forms part of the composite supply's total value. Therefore, the exemption available for healthcare services does not extend to render the composite transaction exempt, and the applicable tax rate is that of the principal supply.

The composite supply is taxable at the rate applicable to the principal supply (sale of vaccine) and is not exempt under the GST Act.

Final Conclusion: The Authority rules that administering COVID-19 vaccination by hospitals constitutes a composite supply in which the sale of the vaccine is the principal supply; such transactions do not qualify as exempt healthcare services under Notification No. 12/2017 and are taxable at the rate applicable to the principal supply.

Classification of goods - essential character of the commodity - fruit cooked by steaming or boiling in water - fruit otherwise prepared or preserved - exclusion of Chapter 20 where processes of Chapters 7, 8 or 11 apply

Classification of goods - essential character of the commodity - fruit cooked by steaming or boiling in water - fruit otherwise prepared or preserved - Whether the product 'Ber Berry' is classifiable under Tariff Heading 0810 or 0811 or under Tariff Heading 2008 - HELD THAT: - The Authority examined the nature of the product and the manufacturing process as stated by the applicant: sorting, cleaning, soaking in hot water, centrifugal processing, cooking in a steam-jacketed tank with the addition of sugar, salt, permitted preservative (E-211) and spices, followed by cooling and packing into small sachets. The product is therefore processed and cannot be treated as fresh fruit under Tariff Heading 0810. Chapter heading 0811 covers fruits uncooked or cooked merely by steaming or boiling in water; however, the Authority found the applicant's process to involve additional preparatory steps and the incorporation of preservative and other ingredients such that the process is beyond the simple steaming/boiling contemplated by 0811. The Authority concluded that the product falls within the description of fruits otherwise prepared or preserved (Tariff Heading 2008) rather than being classifiable as fresh fruit or as fruit merely cooked by steaming. The Authority rejected the applicability of the AAAR, Uttar Pradesh decision cited by the applicant on the basis that factual and process differences render that precedent inapplicable to the instant product. The jurisdictional officer's view favouring Chapter 8 was considered but the Authority's reasoning on the composite process and ingredients led to classification under Chapter 20 heading 2008. [Paras 7, 8]

The product 'Ber Berry' is classifiable under GST Tariff heading 2008 as fruit otherwise prepared or preserved.

Final Conclusion: The Authority admits the application and rules that the product marketed as 'Ber Berry' is classifiable under Tariff Heading 2008 (fruits otherwise prepared or preserved), rejecting classification under Heading 0810 or 0811 on the stated facts and process of manufacture.

Classification of goods - principal use rule - Section Note 3 of Section XVII (criterion of sole or principal use) - parts of coach work - Chapter 86 - Heading 8607 (parts of railway or tramway locomotives or rolling-stock)

Classification of goods - principal use rule - Section Note 3 of Section XVII (criterion of sole or principal use) - parts of coach work - Chapter 86 - Heading 8607 (parts of railway or tramway locomotives or rolling-stock) - Classification of the Roof Mounted AC Package Unit manufactured as per specifications and drawings of RDSO and supplied exclusively to Indian Railways. - HELD THAT: - The Authority examined Chapter 86 and the Chapter and Section Notes, in particular Section Note 3 of Section XVII which provides that parts and accessories suitable solely or principally for use with articles of Chapters 86-88 are to be classified in those Chapters and that classification where a part answers descriptions in two or more headings is determined by its principal use. The Roof Mounted AC Package Unit is manufactured strictly to specifications and designs provided by the Indian Railways (RDSO) and is meant to be used solely in railway coaches. The product is not covered by the exclusion clauses of Chapter 86. The Authority applied consistent precedent reasoning that components made to railway specifications and usable solely for rolling-stock are integrally part of the coach and classifiable under heading 8607 as parts of coach work. On this basis the Roof Mounted AC Package Unit satisfies the criterion of principal use and falls within tariff heading 8607 (specifically classified as parts of coach work of railway running stock). [Paras 7, 8]

The Roof Mounted AC Package Unit, manufactured as per RDSO specifications and supplied exclusively to Indian Railways, is classifiable under Chapter 86, heading 8607 (parts of coach work of railway running stock).

Final Conclusion: The Authority rules that the Roof Mounted AC Package Unit made to RDSO specifications and supplied only to the Indian Railways is classifiable under Chapter 86.07 of the GST Tariff; the ruling is issued under Section 98 and is subject to the statutory conditions for advance rulings.

Revisionary power under Section 263(1) of the Income Tax Act - limitation under Section 263(2) of the Income Tax Act - reopening of assessment under Section 147 of the Income Tax Act - show cause notice requirement under Section 263(1)

Limitation under Section 263(2) of the Income Tax Act - revisionary power under Section 263(1) of the Income Tax Act - Whether the order passed by the Commissioner under Section 263 on 31 March 2011 was time-barred in view of the two-year limitation period applicable to revision of the assessment order dated 14 December 2007. - HELD THAT: - The Court accepted the Tribunal's conclusion that the order sought to be revised was the assessment order passed on 14 December 2007. The limitation under Section 263(2) runs from the end of the financial year in which the order sought to be revised was passed. The financial year in which the 14 December 2007 order was passed ended on 31 March 2008; the two-year period therefore expired on 31 March 2010. The impugned revisionary order dated 31 March 2011 was passed after the expiry of the two-year period and was therefore barred by the statutory limitation. The Court held that this legal bar disentitled the Commissioner to exercise revisional powers in respect of the specified assessment order.

The revisionary order dated 31 March 2011 under Section 263 was time barred and therefore unsustainable.

Show cause notice requirement under Section 263(1) - reopening of assessment under Section 147 of the Income Tax Act - Whether the show cause notice issued by the Commissioner related to the assessment completed on 16 November 2009 (i.e., the order passed under Section 143(3) read with Section 147) or only to the earlier assessment dated 14 December 2007. - HELD THAT: - The Tribunal made a factual finding that no notice under Section 263(1) was served on the assessee in respect of the order passed on 16 November 2009 and that the show cause notice dated 18 March 2011 referred only to the assessment order dated 14 December 2007. The High Court found no reason to interfere with this factual finding of the Tribunal. Given that the show cause notice did not pertain to the later order (dated 16 November 2009), the Commissioner could not validly exercise revisional jurisdiction qua that later order on the basis of the impugned notice.

It was held as a factual conclusion that the show cause notice related only to the 14 December 2007 assessment and not to the 16 November 2009 order under Section 143(3) read with Section 147; that factual finding was upheld.

Final Conclusion: The Tribunal's decision was affirmed: the order passed by the Commissioner under Section 263 on 31 March 2011 was barred by limitation and therefore unsustainable, and the factual finding that the show cause notice did not relate to the 16 November 2009 reopening was not disturbed; the appeal is dismissed.

Assessment under Section 153A/Section 153C and requirement of incriminating material - Nexus between seized documents and undisclosed income - Requirement of recorded satisfaction before initiating proceedings under Section 153C - Preponderance of probability in sustaining additions based on seized material

Assessment under Section 153A/Section 153C and requirement of incriminating material - Preponderance of probability in sustaining additions based on seized material - Whether additions made on account of unexplained investment could be sustained when no incriminating material belonging to the assessee was found or seized during the search. - HELD THAT: - The Court applied the principle in Commissioner of Income Tax v. Kabul Chawla as followed by subsequent Division Bench authority and observed that, under the scheme of Section 153A read with Section 153C, reassessment or interference with completed assessments in post-search proceedings must be founded on incriminating material seized in the search or on material which can be related to the seized material. The Tribunal and the CIT(A) both recorded concurrent findings of fact that no incriminating material belonging to the assessee had been seized. In that factual backdrop the Assessing Officer's additions, made without demonstrable nexus to any seized incriminating material and without meeting the standard of preponderance of probability urged by the Revenue, could not be sustained. The Court further noted that the CIT(A) directed scrutiny of the seller's transactions and that the assessee disposed of the same shares in a later assessment year at a lesser price, a fact accepted by the AO, supporting the conclusion that the additions were not justified.

Additions made on account of unexplained investment were not sustainable in absence of incriminating material seized; the Tribunal's confirmation of deletion is upheld.

Requirement of recorded satisfaction before initiating proceedings under Section 153C - Nexus between seized documents and undisclosed income - Whether proceedings under Section 153C could be validly initiated by the Assessing Officer without recording how seized documents reflected undisclosed income of the assessee and without establishing a rational nexus between seized material and escapement of income. - HELD THAT: - The Court examined the Assessing Officer's satisfaction note and found it did not explain how the documents seized during search reflected any undisclosed income of the assessee. Citing settled precedents, the Court reiterated that the subjective satisfaction required for invoking Section 153C must be founded on material that bears a rational nexus to undisclosed income of the third person; mere possession or that documents 'pertain' to the assessee is insufficient where they have no bearing on income escapement. As the AO failed to demonstrate such nexus or to record a reasoned satisfaction, the initiation of proceedings under Section 153C was held to be impermissible in the facts of this case.

Proceedings under Section 153C were invalidly initiated in absence of recorded, reasoned satisfaction and nexus between seized documents and undisclosed income; the reassessment could not be sustained on that basis.

Final Conclusion: The Revenue's appeal is dismissed; the ITAT's order confirming deletion of the additions is upheld and no substantial question of law arises for consideration.

Withholding tax certificate under Section 197 of the Income Tax Act - rectification of assessment and effect on outstanding demand - decision on refund consequent to rectification - protection of revenue as a ground for withholding certificate denial

Withholding tax certificate under Section 197 of the Income Tax Act - protection of revenue as a ground for withholding certificate denial - Legality of rejection of the petitioner's application under Section 197 for Assessment Year 2022-23. - HELD THAT: - The impugned order rejecting the application under Section 197 was founded on the existence of large outstanding demands on the petitioner's PAN but simultaneously recorded that rectification applications were pending and that demands were likely to be reduced to nil once rectifications were decided. That factual position rendered the stated foundation for rejection self-contradictory. In view of this internal inconsistency, the Court set aside the rejection and required respondent to re-decide the Section 197 application qua Sections 194A and 194J after the rectification applications are disposed of, without expressing any opinion on the merits of those rectifications. The Court directed re-consideration to occur within a specified short period following disposal of rectifications so that the conflicting basis for the earlier rejection is removed before any fresh decision is taken.

Impugned rejection under Section 197 quashed; Respondent No.1 directed to re-decide the petitioner's Section 197 application in respect of Sections 194A and 194J within two weeks of disposal of rectification applications.

Rectification of assessment and effect on outstanding demand - decision on refund consequent to rectification - Obligation of the assessing authority to decide the petitioner's pending rectification applications and consequential refund claim. - HELD THAT: - The Court observed that multiple rectification applications filed by the petitioner remained pending despite representations since 2019 and that the PAN demand shown on departmental portals was likely to be reduced to nil upon disposal of those rectifications. To remove the stand-off caused by the pendency and to enable correct determination of both outstanding demand and any entitlement to refund, the Court directed Respondent No.2 to decide the rectification applications in accordance with law within six weeks. The Court further directed that if any refund becomes due to the petitioner upon such decision, it shall be refunded in accordance with law within eight weeks from the date directed by the Court. The Court expressly refrained from expressing any view on the merits of the rectification claims.

Rectification applications remanded for fresh decision within six weeks; if refunds are found due, they shall be paid within eight weeks thereafter.

Final Conclusion: The writ petition succeeds in part: the order rejecting the petitioner's Section 197 application for AY 2022-23 is set aside and the Section 197 application (for Sections 194A and 194J) is to be re-decided after the assessing authority disposes of the pending rectification applications within the time directed; the assessing authority is further directed to decide rectifications and, if a refund is due, to refund it within the specified timeframe.

Disallowance under Section 14A read with Rule 8D - Retrospective operation of an Explanation enacted "for removal of doubts" - Binding effect of Division Bench precedent in absence of a stay - Prospective application of statutory amendment

Disallowance under Section 14A read with Rule 8D - Deletion by the ITAT of the disallowance made under Section 14A read with Rule 8D was upheld. - HELD THAT: - The Court found that the ITAT correctly deleted the disallowance of expenditure purportedly attributable to exempt income for Assessment Year 2013-14 in accordance with the Division Bench decision in PCIT v. IL & FS Energy Development Company Ltd. The revenue's contention that that decision is not binding because an SLP is pending before the Supreme Court was rejected since no stay of the Division Bench judgment has been granted. The appeal was therefore dismissed as being covered by existing Division Bench precedent. [Paras 2, 3, 9]

The ITAT's deletion of the disallowance is sustained and the appeal is dismissed on that ground.

Retrospective operation of an Explanation enacted "for removal of doubts" - Prospective application of statutory amendment - The 2022 amendment to Section 14A (inserting a non-obstante clause and an Explanation 'for removal of doubts') cannot be treated as having retrospective effect to alter the law for Assessment Year 2013-14. - HELD THAT: - Relying on settled Supreme Court authority (Sedco Forex and M.M. Aqua Technologies), the Court held that an Explanation framed as 'for removal of doubts' will not be presumed retrospective if it effects a change in the law as it previously stood. The Memorandum to the Finance Bill, 2022 and the express language therein show the amendment takes effect from 1 April 2022 and applies to Assessment Year 2022-23 and subsequent years. Consequently, the amendment does not affect the assessment for 2013-14 and cannot be invoked to disturb the ITAT's decision. [Paras 5, 6, 8]

The Finance Act, 2022 amendment to Section 14A is prospective and does not alter the law applicable to AY 2013-14.

Binding effect of Division Bench precedent in absence of a stay - In the absence of a stay, the Division Bench decision relied upon is binding on the Court and governs the present appeal. - HELD THAT: - The Court applied principles that an earlier Division Bench ruling of this Court governs subsequent matters until altered by a larger bench or stayed by the Supreme Court. Although the Division Bench judgment in PCIT v. IL & FS Energy Development Company Ltd. is the subject of an SLP before the Supreme Court, there is no stay of that judgment; accordingly, the present appeal is bound by that precedent. The Court further noted that the present order will abide by the final decision of the Supreme Court in the pending SLP. [Paras 9, 10]

The appeal is dismissed as covered by the Division Bench precedent; the order shall abide by the Supreme Court's final decision in the pending SLP.

Final Conclusion: The appeal is dismissed; the ITAT's deletion of the Section 14A/Rule 8D disallowance for AY 2013-14 is upheld, the 2022 amendment to Section 14A is prospective (applicable from AY 2022-23 onwards) and the present order remains subject to the outcome of the pending SLP concerning the cited Division Bench decision.

Voidability of transfers under Section 281 - jurisdiction of the Tax Recovery Officer in possession proceedings - distinction between right to possession and validity of transfer - requirement of a civil suit for declaration under Section 281 - principles of natural justice in adjudication of transfers

Jurisdiction of the Tax Recovery Officer in possession proceedings - distinction between right to possession and validity of transfer - voidability of transfers under Section 281 - Order of the Tax Recovery Officer declaring the transfer to the petitioner void under Section 281 is without jurisdiction and liable to be set aside. - HELD THAT: - The court applied the ratio of the Supreme Court in Tax Recovery Officer v. Gangadhar Vishwanath Ranade and the Division Bench decision in Ms. Ruchi Mehta v. Union of India to hold that the TRO's statutory role is to examine possession and, insofar as necessary, whether possession is claimed in the transferee's own right or on behalf of the assessee. Adjudication on the substantive validity of the transfer under Section 281 - i.e., declaring a transfer void as against the Department's claim - falls outside the TRO's jurisdiction and, if the Department seeks such a declaration, it must approach the civil forum by filing a suit. The court also noted the preceding decision that the absence of any opportunity to the transferee before such a declaration would violate principles of natural justice. Applying these principles, the impugned order purporting to declare the transfer void under Section 281 was held to be beyond the TRO's competence and therefore set aside. [Paras 5, 6, 7]

Impugned order dated 27th June, 2007 declaring the transfer void under Section 281 quashed; respondents may proceed thereafter by following due procedure.

Final Conclusion: The order of the Tax Recovery Officer purporting to declare the transfer void under Section 281 is set aside as beyond the TRO's jurisdiction; the Revenue remains entitled to pursue its claim by following appropriate civil procedure and observing principles of natural justice.

Genuineness of purchases - estimation of profit element on unexplained purchases - acceptance of consumption reports and completion certificates as evidentiary corroboration - appellate interference limited by perversity/ reasonableness standard

Genuineness of purchases - acceptance of consumption reports and completion certificates as evidentiary corroboration - estimation of profit element on unexplained purchases - Whether the Tribunal was justified in upholding the CIT(A)'s deletion of the bulk of the addition and restricting the addition to the estimated profit of 12.5% on purchases treated as non-genuine. - HELD THAT: - The Tribunal sustained the CIT(A)'s conclusion that the Assessing Officer could not reasonably hold the entire claimed purchases to be bogus where the consumption reports and contract completion certificates - evidencing that works were executed and materials consumed - were not controverted by the AO. The CIT(A), following the approach of estimating only the profit element on unexplained purchases, applied a 12.5% rate to compute the addition. The High Court found no legal infirmity in the Tribunal's reliance on the uncontroverted consumption and contract evidence to refuse total disallowance, and held that the Tribunal's acceptance of the CIT(A)'s estimated profit addition was neither perverse nor unsustainable in law. [Paras 6, 7, 10, 12, 13]

Tribunal's order upholding the CIT(A)'s restriction of the addition to estimated profit at 12.5% on the purchases is legally valid and does not warrant interference.

Final Conclusion: The Income Tax Appeal is dismissed; the Tribunal's order upholding the CIT(A)'s partial deletion of the addition and the estimate-based addition is affirmed.

Incriminating material - search and seizure under Section 132 - notice under Section 153A - completed assessment attained finality - assessment under Section 153A limited to seized material or material relatable thereto - reopening/reassessment of completed assessments only on basis of seized incriminating material

Incriminating material - completed assessment attained finality - assessment under Section 153A limited to seized material or material relatable thereto - Whether additions to the assessee's income for Assessment Year 2010-11 could be made under the proceedings consequent to search where the assessment for that year was completed on the date of search and no incriminating material pertaining to that year was found during the search. - HELD THAT: - The ITAT found, and this Court concurs, that the assessment for AY 2010-11 had attained finality on the date of search (8th July, 2015) and was not pending. The Assessing Officer's additions were not supported by any incriminating material discovered from the assessee's addresses during the search; the documents relied upon related to a later period and merely recorded transfer entries without indicating unexplained investment by the assessee. Applying the legal principle in Kabul Chawla and the exposition in Meeta Gutgutia, an assessment under Section 153A of the Act may interfere with a completed assessment only if there is incriminating material unearthed in the search or other post-search material relatable to the seized evidence. Absent such nexus or seized incriminating material, the Assessing Officer cannot make additions to a completed assessment; mere presumptions or reliance on documents not found from the assessee and not evidencing unexplained investment do not suffice. The ITAT's concurrent conclusion that no new ground justified departing from similar dismissed departmental appeals in the group further supports acceptance of the view that additions could not be sustained. [Paras 8, 10, 11, 13, 14]

Additions made to the assessee's income for AY 2010-11 were not sustainable in the absence of incriminating material found during the search and the appeal is dismissed.

Final Conclusion: The departmental appeal is dismissed; the ITAT's conclusion that no additions could be made to the completed assessment for AY 2010-11 in the absence of incriminating material unearthed in the search is affirmed and the appeal is dismissed along with pending applications.

Conclusive effect of certificate issued under Section 5(1) of the Vivad Se Vishwas Scheme - one declaration rule - no revised declaration after issuance of certificate - revised declaration non est in law - deemed withdrawal of pending appeals upon issuance of certificate - finality of determination under the Scheme and bar on reopening - Section 9(c) exclusion clause and prosecution instituted against a person

Revised declaration non est in law - one declaration rule - no revised declaration after issuance of certificate - Validity of the revised/fresh declaration dated 23.01.2021 filed by the petitioner - HELD THAT: - A conjoint reading of Sections 3, 4 and 5 of the Scheme shows that a declarant is entitled to file one declaration in respect of tax arrears and the Designated Authority is to determine the amount payable and grant a certificate under Section 5(1). The Scheme and the Rules do not provide for filing of a revised declaration after issuance of the certificate. CBDT Circular No.21/2020 confirms that a declaration can be revised only before the DA issues a certificate under Section 5(1). Consequently, the second declaration filed on 23.01.2021 was not maintainable and is non est in law; any consequential order passed thereon has no legal effect. [Paras 16, 17, 18, 21, 22]

The revised/fresh declaration dated 23.01.2021 is non est in law and the order passed pursuant thereto is of no legal consequence.

Conclusive effect of certificate issued under Section 5(1) of the Vivad Se Vishwas Scheme - deemed withdrawal of pending appeals upon issuance of certificate - finality of determination under the Scheme and bar on reopening - Legal status and consequences of the certificate dated 20.01.2021 issued under Section 5(1) of the Scheme and the consequent obligations - HELD THAT: - Once the Designated Authority issued the certificate dated 20.01.2021 accepting the original declaration, the certificate is conclusive as to the matters stated therein and, by operation of Section 4(2) read with Section 5(3), any appeals pending before the ITAT or Commissioner (Appeals) in respect of the disputed amounts stand deemed to have been withdrawn. The Scheme contains no provision for review or fresh declaration after acceptance; allowing subsequent declarations to affect the original certificate would undermine provisions such as the non-refund rule in Section 7. In view of the foregoing and the fact that the Department has not revoked the certificate, equity requires that the certificate be given effect to: the petitioner is directed to pay the amount determined in the certificate within fifteen days and the Department shall accept the payment and record the declaration as satisfied under the Scheme. [Paras 18, 19, 20, 21, 23]

The certificate dated 20.01.2021 remains operative and, subject to the petitioner depositing the amount determined therein within fifteen days, the declaration shall be deemed satisfied and the respondents shall act in terms of Section 5(2).

Section 9(c) exclusion clause and prosecution instituted against a person - Applicability of Section 9(c) of the Scheme insofar as a prosecution against a director (and not the declarant-company) was relied upon to reject the revised declaration - HELD THAT: - The Court noted competing submissions on whether the term 'person' in Section 9(c) must be read as limited to the declarant (company) or extends to prosecutions against its directors, and whether a charge-sheet submitted before filing of the second declaration would preclude benefit. However, having held that the second declaration is non est in law, the Court refrained from adjudicating the correctness of the Designated Authority's reliance on Section 9(c) to reject the revised declaration. That substantive question was therefore not decided on the merits. [Paras 11, 12, 13, 14, 22]

Left open for determination - the Court refrained from deciding the applicability of Section 9(c) to the facts and did not adjudicate the merit of rejection based on prosecution against a director.

Final Conclusion: The writ petition is allowed insofar as the revised/fresh declaration dated 23.01.2021 is held to be non est in law and of no effect; the certificate dated 20.01.2021 issued under Section 5(1) remains operative and the petitioner is directed to deposit the amount determined therein within fifteen days, whereupon the respondents shall accept payment and treat the declaration as satisfied under the Scheme. The question whether Section 9(c) applies on the facts was not decided.

Interest under section 244A taxable in the year of receipt - Deductibility under section 37 - business expenditure - allowance limited where no segregated accounts - Write off of investments as business loss where real character is akin to advances/working capital and company objects support such treatment

Interest under section 244A taxable in the year of receipt - Whether interest received under section 244A of the Act is taxable in the year of receipt despite pendency of appeals by the Department. - HELD THAT: - The Tribunal noted that the assessee received interest under section 244A and credited it to its accounts in the year under consideration. The assessee relied on earlier favourable orders but conceded that its own subsequent ITAT decisions for AYs 2001-02 & 2002-03 went against it. Following the binding precedent of the Tribunal in the assessee's own case for those later years and relevant authorities, the Tribunal held that the interest granted with the refund satisfies the requirements of taxable income and is assessable in the year of receipt; the possibility of future variation under subsection (3) of section 244A does not affect taxation in the year of receipt. The Tribunal therefore dismissed the assessee's contention and affirmed the addition. [Paras 4]

Assessee's appeal on taxability of interest under section 244A dismissed; interest held taxable in year of receipt.

Deductibility under section 37 - business expenditure - allowance limited for lack of segregated accounts - Whether the expenditure incurred as customary entertainment/meeting expenses is wholly deductible as business expenditure or liable to disallowance in absence of segregated accounts. - HELD THAT: - The Tribunal accepted that the expenditures were incurred in the course of business to interact with various government departments but noted that the assessee had not maintained separate accounts to apportion amounts between employees and visiting officials. On that basis, and following the approach taken by the CIT(A) in similar earlier years, the Tribunal agreed with the estimate made by the CIT(A) to allow 25% and disallow the balance for want of precise evidence to substantiate the full claim. [Paras 6]

Assessee's appeal on the claim for extraordinary business expenditure dismissed; allowance limited to 25% and 75% disallowed for lack of segregated evidence.

Write-off of investments as business loss where real character is akin to advances/working capital and company objects support such treatment - Deductibility under section 37 - write off of investments held for commercial expediency - Whether the write off of investments in Ponni Sugars (Orissa) Ltd. is capital in nature or allowable as a business loss/deduction under section 37. - HELD THAT: - The Tribunal examined the nature of the assessee's investments (equity, non convertible debentures, zero coupon preference shares), the commercial background including failed revival efforts, declaration as a sick unit by BIFR, and factual matrix showing investments made to secure raw material supply and to support the enterprise. Relying on ratio and rulings of the Hon'ble Madras High Court - which treated similar transactions as akin to loans/advances and investments as part of the assessee's primary business activity - the Tribunal held that the write off was not a capital loss but a business loss deductible in computing business income. The Tribunal reversed the findings of the lower authorities and allowed the claim. [Paras 11, 12]

Assessee's appeal on write off of investments allowed; write off treated as business loss and deductible.

Final Conclusion: The appeal is partly allowed: the Tribunal dismissed the assessee's challenges on taxability of interest under section 244A and on the expenditure disallowance (confirming 25% allowance), but allowed the claim for write off of investments as a business loss.

Claiming foreign tax credit under Article 24(2) read with Section 90 of the Income tax Act, 1961 - timeliness of Form 67 and Rule 128 of the Income tax Rules, 1962 - original return versus revised return - treatment for processing and consequences - disallowance of depreciation for incorrect disclosure in return - interest under Section 234A - interest under Sections 234B and 234C (consequential computation) - late filing fee under Section 234F

Claiming foreign tax credit under Article 24(2) read with Section 90 of the Income tax Act, 1961 - timeliness of Form 67 and Rule 128 of the Income tax Rules, 1962 - original return versus revised return - treatment for processing and consequences - Entitlement to foreign tax credit claimed by the assessee for taxes paid in the UK. - HELD THAT: - The Tribunal found on the record that the assessee filed an original return on 23 August 2018 and furnished Form No. 67 prior to the due date for filing the return. The Central Processing Centre and the CIT(A) had treated a subsequently filed revised return as the operative return and held that Form 67 was filed beyond the due date, denying the foreign tax credit. The Tribunal held that the original return and the contemporaneous filing of Form 67 were on file and had been ignored by the lower authorities. Because Form 67 was furnished on or before the due date prescribed for filing the return, the statutory requirement for claiming foreign tax credit under the DTAA and Section 90 (read with Rule 128) was satisfied, and the denial by the lower authorities was reversed. [Paras 11]

Foreign tax credit claim allowed and the assessing officer directed to grant the credit.

Disallowance of depreciation for incorrect disclosure in return - Validity of disallowance of depreciation claimed in an incorrect schedule of the return. - HELD THAT: - The assessee had populated the schedule relating to business profits in a manner that indicated the depreciation related to an undertaking engaged in power generation/distribution. The CPC observed that the assessee was not in that business and therefore the claim arose from incorrect disclosure. The Tribunal agreed with the CIT(A) that the onus is on the assessee to correctly fill the return and that incorrect claims made in an improper column can be rejected. The denial of the small depreciation claim was therefore upheld. [Paras 12]

Ground challenging disallowance of depreciation dismissed.

Interest under Section 234A - Whether interest under Section 234A for alleged delay in filing the return was leviable. - HELD THAT: - Because the Tribunal found that the assessee had filed the original return within the due date prescribed for the assessment year, the premise for charging interest under Section 234A (delay in filing the return) did not hold. The Tribunal therefore deleted the interest charged under Section 234A. [Paras 13]

Interest under Section 234A deleted.

Interest under Sections 234B and 234C (consequential computation) - Treatment of interest under Sections 234B and 234C consequential to the adjustments. - HELD THAT: - The Tribunal held that computation of interest under Sections 234B and 234C is consequential in nature. Having ruled in favour of the assessee on the timeliness of filing, the assessing officer was directed to recompute interest under Sections 234B and 234C in accordance with law and the corrected assessment position. [Paras 14]

Directed recomputation of interest under Sections 234B and 234C in accordance with law.

Late filing fee under Section 234F - Leviability of fee under Section 234F for late filing. - HELD THAT: - Since the Tribunal concluded that the original return was filed within the due date, the statutory basis for imposing the late filing fee under Section 234F did not exist. Accordingly, the fee imposed was held to be not leviable and was deleted. [Paras 15]

Fee under Section 234F deleted.

Final Conclusion: The appeal is partly allowed: the foreign tax credit claim is allowed and the assessing officer directed to grant the credit; the disallowance of depreciation is sustained; interest under Section 234A and late filing fee under Section 234F are deleted; interest under Sections 234B and 234C to be recomputed consequentially.

Disallowance under section 14A and Rule 8D - Presumption of investment from interest-free funds - Nature of carbon credits as capital receipt - Deduction under section 80IA and non applicability if capital receipt - Forward premium and applicability of section 43A - Remand for verification of forex forward premium - Allowability of Corporate Social Responsibility expenditure under section 37 - Prospective operation of Explanation (2) to section 37(1) - Disallowance under section 40(a)(ia) for failure to deduct tax under section 195 - Taxability of commission to non-resident agents and scope of section 9

Disallowance under section 14A and Rule 8D - Presumption of investment from interest-free funds - Validity of disallowance under section 14A read with Rule 8D(2)(ii) where assessee had substantial interest free funds and AO did not find nexus of interest bearing funds to exempt investments. - HELD THAT: - The Tribunal found that the assessee had large own interest free funds (share capital and reserves & surplus) substantially exceeding the investments yielding exempt dividend. Neither the Assessing Officer nor the CIT(A) recorded any finding that interest bearing borrowed funds were actually applied to the investments producing exempt income. Relying on the presumption recognised by the Bombay High Court in CIT v. HDFC Ltd., where no such nexus is established the presumption favours the assessee and a disallowance under Rule 8D cannot be sustained. Applying that legal principle to the facts, the Tribunal allowed the challenge to the interest disallowance under Rule 8D(2)(ii). [Paras 2, 8]

Disallowance under section 14A/Rule 8D in respect of interest disallowed was reversed and the ground of the assessee's appeal allowed.

Nature of carbon credits as capital receipt - Deduction under section 80IA and non applicability if capital receipt - Whether receipts from sale of carbon credits are capital receipts and thus not includible in taxable income (and consequently not relevant for deduction under section 80IA). - HELD THAT: - The Tribunal followed the decision of the Madras High Court in PCIT v. Chemplast Sanmar Ltd., which held that receipts from sale of carbon credits are capital in nature. The High Court observed that where carbon credit receipts are capital receipts they fall outside the definition of total income and therefore any claim under section 80IA is immaterial. The Tribunal noted that the assessee conceded the deduction under section 80IA was not maintainable but contended that the receipts were capital in nature; applying the High Court precedent the Tribunal held the receipts to be capital receipts and reversed the additions made by the authorities below. [Paras 3]

Addition of carbon credit receipts to taxable income was reversed; carbon credit receipts held to be capital receipts and the assessee's appeal allowed on this issue.

Forward premium and applicability of section 43A - Remand for verification of forex forward premium - Whether forward premium charges relating to foreign currency forward contracts should be capitalised under section 43A or allowed as revenue expenditure. - HELD THAT: - The Tribunal observed that neither the Assessing Officer nor the CIT(A) had examined the detailed particulars of the forex forward premium charges now placed before the Tribunal. The assessee produced detailed annexures which were not considered by lower authorities, and the assessee admitted that the nature of the expenditure warranted fresh examination. Given the lack of adjudication on the merits and the material placed on record for verification, the Tribunal directed that the matter be remitted to the Assessing Officer to examine the details and determine whether the premium relates to capital expenditure (section 43A) or is allowable as revenue expenditure. [Paras 4, 12]

Issue remanded to the Assessing Officer for fresh consideration after verification of the details of forex forward premium; allowed for statistical purposes.

Allowability of Corporate Social Responsibility expenditure under section 37 - Prospective operation of Explanation (2) to section 37(1) - Whether CSR expenditures claimed by the assessee are deductible under section 37 as business expenditure for the relevant assessment years. - HELD THAT: - The Tribunal followed the reasoning of the Karnataka High Court in CIT v. Infosys Technologies Ltd., which held that certain CSR expenditures could be allowable under section 37(1) when they are incurred for commercial expediency and to facilitate business (for example to maintain labour relations, secure raw materials or enable operations). The Tribunal noted the factual matrix that the assessee's CSR spending was directed to maintaining community relations necessary for its paper manufacturing operations (water management, infrastructure, etc.). The Tribunal also accepted that the Explanation inserting the prohibition on CSR deduction was prospective and inapplicable to the years under consideration. Applying the precedent and the facts, the Tribunal sustained the CIT(A)'s allowance of CSR expenditure and dismissed the Revenue's appeals for the years considered. [Paras 6, 7, 10]

CIT(A)'s deletion of disallowance of CSR expenses was upheld; Revenue's appeals dismissed and assessee's claims allowed.

Disallowance under section 40(a)(ia) for failure to deduct tax under section 195 - Taxability of commission to non-resident agents and scope of section 9 - Whether commission paid to non-resident agents without deduction of tax at source under section 195 is disallowable under section 40(a)(ia) where the commission does not accrue or arise in India. - HELD THAT: - The Tribunal considered that the overseas agents had no permanent establishment in India and rendered services outside India in procuring export orders. There was no material to show that the commission income accrued or arose in India within the scope of section 9. The Tribunal relied on earlier coordinate bench decisions in the assessee's own case for prior years where similar disallowances were deleted, and on authority holding that payments not chargeable to tax in India do not attract obligation to deduct TDS under section 195. Applying those findings, the Tribunal held that the disallowance under section 40(a)(ia) was not sustainable. [Paras 9]

Disallowance under section 40(a)(ia) in respect of commission paid to non residents was deleted and the assessee's claim allowed.

Final Conclusion: The Tribunal allowed the assessee's appeals largely: disallowances under section 14A/Rule 8D were reversed where interest bearing funds were not shown to be applied to exempt investments; carbon credit receipts were held capital in nature and removed from taxable income; CSR expenditures were held deductible under section 37 for the years in issue; commission paid to non residents without TDS was not disallowable where income did not accrue in India; the question of forex forward premium was remanded to the Assessing Officer for verification and fresh decision. Overall, the assessee's appeals were allowed (some for statistical purposes) and the Revenue's appeals were dismissed as indicated.

Condonation of delay - reopening of assessment under section 148 - capital gains arising on execution of joint development agreement cum irrevocable power of attorney - exemption under section 54F - remand for fresh adjudication

Condonation of delay - Whether the delay in filing the Revenue's appeal and the assessee's cross-objection should be condoned and the matters admitted for adjudication - HELD THAT: - Both parties had filed applications for condonation of delay (an 80-day delay by the Revenue and one day by the assessee). The Tribunal heard the explanations tendered by both sides and exercised its discretion to condone the delays. Consequently, the appeal and the cross-objection were admitted for adjudication. [Paras 2]

Delays in filing the appeal by the Revenue and the cross-objection by the assessee are condoned and both matters are admitted for adjudication.

Exemption under section 54F - remand for fresh adjudication - Whether the assessee is entitled to claim exemption under section 54F in respect of 52 flats and whether the matter requires fresh consideration - HELD THAT: - The Assessing Officer treated the JDA cum irrevocable GPA as a transfer giving rise to capital gains assessable in A.Y.2012-13 and the CIT(A) allowed the assessee's belated ground claiming exemption under section 54F in respect of 52 flats without verifying factual prerequisites. The Tribunal observed that section 54F disqualifies exemption if the assessee owns more than one residential house other than the new asset on the date of transfer, and that this factual requirement was not ascertained because no return was filed and no enquiry was made by either the AO or the CIT(A). The Tribunal held that the CIT(A) had not verified material facts nor obtained a remand report and therefore could not allow the exemption without fresh fact-finding. In the interest of justice the Tribunal restored the issue to the file of the CIT(A) with directions to decide the claim afresh after affording opportunity and, if necessary, obtaining a remand report from the AO; the Tribunal also directed the CIT(A) to consider whether receipt/allotment of 52 constructed flats pursuant to the development agreement amounts to construction of a residential house for section 54F purposes. [Paras 9]

The question of entitlement to exemption under section 54F in respect of the 52 flats is remitted to the CIT(A) for fresh adjudication after verification of facts and after affording the assessee an opportunity of hearing; the CIT(A) may call for a remand report from the AO.

Remand for fresh adjudication - Whether the grounds raised by the assessee in the cross-objection (restriction of cost of acquisition, computation of consideration, and existence of transfer on JDA cum GPA) require adjudication and/or remand - HELD THAT: - The assessee's cross-objection raised factual and legal contentions which were not adjudicated by the CIT(A). Given that the Tribunal has restored the Revenue's appeal to the CIT(A) for fresh consideration and that the cross-objection raises matters that were not decided below, the Tribunal considered it appropriate in the interest of justice to restore those grounds to the file of the CIT(A). The CIT(A) is directed to adjudicate the cross-objection issues in accordance with law after giving the assessee an opportunity to be heard. [Paras 11]

Grounds raised in the assessee's cross-objection are remitted to the CIT(A) for adjudication afresh after due opportunity; the cross-objection is accordingly restored for consideration.

Final Conclusion: The Tribunal condoned the delays and admitted both the appeal and cross-objection; the substantive questions regarding entitlement to exemption under section 54F and the factual issues raised in the assessee's cross-objection were not decided on merits and are remitted to the CIT(A) for fresh adjudication in accordance with law after providing opportunity of hearing and, if necessary, obtaining a remand report from the Assessing Officer. The appeals are allowed for statistical purposes.

Reopening of assessment - reasons to believe - independent application of mind - information received from Investigation Wing insufficient - reassessment void ab initio

Reopening of assessment - reasons to believe - independent application of mind - information received from Investigation Wing insufficient - reassessment void ab initio - Validity of reassessment proceedings initiated under section 147/148 where notice was issued solely on the basis of information from the Investigation Wing. - HELD THAT: - The Tribunal examined the reasons recorded for reopening and found that the notice under section 148 was issued only on the basis of information received from the Investigation Wing without any independent application of mind by the Assessing Officer. Reliance was placed on the Tribunal's earlier decisions in the assessee's own case for the immediately succeeding assessment year and on co-ordinate Bench and High Court authority which hold that information from the Investigation Wing, standing alone, does not constitute the requisite material unless the AO applies his mind and forms a prima facie reason to believe that income has escaped assessment. The Tribunal observed that post-reopening analysis of materials during appellate proceedings cannot validate a reopening that lacked the jurisdictional satisfaction at the time it was made. Because the facts here were identical to those in the prior Tribunal decisions, and no contrary material was placed on record, the reassessment was held to be invalid and the assessment framed thereunder to be void ab initio. As the assessee succeeded on this legal ground, the Tribunal declined to adjudicate the substantive additions on merit. [Paras 7, 8, 9]

Reopening based solely on information from the Investigation Wing without the AO's independent application of mind was invalid; consequent reassessment and assessment are void ab initio, appeal allowed on this ground.

Final Conclusion: The Tribunal allowed the appeal for AY 2010-11, holding the reassessment initiated on the basis of information from the Investigation Wing without independent application of mind to be invalid and the assessment framed thereon void ab initio; substantive issues were not adjudicated.

Deductibility under section 37(1) (wholly and exclusively for business) - personal versus business expenditure - reimbursement of legal and travelling expenses to directors and shareholders - effect of subsequent judicial acquittal on allowability of expenditure - remand for fresh consideration in light of subsequent judicial decision

Deductibility under section 37(1) (wholly and exclusively for business) - personal versus business expenditure - effect of subsequent judicial acquittal on allowability of expenditure - Whether legal and travelling expenses reimbursed to the company's directors and shareholders are allowable as business expenditure under section 37(1). - HELD THAT: - The Tribunal noted that both the Assessing Officer and the CIT(A) disallowed the expenses on the basis that the criminal proceedings before the Special CBI Court related to alleged misconduct of the directors and shareholders in their individual capacity and not to the company's ordinary business, and therefore the reimbursements were personal in nature and not incurred wholly and exclusively for the purpose of business. The Tribunal observed that at the time of the assessment the CBI judgment was not available but that a judgment of acquittal dated 21.12.2017 of the Special CBI Court was available before the CIT(A) and that neither authority examined the outcome of that judgment. Because the allowability turns on whether the expenses were incurred for the purpose of the company's business - a question that the lower authorities did not decide after considering the Special CBI Court's judgment - the Tribunal held that the matter must be reconsidered by the Assessing Officer after examining the CBI Court judgment and deciding afresh in accordance with law. [Paras 7]

Set aside and remitted to the Assessing Officer for fresh decision after examining the Special CBI Court judgment.

Remand for fresh consideration in light of subsequent judicial decision - reimbursement of legal and travelling expenses to directors and shareholders - Whether identical claims for assessment years 2013-14 and 2014-15 should be reopened to the Assessing Officer for fresh adjudication in view of the Tribunal's decision in 2012-13. - HELD THAT: - The Tribunal applied the reasoning adopted in the decision for assessment year 2012-13 and remitted the identical issues in respect of assessment years 2013-14 and 2014-15 to the Assessing Officer for fresh consideration in accordance with law, directing that the Special CBI Court judgment be examined while deciding the allowability of the claimed expenses. [Paras 8]

Matter remitted to the Assessing Officer for fresh decision for assessment years 2013-14 and 2014-15.

Procedural ground not pressed - Whether the limitation ground raised for assessment year 2014-15 should be adjudicated. - HELD THAT: - The Tribunal recorded that the counsel for the assessee did not press the limitation ground in respect of assessment year 2014-15 and therefore declined to adjudicate that issue. [Paras 9]

Limitation ground dismissed as not pressed.

Final Conclusion: The Tribunal set aside the orders of the CIT(A) and remitted the question of allowability of legal and travelling expenses reimbursed to directors and shareholders in AY 2012-13 to the Assessing Officer for fresh consideration after examining the Special CBI Court judgment; identical issues for AYs 2013-14 and 2014-15 are similarly remitted; the limitation ground for AY 2014-15 was dismissed as not pressed. Appeals allowed/partly allowed for statistical purposes as recorded.

Revisionary jurisdiction under section 263 - requirement of Form 3CEB and transfer pricing compliance - reference to Transfer Pricing Officer for determination of arm's length price - verification of sundry creditors and genuineness/existence of liability - cessation of liability under section 41(1) - scope of enquiry by assessing officer and limits of revisional jurisdiction - ad hoc disallowance and its review in revision proceedings

Requirement of Form 3CEB and transfer pricing compliance - reference to Transfer Pricing Officer for determination of arm's length price - Revisionary jurisdiction under section 263 - The validity of invoking section 263 on the ground that the AO did not refer transactions to the TPO or require Form 3CEB where purchases involved outward remittances. - HELD THAT: - The PCIT's show-cause merely reflected suspicion about a possible need for reference to the TPO; the assessee had denied transactions with associated enterprises and submitted supporting material during assessment. The impugned order itself records that if no associated enterprise transactions are found, reference to the TPO is not required. Selection was not on TP risk parameters and there were no material findings indicating non-arm's-length transactions. A revisional proceeding under section 263 cannot be instituted for fishing or roving enquiries where the AO has taken a plausible view after verification. Applying these principles, the Tribunal finds that the PCIT had no valid basis to treat the assessment order as erroneous or prejudicial merely for not making a TPO reference. [Paras 18, 19]

Proceedings under section 263 quashed insofar as they rest on alleged failure to refer to the TPO or to require Form 3CEB.

Verification of sundry creditors and genuineness/existence of liability - cessation of liability under section 41(1) - scope of enquiry by assessing officer and limits of revisional jurisdiction - Whether the AO's examination of sundry creditors was inadequate such that the assessment order is erroneous and prejudicial to revenue under section 263. - HELD THAT: - The AO raised queries during assessment, obtained creditor details, issued notices under section 133(6) to some creditors and relied on confirmations and PAN/address details furnished by the assessee. The PCIT's objection was based on suspicion regarding large creditor balances and grouping of certain advances as creditors, but the impugned order did not point to any specific adverse factual finding or irregularity sufficient to characterise the assessment as erroneous. Where the AO's view after verification is a plausible one, the revisional jurisdiction cannot be invoked merely on suspicion. On the facts the AO had made proper enquiries and no prejudice to revenue was established. [Paras 20]

The section 263 order cannot be sustained on the ground of alleged inadequate verification of sundry creditors; that limb of the revision is quashed.

Scope of enquiry by assessing officer and limits of revisional jurisdiction - ad hoc disallowance and its review in revision proceedings - Whether commission and assortment expenses and the ad hoc disallowance were improperly dealt with so as to render the assessment erroneous or prejudicial to revenue. - HELD THAT: - The assessee furnished vouchers, bills, TDS evidences and other supporting material during assessment to substantiate commission and assortment expenses, and payments were through banking channels. The AO considered these materials. Regarding the adhoc disallowance of Rs. 50,000/-, the PCIT himself recorded that the assessee's submissions were acceptable and did not disturb the disallowance. Where expenditures are examined and supported and the revisional authority accepts the AO's conclusion (or declines to disturb an adhoc disallowance), there is no scope for treating the assessment as erroneous under section 263. The Tribunal also noted that past scrutiny assessments had not disclosed adverse findings on these matters. [Paras 21, 22]

PCIT's invocation of section 263 on these grounds is unsustainable; the disallowance was left undisturbed by PCIT and other expense issues were found to have been duly examined.

Revisionary jurisdiction under section 263 - scope of enquiry by assessing officer and limits of revisional jurisdiction - Whether, having regard to the totality of enquiries made by the AO, the PCIT was justified in invoking section 263 to set aside the assessment order. - HELD THAT: - Applying settled law that the revisional jurisdiction under section 263 is not exercisable where the AO has made proper enquiries and taken a plausible view, and having regard to the AO's queries, documents produced, issuance of section 133(6) notices, confirmations obtained and the absence of any specific adverse finding in the impugned order, the Tribunal holds that the PCIT was not justified in holding the AO's order to be erroneous and prejudicial. Authorities cited in the impugned order and by the Tribunal reinforce that revision cannot be used to supplant a permissible view taken by the AO after verification. [Paras 23]

The order under section 263 is quashed in its entirety and the assessment order stands.

Final Conclusion: The Tribunal allows the appeal for A.Y. 2016-17, quashes the order passed under section 263 and holds that the AO's assessment, after the enquiries made, was a plausible view not vitiating revenue interest; the revisional proceedings were therefore unsustainable.

Full and true disclosure - settlement before the Settlement Commission - legality of the procedure followed - scope of judicial review of Settlement Commission orders - jurisdiction of High Court under Article 226 limited to decision making process

Full and true disclosure - settlement before the Settlement Commission - Whether the Settlement Commission erred in entertaining and disposing the application of the importer despite allegations that the importer had not made full and true disclosure. - HELD THAT: - The Court examined the record of proceedings and the final order of the Settlement Commission and found no material to conclude that the Commission acted contrary to the statutory conditions for settlement. Although a hearing note recorded that the applicant was reminded to make true disclosure and to pay admitted liability with interest, that note was not a final rejection and the record shows the matter proceeded to final disposal. The majority and minority conclusions in the Commission's order differed only on valuation and the resultant duty, not on the applicant's conduct or on failure to make full and true disclosure. On the materials placed before this Court, there was no demonstrable defect in the decision making by the Commission that warranted interference under writ jurisdiction. [Paras 9, 10]

The challenge to the Settlement Commission's acceptance and disposal of the application on grounds of alleged non disclosure is rejected; no infirmity in the Commission's procedure or its final order is found.

Legality of the procedure followed - scope of judicial review of Settlement Commission orders - jurisdiction of High Court under Article 226 limited to decision making process - Extent of the High Court's power under Article 226 to examine orders of the Settlement Commission. - HELD THAT: - The Court reiterated settled principles that under Article 226 the High Court's scrutiny of a Settlement Commission's order is confined to the legality of the procedure and the decision making process and does not extend to re appreciation of the merits as a court of appeal. Authorities cited in the judgment support that the writ court is concerned with whether the Commission acted in accordance with the Act and with procedural fairness, and not with re deciding valuation or other merits unless the order is shown to be contrary to statutory provisions or vitiated by bias, fraud or malice. Applying this principle, the Court examined the process adopted by the Commission and found it to be in accordance with law. [Paras 8, 9]

The High Court's interference is limited to legality of the procedure and decision making process; no ground for interference is made out in the present case.

Final Conclusion: Writ petition dismissed; the Settlement Commission's order is left undisturbed as there is no demonstrable procedural illegality or infirmity warranting interference under Article 226.

Interim restraint on coercive action - multiple adjudication orders arising from a single show-cause notice - production of legible annexures - notice acceptance and timetable for counter-affidavit

Interim restraint on coercive action - No coercive measures shall be taken pursuant to the impugned adjudication orders until the next date of hearing. - HELD THAT: - The Court granted interim relief restraining the respondents from taking any coercive action under the adjudication orders impugned in these petitions. The restraint is operative in the interregnum until the matters are listed next for hearing, thereby preserving the status quo and enabling adjudication on merits after pleadings are filed and exchanged. [Paras 7]

Coercive measures stayed until the next date of hearing.

Production of legible annexures - Petitioners directed to file legible copies of annexures before the next date of hearing. - HELD THAT: - The Court allowed the application subject to the petitioners furnishing legible copies of the annexures at least three days before the next hearing. This direction is procedural and intended to ensure that the record is accessible and that the respondents and the Court can meaningfully deal with the issues raised. [Paras 1]

Petitioners to file legible annexures three days before the next hearing.

Multiple adjudication orders arising from a single show-cause notice - The Court observed prima facie that two separate adjudication orders appear to have been passed arising out of a single show-cause notice. - HELD THAT: - The Court recorded that, on the face of record, the petitioners' grievance that two adjudication orders stem from a single show-cause notice appears correct. The observation was recorded to frame the controversy for further response and does not constitute a final adjudication on merits; the respondents were directed to file a counter-affidavit and return with instructions for fuller consideration. [Paras 2]

Prima facie correctness of the petitioners' assertion noted for further adjudication.

Notice acceptance and timetable for counter-affidavit - Notice issued to respondents, notice accepted, and timeline fixed for filing counter-affidavit and rejoinder. - HELD THAT: - The Court issued notice which the respondents accepted. It directed the respondents to file a counter-affidavit within four weeks and permitted any rejoinder to be filed before the next date of hearing. The matters were listed for further hearing on the specified date, thereby fixing the procedural timetable for adjudication of the contested issues. [Paras 4, 5, 6]

Notice accepted; counter-affidavit and rejoinder timelines fixed and matters listed for further hearing.

Final Conclusion: The Court granted interim protection against coercive measures, directed the petitioners to file legible annexures, issued notice (accepted by respondents) with a timetable for counter-affidavit and rejoinder, and listed the matters for further hearing, while recording a prima facie view that two adjudication orders appear to emanate from a single show-cause notice.

Regular bail - compliance with Section 212(6) of the Companies Act, 2013 - personal liberty and expeditious trial - parity with co-accused

Regular bail - parity with co-accused - personal liberty and expeditious trial - Grant of regular bail to the applicant in CC No. 77/2019 under Section 447 of the Companies Act, 2013 - HELD THAT: - The Court considered the applicant's professional role, his attendance before the trial court over three years, absence of prior arrest until 31.05.2022, the fact that the charge-sheet has been filed and no further recovery is required from him, and decisions granting bail or interim relief to co-accused and other participants in related proceedings. The Court accepted the applicant's undertaking to appear when called and observed that, having regard to delay risks in complex trials involving many accused, protection of personal liberty weighed in favour of bail. The Court recorded a prima facie view that the applicant is not guilty of the offence charged and that he is not likely to commit further offences while on bail. [Paras 5, 6, 7, 10, 11]

Applicant enlarged on bail subject to specified conditions

Compliance with Section 212(6) of the Companies Act, 2013 - Whether the conditions of Section 212(6) were satisfied for grant of bail - HELD THAT: - The Court found that Sub-section (i) of Section 212(6) was complied with since the Public Prosecutor was afforded an opportunity to oppose the bail application. The Court was prima facie satisfied with Sub-section (ii), concluding that the applicant was not likely to commit any further offence while on bail. The Court noted relevant Supreme Court observations about balancing the stringent approach to bail in economic offences with protection of personal liberty where trial delay is likely, and distinguished the applicant's role from that of main accused persons. [Paras 8, 9]

Section 212(6) conditions held satisfied for the purpose of granting bail

Final Conclusion: Bail application allowed; applicant enlarged on bail on furnishing personal bond with two local sureties and subject to conditions that he appear as directed and inform authorities of any change of address; the view expressed is confined to the bail application and does not affect final adjudication.

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code - initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code - compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - service at registered office or upon Whole Time Director as alternative modes of compliance - pre-existing dispute as a bar to initiation of CIRP - admissibility and probative value of electronic evidence including WhatsApp messages - sufficient compliance of statutory notice requirements

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code - compliance with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - service at registered office or upon Whole Time Director as alternative modes of compliance - sufficient compliance of statutory notice requirements - Validity of service of the demand notice under Section 8 and compliance with Rule 5 - HELD THAT: - The Tribunal held and this Court upheld that delivery of the demand notice under Section 8 is a sine qua non for filing under Section 9, and Rule 5 prescribes the form and manner of service. Rule 5(2)(a&b) permits service either at the registered office or upon the Whole Time Director (the legislature having used "or"), so service upon one of the entities suffices. In the present facts the notice was served upon a director (R.K. Gupta), who had been in communication with the operational creditor, and the operational creditor relied on the company master data address for service. The appellant did not contend below that service upon the Whole Time Director was not effected. The Tribunal's finding of sufficient compliance with Section 8 read with Rule 5 is affirmed.

The demand notice was validly served in compliance with Section 8 and Rule 5; the challenge to service fails.

Pre-existing dispute as a bar to initiation of CIRP - admissibility and probative value of electronic evidence including WhatsApp messages - Whether alleged defects in goods shown in WhatsApp messages constitute a pre-existing dispute sufficient to defeat the Section 9 application - HELD THAT: - The Tribunal correctly observed that electronic communications such as WhatsApp may be examined to ascertain existence of a dispute, but such material must be corroborated and not selectively relied upon. On the record the corporate debtor had the debt reflected in its books as a sundry creditor and there were messages acknowledging the debt; the corporate debtor relied selectively on chat exchanges asserting defects only after the Section 9 application was filed. No independent corroborative evidence (for example, contemporaneous notice of defective goods or other proof) was placed before the Tribunal. The Tribunal's conclusion that the WhatsApp messages did not establish a pre-existing dispute warranting rejection of the Section 9 petition is maintained. The Court noted and considered earlier decisions referred to by the parties (Vinod Mittal Vs. Rays Power Experts Pvt. Ltd. ; M/s Bhandari Hosiery Exports Limited and Ors. Vs. M/s In-Time Garments Pvt. Ltd. ; Jyoti Strips Pvt. Ltd. Vs. J.S.C. Ispat Pvt. Ltd. ; Mr. Shalender Sharma Vs. Ercon Composites ; Mahabir Cold Storage Vs. CIT ; A.V. Murthy Vs. B.S. Nagabasavanna ; Asset Reconstruction Company(India) Ltd. Vs. Bishal Jaiswal and Another ) and found no basis to interfere with the Tribunal's assessment of the evidence.

The Whatsapp communications do not establish a pre-existing dispute sufficient to bar initiation of CIRP; the Tribunal's finding is upheld.

Final Conclusion: The appeal is dismissed; the National Company Law Tribunal's order admitting the Section 9 application and initiating CIRP is upheld, the service challenge and the alleged pre-existing dispute were rejected, and the appeal fails without orders as to costs.

Moratorium against the institution of proceedings - applicability of moratorium to group entities, affiliates, trusts and subsidiaries - definition and scope of "Affiliate" and "Control" - appointment/nomination of directors by parent/new board as indicia of control - adjournment sine die of Section 7 proceedings during moratorium

Moratorium against the institution of proceedings - applicability of moratorium to group entities, affiliates, trusts and subsidiaries - definition and scope of "Affiliate" and "Control" - appointment/nomination of directors by parent/new board as indicia of control - adjournment sine die of Section 7 proceedings during moratorium - Whether the moratorium imposed by the Supreme Court orders dated 20.01.2020 and 24.03.2021 in Bhupinder Singh v. Unitech Limited extended to the appellant (a joint venture/affiliate) and whether the Adjudicating Authority erred in refusing to adjourn the Section 7 proceedings against the appellant. - HELD THAT: - The Supreme Court order dated 20.01.2020 imposed a moratorium "against the institution of proceedings against Unitech Limited and its subsidiaries" and the subsequent order dated 24.03.2021 clarified that the earlier order is applicable to the Unitech Group "including all its affiliates, trusts, subsidiaries etc.". The appellant, though not a subsidiary, holds 41.95% of its shares through Unitech Holdings Limited (a wholly owned subsidiary of Unitech Limited) and is therefore within the contractual definition of "Affiliate" relied upon by the appellant, which defines "Affiliate" by reference to control and a specified threshold of ownership. The record shows nomination and appointment of directors in the appellant by the new Board of Unitech pursuant to the Supreme Court directions and shareholder approval, and minutes of the new Board of Unitech record the appellant as an affiliate and its project as part of group matters. These facts demonstrate that Unitech Group exercised control/nomination rights over the appellant such that the appellant falls within the class of group entities covered by the Supreme Court directions. Consequently, the Adjudicating Authority's conclusion that the moratorium did not apply to the appellant was erroneous. Given the applicability of the moratorium as clarified by the Supreme Court, the Section 7 petition against the appellant was required to be adjourned sine die for the duration of the moratorium, subject to any further clarification or orders by the Supreme Court. [Paras 6, 11, 12, 13, 14]

The appellate court set aside the Adjudicating Authority's order and held that the Supreme Court moratorium applies to the appellant as an affiliate of Unitech Group; I.A. No. 5608 of 2021 is allowed and the Section 7 application stands adjourned sine die during the moratorium, subject to further orders of the Supreme Court.

Final Conclusion: The appeal succeeds: the NCLT order is set aside, the application to adjourn the Section 7 proceedings is allowed and the Section 7 petition is adjourned sine die for the currency of the Supreme Court moratorium, subject to any further clarification or order by the Supreme Court; parties to bear their own costs.

Eligibility under section 29A of the Insolvency and Bankruptcy Code, 2016 - MSME status of the corporate debtor - role of the Committee of Creditors in evaluating and voting on resolution plans - duty of the Resolution Professional to examine and report on MSME classification - trigger for liquidation under section 33 of the Insolvency and Bankruptcy Code, 2016 - consideration of a resolution plan on merits despite objections as to eligibility

Eligibility under section 29A of the Insolvency and Bankruptcy Code, 2016 - MSME status of the corporate debtor - role of the Committee of Creditors in evaluating and voting on resolution plans - duty of the Resolution Professional to examine and report on MSME classification - consideration of a resolution plan on merits despite objections as to eligibility - trigger for liquidation under section 33 of the Insolvency and Bankruptcy Code, 2016 - Whether the Adjudicating Authority erred in directing the proposed Resolution Applicant to approach the CoC instead of deciding the MSME status and eligibility under section 29A, and whether the CoC/RP failed to consider the appellant's resolution plan before initiating liquidation under section 33. - HELD THAT: - The Tribunal examined the record of proceedings, the affidavits filed by the Resolution Professional and the minutes of the CoC meetings. The Adjudicating Authority had earlier directed the RP/CoC to re-examine the MSME classification and the RP filed an additional affidavit stating that, on the basis of information from the District Industries Centre and the revised MSME definition effective 1.7.2020, the corporate debtor could only be classified as MSME prospectively from that date. The CoC's minutes (7th, 8th, 9th and 10th meetings) show that the appellant's plan was repeatedly considered, queried, and the CoC asked for modifications; the CoC specifically asked the appellant to resubmit a modified plan and eventually put the modified plan to electronic vote, which resulted in rejection with 70.60% votes against it. The appellant also withdrew the plan by email on 12.6.2020. Given that the RP had filed the MSME-related affidavit, the CoC had actively considered the plan on merits despite some members raising section 29A objections, and nearly three years had elapsed since CIRP initiation, the Tribunal found that sufficient opportunity had been afforded to the appellant and that the initiation of steps under section 33 for liquidation was warranted. The Tribunal therefore concluded that there was no error in the Adjudicating Authority directing the appellant to approach the CoC and no prejudice arose from leaving the factual and commercial evaluation to the CoC/RP in the circumstances of this case. [Paras 13, 15, 16, 18, 19]

The CoC and Resolution Professional did consider the appellant's resolution plan and addressed the MSME/section 29A issues; the appellant withdrew the plan and, with prolonged CIRP delay, initiation of liquidation under section 33 was appropriate - the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The record shows the RP/CoC re-examined the MSME classification and duly considered the appellant's resolution plan on merits; the appellant withdrew the plan and, given the protracted CIRP, initiation of liquidation under section 33 was justified.

Appointment of Authorized Representative - class of creditors - Home Buyers - class of creditors - Deposit Holders - selection by majority of financial creditors - consent of financial creditors to Authorized Representative - Authorisation for Assignment (AFA) - Regulation 16A of the IBBI (CIRP) Regulations, 2016 - Section 21(6A)(b) of the Insolvency and Bankruptcy Code, 2016 - compliance with prescribed procedure for appointment of Authorized Representative

Class of creditors - Home Buyers - selection by majority of financial creditors - consent of financial creditors to Authorized Representative - Regulation 16A of the IBBI (CIRP) Regulations, 2016 - Appointment of Mr. Vibin Vincent as the Authorized Representative for the class of creditors 'Home Buyers'. - HELD THAT: - The Resolution Professional filed the list of financial creditors in the Home Buyers class and the forms evidencing their choices. The tabulation of choices shows Mr. Vibin Vincent obtained the highest voting share (57.47%) among the proposed insolvency professionals. Consents in the prescribed Form AB were produced. The Tribunal observed that the Resolution Professional complied with the procedures under the Code and Regulations and, having verified the consents and selections, was satisfied to appoint the candidate chosen by the majority of the Home Buyers as their Authorized Representative. [Paras 7, 8, 11, 16, 17]

Mr. Vibin Vincent is appointed as the Authorized Representative for the class of creditors 'Home Buyers'.

Class of creditors - Deposit Holders - selection by majority of financial creditors - consent of financial creditors to Authorized Representative - Authorisation for Assignment (AFA) - Regulation 16A of the IBBI (CIRP) Regulations, 2016 - Appointment of Mrs. Celine P. Thomas as the Authorized Representative for the class of creditors 'Deposit Holders'. - HELD THAT: - The Resolution Professional produced the list of Deposit Holders and their individual authorisations indicating their choice. The tabulation shows Mrs. Celine P. Thomas secured the highest voting share (77.24%) among proposed candidates and furnished consent in Form AB along with the AFA. The Tribunal found that the statutory and regulatory requirements for appointment were fulfilled and, on verification of the consents and authorisations, appointed the insolvency professional selected by the Deposit Holders. [Paras 9, 10, 11, 16, 17]

Mrs. Celine P. Thomas is appointed as the Authorized Representative for the class of creditors 'Deposit Holders'.

Final Conclusion: The application under Section 21(6A)(b) of the IBC read with the CIRP Regulations is allowed; Mr. Vibin Vincent and Mrs. Celine P. Thomas are appointed as Authorized Representatives for the Home Buyers and Deposit Holders classes respectively.

Insolvency Resolution Process against Personal Guarantor - Interim moratorium under section 96(1)(a) of the IBC, 2016 - Application under section 95(1) of the IBC, 2016 read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 - Demand Notice in Form B under rule 7(1) of the IB Rules, 2019 - Appointment of Resolution Professional under section 97 of the IBC, 2016 - Powers and duties of the Resolution Professional under section 99 of the IBC, 2016 - Requirement of valid Authorisation for Assignment (AFA) under regulation 7A of the IP Regulations, 2019

Insolvency Resolution Process against Personal Guarantor - Application under section 95(1) of the IBC, 2016 read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 - Demand Notice in Form B under rule 7(1) of the IB Rules, 2019 - Interim moratorium under section 96(1)(a) of the IBC, 2016 - Initiation of insolvency resolution process against the respondent personal guarantor pursuant to the application under section 95(1) of the IBC, 2016. - HELD THAT: - The Applicant bank filed an application under section 95(1) of the IBC, 2016 read with the relevant rules and regulations for initiation of the insolvency resolution process against the respondent as personal guarantor of the corporate debtor, on account of default in repayment and classification of the loan accounts as NPA. A demand notice in Form B under rule 7(1) of the IB Rules, 2019 was issued by the Applicant. On filing of the application, the interim moratorium is declared to commence in terms of section 96(1)(a) of the IBC, 2016. The Adjudicating Authority proceeded to consider the application and directed further steps in respect of the insolvency resolution process against the personal guarantor. [Paras 2, 4, 6, 8]

Application under section 95(1) was entertained and interim moratorium commenced; the insolvency resolution process against the personal guarantor was put in motion.

Appointment of Resolution Professional under section 97 of the IBC, 2016 - Powers and duties of the Resolution Professional under section 99 of the IBC, 2016 - Requirement of valid Authorisation for Assignment (AFA) under regulation 7A of the IP Regulations, 2019 - Appointment of the named Resolution Professional and directions regarding his duties and conditions for appointment. - HELD THAT: - The Applicant proposed a specific insolvency professional and produced his consent in Form A. The Authority appointed the proposed professional as Resolution Professional under section 97 subject to his possession of a valid Authorisation for Assignment (AFA) issued by his Insolvency Professional Agency as required by regulation 7A of the IP Regulations, 2019. The Resolution Professional was directed to file a declaration within seven days that he fulfils all requirements for appointment and was required to exercise the powers enumerated under section 99, including making recommendations on acceptance or rejection of the application and furnishing the report under section 99(7) to the Applicant once filed before the Adjudicating Authority. [Paras 9, 10]

Mr. Manish Jain was appointed as Resolution Professional subject to possession of a valid AFA and required to file the prescribed declaration and to perform the duties and powers under section 99.

Final Conclusion: The Tribunal entertained the application under section 95(1) for initiation of insolvency resolution proceedings against the personal guarantor, declared the interim moratorium to commence, appointed the proposed Resolution Professional subject to statutory formalities and directed him to perform the statutory duties under section 99; procedural directions for service, filing and listing were issued.

Operational debt - default - dispute as to existence of debt under Section 5(6) of the Code - admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Code - appointment of Interim Resolution Professional - public announcement of initiation of CIRP - compliance with Regulation 7A of IBBI (Insolvency Professionals) Regulations, 2016 - provision for interim expenses under Regulation 6 of IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016

Operational debt - default - dispute as to existence of debt under Section 5(6) of the Code - Operational debt as claimed by the applicant is due and payable by the Corporate Debtor and the Corporate Debtor has defaulted in payment. - HELD THAT: - The Corporate Debtor's counter did not dispute the existence of the debt and only challenged the quantum. Under the definition of "dispute" in Section 5(6) of the Code, a dispute must relate to the existence of the amount of debt, quality of goods or services, or breach of representation or warranty. Since the Corporate Debtor admitted liability in existence and did not assert discharge of the debt, the Tribunal treated the operational debt as undisputed and the default as established. Consequently, the statutory threshold for admission of a Section 9 petition was satisfied and admission was warranted. [Paras 6, 7, 8]

Petition under Section 9 admitted; operational debt declared undisputed and default established.

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Code - appointment of Interim Resolution Professional - public announcement of initiation of CIRP - compliance with Regulation 7A of IBBI (Insolvency Professionals) Regulations, 2016 - provision for interim expenses under Regulation 6 of IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016 - Consequential reliefs on admission - imposition of moratorium, appointment of IRP, requirement of public announcement and directions regarding interim expenses - are to be granted and implemented. - HELD THAT: - Upon admitting the petition, the Tribunal directed declaration of moratorium as contemplated by Section 14 of the Code, prohibited continuation or institution of suits and certain enforcement actions, and preserved supply of essential goods and services. The Tribunal appointed the named Interim Resolution Professional after recording compliance with Regulation 7A of the IBBI (Insolvency Professionals) Regulations, 2016, and ordered the petitioner to pay a prescribed interim sum to the IRP for meeting initial expenses subject to adjustment by the Committee of Creditors, relying on Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The Tribunal also directed immediate public announcement of initiation of CIRP as prescribed under Section 13. [Paras 8]

Moratorium imposed; IRP appointed; public announcement and interim expense directions ordered to be complied with.

Final Conclusion: The Tribunal admitted the Section 9 petition: the operational debt was held undisputed (only quantum contested) and default established; a moratorium was declared, the named Interim Resolution Professional was appointed after noting regulatory compliance, public announcement of CIRP was directed, and interim expense provisions were ordered.

Permission to travel abroad while on bail - medical necessity as ground for foreign travel - availability of treatment in India versus necessity to travel - apprehension of tampering with evidence and influencing witnesses - flight risk and past compliance with bail conditions - imposition of additional supervisory condition (mobile numbers and location sharing)

Permission to travel abroad while on bail - medical necessity as ground for foreign travel - Validity of the Special Court's order permitting the respondent to travel abroad for medical treatment while on bail - HELD THAT: - The High Court upheld the Trial Court's grant of permission to travel abroad, accepting that the respondent requires treatment under a doctor familiar with his cardiac history and that the cyst removal must be supervised in conjunction with his cardiac care. The court found that the mere availability of certain facilities in India (such as a 640 Slice CT Scan at Apollo or dental surgery at AIIMS) did not render the foreign treatment unnecessary where the treating foreign physician knows the respondent's medical history, appointments at Indian institutions were unavailable in the required timeframe, and the cardiac condition necessitated coordinated care. The court also observed that the fact of another ECIR being registered did not, by itself, change the factual matrix established by the respondent's prior travel history and medical need, and therefore did not furnish a sufficient ground to overturn the permission already granted by the Trial Court. [Paras 15, 16, 17, 22]

The Special Court's order permitting travel abroad for one month on the stated medical grounds was sustained, subject to conditions.

Apprehension of tampering with evidence and influencing witnesses - flight risk and past compliance with bail conditions - Whether the Directorate's apprehensions about tampering, influencing witnesses or the respondent not returning warranted refusal or recall of the travel permission - HELD THAT: - The court rejected the prosecution's apprehensions as insufficiently substantiated: officials failed to identify specific evidence abroad that could be tampered with or particular witnesses who would be influenced during the limited travel period. The court placed weight on the respondent's long history of prior foreign travel after passport release during earlier proceedings and his consistent compliance with conditions, concluding that past conduct diminished the presumption of flight risk. Consequently, the mere registration of an additional ECIR did not change the assessment of risk. [Paras 13, 14, 15]

Apprehensions of tampering, influencing witnesses or flight risk were not held to be sufficient to deny the permission already granted.

Imposition of additional supervisory condition (mobile numbers and location sharing) - recall of permission on violation of conditions - Whether additional supervisory conditions should be imposed and consequences for breach - HELD THAT: - While dismissing the petition, the High Court imposed an additional condition that the respondent must share all mobile numbers with the petitioner and keep mobile location on at all times during travel. The court also clarified that if any condition of the Trial Court's order or the additional condition is violated, officials of the petitioner are at liberty to approach the Special Judge for recalling the travel permission. The respondent was directed to file detailed itinerary and stay/hospital particulars before departing. [Paras 18, 19, 22]

An additional supervisory condition was imposed and the petitioner was permitted to seek recall of the travel permission on breach.

Final Conclusion: The petition challenging the Special Court's order permitting the respondent to travel abroad for medical treatment is dismissed; the Trial Court's permission is sustained with an additional condition requiring the respondent to share mobile numbers and keep mobile location on, and the respondent must file his travel itinerary and stay/hospital details before departure.

Summary order. Notice issued; matter listed in August 2022. Counter-affidavit/reply to be filed within three weeks of service, rejoinder within two weeks of filing the counter-affidavit/reply; returnable in six weeks.

Service tax - value added tax - prevention of double taxation - taxation of goods versus services

Service tax - value added tax - prevention of double taxation - Claim for service tax in respect of the subject goods is not maintainable where the respondent regularly paid VAT on those goods during the relevant period. - HELD THAT: - The Court recorded that it was not disputed that the respondent had regularly discharged the VAT liability in respect of the subject goods during the period in question. On that factual foundation the Court held that a claim for service tax in respect of the same subject goods did not arise, effectively precluding overlapping taxation in the circumstances before it. The conclusion follows from the Court's finding that payment of VAT on the goods removes any basis for asserting a service-tax liability on those transactions in the present case. [Paras 2, 3]

Civil appeal dismissed on the ground that service tax could not be claimed where VAT had been regularly paid in respect of the subject goods.

Final Conclusion: The appeal was dismissed: since the respondent had regularly paid VAT on the subject goods, the claim for service tax did not arise; pending applications disposed of.

Substantial compliance - Refund of cenvat credit under Rule 5 - Condition No. 2(h) of Notification No. 27/2012-CE (NT) - Debiting cenvat credit record before adjudication - Doctrine of precedent and Article 141

Debiting cenvat credit record before adjudication - Condition No. 2(h) of Notification No. 27/2012-CE (NT) - Substantial compliance - Whether a refund claim under Rule 5 read with Notification No. 27/2012-CE (NT) can be rejected solely because the amount claimed was not debited in the cenvat credit record at the time of filing when the assessee subsequently debited the amount suo moto before adjudication. - HELD THAT: - The Tribunal found that the appellant had, before adjudication, debited the claimed amount in the cenvat ledger and supported the same with a Chartered Accountant's certificate. Applying the doctrine of substantial compliance as expounded by the Supreme Court in Hari Chand Shri Gopal, the Tribunal held that debiting the amount suo moto before adjudication amounts to sufficient compliance with Condition No. 2(h) of the Notification. The Tribunal further held that the Commissioner (Appeals) misdirected himself by ignoring the Supreme Court's authority, thereby contravening the doctrine of precedent under Article 141. Consequently, the rigid requirement that the debit must occur exactly at the time of filing was not treated as an absolute bar where the debit was effected prior to adjudication and notified to revenue. [Paras 9, 10]

The rejection of the refund solely for non-debit at the time of filing was set aside; debit made suo moto before adjudication satisfies Condition No. 2(h) and refund directed to be granted with interest.

Final Conclusion: Appeal allowed; impugned order rejecting refund set aside. Adjudicating Authority directed to grant the refund for October, 2016 to December, 2016 with interest within 45 days from receipt of the order.

Sealing of manufacturing machinery - Temporal limit on seals between production shifts - Delegated trade notices must conform to statute and rules - Reasonableness under Article 14 - Power to regulate production for proper levy and collection of duty - Capacity based levy under Section 3A - Assistance of technical experts for verification

Sealing of manufacturing machinery - Temporal limit on seals between production shifts - Legality of keeping the petitioner's cigarette manufacturing machines and DG sets sealed beyond the period between the last production and the next working shift/day. - HELD THAT: - The Court held that Clause 4.1 of Trade Notice No.02/2015 limits sealing to the period between the last production and the next working shift/day so that commercial production cannot occur without removal of the seal. Beyond that inter shift period the authority to keep machines sealed to halt production is absent. The respondents relied on a general power to regulate production for levy of duties, but the Court found no rule framed under the statutory power that authorises indefinite sealing beyond the specified inter shift purpose; accordingly the action of keeping the machines sealed for an extended and indefinite period was beyond the authorised ambit of the Trade Notice and thus without jurisdiction. [Paras 19, 21, 24]

Sealing could not lawfully be continued beyond the inter shift period; respondents had no authority to keep the machines sealed indefinitely and the continued sealing was without jurisdiction.

Delegated trade notices must conform to statute and rules - Reasonableness under Article 14 - Capacity based levy under Section 3A - Validity of clause 6.3 of Trade Notice No.04/2020 21 (18.01.2021) which required manufacturers to undertake to utilize at least 50% of installed capacity and permitted sealing till further orders if not complied with. - HELD THAT: - The Court examined clause 6.3 and found it unreasonable and inconsistent with the Central Excise Act and Rules. There is no provision in the Act or Rules empowering the authorities to compel a manufacturer to operate machines at 50% of declared capacity. Section 3A permits capacity based assessment only for notified goods and cigarettes are not a notified item under Section 3A; thus no statutory basis existed for imposing a 50% utilization requirement. The Court therefore struck down clause 6.3 of Trade Notice No.04/2020 21 as beyond delegated power and inconsistent with the statute, also observing that production levels depend on market and operational factors and cannot be mandated by the Trade Notice. [Paras 22, 23]

Clause 6.3 of Trade Notice No.04/2020 21 is unreasonable, inconsistent with the Act and Rules, and is struck down.

Assistance of technical experts for verification - Validity of seeking expert verification (chartered engineers) to assess machine capacity and the separate writ challenging that action. - HELD THAT: - The Court noted that authorities had sought verification of machine capacity by experts and observed that statutory provisions permit seeking expert assistance (the Court referred to the analogous power under the GST framework). Given Section 145 (and the investigatory powers under the GST regime) the Court found no need to adjudicate further on the separate writ challenging appointment of chartered engineers and held that the petition contesting that step was without substance and therefore dismissed. [Paras 25]

Writ petition challenging appointment of chartered engineers dismissed; authority to seek expert opinion sustained.

Relief by quashing administrative refusal and direction for de sealing - Whether the impugned refusal to de seal (Annexure P/1) should be quashed and consequential relief granted to the petitioner. - HELD THAT: - Applying the conclusions that prolonged sealing was without authority and clause 6.3 was invalid, the Court quashed the impugned refusal to de seal and directed immediate de sealing of the machines and two DG sets. The Court also observed the prejudice caused by prolonged non release and left compensation for loss to appropriate remedies, while awarding a costs payment to the petitioner to be paid by the respondents. [Paras 26, 27]

Annexure P/1 quashed; respondents directed to de seal the machines and two DG sets forthwith and to pay costs of Rs.50,000 to the petitioner.

Final Conclusion: Writ petition No.23618/2021 allowed: the administrative refusal to de seal (Annexure P/1) is quashed, the machines and two DG sets are to be de sealed forthwith and costs awarded to the petitioner; the challenge to appointment of chartered engineers (W.P. No.23624/2021) is dismissed; clause 6.3 of Trade Notice No.04/2020 21 is declared unreasonable and struck down. Remedies for consequential loss left to appropriate proceedings and departmental action in respect of revenue loss noted.

Proof of export under Rule 18 of the Central Excise Rules, 2002 - effect of administrative circulars vis-a -vis statutory provisions - duty liability under proviso to Section 3(1) of the Central Excise Act, 1944 - recovery in enforcement of B-17 bond and Section 11A(10) - interest under Section 11AA of the Central Excise Act, 1944 - penalty under Section 11AC(1)(a) read with Rule 25(1)(d) of the Central Excise Rules, 2002 - role of Development Commissioner and Circular No.21/95 dated 10-3-1995

Proof of export under Rule 18 of the Central Excise Rules, 2002 - duty liability under proviso to Section 3(1) of the Central Excise Act, 1944 - effect of administrative circulars vis-a -vis statutory provisions - role of Development Commissioner and Circular No.21/95 dated 10-3-1995 - Whether the demands of central excise duty (and attendant recovery under the B-17 bond) raised by treating exports through merchant exporters as DTA clearances were sustainable. - HELD THAT: - The Tribunal accepted that the annexures to the show cause notices and the record admitted that the consignments were cleared against ARE-1 and proof of export had been submitted. Once proof of export is submitted in accordance with the statutory procedure, the factum of export is established under Rule 18 and such consignments cannot be treated as DTA clearances merely because the shipping bills did not record the noticee's name or EOU status. The adjudicating authority's reliance on Board Circular No.03/91-Cus and subsequent EPCES/DGFT circulars to convert exports into DTA sales was held to be impermissible to the extent they overrode or curtailed statutory entitlement; administrative circulars cannot be applied to deny a benefit which exists under the statute without the requisite action by the statutory authority. Further, Circular No.21/95 was noted to require consultation with the Development Commissioner before confirming duty demands where the EOU's export entitlement is in issue; no record was shown that the Development Commissioner had denied export benefit in respect of these consignments. In that factual and legal matrix the Tribunal found the demand unsustainable and vacated it. [Paras 4]

Demands of central excise duty treated as DTA clearances and recovery under the B-17 bond were not sustainable and are set aside.

Penalty under Section 11AC(1)(a) read with Rule 25(1)(d) of the Central Excise Rules, 2002 - interest under Section 11AA of the Central Excise Act, 1944 - recovery in enforcement of B-17 bond and Section 11A(10) - Whether interest and penalty could be sustained once the substantive demand was found to be without merit. - HELD THAT: - The Tribunal, having found no merit in the substantive demand, declined to uphold the consequential measures. The adjudicating authority had imposed interest and a penalty on the premise that clearances were DTA sales and that omission in export documents was deliberate; the Tribunal held that those conclusions could not stand where proof of export had been established and where there was no record of the Development Commissioner denying export benefit. Given the primary demand was vacated, the imposition of interest and penalty founded on that demand was not sustained; the Tribunal accordingly was not inclined to examine limitation, interest or other ancillary aspects separately. [Paras 4, 5]

Interest and penalty imposed consequentially on the demands were not sustained; the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the confirmed demands (and the consequential interest and penalty) in respect of consignments for the period 01.4.2007 to 31.12.2013, holding that proof of export under the statutory procedure (Rule 18) and the absence of any decision by the Development Commissioner to deny export benefits rendered the demands without merit and that administrative circulars could not be used to override statutory entitlement.

Entertainment of writ under Article 226 of the Constitution - jurisdictional error - violation of principles of natural justice - efficacy of alternative statutory remedy by appeal - assessment of escaped turnover - compliance with Section 25AA of the Kerala Value Added Tax Act, 2003

Entertainment of writ under Article 226 of the Constitution - efficacy of alternative statutory remedy by appeal - compliance with Section 25AA of the Kerala Value Added Tax Act, 2003 - Whether the High Court should entertain a writ petition under Article 226 challenging the assessment orders (Ext.P3 and P3(a)) passed under the KVAT Act for the years 2015-16 and 2016-17, in view of the availability of an appellate remedy. - HELD THAT: - The Court accepted the Single Judge's conclusion that the points raised by the appellant-including whether the Assessing Officer followed the mandate under Section 25AA-involved disputed questions of fact and therefore were more appropriately addressed through the statutory appellate mechanism. While recognising the settled principle that jurisdictional error or a violation of principles of natural justice amounting to a travesty of justice can justify exercise of writ jurisdiction, the Court found no such exceptional circumstance established on the record. Consequently, because an efficacious and alternative remedy by way of appeal exists under the statute, the High Court should not entertain the writ challenge to the assessment orders at this stage; the appellant remains free to pursue its statutory remedy. [Paras 3, 5]

Writ petition not entertained; appellant directed to pursue the appellate remedy under the statute.

Final Conclusion: The Writ Appeal is dismissed; there is no interference with the Single Judge's order and the appellant must pursue the statutory appeal, absent a shown jurisdictional error or violation of natural justice amounting to a travesty.

Appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Exclusive jurisdiction arising from prior Section 9 proceedings (operation of Section 42 of the Arbitration and Conciliation Act, 1996) - Maintainability of an application for appointment of arbitrator before a High Court where prior arbitral relief was filed in another Court

Appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Exclusive jurisdiction arising from prior Section 9 proceedings (operation of Section 42 of the Arbitration and Conciliation Act, 1996) - Maintainability of an application for appointment of arbitrator before a High Court where prior arbitral relief was filed in another Court - Whether the High Court of Orissa at Cuttack had jurisdiction to entertain the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 in view of earlier Section 9 proceedings filed before the Court at Visakhapatnam. - HELD THAT: - The Court held that Section 42 of the Arbitration and Conciliation Act, 1996 grants exclusive jurisdiction to the Court where an earlier application under the Part has been made; accordingly, once the respondent had initiated proceedings under Section 9 before the Court at Visakhapatnam, subsequent applications arising out of the same arbitration agreement must be made before that Court and the High Court having appellate/supervisory jurisdiction over it (High Court of Andhra Pradesh at Amaravati). The High Court of Orissa erred in entertaining the Section 11(6) application and appointing an arbitrator without first addressing its lack of jurisdiction. The fact that the appellants did not, in principle, oppose appointment of an arbitrator did not confer jurisdiction upon the Orissa High Court. In consequence, the impugned appointment was quashed and set aside on jurisdictional grounds, while preserving the claimant's right to move the competent High Court (Andhra Pradesh at Amaravati) for appointment under Section 11(6) within the limited period specified by this Court. [Paras 6, 7, 8]

Impugned order of the High Court of Orissa appointing the sole arbitrator quashed and set aside for lack of jurisdiction; liberty granted to the claimant to file a fresh Section 11(6) application before the competent High Court of Andhra Pradesh at Amaravati within four weeks, to be decided on merits.

Final Conclusion: The appeal is allowed; the High Court of Orissa's order appointing the sole arbitrator is quashed solely on the ground of want of jurisdiction in view of prior Section 9 proceedings filed at Visakhapatnam under the Arbitration and Conciliation Act, 1996, with liberty to the claimant to apply to the competent High Court of Andhra Pradesh at Amaravati within four weeks.