TaxTMI Updates e-Newsletter
Jul 30,2024

Condonation of delay - withdrawal of Special Leave Petition with liberty to file statutory appeal - bar on raising limitation if statutory appeal filed within specified time

Withdrawal of Special Leave Petition with liberty to file statutory appeal - Permission granted to withdraw the Special Leave Petition with liberty to file a statutory appeal before the Appellate Authority within one month; SLP dismissed as withdrawn. - HELD THAT: - The Court allowed the petitioner to withdraw the Special Leave Petition and dismissed the petition as withdrawn while expressly reserving liberty to the petitioner to institute the statutory appeal before the appropriate Appellate Authority within a period of one month from the date of the order. The Court recorded the submission of learned counsel and formally placed it on record before granting the withdrawal and dismissal as withdrawn.

Special Leave Petition dismissed as withdrawn with liberty to file statutory appeal within one month.

Condonation of delay - bar on raising limitation if statutory appeal filed within specified time - Delay in filing the petition was condoned and the Appellate Authority shall not raise limitation if the statutory appeal is filed within the one month period granted by the Court. - HELD THAT: - The Court expressly recorded that delay was condoned. It further directed that if the statutory appeal is filed within the one month period granted, the Appellate Authority shall not advert to or raise the plea of limitation. This operates as a protective direction ensuring the Appellate Authority does not reject the appeal on the ground of limitation where the appeal is instituted within the timeframe specified by this order.

Delay condoned; Appellate Authority prohibited from raising limitation if appeal filed within one month.

Final Conclusion: The Special Leave Petition is dismissed as withdrawn with delay condoned and with liberty to file a statutory appeal before the Appellate Authority within one month; if such appeal is filed within that period, the Appellate Authority shall not raise the question of limitation.

Non-speaking order - requirement of a speaking order - duty to record reasons for rejection of explanation - opportunity of being heard - remand for fresh adjudication

Non-speaking order - duty to record reasons for rejection of explanation - Impugned adjudication order set aside for failure to provide reasons and for not considering the petitioner's reply - HELD THAT: - The adjudicating authority's order merely records receipt of the petitioner's reply but states it is "not acceptable being incomplete/not duly supported by adequate documents / without proper justification and thus unable to clarify the issue" without any articulated reasoning. The Court found that the authority had not considered the petitioner's explanation that taxes and interest in respect of the alleged 'unbilled revenue' had already been paid and that details were furnished. Absence of any recorded basis for rejecting the explanation renders the order non-speaking and legally unsustainable, warranting setting aside. [Paras 5, 6]

Order set aside for being non-speaking and for failure to record reasons for rejecting the petitioner's explanation.

Remand for fresh adjudication - opportunity of being heard - requirement of a speaking order - Matter remanded to the Adjudicating Authority for fresh consideration with directions to afford hearing and pass a speaking order - HELD THAT: - Having set aside the impugned order, the Court remanded the matter to the adjudicating authority to consider the petitioner's reply afresh. The authority is directed to afford the petitioner an opportunity of being heard, may call for additional documents or material if necessary, and must pass a reasoned (speaking) order addressing the petitioner's contentions and the materials furnished. The remand contemplates adjudication on merits consistent with these directions. [Paras 7]

Remitted for fresh adjudication after giving the petitioner hearing and for issuance of a speaking order; authority may call for further documents/material if necessary.

Final Conclusion: Impugned order dated 29.04.2024 set aside for being non-speaking; matter remanded to the Adjudicating Authority for fresh consideration after affording the petitioner an opportunity of hearing and for passing a speaking order.

Rules of natural justice - ex-parte adjudication - service of notice by electronic mode - opportunity of personal hearing - revival of registration

Rules of natural justice - ex-parte adjudication - service of notice by electronic mode - revival of registration - Adjudication order passed without service of notice due to cancellation of registration and resultant breach of principles of natural justice was set aside. - HELD THAT: - The court accepted that the petitioner's registration had been cancelled and never revived, and therefore the petitioner was not obliged to monitor or receive notices issued through the GST portal. There was no case by the revenue that any physical or offline notice had been served prior to the impugned adjudication order. In these circumstances the essential requirements of the rules of natural justice were not satisfied and the order passed in absence of effective notice amounted to an ex-parte adjudication warranting interference. The High Court set aside the impugned order for these reasons and directed remedial action.

Impugned adjudication order set aside for breach of natural justice owing to lack of effective service of notice where registration remained cancelled.

Opportunity of personal hearing - Direction for fresh consideration after affording opportunity to the petitioner to file reply and to be heard was issued. - HELD THAT: - Recalling that the petitioner had not received effective notice, the court treated the impugned order as a notice and granted the petitioner a four-week period to submit its final reply. The matter was remitted for fresh consideration with a clear directive that, subject to the petitioner's compliance, a fresh order be passed only after affording an opportunity of personal hearing, preferably within three months from compliance. The disposal thus remands the adjudication for further proceedings consistent with the court's directions.

Matter remitted for fresh adjudication after the petitioner files its reply within four weeks and is afforded personal hearing; fresh order to be passed expeditiously, preferably within three months.

Final Conclusion: Writ petition disposed of by setting aside the impugned adjudication order for failure to afford natural justice due to non-receipt of e-notice in circumstances where registration remained cancelled; petitioner given four weeks to file final reply and the matter remitted for fresh adjudication after personal hearing, with a direction to decide preferably within three months.

Provisional attachment under Section 83 of the CGST Act to protect the interest of revenue - input tax credit claimed from allegedly fake suppliers - nexus between material on record and adjudicating officer's opinion - objections to provisional attachment and their rejection - procedural requirement to produce or seek copy of attachment order

Provisional attachment under Section 83 of the CGST Act to protect the interest of revenue - input tax credit claimed from allegedly fake suppliers - nexus between material on record and adjudicating officer's opinion - objections to provisional attachment and their rejection - Validity of the Commissioner's order provisionally attaching the petitioner's bank account and rejection of the petitioner's objections thereto. - HELD THAT: - The court found that investigations showed the petitioner had claimed input tax credit from two suppliers who were found to be non-existent or used without real supplies, and admissions by persons involved indicated invoices were issued without supply. On this material the Commissioner formed an opinion and provisionally attached the petitioner's bank account to protect the revenue. The court held that the material on record had a live nexus with the officer's opinion and that the exercise of power to provisionally attach could not be faulted. Consequently, the rejection of the petitioner's objections was upheld. [Paras 3, 4, 5, 6, 7]

The provisional attachment and the order rejecting the objections are lawful and are not set aside.

Procedural requirement to produce or seek copy of attachment order - Effect of non-production of the attachment order by the petitioner and absence of evidence of having sought a copy from the authority. - HELD THAT: - The court noted that the petitioner did not produce the attachment order and there was no record of any communication showing that the petitioner had requested a copy from the concerned officer. Although the petitioner alleged non-receipt, the absence of demonstrable steps taken to obtain the order was recorded and treated as part of the factual matrix; the court did not find this omission sufficient to vitiate the attachment or the impugned order. [Paras 2]

The petitioner's contention regarding non-receipt of the attachment order did not negate the validity of the impugned action.

Final Conclusion: The petition is dismissed; the impugned order upholding the provisional attachment of the bank account and rejecting the objections is sustained, and pending applications stand disposed of.

Article 227 - order under Section 74(9) of the CGST Act - principles of natural justice - relegation to alternate remedy under Section 107 of the CGST Act - entertainment of writ petition where efficacious statutory remedy exists

Article 227 - order under Section 74(9) of the CGST Act - principles of natural justice - relegation to alternate remedy under Section 107 of the CGST Act - Challenge to the order dated 03.05.2024 under Section 74(9) of the CGST Act by writ under Article 227 and whether the petitioner should be relegated to the statutory remedy under Section 107. - HELD THAT: - The petitioner alleged denial of opportunity and non-provision of relied-upon documents prior to passing of the order dated 03.05.2024. On perusal of the impugned order, the Court found that the authority had given ample opportunity of hearing to the petitioner. Applying the principle that a High Court should not entertain a writ petition where an efficacious alternative statutory remedy is available, and having regard to the decision of the Apex Court in The Assistant Commissioner of State Tax vs. M/s. Commercial Steel Limited, the Court refrained from adjudicating the merits and relegated the petitioner to pursue the remedy under Section 107 of the CGST Act. The court did not express any view on the substantive correctness of the impugned order and confined its decision to procedural propriety and availability of alternate remedy.

The writ petition is disposed of by relegating the petitioner to initiate appropriate proceedings under Section 107 of the CGST Act; no adjudication on merits of the impugned order.

Final Conclusion: Petition under Article 227 challenging the order under Section 74(9) is disposed of with liberty to the petitioner to pursue the alternate statutory remedy under Section 107 of the CGST Act; the court declines to decide the merits.

Assessment under the Central Goods and Services Tax Act, 2017 (Section 73) and requirement of reasons - Special audit findings and adequacy of adjudicatory reasons - Failure to consider replies and additional submissions - Remand for fresh adjudication with opportunity of hearing

Assessment under the Central Goods and Services Tax Act, 2017 (Section 73) and requirement of reasons - Special audit findings and adequacy of adjudicatory reasons - Failure to consider replies and additional submissions - Remand for fresh adjudication with opportunity of hearing - Impugned order dated 27.04.2024 confirming demand based on Special Audit and the Show Cause Notice is liable to be set aside and the matter remanded for fresh consideration. - HELD THAT: - The adjudicating authority confirmed the demand after recording that the taxpayer's reply contained no substantial fact to counter the special auditor's observations, but the impugned order does not engage with or record any analysis of the contentious issues raised by the petitioner. The Show Cause Notice and order were founded on a Special Audit Report yet neither specifically addressed the petitioner's detailed replies nor the additional submissions filed on 15.03.2024. The order merely affirmed the auditor's conclusions without reasons or consideration of the petitioner's contentions (including the explanation that a single bank account was used for multiple GST registrations and the state-wise attribution issue). For lack of reasoned adjudication and failure to consider the material placed before it, the order cannot be sustained. The matter is therefore remitted to the Adjudicating Authority to consider afresh the reply and additional submissions, to afford the petitioner an opportunity of being heard, and to call for any further documents or material as may be necessary before passing a reasoned order. [Paras 6, 9, 10, 11, 12]

Impugned order set aside; matter remanded to the Adjudicating Authority for fresh, reasoned consideration after hearing the petitioner and, if necessary, calling further documents.

Final Conclusion: The petition is allowed: the order dated 27.04.2024 is quashed for failure to record reasons and to consider the petitioner's replies and additional submissions; the matter is remanded for fresh adjudication in accordance with the directions given, and the petition stands disposed of.

Validity of show cause notice - requirement of intelligible reasons - Principles of natural justice in cancellation of GST registration - Cancellation of GST registration and retrospective effect - Availment of Input Tax Credit in violation of entitlement provisions

Validity of show cause notice - requirement of intelligible reasons - Principles of natural justice in cancellation of GST registration - Cancellation of GST registration and retrospective effect - Availment of Input Tax Credit in violation of entitlement provisions - Impugned show cause notice and consequent order cancelling GST registration quashed for failure to disclose intelligible reasons and for breach of natural justice; registration to be restored. - HELD THAT: - The show cause notice merely alleged that the petitioner had availed Input Tax Credit in violation of the entitlement provisions, but did not furnish any particulars or explanation as to how Section 16 was violated or what specific acts or transactions were relied upon. A show cause notice must set out the allegations with sufficient detail to enable a meaningful response; a notice bereft of particulars leaves the noticee incapable of meeting the case. The cancellation order likewise provided no independent reasons and was issued with retrospective effect not indicated in the show cause notice. The deficiency in particulars and absence of reasons resulted in a breach of the principles of natural justice. In these circumstances the impugned show cause notice and the order of cancellation cannot stand; however the respondents are not debarred from initiating fresh proceedings in accordance with law and with adherence to natural justice. [Paras 7, 8, 9, 10, 11]

Impugned show cause notice and cancellation order set aside; GST registration restored forthwith; respondents may initiate fresh action in accordance with law.

Final Conclusion: The petition is allowed: the impugned show cause notice and the order cancelling the petitioner's GST registration are quashed for failure to state intelligible reasons and for breach of natural justice; the petitioner's registration is restored, subject to the respondents' liberty to initiate fresh proceedings in accordance with law.

Input Tax Credit admissibility - burden of proof for claiming ITC - genuineness of transaction and movement of goods - e-way bill as evidentiary support for movement of goods - non-application of mind by appellate authority - remand for fresh consideration

Input Tax Credit admissibility - burden of proof for claiming ITC - genuineness of transaction and movement of goods - e-way bill as evidentiary support for movement of goods - non-application of mind by appellate authority - Whether the appellate authority was justified in rejecting the petitioner's claim to ITC in respect of supplies from Dhiraj Kumar Sharma for September-October 2017 despite production of invoices, e way bills, bank statements, party ledger and GSTR 2A - HELD THAT: - The High Court found that the petitioner had produced at the appellate stage the inward tax invoices, party ledger for 01.04.2017-31.03.2018, bank statements, GSTR 2A and relevant e way bills which together prima facie established filing of returns by the supplier and conclusiveness of the financial transactions (paras 5, 10-12). Although the burden to prove entitlement to ITC lies on the claimant, the petitioner had discharged its initial burden by placing those documents on record (para 12). The appellate authority, however, reproduced the adjudicating authority's finding that the goods' movement was not proved and declined ITC on the ground of non production of transport and ancillary vouchers, without specifying what additional documents were required or impeaching the documents already produced (paras 11-14). That approach amounted to non application of mind and was perverse because, unless the respondents successfully challenged the documents placed on record, the absence of loading/unloading or other vouchers alone could not justify rejection of the claim (para 14). [Paras 10, 11, 12, 13, 14]

The appellate order is set aside to the extent indicated and the matter is remanded to the appellate authority to reconsider the issue of movement of goods and genuineness of the transactions in the light of the e way bills, tax invoices, bank statements and party ledger produced by the petitioner, giving opportunity of hearing and specifying any further documents required (para 15).

Remand for fresh consideration - Scope and direction of remand to the appellate authority - HELD THAT: - The Court directed the appellate authority to test whether the e way bills, tax invoices, bank statements and party ledger match the transactions for the relevant period and, if satisfied that they do so, to desist from questioning the genuineness of the transactions/movement of goods; the appellate authority must give the petitioner an opportunity of hearing and decide the appeal expeditiously, preferably within eight weeks. The petitioner is permitted to furnish additional documents if advised (para 15-16). [Paras 15, 16]

Matter remanded to appellate authority with directions to reconsider and decide expeditiously, permitting additional disclosures by the petitioner and treating the Court ordered deposit as pre deposit under Section 112(8) of the Act (para 15-16).

Final Conclusion: Writ petition disposed by remanding the appeal relating to supplies from Dhiraj Kumar Sharma (September-October 2017) to the appellate authority for fresh consideration of movement and genuineness of transactions in the light of the documents produced; petitioner permitted to place additional documents and the deposit made shall be treated as pre deposit under Section 112(8).

Offence punishable u/s 276B - delay in depositing the TDS amount in the account of the Opposite Party (Complainant) ranging from 31 days to 214 days - COVID-19 Pandemic Effects - Reasonable and sufficient cause

As decided by HC [2023 (11) TMI 447 - ORISSA HIGH COURT] present complaint is vitiated as the failure on the part of the Petitioners to comply within the provision of law as to deposit of the deducted TDS was on account of the reasonable causes for the prevalence of COVID-19 Pandemic standing on their way.

The order of sanction thus being found to have been passed without due application of mind and in a mechanical manner even putting the blame upon the Petitioners for not filing any exemption/ relaxation notifications / circulars, the same stands vitiated. The Court below in the facts and circumstances ought not to have taken cognizance of the offence u/s 279B, section 2(35) and 278(B) of the I.T. Act when even the latter two are no penal provisions and as such is bad in law and liable to be set aside.Revision is allowed

HELD THAT:- Delay condoned. We are not inclined to interfere with the impugned judgment and order of the High Court. The Special Leave Petition is, accordingly, dismissed.

Education as 'charitable purpose' under Section 2 (15) - formal and systematic instruction as test for education - affiliation/recognition by regulatory authority not essential to education - proviso to Section 2 (15) and characterization of receipts - receipt characterisation: donations/CSR versus business receipts

Education as 'charitable purpose' under Section 2 (15) - formal and systematic instruction as test for education - affiliation/recognition by regulatory authority not essential to education - receipt characterisation: donations/CSR versus business receipts - proviso to Section 2 (15) and characterization of receipts - Assessee's activities qualify as education within the meaning of Section 2 (15) of the Income Tax Act - HELD THAT: - The Court affirmed the Tribunal's factual and legal conclusions that the assessee carried out systematic, formal instruction and training designed to develop knowledge, skill and employability of students. The assessing officer had examined objects, activities, curriculum, attendance requirements, examinations and certification, and earlier assessment history supported the educational character. The Tribunal's findings that courses were NSDC-approved or recognized by globally accepted bodies, were conducted at fixed duration with session plans, compulsory attendance, evaluations and certificates, and that fees were subsidized or waived for underprivileged beneficiaries were accepted. Corporate receipts were treated as donations/sponsorships utilised for education (often flowing from CSR), and the mere fact of TDS or service tax being applied by payers did not convert the receipts into business income. The Court endorsed the Tribunal's view that affiliation to a regulatory authority is not a precondition for qualification as 'education' under Section 2(15), and that modern modes of delivery (including digital/virtual classrooms) do not defeat the formal and systematic character of education. Applying the principles in Lok Shikshana Trust and New Noble Educational Society, the Court held that the tests for education were satisfied on the material on record. [Paras 27, 29, 30, 31, 32]

Assessee held to be carrying on educational activities within Section 2(15); findings in favour of the assessee

Final Conclusion: The appeal is dismissed. Question B is answered affirmatively in favour of the assessee (activities qualify as education under Section 2(15)); Question A (validity of invoking Section 263) was not answered as it became otiose in view of the conclusion on Section 2(15).

Validity of notice under Section 148 - compliance with Section 151A and Scheme dated 29 March, 2022 - jurisdiction of Jurisdictional Assessing Officer versus Faceless Assessing Officer - quashing of actions taken contrary to law without requirement to prove prejudice - reassessment order passed pursuant to foundationally-defective notice is void

Compliance with Section 151A and Scheme dated 29 March, 2022 - jurisdiction of Jurisdictional Assessing Officer versus Faceless Assessing Officer - validity of notice under Section 148 - Impugned notice issued by the Jurisdictional Assessing Officer was invalid for non-compliance with Section 151A and the Scheme dated 29 March, 2022 assigning issuance to the Faceless Assessing Officer. - HELD THAT: - The Court found on the record that the notice under Section 148 and the underlying order under Section 148A(d) were issued by the JAO and not by the FAO as required by the Scheme framed under Section 151A. Relying on the Division Bench decision in Hexaware, the Court held that the Scheme's mandatory automated allocation and assignment of jurisdiction to the FAO excludes concurrent issuance by the JAO; the Scheme applies to issuance of notices under Section 148 and must be followed. An act done contrary to that delegated scheme and statutory mandate is without authority, and the invalidity of the notice does not require the assessee to prove further prejudice. [Paras 3, 4, 5, 6]

Notice under Section 148 issued by the JAO was invalid for non-compliance with Section 151A and the Scheme dated 29 March, 2022, and vitiates the proceedings.

Reassessment order passed pursuant to foundationally-defective notice is void - quashing of actions taken contrary to law without requirement to prove prejudice - Reassessment order passed pursuant to the defective notice and consequential demand and penalty notices stand quashed and set aside. - HELD THAT: - Having concluded that the foundational notice was invalid because jurisdiction to issue it lay with the FAO under the Scheme, the Court followed the binding Division Bench precedents (including Vikram Developers) that an assessment/reassessment order founded on such a defective notice cannot be sustained. Consequential demand and penalty notices issued pursuant to that reassessment likewise must be quashed. The Court refrained from expressing any view on other substantive grounds raised in the petition as disposal rested on the jurisdictional defect. [Paras 9]

Reassessment order dated 12 March, 2024 and consequential demand and penalty notices are quashed and set aside.

Final Conclusion: Writ petition allowed: impugned notice under Section 148, the reassessment order dated 12 March, 2024, and consequential demand/penalty notices quashed for non-compliance with Section 151A and the Scheme dated 29 March, 2022; other issues left undecided.

Assessee in default - Tax deducted at source (TDS) and deposit to Government exchequer - Re-characterisation of transaction from sale of shares to sale of assets - Jurisdiction under section 201(1)/201(1A) of the Income Tax Act

Assessee in default - Tax deducted at source (TDS) and deposit to Government exchequer - Re-characterisation of transaction from sale of shares to sale of assets - Jurisdiction under section 201(1)/201(1A) of the Income Tax Act - Whether the assessee is an 'assessee in default' under proceedings initiated under section 201(1)/201(1A) when it deducted and deposited TDS on consideration paid for purchase of shares and the Assessing Officer re-characterised the transaction as sale of assets. - HELD THAT: - The Tribunal accepted the undisputed fact that the assessee deducted tax at source on payments made for purchase of unlisted shares and deposited the same to the Government exchequer. The Assessing Officer's order under section 201(1)/201(1A) sought to re-characterise the nature of the transaction from sale of shares to sale of assets, but the Tribunal held that such re-characterisation in proceedings under section 201 proceeded on surmises and conjectures and amounted to going beyond the AO's jurisdiction. Given the admitted deduction and deposit of TDS by the assessee, and in the absence of lawful exercise of power to re-characterise the transaction in the summary default proceedings, the assessee could not be held to be an "assessee in default." The Tribunal found no infirmity in the CIT(A)'s conclusion that the AO's action was not correct and accordingly upheld the appellate finding. [Paras 8, 9]

The assessee is not an "assessee in default"; the AO exceeded jurisdiction in re-characterising the transaction and the CIT(A) order is upheld.

Final Conclusion: The appeal by the Revenue is dismissed; the order of the CIT(A) holding that the assessee is not an assessee in default (having deducted and deposited TDS on the share purchase) and rejecting the AO's re-characterisation is upheld.

Disallowance under section 14A - Computation of disallowance under Rule 8D(2)(ii) - Allocation of interest-bearing funds versus interest-free funds - Characterisation of bank charges and bank guarantee charges as interest - Consistency of treatment across assessment years and precedential weight (Godrej Boyce principle)

Disallowance under section 14A - Computation of disallowance under Rule 8D(2)(ii) - Allocation of interest-bearing funds versus interest-free funds - Characterisation of bank charges and bank guarantee charges as interest - Consistency of treatment across assessment years and precedential weight (Godrej Boyce principle) - Sustaining of disallowance of interest under section 14A read with Rule 8D(2)(ii) in respect of investments made in a partnership firm - HELD THAT: - The Assessing Officer applied Rule 8D(2)(ii) and computed a proportionate disallowance of interest by attributing part of the appellant's interest-bearing borrowings (including bank charges and bank guarantee charges) to investments in a partnership firm whose income was exempt in the hands of the appellant. The appellant had asserted availability of sufficient interest-free funds (share capital, reserves and surplus) and had contended that no part of borrowings was diverted to earn exempt income and that bank charges and bank guarantee charges should not be treated as interest for the purposes of disallowance. Neither the AO nor the CIT(A) produced material to show diversion of interest-bearing funds for earning exempt income or satisfactory evidence to rebut the appellant's claim of adequate interest-free funds. The Tribunal applied the principle in Godrej Boyce that, absent material establishing diversion or a reasonable nexus between borrowings and exempt income, a departure from the assessee's consistent position must be supported by strong reasons. The authorities below also failed to address the appellant's submission on the characterisation of bank charges and bank guarantee charges. In view of the lack of evidence showing utilisation of borrowed funds for earning exempt income and the non-adversion to the appellant's contention on bank charges, the Tribunal held the disallowance of interest unsustainable and deleted the impugned addition. [Paras 10, 11, 12, 13]

The disallowance of interest under section 14A read with Rule 8D(2)(ii) is deleted and the appellant's grounds in this regard are allowed.

Final Conclusion: The appeal is allowed: the Tribunal, following the reasoning in Godrej Boyce, deleted the disallowance made under section 14A/Rule 8D(2)(ii) in respect of interest expenditure and set aside the addition confirmed by the CIT(A).

Admission of appeal under Section 249(4)(b) and proviso - requirement for deposit of advance tax as condition precedent to admission - claim of exemption for agricultural income under Section 10(1) - best judgment reassessment under Section 144 read with Section 147 - obligation to file return pursuant to notice under Section 148 - admission of additional evidence under Rule 46A - duty of appellate authority to state points, decision and reasons under Section 250(6)

Admission of appeal under Section 249(4)(b) and proviso - requirement for deposit of advance tax as condition precedent to admission - claim of exemption for agricultural income under Section 10(1) - obligation to file return pursuant to notice under Section 148 - best judgment reassessment under Section 144 read with Section 147 - Whether the Commissioner (Appeals) was justified in dismissing the appeal as not maintainable under Section 249(4)(b) for non-deposit of advance tax where the assessee claimed agricultural income and had not filed a return - HELD THAT: - The Tribunal found that the assessee had not filed a return though a notice under Section 148 had been issued and a best judgment reassessment under Section 144 read with Section 147 was passed. The CIT(A) dismissed the appeal on the ground that the assessee had not deposited the advance tax amount, invoking Section 249(4)(b). The assessee, however, asserted before CIT(A) that the receipts were agricultural in nature and exempt under Section 10(1) and placed land records and other documents as additional evidence under Rule 46A. The Tribunal held that the proviso to Section 249(4)(b) permits the CIT(A) to exempt a taxpayer from the deposit requirement if good and sufficient reasons are shown on application. Given that the taxability of the receipts (whether taxable income or exempt agricultural income) was itself disputed and arose from an ex parte best judgment assessment, the Tribunal considered that the prima facie claim of exemption and the explanation for non appearance/non compliance warranted preliminary enquiry by the CIT(A). The Tribunal therefore set aside the CIT(A) order and directed the CIT(A) to examine the assessee's claim and documents and to decide on admission in a reasoned and speaking order in accordance with the proviso to Section 249(4)(b). The Tribunal expressly refrained from deciding the merits of taxability, leaving that to adjudication if the appeal is admitted. [Paras 6]

Set aside the CIT(A) order and remitted for preliminary enquiry and fresh decision on admission under Section 249(4)(b) read with its proviso; merits not decided

Admission of additional evidence under Rule 46A - duty of appellate authority to state points, decision and reasons under Section 250(6) - best judgment reassessment under Section 144 read with Section 147 - Whether additional evidence filed by the assessee should be admitted and, if the appeal is admitted, how the appeal is to be adjudicated - HELD THAT: - The Tribunal recorded that the assessee claimed to have filed land records, evidence of agricultural income and bank statements with Form No.35 before the CIT(A) as additional evidence under Rule 46A. The Tribunal directed the CIT(A) to verify prima facie whether such additional evidence was placed before him and, if found prima facie true, to admit the appeal notwithstanding non payment of advance tax by applying the proviso to Section 249(4)(b). If the appeal is admitted, the Tribunal directed the CIT(A) to admit and consider the additional evidence and to adjudicate the appeal on merits by passing a speaking and reasoned order stating the points for determination, the decision thereon and the reasons, as required by Section 250(6). The Tribunal clarified that it did not express any view on the substantive merit of the taxability contention. [Paras 6]

Remitted to CIT(A) to verify and admit additional evidence under Rule 46A if prima facie established, and if appeal is admitted, to decide the appeal on merits with a reasoned order under Section 250(6)

Final Conclusion: The Tribunal set aside the order of the CIT(A) and remitted the matter to the CIT(A) to make a preliminary enquiry into the assessee's claim of agricultural income and filing of additional evidence; if prima facie established, the CIT(A) is to admit the appeal under the proviso to Section 249(4)(b), admit the additional evidence and decide the appeal on merits by a speaking order in accordance with Section 250(6). The Tribunal did not decide the substantive question of taxability and allowed the appeal for statistical purposes.

Inclusion of excise duty in turnover for rate determination - scope of section 145A - valuation of purchases, sales and inventory - processing of return under section 143(1) - limits on correcting debatable issues - exclusive vs inclusive method of accounting (ICAI guidance) - equal protection under Article 14 in tax rate classification

Inclusion of excise duty in turnover for rate determination - scope of section 145A - valuation of purchases, sales and inventory - processing of return under section 143(1) - limits on correcting debatable issues - exclusive vs inclusive method of accounting (ICAI guidance) - equal protection under Article 14 in tax rate classification - Whether excise duty can be included in the assessee's turnover for determining the applicable corporate tax rate under the First Schedule of Finance (No.2) Act, 2019, and whether such a contention can be resolved in the intimation processed under section 143(1) of the Income-tax Act, 1961. - HELD THAT: - The Tribunal examined section 145A and concluded that its statutory purpose is confined to valuation adjustments for purchase, sale and inventory (to address MODVAT/MRVAT issues) and was not enacted to determine the threshold turnover for applying the First Schedule tax rates. The ICAI guidance note permits exclusion of taxes like excise where the assessee follows the exclusive method of accounting; the assessee's exclusive accounting method was not disputed. Considerations of Article 14 were noted: inclusion of excise (which varies by product) could result in similarly placed taxpayers being placed in different tax slabs, raising an equality concern. Crucially, the Tribunal held that the question whether excise duty must be included in turnover for the purpose of selecting the tax rate is a debatable legal issue and, therefore, is not amenable to final adjudication in the limited machinery of an intimation under section 143(1). Reliance was placed on the principle that only errors apparent on the face of record may be corrected in processing under section 143(1), and debatable questions require full adjudication. The Tribunal further observed that the CIT(A) had applied turnover for the year under assessment rather than the previous year 2016-17 relevant for the threshold, and having regard to the debatable nature of the inclusion, the adjustment made by the revenue in the 143(1) intimation was not sustainable. [Paras 12]

The adjustment to include excise duty in turnover for determining the applicable tax rate is a debatable issue not resolvable in an intimation under section 143(1); the finding of the CIT(A) is set aside and the AO is directed to delete the adjustment.

Final Conclusion: The Tribunal partly allowed the appeal: it held that the question whether excise duty must be included in turnover for applying the First Schedule tax rates is debatable and cannot be decided in a section 143(1) intimation, set aside the CIT(A)'s conclusion, and directed the AO to delete the adjustment.

Addition under section 68 - reassessment under section 147 - rectification under section 154 - evidence of cash deposits and recovery from debtors - remand for de novo consideration - infructuous appeal

Addition under section 68 - evidence of cash deposits and recovery from debtors - remand for de novo consideration - Confirmation of addition under section 68 was not sustained and the matter was remanded to the Assessing Officer for fresh consideration. - HELD THAT: - The assessment under section 147 read with section 144B disallowed 5% of total cash deposits as unexplained cash credits under section 68. The assessee had furnished, in response to the notice, details of cash deposits, cash book entries and particulars of recoveries from debtors, but the Assessing Officer completed assessment without seeking further particulars or verifying the evidence. The Commissioner (Appeals) confirmed the addition. In the interest of justice and since the assessee sought an opportunity to furnish complete details, the Tribunal held that the matter should be considered afresh by the Assessing Officer. The assessee is permitted to file evidence in support of the claim and the Assessing Officer shall conduct the assessment proceedings de novo. The grounds are allowed for statistical purposes. [Paras 3, 4, 5, 7]

Matter remanded to the Assessing Officer for de novo consideration; assessee permitted to file evidence; grounds allowed for statistical purposes.

Rectification under section 154 - infructuous appeal - Appeal against the rectification order under section 154 was dismissed as infructuous. - HELD THAT: - The Assessing Officer had passed a rectification under section 154 read with section 147 to correct the tax and interest computation, resulting in a fresh demand. The Commissioner (Appeals) confirmed the rectification. Having remitted the principal issue of quantum to the Assessing Officer for de novo consideration, the Tribunal found the appeal against the rectification order to be academic and without practical consequence, and therefore dismissed it as infructuous. [Paras 8, 9, 10]

Appeal against the rectification order dismissed as infructuous.

Final Conclusion: The appeal against the quantum addition is remitted to the Assessing Officer for fresh adjudication with liberty to the assessee to produce evidence; the appeal against the rectification order is dismissed as infructuous.

Corporate guarantee as international transaction - arm's length price / benchmarking - interest on delayed receivables as international transaction - credit period as per invoices for computation of interest - LIBOR+200 basis points as applicable benchmark rate - weighted deduction under section 35(2AB) - clinical trials expenses outside approved R&D facility

Corporate guarantee as international transaction - arm's length price / benchmarking - Whether corporate guarantees furnished by the assessee constitute an international transaction and the appropriate arm's length commission to be adopted - HELD THAT: - Following the decision of the Hon'ble Madras High Court in PCIT v. Redington (India) Ltd., the Tribunal holds that corporate guarantees qualify as an international transaction and therefore require benchmarking. No contrary binding authority or fresh material was shown to displace that principle. On the question of quantification, the Tribunal followed the view of a Coordinate Bench in the assessee's own case and several other Tribunals that corporate guarantee commission be fixed at 0.50% of the amount guaranteed. In view of lack of persuasive recent material to adopt a different rate, the Assessing Officer/TPO is directed to apply 0.50% as the arm's length commission on the guaranteed amount. [Paras 9, 11, 12]

Corporate guarantees are international transactions requiring benchmarking; commission fixed at 0.50% of the amount guaranteed.

Interest on delayed receivables as international transaction - credit period as per invoices - arm's length price / benchmarking - Whether interest on outstanding receivables from associated enterprises is an international transaction requiring separate benchmarking and how the credit period for computation should be determined - HELD THAT: - The Tribunal follows binding precedents (including DCIT v. McKensey Knowledge Centre and related Tribunal views) that, post-introduction of the explanation to section 92B, delay in realization of trade receivables arising from business transactions attracts transfer pricing adjustment by treating the delay as a notional loan and requires separate benchmarking of interest. The CIT(A)'s direction to compute interest only for the period beyond the credit period agreed between the parties as reflected in the invoices was upheld. The Tribunal noted that in the assessee's own case for AY 2018-19 the DRP directed application of invoice credit periods and that finding has become final; accordingly, the credit periods extended to non-AEs (ranging between 60 and 240 days) shall be extended to AEs for benchmarking purposes. The Assessing Officer/TPO is directed to verify invoices and compute interest beyond the agreed invoice credit period. [Paras 21, 22, 25]

Interest on delayed receivables is an international transaction requiring separate benchmarking; credit period for computing interest shall be the period agreed in the invoices and those credit periods extended to non-AEs shall be applied to AEs.

LIBOR+200 basis points - arm's length price / benchmarking - Appropriate benchmark rate for computing arm's length interest on delayed foreign currency receivables - HELD THAT: - The Tribunal prefers and follows the decisions of the Hon'ble Bombay High Court (PCIT v. Tecnimont (P.) Ltd.) and the Hon'ble Delhi High Court (CIT v. Cotton Naturals) which hold that the market determined interest rate applicable to the currency concerned should be applied. Applying that principle, and having regard to precedent, the Tribunal directs adoption of LIBOR plus 200 basis points as the appropriate rate to compute the notional interest on delayed foreign currency receivables/advances for transfer pricing purposes. [Paras 30, 31]

Adopt LIBOR+200 basis points for computing arm's length interest on similar foreign currency receivables/advances.

Weighted deduction under section 35(2AB) - clinical trials expenses outside approved R&D facility - Allowability of weighted deduction under section 35(2AB) for (a) expenditure not quantified in DSIR approval and (b) clinical trials expenses incurred outside approved R&D facility - HELD THAT: - For expenditure incurred that was not quantified in the DSIR approval (such as rates, taxes and travelling expenses of research units), the authorities correctly held that such expenditure does not qualify for weighted deduction because it was not approved by the prescribed authority; however, since the expenditure was incurred in relation to scientific research, it is allowable as a 100% deduction. Concerning clinical trials expenses incurred outside the approved R&D facility, the Tribunal follows the Gujarat High Court decision in CIT v. Cadila Healthcare Ltd. and subsequent judicial treatment (including Sun Pharmaceuticals) holding that clinical trials and related regulatory approval expenses, which normally occur outside an approved facility, can qualify for weighted deduction where the prescribed authority's approval covers such expenses. Respectfully following a Coordinate Bench in the assessee's own case, the Tribunal allows weighted deduction for clinical trials expenses insofar as they are approved by the prescribed authority. [Paras 32, 36, 37]

Expenditure not quantified in DSIR approval does not qualify for weighted deduction but is allowable as 100% deduction; clinical trials expenses outside approved facilities are eligible for weighted deduction if approved by the prescribed authority.

Final Conclusion: Revenue's appeal dismissed; assessee's appeal partly allowed. Adjustments sustained and quantified as directed: corporate guarantee commission limited to 0.50% of amount guaranteed; interest on delayed receivables to be computed beyond invoice credit periods and benchmarked at LIBOR+200 basis points; unapproved R&D expenditures not eligible for weighted deduction but allowable as 100% deduction; clinical trials expenses allowed for weighted deduction where approved by the prescribed authority.

Reason to believe based on tangible material (not mere suspicion) - reopening of assessment beyond four years subject to failure to disclose fully and truly all material facts - change of opinion doctrine - value of any benefit or perquisite arising from business for taxation under business income - monetary receipts are generally not taxable as benefit under the commercial perquisite limb - distinction between shares held as capital asset and stock-in-trade (intention test) - burden on Revenue to prove nexus between alleged concession and any payment by third party - arm's length / transfer pricing acceptance of inter-company payments

Reason to believe based on tangible material (not mere suspicion) - reopening of assessment beyond four years subject to failure to disclose fully and truly all material facts - change of opinion doctrine - burden on Revenue to show fresh tangible material - Validity of reassessment proceedings under section 147/148 in absence of fresh tangible material and allegation of non-disclosure - HELD THAT: - The Tribunal held that proceedings under section 147/148 require a 'reason to believe' founded on tangible or reliable information emerging after the original assessment, and not on mere suspicion, conjecture or the Assessing Officer's own perception. The AO's recorded reasons, which relied on an inference that the share purchase price was a 'discount' tied to concessions granted to Honda, were found to be based on surmises and AO's standalone view of the transaction rather than new material. The transaction documents (notably the share transfer agreement) and extensive disclosures in audited accounts, tax audit notes, filings under section 133(6), Form 15CA, and replies during original assessment placed the price and its basis before the AO during the original assessment; the AO had examined investments and made substantive findings (including a section 14A disallowance) in the original assessment. The Tribunal concluded that the reassessment notice issued after the four-year period was effectively a change of opinion and not founded on fresh tangible material; accordingly the proviso to section 147 (failure to disclose fully and truly all material facts) did not apply because primary facts had been disclosed and the Revenue merely sought to draw different inferences. Reopening was therefore invalid. [Paras 9, 15, 17, 26, 27]

Reassessment proceedings quashed as the reasons recorded did not constitute fresh tangible material and amounted to impermissible change of opinion; no failure to disclose fully and truly all material facts was made out.

Value of any benefit or perquisite arising from business for taxation under business income - monetary receipts are generally not taxable as benefit under the commercial perquisite limb - distinction between shares held as capital asset and stock-in-trade (intention test) - burden on Revenue to prove nexus between alleged concession and any payment by third party - arm's length / transfer pricing acceptance of inter-company payments - Whether alleged 'benefit' by reason of discount on purchase of shares could be charged to business income under clause dealing with 'value of any benefit or perquisite' (section 28(iv) as then applicable) - HELD THAT: - On the merits the Tribunal found no basis to treat the transaction as yielding a taxable business benefit under section 28(iv). There was no evidence establishing (a) that the shares were sold by Honda at a concession plainly referable to concessions granted by the appellant, (b) that HHML paid the license fee to Honda as consideration on behalf of the appellant, or (c) any tacit arrangement linking the license fee and the alleged discount. The license payments were scrutinised and accepted for arm's length treatment by the TPO; statutory authorities and regulatory filings did not cast doubt on those payments. Further, the Tribunal emphasised that section 28(iv) applies to benefits/perquisites arising from business and that monetary receipts as such are generally not taxable as benefit under that provision; taxing a notional discount immediately would amount to charging hypothetical income rather than real accruals. The character of the shares as long term investments (promoter holdings held for decades and reflected as investments in accounts) supported the conclusion that any differential, if at all realisable, is of capital character and not a business income per section 28(iv). In sum, even if a price differential existed, Revenue failed to prove the requisite nexus and legal basis to tax it as business perquisite in the year of acquisition. [Paras 30, 31, 33, 41, 44]

Addition under section 28(iv) disallowed; alleged discount/concession not taxable as business income and, on the facts, any differential would be capital/notional and not a taxable perquisite in the year of acquisition.

Final Conclusion: The appeal is allowed: the reassessment under section 147/148 (notice dated 31.03.2018 and order dated 29.12.2018) was invalid for lack of fresh tangible material and amounted to change of opinion; consequential addition under the business perquisite provision was unsustainable and is deleted.

Section 14A disallowance - interest expenses - Rule 8D allocation of administrative expenses - Employees Stock Option Plan (ESOP) deduction under Section 37 - Reliance on Tribunal Special Bench and Karnataka High Court in Biocon Ltd.

Rule 8D allocation of administrative expenses - Section 14A disallowance - administrative expenses - Disallowance under Section 14A in respect of administrative/operating expenses - HELD THAT: - The assessee expressly abandoned this ground before the Tribunal. The appeal on this aspect is accordingly not pressed and is dismissed on that basis. Although earlier orders and the Tribunal's prior directions had engaged with Rule 8D inquiries and remand to the AO, the current proceedings record that the assessee did not press the administrative-expenses ground. [Paras 4]

Ground relating to administrative expenses under Section 14A is dismissed as not pressed.

Section 14A disallowance - interest expenses - Application of prior ITAT findings in assessee's own case - Disallowance under Section 14A in respect of interest expenses - HELD THAT: - The Tribunal examined its own earlier order in the assessee's case for the same year (and the ITAT decision for AY 2008-09) which had found that the assessee had sufficient own funds and therefore interest expense should not be considered for Section 14A disallowance. Having regard to those categorical findings and identical facts, the Tribunal held that no disallowance under Section 14A is called for in respect of interest expense for AY 2010-11, and, because facts and issues are identical, for AY 2011-12 as well. [Paras 12, 13]

Disallowance of interest expenses under Section 14A is deleted; assessee's appeals on this ground are allowed for the years under consideration.

Employees Stock Option Plan (ESOP) deduction under Section 37 - Reliance on Tribunal Special Bench and Karnataka High Court in Biocon Ltd. - Allowability of ESOP-related expense claimed as deduction under Section 37 - HELD THAT: - The Tribunal considered the factual matrix and the binding trajectory of decisions upholding the Special Bench in Biocon Ltd., later affirmed by the Karnataka High Court, which treat ESOP discount (quantified on exercise) as an ascertainable liability and an allowable business expenditure under Section 37(1). The assessee had disclosed the ESOP scheme in the annual report, furnished employee-wise details, shown that the benefit was taxed as a perquisite in employees' hands and TDS was deducted. In view of consistent tribunal and High Court decisions and the facts disclosed, the Tribunal found no error in CIT(A)'s allowance of the ESOP deduction and dismissed the Department's appeal. [Paras 21, 22]

Deduction claimed for ESOP expenses is allowable under Section 37; Department's appeal is dismissed.

Final Conclusion: The Tribunal: (a) dismisses the assessee's ground on administrative expenses as not pressed; (b) allows the assessee's appeals deleting the Section 14A disallowance in respect of interest expenses for AY 2010-11 and 2011-12; and (c) dismisses the Department's appeal and upholds allowance of ESOP deduction under Section 37 in favour of the assessee.

Disallowance of embezzlement loss - admissibility and evidentiary value of FIR and police charge sheet - treatment of purchases as bogus / unexplained - application of gross profit rate to adjust alleged bogus purchases - reopening of assessment under section 147

Disallowance of embezzlement loss - admissibility and evidentiary value of FIR and police charge sheet - Allowability of loss claimed on account of embezzlement of stock for A.Y. 2011-12 - HELD THAT: - The assessee, a partnership firm dealing in gold and diamond jewellery, claimed a loss on account of embezzlement of stock and filed FIRs quantifying the loss, subsequently supported by police enquiry, charge sheet and partial recoveries. The Assessing Officer doubted the claim because of delay in finalising the quantum and alleged casualness in lodging FIRs; the CIT(A) declined to admit the police report as additional evidence and sustained the disallowance. Having examined the records, including the FIRs, stock tallies, police communication confirming registration of crime, filing of charge sheet and particulars of recovered jewellery, the Tribunal found no basis to disbelieve the embezzlement. The Tribunal accepted the assessee's explanation for the time taken to tally complex stock, held that the police material went to the root of the controversy and that the authorities below erred in rejecting the claim without adequate justification, and therefore deleted the disallowance and allowed the claimed loss. [Paras 5, 7]

Loss on account of embezzlement of stock of Rs. 1,32,14,143/ for A.Y. 2011 12 allowed and disallowance deleted.

Treatment of purchases as bogus / unexplained - application of gross profit rate to adjust alleged bogus purchases - reopening of assessment under section 147 - Additions in respect of purchases treated as bogus for A.Y. 2012-13 and appropriate mode of adjustment - HELD THAT: - Following information from DGIT(Investigation) about alleged accommodation entries, the Assessing Officer reopened the assessment under section 147 and treated purchases from two parties as wholly bogus, adding the entire amounts. The assessee produced purchase invoices, ledger accounts, bank payments, party confirmations, affidavits, ITRs of suppliers and corresponding sales/exports in matching quantities. The Tribunal observed that where quantities and corresponding sales recorded in the books are not disputed and supporting banking and corroborative documents are placed on record, the Assessing Officer cannot make a complete disallowance of purchases under the guise of bogus purchases. Applying the Tribunal's and High Court precedents relied on in the order, the Tribunal directed that instead of adding the full purchase amount, a gross profit adjustment be applied. Having regard to earlier practice in the assessee's case and the authorities, the Tribunal applied a 3% gross profit margin over and above the assessee's declared gross profit rate on the disputed purchases, resulting in a limited addition and thereby granting part relief to the assessee. [Paras 11, 12]

Addition on account of alleged bogus purchases for A.Y. 2012 13 partly sustained; gross profit of 3% applied over and above declared GP rate on disputed purchases, yielding a limited adjustment.

Final Conclusion: The assessee's appeal for A.Y. 2011 12 is allowed in full by admitting the embezzlement loss supported by FIR and police records; the appeal for A.Y. 2012 13 is partly allowed by rejecting a full addition on alleged bogus purchases and directing a gross profit based adjustment.

Validity of assessment order without DIN - approval under section 153D - satisfaction note under section 153C - use of seized documents from a third party - reliance on statement recorded under section 132(4) - opportunity of cross-examination and principles of natural justice - addition based on surmise, conjecture or unreliable material

Validity of assessment order without DIN - Validity of the assessment order passed without mentioning DIN in the body of the order. - HELD THAT: - The Tribunal examined the remand report and record which showed that a DIN was generated and separately intimated to the assessee by letter dated 28.12.2019. Having regard to the remand report and the recent stay referred to in Brandix Mauritius Holdings Ltd., the contention that the absence of DIN in the body of the assessment order rendered the order invalid was rejected. The Tribunal held that separate generation and intimation of DIN supported the validity of the order passed on 27.12.2019. [Paras 4]

Objection to validity of assessment for lack of DIN rejected.

Approval under section 153D - Validity of the approval under section 153D and whether approval was granted mechanically. - HELD THAT: - The Tribunal noted that the assessment order itself recorded that approval under section 153D was granted and found nothing on record to infer that the approval was given in a mechanical manner. The Tribunal applied its finding on DIN mutatis mutandis to the question of DIN on the approval and found no infirmity in the approval having been obtained. [Paras 4]

Approval under section 153D upheld; no merit in contention that approval was mechanical or invalid for want of DIN on the approval letter.

Satisfaction note under section 153C - use of seized documents from a third party - addition based on surmise, conjecture or unreliable material - reliance on statement recorded under section 132(4) - opportunity of cross-examination and principles of natural justice - Sustainability of the addition of the alleged cash receipt in assessee's hands made under section 153C/assessment when based on seized material from a third party, Excel sheets reproduced in the satisfaction note, and extracts of a third party's statement, without effective cross-examination or corroboration. - HELD THAT: - The Tribunal found that the primary incriminating paper (Annexure AS Exhibit 5 page 83) was seized from the third party and did not mention the assessee's name, unit wise bifurcation, or dates; it therefore could not by itself show which amounts related to the assessee. The AO relied further on reproduced Excel sheets (pages 3-11 of the satisfaction note) that lacked seizure formalities, provenance, signatures, exhibit/annexure references and contained material numerical discrepancies and mismatches when tested against registered sale deeds. The statement extracts of the third party did not admit passing cash to the assessee and in fact indicated refund/returns; the AO did not place the complete statements on record nor secure effective attendance or summons to enable cross examination. The Tribunal held that the satisfaction note was not a speaking, corroborated record for the year under consideration, the Excel sheets were unreliable, and reliance on statements of a third party without meaningful opportunity of cross examination and without corroborative seized material rendered the addition based on surmise and conjecture unsustainable. The Tribunal also noted supportive findings of the GST appellate authority and precedent of the Jaipur Bench where analogous additions were deleted. [Paras 5]

Addition of the alleged on-money in the assessee's hands deleted; assessment under section 153C/143(3) cannot be sustained on the material relied upon and without effective cross examination or corroboration.

Final Conclusion: The Tribunal rejected the challenge to validity of the assessment on grounds of absence of DIN and upheld the approval under section 153D, but found the satisfaction note, reproduced Excel sheets and reliance on third party statement to be unreliable and not corroborative; for these reasons and for failure to afford effective cross examination, the addition made in the assessment was deleted and the assessee's appeal was allowed in part.

Violation of the principles of natural justice - failure to assign reasons for acceptance or rejection of evidence - jurisdictional vires of administrative order - remand for fresh consideration and hearing

Jurisdictional vires of administrative order - violation of the principles of natural justice - Impugned final assessment orders dated 24.04.2024 and 18.05.2024 were quashed on grounds of being without jurisdiction and for failure to comply with principles of natural justice, and the matter was remitted for fresh hearing. - HELD THAT: - The Court found that the assessment orders could not be sustained because the assessing authority acted without applying independent mind and without affording a proper opportunity of hearing to the petitioner. The petitioner had contended that the officer acted at the behest of a senior authority and did not give a hearing; having regard to the contentions and records, the Court concluded that the impugned orders were vitiated and therefore liable to be set aside. The matter was directed to be heard afresh and decided in accordance with law by the authority concerned. [Paras 8]

Impugned assessment orders quashed and matter remitted to the authority for fresh hearing and decision in accordance with law.

Failure to assign reasons for acceptance or rejection of evidence - remand for fresh consideration and hearing - Acceptance of one test report and rejection of others without assigning reasons was held unsustainable and required fresh consideration. - HELD THAT: - The assessment record showed that a re-test report was accepted while four other test reports were rejected without any reasoned basis. The Court observed that acceptance and rejection of competing test reports without recording reasons cannot be sustained in law. Consequently, the matter as regards the test reports was not adjudicated on merits and was remitted to the authority to re-evaluate the reports after affording the petitioner an opportunity of hearing and recording reasoned findings. [Paras 7, 8]

Acceptance/rejection of competing test reports set aside for want of reasons; authority directed to reconsider after hearing and to record reasoned findings.

Final Conclusion: The High Court quashed the impugned final assessment orders and remitted the matter to the appropriate authority for fresh hearing and decision in accordance with law, directing that the petitioner be afforded an opportunity to be heard and that reasoned findings be recorded on the test reports and related issues.

Determination of export transaction value under Customs Valuation Rules - Market enquiry and residual valuation under Rule 6 - Admissibility of admissions recorded under Section 108 - Confiscation for mis-declaration under Section 113 - Penalty for mis-declaration under Section 114 - Penalty for furnishing false information to avail export incentives under Section 114AA

Market enquiry and residual valuation under Rule 6 - Determination of export transaction value under Customs Valuation Rules - Admissibility of admissions recorded under Section 108 - Validity of the market enquiry conducted and re-determination of the F.O.B. value of the exported goods - HELD THAT: - The Tribunal upheld the re-determination of the F.O.B. value by proceeding sequentially under the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and applying the residual method under Rule 6 after the value could not be ascertained under Rules 4 and 5. The market enquiry was conducted in the presence of the exporter's authorised representative and independent sellers; the recalculated value was explained to and accepted by the authorised representative in a statement recorded under Section 108. Having voluntarily participated in and admitted the results of the market enquiry, the exporter could not subsequently challenge the methodology or outcome. Distinguishing precedents where market surveys were held in the absence of exporter or representative, the Tribunal found no flaw or arbitrariness in the enquiry here and relied on the settled principle that admitted facts need not be proved. [Paras 6, 7, 8, 9, 11]

Redetermination of the F.O.B. value on the basis of the market enquiry was valid and the challenge to the valuation is rejected.

Confiscation for mis-declaration under Section 113 - Penalty for mis-declaration under Section 114 - Penalty for furnishing false information to avail export incentives under Section 114AA - Liability to confiscation and imposition of penalties for mis-declaration of quantity and value and for furnishing false information to obtain export incentives - HELD THAT: - The Tribunal agreed with the authorities below that there was mis-declaration both as to quantity and value, and that the exporter had intentionally mis-declared to obtain undue export benefits (drawback and ROSCTL). On that basis the goods were liable for confiscation under sub-sections (i), (ia) and (ja) of Section 113, and penalty under Section 114 was upheld for overvaluation. The Tribunal also affirmed the imposition of penalty under Section 114AA for submitting false documents or information to avail export incentives. The findings of intentional mis-declaration and the consequent penalties were endorsed. [Paras 4, 12]

Confiscation of goods and imposition of penalties under Sections 114 and 114AA (and related provisions of Section 113) are justified and affirmed.

Final Conclusion: The appeal is dismissed and the impugned order confirming re-determination of F.O.B. value, confiscation, and penalties is affirmed.

Mis-declaration - mis-classification - absence of willful or deliberate mis-declaration - confiscation of export goods - redemption fine - penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962

Mis-declaration - absence of willful or deliberate mis-declaration - No deliberate or willful mis-declaration/mis-classification was made by the appellant to avail excess drawback. - HELD THAT: - The Tribunal examined the record including the appellant's explanation that a clerical error occurred in preparing the invoice and packing list because of multiple varieties of goods, and noted supporting material such as revised documents submitted to authorities and third party laboratory test reports indicating viscose construction. The adjudicating authority's conclusion lacked discussion of specific acts of omission or commission establishing knowledge or intent. On this basis the Tribunal concluded that the mismatch was inadvertent and not a knowing attempt to obtain excess drawback. [Paras 8, 9]

Allegation of mis-classification and mis-declaration set aside for want of willful intent.

Confiscation of export goods - redemption fine - penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 - Confiscation of goods, redemption fine and penalty imposed on the appellant are not sustainable and are set aside. - HELD THAT: - Having found no deliberate mis-classification or mis-declaration, the legal foundation for confiscation, redemption fine and penalties under the cited provisions of the Customs Act collapsed. The Tribunal therefore held that the order of confiscation and imposition of penal consequences could not be sustained in law and directed that the impugned orders be set aside with consequential relief as per law. [Paras 10, 11]

Confiscation, redemption fine and penalties set aside and appeal allowed.

Final Conclusion: The appeal is allowed; the order of confiscation of export goods, the redemption fine and the penalty imposed on the appellant are set aside, with consequential relief as per law.

Leave to withdraw application for amendment - abatement of suit under Order XXII Rule 8 CPC - restoration of company under Section 252 of the Companies Act, 2013 - compliance of conditions for restoration imposed by NCLAT - effect of striking off on corporate status and revival

Leave to withdraw application for amendment - Application I.A.3616/2023 seeking leave to withdraw an application and liberty to move a fresh amendment application - HELD THAT: - The substituted legal representatives of Defendant No.3 sought permission to withdraw their application to file a Written Statement and indicated intention to move a fresh amendment application on account of alleged fraud and to take a new defence. After hearing, the Court allowed the application to be withdrawn and granted the liberty sought to file a fresh amendment application. The application was disposed of accordingly. [Paras 4, 5]

Application permitted to be withdrawn with liberty to file a fresh amendment application; application disposed of.

Abatement of suit under Order XXII Rule 8 CPC - restoration of company under Section 252 of the Companies Act, 2013 - compliance of conditions for restoration imposed by NCLAT - effect of striking off on corporate status and revival - I.A.24676/2023 seeking dismissal of the suit as abated on the ground that the plaintiff company had been struck off and dissolved - HELD THAT: - The application alleged that the plaintiff had not filed annual accounts for many years, had its name struck off by ROC and therefore the suit was abated under Order XXII Rule 8 CPC. The plaintiff relied on the NCLAT order dated 15.12.2022 which conditionally restored the company subject to payment of costs and filing of past annual returns and balance sheets. The Court examined compliance with the conditions: the cost directed by NCLAT was deposited (by an authorised company secretary) and steps had been initiated to file voluminous past annual returns (including seeking ROC permission for offline filing); TDS and income-tax filings were being addressed; and the ROC master data showed the company as active to enable filings. On the material before it the Court concluded that the NCLAT-imposed conditions stood complied with and that the company could not be treated as dead for purposes of abatement. Consequently Order XXII Rule 8 CPC did not apply to dismiss the suit as abated and the application was dismissed as without merit. [Paras 24, 25, 26, 27, 28]

Application dismissed; the plaintiff company is effectively restored for compliance purposes and the suit does not stand abated.

Final Conclusion: The Court granted leave to withdraw I.A.3616/2023 with liberty to file a fresh amendment application, and dismissed I.A.24676/2023 seeking dismissal of the suit as abated because the NCLAT conditions for restoration of the plaintiff company were complied with and the company was not to be treated as dissolved for purposes of abatement.

Avoidance of transfers after commencement of winding up - validation of transactions under Section 536(2) - avoidance of voluntary transfer within one year before presentation of winding up petition - ordinary course of business - good faith and bonafides of transaction - protection of interests of stakeholders versus proprietary rights of third parties

Avoidance of transfers after commencement of winding up - validation of transactions under Section 536(2) - ordinary course of business - good faith and bonafides of transaction - De-sealing and handing over of vacant and peaceful possession of Plot No.1, Sector-154, Noida to M/s. Surya Jyoti Software Pvt. Ltd. - HELD THAT: - The Court applied the statutory scheme relating to avoidance of dispositions after commencement of winding up and the principles governing validation under Section 536(2) of the Companies Act, 1956. Having considered the sequence and dates of payments (which commenced in 2013 and continued until December 2015) and the terms of the Agreement dated 16.04.2013, the Court concluded that the transfer of shareholding and the pattern of payments occurred in the ordinary course of business and were bona fide. The Court rejected bald allegations of collusion and the contention that the transaction was a device to transfer the land for ulterior purposes, noting absence of evidence of siphoning or that the applicant was beneficiary of any misappropriation. Applying the established discretionary tests for validation (including whether the transaction was for the benefit of the company or done under commercial compulsion to keep the company going), the Court found no reason to vest the subject property in the Official Liquidator and held that the Official Liquidator's seizure did not oust the applicant's proven proprietary claim. Consequently, the application for de-sealing and possession was allowed subject to directions regarding security charges. [Paras 26, 36, 37, 39, 40]

Application allowed; Official Liquidator directed to de-seal the property and hand over vacant and peaceful possession to the applicant-company, subject to payment/verification of security agency charges and related directions.

Avoidance of voluntary transfer within one year before presentation of winding up petition - good faith and bonafides of transaction - protection of interests of stakeholders versus proprietary rights of third parties - Whether the Agreement dated 16.04.2013 was collusive or voidable such that the subject property should be vested in the company (in liquidation)/Official Liquidator. - HELD THAT: - The Court examined the terms of the perpetual lease with Noida Authority and the Agreement of 16.04.2013, the chronology of payments and the interlocutory proceedings (including OMP(I) No.11/2016 and its disposal dated 19.12.2016). It found that substantial payments were made prior to the winding up petition being entertained and that the Agreement contemplated transfer of shareholding in the ordinary course. The Court found no cogent evidence of collusion, misappropriation or that the applicant had been unjustly enriched; the SFIO report did not implicate the applicant. On these facts, the Court held that the transaction could not be treated as a sham or void against the Official Liquidator and that mere proposals for revival schemes did not justify vesting the property in the company (in liquidation). [Paras 31, 33, 35, 36, 37]

Agreement held to be not shown to be collusive; no basis to treat the property as liable to be vested in the company (in liquidation) on that ground.

Final Conclusion: The application by M/s. Surya Jyoti Software Pvt. Ltd. for de-sealing and delivery of vacant possession of Plot No.1, Sector-154, Noida is allowed: the Court held the April 2013 transaction to be in the ordinary course and bona fide, rejected allegations of collusion, and directed the Official Liquidator to de-seal and hand over possession subject to verification and payment of security agency charges as specified.

Summary order. Notice issued returnable in the week commencing 25.11.2024; petitioner directed to file copy of the license deed with terms and conditions and statement of accounts within four weeks; respondents permitted to file reply including preliminary objections within seven weeks; rejoinder within three weeks; notice to unrepresented respondent No.1 to be effected by all modes including dasti.

Binding nature of approved resolution plan under Section 31(1) of the IBC - extinguishment of claims not admitted or not filed in CIRP - fresh start doctrine under the Insolvency and Bankruptcy Code - finality of resolution plan and protection against post CIRP resurrection of claims - tender eligibility based on settlement of past dues vis a vis approved resolution plan

Binding nature of approved resolution plan under Section 31(1) of the IBC - extinguishment of claims not admitted or not filed in CIRP - fresh start doctrine under the Insolvency and Bankruptcy Code - Whether the Respondent can debar the Petitioner from participating in coal mine auctions on account of dues alleged to have arisen prior to CIRP after approval of the resolution plan. - HELD THAT: - The Court held that the approved resolution plan, being binding on the corporate debtor and all stakeholders, precludes revival of claims which were not admitted by the Resolution Professional or which were not filed in the prescribed manner during CIRP. The Resolution Professional rejected the Respondent's Form C classification of the PBG claim as a financial debt and invited the Respondent to re file in an appropriate form; no such re filing or challenge to the plan was made. The resolution plan admitted the operational claim and effected its proportionate settlement; the larger PBG claim was not admitted and, in the absence of requisite filing or challenge, stood extinguished by operation of the CIRP and the approved plan. The Court relied on the statutory scheme and object of the IBC to effect a 'fresh start' for the corporate debtor and observed that permitting the Respondent to deny tender eligibility on the basis of extinguished or unapproved pre CIRP liabilities would frustrate the purpose of the resolution process. Consequently, the Respondent had no legal basis to insist on payment of the alleged pre CIRP dues as a condition for participation in auctions. [Paras 32, 33, 34, 35, 36]

The impugned decision debarring the Petitioner from participating in coal mine auctions on account of the said past dues is unsustainable and is set aside; the Petitioner is eligible to participate in auctions.

Final Conclusion: Writ petition allowed; the Respondent's decision dated 22.05.2024 disqualifying the Petitioner from coal mine auctions on account of the discussed pre CIRP dues is set aside and the Petitioner is held eligible to participate in auctions.

Recording and communication of reasons for forming opinion under Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - Right to be heard and rules of natural justice in adjudicatory proceedings - Holistic construction of procedural provisions (Rule 4 read with Rule 4(4)) - Precedential effect of a later Division Bench decision - Binding nature of departmental circulars issued in implementation of judicial decisions

Recording and communication of reasons for forming opinion under Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - Holistic construction of procedural provisions (Rule 4 read with Rule 4(4)) - Right to be heard and rules of natural justice in adjudicatory proceedings - Precedential effect of a later Division Bench decision - Whether an adjudicating authority is statutorily obliged to record in writing and communicate to the noticee the reasons for forming an opinion to hold an inquiry under Rule 4(3) of the Rules - HELD THAT: - The Court examined Rule 4 in its entirety and held that sub rule (3) requires the adjudicating authority, after considering the cause shown by the noticee, to form an opinion whether an inquiry should be held and, if so, to issue a notice fixing the date for appearance. That opinion denotes the authority's personal satisfaction to proceed to personal hearing and is prima facie in nature. The Division Bench of this Court in India Cements Limited construed Rule 4(3) and rejected the view of the Bombay High Court that reasons for forming the opinion must be recorded in writing and communicated to the noticee prior to holding an inquiry. The Court agreed that Rule 4(3) cannot be read in isolation and must be read with Rule 4(4), which expressly requires the adjudicating authority, on the hearing date, to explain to the person or his representative the contraventions alleged and the provisions relied upon. Communicating the internal opinion formed under Rule 4(3) before the hearing would amount to an impermissible expansion of the procedural scheme, create an additional procedural opportunity not contemplated by the Rules, and risk protracting proceedings. The Court therefore followed the later Division Bench decision of this High Court as binding and concluded that there is no statutory obligation to record and communicate the reasons for forming the opinion under Rule 4(3) before issuing the hearing notice; compliance with Rule 4(4) at the hearing suffices to meet the requirements of a fair opportunity and the rules of natural justice. [Paras 18, 19, 20, 21, 22]

No statutory duty to record in writing and communicate the reasons for forming an opinion under Rule 4(3) prior to holding an inquiry; Rule 4(3) must be read with Rule 4(4) and the later Division Bench decision of this High Court is followed.

Binding nature of departmental circulars issued in implementation of judicial decisions - Precedential effect of a later Division Bench decision - Whether departmental circulars issued in purported implementation of the Bombay High Court judgment can override or bind the Court's interpretation - HELD THAT: - The Court noted the settled principle that departmental circulars represent the executive's understanding and are not binding on courts when a court has declared the law. While circulars may guide departmental action, they cannot be relied upon to supplant or override judicial interpretation. Given that the Division Bench of this High Court has thereafter considered and rejected the expanded interpretation of Rule 4(3) by the Bombay High Court, the later judicial pronouncement governs. Consequently, circulars issued in the wake of the Bombay High Court decision do not alter the Court's conclusion or create a binding obligation to record and communicate reasons under Rule 4(3). [Paras 8, 22]

Departmental circulars cannot override the judicial interpretation of Rule 4(3); the later Division Bench decision of this High Court governs.

Final Conclusion: Writ petitions dismissed; the Division Bench interpretation of this High Court in India Cements Limited is followed: Rule 4(3) does not require recording and prior communication of reasons for forming the opinion to hold an inquiry, and Rule 4 must be read with Rule 4(4) to ensure a fair opportunity; departmental circulars do not alter this legal position.

Exemption from payment of service tax under Notification No.42/2012-ST - Condition No.3 - export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary - procedural requirement of filing Form EXP-3 - Proviso (b) - invoice, bill, challan or any other document to be issued in the name of the exporter - substantive vs. procedural conditions - denial of benefit for technical non-compliance - strict construction of exemption notifications at applicability stage and liberal construction thereafter

Condition No.3 - export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary - exemption from payment of service tax under Notification No.42/2012-ST - Applicability of Condition No.3 to deny exemption where majority shareholding in the Indian company is held by a foreign entity - HELD THAT: - The Tribunal examined Condition No.3 which excludes exemption for 'export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary.' The Authorities below construed the condition to disallow exemption because a foreign entity held 69.62% shares in the appellant. The Tribunal held that the condition applies where the export is made by an Indian partner in a company that itself has equity participation in an overseas joint venture or is a wholly owned subsidiary; it does not apply to the factual matrix where the appellant company is majority-held by a foreign entity. On the admitted shareholding pattern, Condition No.3 is not attracted and cannot be a ground to deny the exemption under the notification. [Paras 7]

Condition No.3 does not apply and cannot dis-entitle the appellant to the exemption.

Procedural requirement of filing Form EXP-3 - substantive vs. procedural conditions - denial of benefit for technical non-compliance - exemption from payment of service tax under Notification No.42/2012-ST - Whether belated filing of Form EXP-3 (intimation) disentitles the appellant to the exemption - HELD THAT: - The Tribunal treated filing of Form EXP-3 as a procedural/intimation requirement distinct from substantive compliance under the notification. Noting that the half-yearly returns in Form EXP-4 showing availed exemption were filed within the prescribed time with requisite documents evidencing export, the Tribunal concluded that delay in submitting EXP-3 was a procedural lapse. Applying established precedents distinguishing substantive and procedural conditions, the Tribunal held that strict compliance with the intimation requirement is not a ground for denial of the substantive exemption where the core conditions evidencing export and entitlement are satisfied. [Paras 8]

Belated filing of Form EXP-3 is a procedural lapse and does not disentitle the appellant to the exemption.

Proviso (b) - invoice, bill, challan or any other document to be issued in the name of the exporter - exemption from payment of service tax under Notification No.42/2012-ST - substantive vs. procedural conditions - denial of benefit for technical non-compliance - Whether non-submission of invoices issued by foreign commission agents (or absence of conventional invoices) defeats entitlement under proviso (b) - HELD THAT: - Proviso (b) requires the invoice, bill, challan or 'any other document by whatever name called' issued by the service provider to be in the name of the exporter. The Tribunal observed that proviso (b) is broadly worded to capture varied nomenclature of documents, but the underlying requirement is proof that the service provider issued a document in the exporter's name evidencing the service on which exemption is claimed. The appellant produced agency agreements, export invoices, shipping bills, bank payment advices and invoice wise commission calculations establishing that commission was paid per agreed percentage of FOB and supported by bank records. Given these primary documents evidencing export and payment, the absence of a conventional invoice from the foreign agent was not held to be a fatal lapse. On that basis, the Tribunal treated the deficiency as non decisive and upheld entitlement to the exemption. [Paras 9]

Non-submission of conventional invoices from foreign agents, where alternative documentary evidence (agreement, shipping bills, bank payment advices and commission calculations) establishes the transaction, does not disentitle the appellant to the exemption.

Substantive vs. procedural conditions - denial of benefit for technical non-compliance - strict construction of exemption notifications at applicability stage and liberal construction thereafter - Whether, having decided entitlement on merits, invocation of extended limitation, interest and penalty requires separate consideration - HELD THAT: - The Tribunal recorded that since entitlement to exemption was finally decided on merits in favour of the appellant, there was no need to separately consider invocation of extended period of limitation or the imposition of interest and penalty. The conclusion on substantive entitlement rendered ancillary proceedings regarding limitation, interest and penalty unnecessary for adjudication. [Paras 15]

Extended limitation, interest and penalty need not be considered once entitlement is allowed on merits.

Final Conclusion: The Tribunal allowed the appeal, setting aside the adjudication: Condition No.3 was not attracted on the facts; belated filing of Form EXP-3 was a procedural lapse not warranting denial of the exemption; absence of a conventional invoice from foreign agents was not fatal where alternative documentary evidence established export and payment of commission; consequential issues of extended limitation, interest and penalty did not require consideration once exemption was granted.

Exemption from levy of service tax for SEZ authorised operations - overriding effect of the SEZ Act on other fiscal statutes - Section 26 of the SEZ Act and rule-making power under the SEZ Rules - inapplicability of conditions in Finance Act exemption notifications to SEZ units - requirement of legal authority to levy or collect tax (Article 265) - refund of service tax paid on input services by SEZ units

Exemption from levy of service tax for SEZ authorised operations - Section 26 of the SEZ Act and rule-making power under the SEZ Rules - overriding effect of the SEZ Act on other fiscal statutes - inapplicability of conditions in Finance Act exemption notifications to SEZ units - refund of service tax paid on input services by SEZ units - Admissibility of refund claims filed by an SEZ unit for service tax paid on input services and whether conditions of Finance Act exemption notifications can be enforced against SEZ units. - HELD THAT: - The Tribunal held that SEZ units holding letters of approval for authorised operations are exempt from payment of duties under the Customs Act, Central Excise Act and the Finance Act by virtue of section 26 of the SEZ Act, read with the rule-making power under the SEZ Rules. Section 51 gives the SEZ Act overriding effect over inconsistent provisions of other laws. Because the charging provisions of the other enactments are thereby overridden in respect of authorised SEZ operations, there is no legal authority to levy or collect service tax on those operations; in consequence, the conditional requirements contained in exemption notifications issued under the Finance Act are redundant and cannot be applied to deny refunds to SEZ units. The Tribunal accepted the factual finding that the services for which refund was claimed were availed for carrying out authorised operations and that payment of service tax under reverse charge was established by accountant certificates, bank statements and party-wise payment details. Applying the settled principles, the Tribunal concluded that the refund claims were rightly allowed by the Commissioner (Appeals) and that the revenue's reliance on general exemption jurisprudence was inapplicable to SEZ units which are governed by the special scheme under the SEZ Act. [Paras 8, 10, 11, 12]

Refund claims of the SEZ unit for service tax paid on input services are admissible; conditions in Finance Act exemption notifications cannot be imposed to deny such refund as inconsistent with the SEZ Act.

Final Conclusion: The Tribunal dismissed the revenue appeals and upheld the allowance of the refund claims filed by the SEZ unit for service tax paid on input services, concluding that the SEZ Act overrides the charging provisions of other fiscal statutes and precludes denial of refund by applying conditions of Finance Act exemption notifications.

Premature petition - liberty to file reply to show-cause notice - adjudication of show-cause notice by competent authority - consideration of prior decision by court as part of administrative adjudication

Premature petition - judicial restraint from adjudicating merits - The writ petition challenging the show-cause notice is premature and not fit for adjudication on merits at this stage. - HELD THAT: - The High Court recorded that the petitioner has challenged the show-cause notice dated 30.04.2024 but may raise all contentions in reply to that notice. The Court declined to enter into merits and observed that the respondent-authority has the capacity to adjudicate the show-cause notice after considering the petitioner's contentions. On that basis the petition was held to be premature and dismissed without deciding substantive issues. [Paras 4, 5]

Petition disposed of as premature; Court did not adjudicate merits.

Liberty to file reply to show-cause notice - adjudication of show-cause notice by competent authority - consideration of prior decision by court as part of administrative adjudication - Petitioner granted liberty to file reply and the respondent-authority directed to adjudicate the show-cause notice after considering the petitioner's contentions, including reference to this Court's decision in CTM Textiles Technical Ltd. - HELD THAT: - Without expressing any view on the merits, the Court expressly permitted the petitioner to file a reply to the impugned show-cause notice and directed that the respondent-authority may adjudicate the matter on receipt of such reply. The Court noted that the authority can and should consider the decision rendered by this Court in CTM Textiles Technical Ltd when adjudicating the notice. The order confines the Court to procedural relief and remits the substantive determination to the administrative forum. [Paras 3, 4, 5]

Liberty granted to petitioner to file reply; matter remitted to respondent-authority for fresh adjudication with directions to consider petitioner's contentions including the cited precedent.

Final Conclusion: Writ petition dismissed as premature; petitioner permitted to file reply to the show cause notice and the respondent authority directed to adjudicate the notice afresh after considering the reply and relevant precedents.

Reliance on precedent subject to a Supreme Court stay - Validity of Rule 8(3A) of the Central Excise Rules, 2002 - Remand to await determination by a higher court - Maintainability of Tribunal orders in presence of a higher court stay

Reliance on precedent subject to a Supreme Court stay - Remand to await determination by a higher court - Whether the Tribunal was justified in allowing the assessee's appeal by following the High Court decision in Indsur Global Ltd. when that decision was stayed by the Supreme Court, and the consequent course to be adopted. - HELD THAT: - The Court noted that the Tribunal allowed the respondent's appeal by following the High Court of Gujarat in Indsur Global Ltd., and also relied upon this Court's decision in Goyal MG Gases which had taken note of Indsur Global. It was recorded that the judgment in Indsur Global had been stayed by the Supreme Court in Special Leave Petition No.16523/2015. In light of the Supreme Court stay and having regard to the approach adopted by this Court in an earlier, similar matter (Commissioner of Central Excise, Bolpur v. M/s. KIC Metaliks Ltd., CEXA/20/2023 dated 24 May 2024), the Court set aside the Tribunal's order and directed that the appeal be restored to the Tribunal's file and kept pending. The matter is to be taken up by the Tribunal for decision only after the Supreme Court renders its judgment in SLP No.16523/2015 and other connected matters. The substantial questions of law raised are left open for consideration after the higher court's determination.

The appellate order of the Tribunal is set aside; the appeal is restored to the Tribunal and remanded to be kept pending and decided after the Supreme Court's judgment in SLP No.16523/2015 and connected matters.

Final Conclusion: The revenue's appeal is allowed; the Tribunal's order is set aside and the matter remanded to the Tribunal to remain pending and be decided only after the Supreme Court disposes of SLP No.16523/2015 and other connected matters; the substantial questions of law are left open.

Clandestine removal - proof of duty-paid nature - burden of proof - benefit of exemption Notification No.2/95-CE - penalty under Section 11AC - deemed export / re-warehousing - reconciliation of invoices and dispatch records

Clandestine removal - proof of duty-paid nature - reconciliation of invoices and dispatch records - Whether the duty of Rs.30,39,220/- confirmed by the Commissioner (out of the show-cause demand) is sustainable. - HELD THAT: - The Tribunal upheld the Commissioner's factual findings that, on verification, various clearances were effected under proforma invoices, courier/lorry receipts and gate passes without corroborative duty-paid invoices. The Range Officers' verification and documentary inconsistencies (mismatch between invoice dates and dispatch dates, non-serial issuance of invoices, lack of auditor endorsement of reconciliation) shifted the onus to the assessee, which the assessee failed to discharge. Amounts correctly shown as deemed exports or subsequently proved to be duty-paid were properly dropped by the Commissioner; amounts where the assessee could not correlate proforma clearances with duty-paid DTA invoices were rightly confirmed. The Tribunal therefore found no reason to interfere with the Commissioner's Annexure wise confirmations and sustained confirmation of the aggregate duty of Rs.30,39,220/-. [Paras 5]

Confirmation of duty of Rs.30,39,220/- upheld.

Benefit of exemption Notification No.2/95-CE - clandestine removal - deemed export / re-warehousing - Whether the appellant-assessee is eligible for the concessional benefit of Notification No.2/95-CE dated 04.01.1995 in respect of the confirmed clearances. - HELD THAT: - The Tribunal held that the Tribunal decision relied upon by the appellant (Euro Cotspin) is no longer good law following the Supreme Court's setting aside and remand in that matter. Further, where clearances amounted to clandestine removals beyond permissible limits and without requisite permission of the Development Commissioner (or where the documentary support for deeming as exports was absent), the concessional benefit cannot be extended. On the facts, several clearances were beyond permissible and the Commissioner's denial of the Notification benefit was sustained. Consequently, the concessional rate under Notification No.2/95-CE could not be applied to the confirmed demand. [Paras 5, 6]

Benefit of Notification No.2/95-CE denied and not available to the assessee for the confirmed clearances.

Penalty under Section 11AC - burden of proof - reconciliation of invoices and dispatch records - Remand for re-determination of penalty and consequential computation where applicable. - HELD THAT: - The Tribunal remanded the departmental appeal to the original authority for re-determining duty and with regard to penalty under Section 11AC. The remand is for fresh adjudication on computation and application of law, including extension of benefit under Section 11AC(d) if the duty along with interest and the reduced penalty is paid within the stipulated period. The remand contemplates re-assessment of penalty consequences in the light of the Tribunal's findings and giving the assessee an opportunity of being heard; it is not a final decision on the quantum or applicability of penalty but a direction for reconsideration consistent with the Tribunal's conclusions. [Paras 5, 7]

Matter remanded to the original authority for re-determination of duty and for reconsideration of penalty, with direction to extend Section 11AC(d) benefit if conditions are met.

Final Conclusion: The appellant's appeal is dismissed; the Commissioner's confirmations of duty totalling Rs.30,39,220/- are sustained and the concessional benefit of Notification No.2/95-CE is denied. The departmental appeal is partly allowed in that the matter is remanded to the original authority for re-determination of duty/penalty and for consideration of Section 11AC(d) relief if payment conditions are satisfied; the assessee to be afforded an opportunity of hearing.

Admissibility of trade discounts for computation of transaction value - cross-model utilisation of incentives/discounts - transaction value under Section 4 of the Central Excise Act, 1944 - invocation of extended period of limitation for suppression - binding effect of Tribunal precedent

Cross-model utilisation of incentives/discounts - admissibility of trade discounts for computation of transaction value - binding effect of Tribunal precedent - Whether discounts/incentives declared for certain models and applied to other models (cross-model utilisation) are admissible as deduction from assessable value. - HELD THAT: - The Tribunal applied its earlier reasoning in Tata Motors Ltd. and observed that discounts which do not conform to the requirements of a trade discount - i.e., not known at or prior to removal, not uniform within the same class of buyers, arbitrary in operation, not passed on to end-customers and effectively compensatory payments to dealers - cannot be excluded from the assessable value under Section 4. The appellant's practice of passing discounts opened for certain models and utilising them against higher-duty models was held to amount to impermissible cross-model utilisation and therefore inadmissible as a deduction from the transaction value. The Tribunal recorded no contrary authority and found no reason to depart from the principle in Tata Motors Ltd. [Paras 7]

Cross-model utilisation of discounts is inadmissible and such discounts do not qualify as deductible trade discounts for computing transaction value.

Invocation of extended period of limitation for suppression - transaction value under Section 4 of the Central Excise Act, 1944 - Whether the extended period of limitation could be invoked on the ground of suppression, permitting recovery of differential duty for the periods in question. - HELD THAT: - The Tribunal examined the departmental conduct and the appellant's long-standing practice since 2008, noting that departmental officers had periodically inspected records and raised no objection until after the Tata Motors Ltd. decision. The demand was computed from available records and the show-cause notice issued thereafter. In the absence of any finding of suppression, mis-declaration or concealment by the appellant, the Tribunal held that invocation of the extended period of limitation was not justified and the demand is time-barred. [Paras 7]

Extended period of limitation is not invocable; the demand for differential duty for the period is barred by limitation.

Final Conclusion: The Tribunal held that cross-model utilisation of discounts is inadmissible under Section 4, but, finding no suppression warranting extended limitation, set aside the demand as time-barred and allowed the appeal on the ground of limitation for the period April 2012 to June 2014.

Classification by tariff heading - test of nomenclature, common parlance, principal function and primary purpose for classification - packing and wrapping paper versus boxes, pouches and wallets - extended period of limitation and requirement of suppression or intent to evade - penalty under section 11AC of the Central Excise Act, 1944

Classification by tariff heading - test of nomenclature, common parlance, principal function and primary purpose for classification - packing and wrapping paper versus boxes, pouches and wallets - Classification of the product known as 'surgical glove inner wrap' / 'inner wallet'. - HELD THAT: - The Tribunal examined the nature, design and function of the product as manufactured - printed paper cut to size and machine-folded, open on three sides, designed to enclose a pair of surgical/examination gloves to maintain sterility and to facilitate uncontaminated donning. Applying classification aids cumulatively (nomenclature, common parlance, principal function and primary purpose) the Tribunal held that the product's principal character is that of packing and wrapping paper and not a wallet in the sense of a securely closable holder containing an assortment of paper stationery. Dictionary-based meanings and trade usage were considered but rejected as decisive where they conflict with the product's functional character. On the facts and by application of those tests the Tribunal agreed with the adjudicating authority that the correct classification is under tariff heading 48239013 (packing and wrapping paper) and not under heading 48173090 (boxes, pouches, wallets and writing compendiums containing an assortment of paper stationery). [Paras 5, 6, 7, 8, 9]

Goods held classifiable under tariff heading 48239013 as packing/wrapping paper; classification under 48173090 rejected.

Extended period of limitation and requirement of suppression or intent to evade - penalty under section 11AC of the Central Excise Act, 1944 - Validity of demand under the extended period of limitation and imposition of penalty under section 11AC. - HELD THAT: - The appellant relied on prior correspondence and disclosures to the department to show that the activity and process were known to authorities and that there was no suppression of facts or intention to evade duty. Revenue disputed that contention. The Tribunal found that although the classification under heading 4817 was incorrect, the appellant could reasonably have considered that heading; there was no evidence of suppression or deliberate intention to evade duty. Consequently the extended period for raising demand could not be invoked and the demand was confined to the normal period with applicable interest. In view of absence of culpable suppression or evasion, the penalty imposed under section 11AC was set aside. [Paras 10, 11, 12]

Extended-period demand and penalty under section 11AC set aside; duty sustained only for the normal period with appropriate interest.

Final Conclusion: The Tribunal upheld classification of the 'surgical glove inner wrap' as packing/wrapping paper under tariff heading 48239013, rejected classification under heading 48173090, confined the duty demand to the normal limitation period with interest, and set aside the penalty under section 11AC; the appeal is partly allowed and disposed of accordingly.

Summary order. Special Leave Petitions dismissed for lack of case for interference; delay condoned; pending application disposed of.

Refund with interest - compensation for mental agony - state instrumentality duty to act fairly and reasonably - forum shopping and its exception in cases of desperation - RERA jurisdictional bar under Section 79 - possession and structural defects

Forum shopping and its exception in cases of desperation - RERA jurisdictional bar under Section 79 - Whether the writ petition was maintainable despite the Petitioner having approached RERA/NCDRC and the respondent's reliance on the bar under Section 79 of the RERA Act - HELD THAT: - The Court recognised that forum shopping is ordinarily condemned, but examined the factual context of a homebuyer who, having sunk life savings and being in desperate circumstances, approached multiple forums out of helplessness rather than to secure a tactical advantage. The Court held that the petitioner's recourse to various fora arose from desperation, frustration and lack of legal knowledge and therefore the State's objection of forum shopping could not be sustained to deny relief. The Court also noted that the respondent, being an instrumentality of the State, is subject to the obligations of fairness and reasonableness in dealing with homebuyers. The factual backdrop of structural defects, prolonged deprivation of money and failure to rehabilitate were treated as material in exercising jurisdiction under Article 226 despite the respondent's reliance on Section 79 of the RERA Act. [Paras 14, 15, 16, 20]

Writ petition entertained notwithstanding prior recourse to RERA/NCDRC; the bar under Section 79 did not preclude exercise of writ jurisdiction in the facts of this case.

Refund with interest - possession and structural defects - state instrumentality duty to act fairly and reasonably - Whether NBCC was liable to return the entire amount paid by the petitioner and to pay interest - HELD THAT: - The Court found that the petitioner had paid the entire consideration and had been deprived of possession for an extended period, that structural defects had been detected in the buildings, and that NBCC, as an instrumentality of the State, had failed to act fairly and rehabilitate the affected homebuyer. Having regard to the prolonged deprivation of the petitioner's monies and the public-authority character of the respondent, the Court directed return of the entire amount paid and awarded interest as compensation for the period during which the respondent held the money. The Court specified the rate and the period from which interest was to run. [Paras 17, 20, 21]

Respondent directed to refund the entire amount paid by the petitioner with interest at 12% per annum from 30.01.2021 until the date of payment.

Compensation for mental agony - state instrumentality duty to act fairly and reasonably - Whether the petitioner was entitled to compensation for mental agony, harassment and hardship caused by non-delivery and resultant displacement - HELD THAT: - The Court took note of the extreme hardship, displacement, prolonged uncertainty and mental anguish suffered by the petitioner who had invested life savings and was left without suitable accommodation. Emphasising the obligation of a State instrumentality to act in the public interest and not in an arbitrary manner, the Court concluded that monetary compensation was warranted to redress the non-pecuniary injuries suffered by the petitioner and to deter similar conduct by the respondent. [Paras 14, 16, 22]

Respondent directed to pay compensation for mental agony; the Court awarded compensation to the petitioner.

Contempt for non-compliance with court order - Whether contempt proceedings against NBCC for alleged non-compliance with earlier directions for interim payment/alternate accommodation should be continued - HELD THAT: - The contempt petition alleged violation of earlier orders directing payment of monthly interim assistance. The Court examined the material on record and found that payments had been made pursuant to the earlier order and that the respondent had taken steps to show alternative accommodations, although the petitioner remained dissatisfied with their value or vicinity. Having found that the respondent complied with the payment direction and made efforts to locate accommodation, the Court declined to proceed further in contempt. [Paras 4, 5, 6]

Contempt petition dismissed as the respondent had complied with the earlier order and payments had been made.

Final Conclusion: Writ petition allowed: NBCC directed to refund the entire amount paid to the petitioner with interest at 12% per annum from 30.01.2021 until payment, and to pay compensation for mental agony; contempt proceedings dismissed as payments under earlier orders were complied with.