TaxTMI Updates e-Newsletter
Jul 31,2023

Opportunity of hearing - refund of accumulated input tax credit in inverted duty structure - rejection of refund application for mismatch with GSTR-2A - restriction of refund to invoices reflected in FORM GSTR-2A - requirement to quantify admissible refund - remand for fresh consideration and speaking order

Opportunity of hearing - rejection of refund application for mismatch with GSTR-2A - Validity of rejection of the petitioner's refund applications without affording an opportunity to be heard where rejection was premised on mismatch with returns. - HELD THAT: - The Court found that the Adjudicating Authority and the Appellate Authority rejected the refund applications principally on the ground of mismatch with the petitioner's returns/GSTR 2A without affording the petitioner an opportunity to reconcile the differences or to be heard. The appellate order itself recorded various discrepancies but did not undertake any exercise to determine the quantum of refund admissible. The Court held that it is not permissible to summarily reject refund claims on the basis of alleged mismatches without permitting the taxpayer to explain, reconcile or scale down the claim and without quantifying the admissible portion. The absence of hearing and of any determination of the extent of admissible refund rendered the impugned orders unsustainable. [Paras 11, 12, 13]

The impugned Order in Appeal dated 18.11.2021 and the orders dated 31.12.2020 are set aside insofar as they rejected the refund applications without affording an opportunity to be heard and without determining admissible quantum.

Refund of accumulated input tax credit in inverted duty structure - restriction of refund to invoices reflected in FORM GSTR-2A - requirement to quantify admissible refund - remand for fresh consideration and speaking order - Procedure to be followed on remand for determination of admissible refund and reconciliation of claimed amounts with returns. - HELD THAT: - The Court directed that the petitioner's refund applications be restored to the Adjudicating Authority for fresh consideration. The petitioner was permitted to file a written explanation and reconciliation statements scaling down its claims and reconciling the quantum claimed with amounts disclosed in returns within two weeks. The Adjudicating Authority is required to consider any such explanation and reconciliation, verify admissibility (including restriction to ITC supported by invoices reflected in FORM GSTR 2A as per the circular relied upon), and pass a speaking order quantifying the refund payable. The remand contemplates determination of admissible amount after affording the petitioner an opportunity to be heard rather than summary rejection. [Paras 14]

The matters are remitted to the Adjudicating Authority for fresh adjudication after the petitioner is afforded an opportunity to be heard and to file reconciliation, and for the Adjudicating Authority to pass a speaking order determining the admissible refund.

Final Conclusion: The Court set aside the appellate and adjudication orders rejecting the petitioner's refund applications and restored the applications to the Adjudicating Authority for fresh consideration; the petitioner may file reconciliation and explanations within two weeks, and the Adjudicating Authority shall consider them and pass a speaking order determining the admissible refund.

Search under Section 67 of the CGST Act - seizure versus mere dispossession/possession without seizure - statutory authority and compliance with procedural rules - refund and restoration of property taken during search - premature encashment of fixed deposit held by revenue pending adjudication

Search under Section 67 of the CGST Act - seizure versus mere dispossession/possession without seizure - statutory authority and compliance with procedural rules - Respondents acted without lawful authority in taking possession of cash from the petitioner's locked room without recording any seizure and such dispossession is illegal. - HELD THAT: - The court recorded that, although there is a broader controversy whether currency can be seized under the CGST Act, it was unnecessary to decide that question on merits because the respondents themselves did not record any seizure of the cash. Instead the respondents took possession of the currency by what the court described as a practice of 'resume'-forcible dispossession without any statutory basis. The CGST regime requires authorities to act strictly in accordance with the statute and rules; there is no provision permitting dispossession of assets without a formal seizure. Consequently the respondents' continued possession of the currency collected from the petitioner's residence was unlawful and cannot be sustained. [Paras 8, 9, 10]

The action of the respondents in dispossessing the petitioner of the currency without recording seizure or any statutory authority is illegal and their continued possession of the currency cannot be permitted.

Refund and restoration of property taken during search - premature encashment of fixed deposit held by revenue pending adjudication - The cash placed in fixed deposit by the respondents must be returned to the petitioner and, subject to attendance and statements, the respondents shall take steps to encash and transfer the proceeds to the petitioner. - HELD THAT: - The record showed the currency taken from the petitioner's premises was deposited by the respondents in a fixed deposit account. Having found the possession impermissible, the court directed restitution. To avoid further controversy the court ordered the petitioner and the family member present during the search to appear before the designated officer on a specified date. If the family member does not dispute that the money belongs to the petitioner, the respondent shall immediately effect pre-mature encashment of the fixed deposit and transfer the proceeds to the petitioner's account. The order implements immediate refund/restoration while providing a limited procedural step (personal appearance and opportunity to the person present during the search) before encashment and transfer. [Paras 11, 14, 15]

Respondents are directed to refund the amount to the petitioner; the petitioner and the family member shall appear before the respondent on the stated date and, if the family member does not dispute ownership, respondent shall prematurely encash the fixed deposit and transfer the proceeds to the petitioner.

Final Conclusion: The petition is allowed: the respondents' retention of the cash taken from the petitioner's locked room without any recorded seizure or statutory authority is illegal and the respondents are directed to refund the amount, with procedural steps for appearance and, if uncontested, immediate premature encashment of the fixed deposit and transfer of proceeds to the petitioner.

Retrospective cancellation of GST registration - Cancellation of registration for non-filing of returns - Discretion under Section 29 of the Central Goods and Services Tax Act, 2017 - Arbitrariness in exercise of statutory power - Denial of Input Tax Credit to recipients on account of retrospective cancellation

Retrospective cancellation of GST registration - Cancellation of registration for non-filing of returns - Arbitrariness in exercise of statutory power - Validity of cancelling the petitioner's GST registration with retrospective effect to 02.07.2017 when the show cause notice grounded cancellation on non-filing of returns. - HELD THAT: - The adjudicating authority cancelled registration retrospectively to 02.07.2017 though the Show Cause Notice dated 30.06.2021 proposed cancellation on the ground of non-filing of returns. There is no material on record justifying retrospective cancellation to the date of grant of registration and the retrospective effect has cascading consequences including denial of Input Tax Credit to recipients. While Section 29 confers a discretion to fix the retrospective date, that power is not unfettered and cannot be exercised arbitrarily. The petitioner had regularly filed returns up to 30.06.2019 and had asserted that he ceased business from June 2019; absent any contrary material, non-filing after cessation of business does not warrant cancellation back to the date of registration. The orders under challenge were passed belatedly and in a mechanical manner without applying mind to the petitioner's claim of having closed his business in June 2019. [Paras 12, 13, 14, 15, 16]

Retrospective cancellation to 02.07.2017 is unjustified and cannot be sustained.

Cancellation of registration for non-filing of returns - Remand for verification - Discretion under Section 29 of the Central Goods and Services Tax Act, 2017 - Relief to be granted and further course of action-whether the petitioner's cancellation application should be processed for effect from 30.06.2019 and whether authorities may verify earlier periods. - HELD THAT: - Having found that retrospective cancellation to the date of registration was not justified on the material before the Adjudicating Authority, the Court directed that the petitioner's application for cancellation be processed with effect from 30.06.2019. This direction is subject to the petitioner furnishing any information relating to the period prior to 30.06.2019 if required by the authorities. The authorities are, however, not precluded from taking appropriate action if, on verification, it is found that the petitioner continued business beyond 30.06.2019 or violated statutory provisions. Thus the matter is remitted to the concerned authorities to process the cancellation application in accordance with this order and to verify antecedent facts only to the extent necessary. [Paras 17, 18]

The petitioner's cancellation application shall be processed to effect cancellation from 30.06.2019, subject to verification of any material relating to prior periods; authorities may take further action if it is found that business continued beyond that date.

Final Conclusion: The petition is allowed; the adjudicating authority's retrospective cancellation to 02.07.2017 is set aside and the authorities are directed to process the petitioner's application to cancel registration with effect from 30.06.2019, subject to verification of earlier periods and without prejudice to any action if it is found that the petitioner carried on business beyond 30.06.2019.

Refund of input tax credit on export of services - zero rated supply of services - application of intercompany master services agreement - finding on whether services were rendered - remand for fresh adjudication - beneficial stand cannot be retracted

Finding on whether services were rendered - application of intercompany master services agreement - refund of input tax credit on export of services - Matter remitted for fresh adjudication to determine whether services were rendered in December 2017 and to apply Clause-2 of the Intercompany Master Services Agreement while deciding the refund claim. - HELD THAT: - The Court found that the determinative factual question is whether the petitioner actually rendered the services in December 2017, noting that invoices for those services were not raised in December but were subsequently reported in March 2018. The earlier adjudication rejected the refund on the basis that the documents were mere adjustment bills and not evidence of service activity; however, the High Court observed that a specific finding on whether services were rendered in December 2017 and appropriate consideration of Clause-2 of the Intercompany Master Services Agreement (which prescribes the method of computing remuneration) are necessary to resolve the dispute. The Court therefore set aside the impugned orders and remitted the matter to respondent No.2 for fresh adjudication limited to recording a finding on these aspects. The remand is subject to the stipulation that any stand previously taken in favour of the assessee during earlier proceedings cannot be retracted by the Revenue when adjudicating afresh.

Impugned orders set aside and matter remitted to respondent No.2 for fresh adjudication to record a finding whether services were rendered in December 2017 and to apply Clause-2 of the agreement; earlier beneficial stands of the assessee shall not be retracted.

Final Conclusion: The orders under challenge are set aside and the matter is remitted to respondent No.2 for fresh adjudication limited to recording whether the services were rendered in December 2017 and considering Clause-2 of the Intercompany Master Services Agreement; any earlier stand beneficial to the petitioner shall not be retracted.

Opportunity of hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017 - show cause notice and requirement of personal hearing before passing adverse order - quashing and setting aside of administrative orders for non-provision of hearing - challenge to vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017

Opportunity of hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017 - show cause notice and requirement of personal hearing before passing adverse order - quashing and setting aside of administrative orders for non-provision of hearing - Whether the petitioner was entitled to an opportunity of personal hearing under Section 75(4) before passing adverse orders on the show cause notices dated 03.02.2023, and whether the orders dated 05.06.2023 should be set aside for failure to grant such hearing. - HELD THAT: - The court noted that Section 75(4) requires that an opportunity of hearing be granted when a written request is received from a person chargeable with tax or penalty before an adverse order is passed in proceedings initiated by a show cause notice under Section 74. The petitioner replied and clicked the option for personal hearing but was not afforded such hearing. The Senior Deputy Advocate General did not dispute the applicability of Section 75(4). In view of the statutory requirement and precedents where similar relief was granted, the court directed the respondents to grant the petitioner an opportunity of hearing on the show cause notices and to pass a fresh order in accordance with law, and therefore set aside the impugned orders dated 05.06.2023. [Paras 6]

Direction issued to respondents to grant personal hearing on the show cause notices and to pass fresh orders; orders dated 05.06.2023 set aside.

Challenge to vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - Whether the challenge to the vires of Section 16(2)(c) was finally adjudicated. - HELD THAT: - The court expressly refrained from deciding the vires challenge asserted by the petitioner against Section 16(2)(c) and kept that issue open for consideration. No adjudication on the merits of the constitutional or vires plea was undertaken in this order. [Paras 6]

The question of the vires of Section 16(2)(c) is left open for determination; not finally decided in this petition.

Final Conclusion: Petition disposed by directing respondents to grant the petitioner a personal hearing on the show cause notices dated 03.02.2023 and to pass fresh orders in accordance with law; the orders dated 05.06.2023 are set aside; the challenge to the vires of Section 16(2)(c) remains undetermined and is kept open.

Eligibility and conditions for taking input tax credit - Time limit for claiming input tax credit - Non-obstante clause and its scope - Input tax credit as a concession/benefit and not a vested right - Statutory interpretation - text and context - Constitutional challenge under Article 14, Article 19(1)(g) and Article 300A - Principles of natural justice and show-cause procedure

Time limit for claiming input tax credit - Input tax credit as a concession/benefit and not a vested right - Constitutional challenge under Article 14, Article 19(1)(g) and Article 300A - Validity of Section 16(4) prescribing a time limit for claiming ITC and its challenge under Articles 14, 19(1)(g) and 300-A of the Constitution - HELD THAT: - The Court examined the scheme of Section 16 (eligibility in sub s (2); restrictions in sub ss (3) and (4)) and held that ITC is a statutory concession/benefit subject to conditions. Reliance on precedents established that taxing statutes and concessions must be interpreted strictly and that the legislature may prescribe conditions, including time limits, for availing concessions. The Court found no arbitrariness in prescribing a cut off for claims; the operative spheres of the constitutional provisions relied upon are distinct from the fiscal limitation under Section 16(4). Authorities upholding analogous time prescriptions for ITC claims were treated as persuasive. Consequently, Section 16(4) is not unconstitutional on the grounds pleaded. [Paras 27]

Section 16(4) is not violative of Articles 14, 19(1)(g) or 300-A and is constitutionally valid.

Non-obstante clause and its scope - Eligibility and conditions for taking input tax credit - Time limit for claiming input tax credit - Whether the non obstante clause in Section 16(2) overrides or nullifies the time limit in Section 16(4) - HELD THAT: - The Court analysed the purpose and ordinary meaning of Section 16(2) and (4). Section 16(2), though beginning with a non obstante clause, operates as a restricting provision specifying eligibility conditions and does not enable ITC per se (that function is in sub s (1)). A non obstante clause gives overriding effect only where a true conflict exists. Since sub s (2) and sub s (4) are complementary restricting provisions with no inconsistency, sub s (2) cannot be construed to override or nullify the temporal restriction imposed by sub s (4). The legislature's insertion of an express time limit in sub s (4) confirms the intent to impose temporal limitation independent of eligibility conditions. [Paras 27]

Section 16(2) does not override Section 16(4); both operate independently.

Eligibility and conditions for taking input tax credit - Time limit for claiming input tax credit - Whether acceptance of belated Form GSTR-3B filed with payment of late fee absolves delay in claiming ITC beyond the period in Section 16(4) - HELD THAT: - The Court held that filing of GSTR 3B with payment of late fee admits the return for assessment of taxable turnover but does not operate as a licence to circumvent independent statutory conditions for claiming ITC. The conditions in Section 16(2) and the temporal bar in Section 16(4) operate independently; collection of late fee cannot be treated as validating an otherwise time barred ITC claim. [Paras 27]

Acceptance of return with late fee does not exonerate delay in claiming ITC beyond the period specified in Section 16(4).

Principles of natural justice and show-cause procedure - Eligibility and conditions for taking input tax credit - Whether the assessment/summary order dated 14.03.2022 was vitiated by defective service of show cause notice or denial of opportunity to be heard - HELD THAT: - The Court reviewed the impugned assessment order and the departmental record indicating that the petitioner was issued show cause notice, filed written objections, and was accorded personal hearing. The 1st respondent discussed and rejected the petitioner's multiple factual and legal objections in the assessment order. On that review the Court found no merit in the contention that procedure under the GST rules or principles of natural justice were breached so as to vitiate the order. [Paras 28]

The challenge to service and hearing was rejected; the assessment/order is not vitiated on procedural grounds.

Final Conclusion: The writ petition is dismissed. The Court upheld the constitutionality and operation of Sections 16(2) and 16(4) as independent provisions, held that belated filing with late fee does not validate time barred ITC claims, and found no procedural illegality in the assessment; no costs.

Appeal within prescribed period under Section 107 - Condonation of delay - Communication of order as triggering limitation - Service of notice through web portal versus physical service

Appeal within prescribed period under Section 107 - Condonation of delay - Appellate Authority's power to admit appeals beyond the statutory period of three months plus the one month extension under Section 107 - HELD THAT: - The Court examined Section 107(1) and (4) and held that the statute prescribes an original period of three months from communication of the order and an additional extension of one month where the Appellate Authority is satisfied that the appellant was prevented by sufficient cause. The provision does not confer any power on the Appellate Authority to condone delay beyond the three months plus one month period; computation of the period begins from the date the decision or order is communicated to the aggrieved person. Consequently, no further statutory power for condonation exists beyond the express one month extension in Section 107(4). [Paras 3]

Appellate Authority cannot condone delay beyond the three months plus one month period fixed by Section 107; limitation runs from communication of the order.

Service of notice through web portal versus physical service - Applicability of Madras High Court's decision permitting simultaneous physical service during initial GST implementation to the present facts - HELD THAT: - The Court noted the Madras High Court's earlier direction allowing simultaneous physical service during the initial teething problems of the GST regime. It concluded that those directions were context-specific to the early implementation phase of GST and were intended as a temporary measure. Given that the present matter relates to 2023, nearly six years after implementation, the Court held that the teething issues envisaged earlier are no longer prevalent and the limited exception recognized by the Madras High Court does not assist the petitioner in the present case. [Paras 5]

Madras High Court's interim practice for physical service during early GST implementation does not apply to the present 2023 case.

Communication of order as triggering limitation - Condonation of delay - Determination of the date of communication of the impugned order and consequent question of limitation and merits of appeal - HELD THAT: - The Court found that the date on which the impugned order was communicated to the petitioner is a disputed question of fact that must be determined by the competent Appellate Authority. The Court declined to enter into the merits and instead remitted the matter: the petitioner is to be relegated to file an appeal before the Appellate Authority which shall first decide the date of communication and then determine whether the appeal was filed within the statutory period; if found within limitation and no other legal bar exists, the Appellate Authority shall decide the appeal on its merits. [Paras 4, 6, 7]

Issue of communication date remitted to Appellate Authority to decide limitation; if appeal is within time, merits to be decided by that Authority.

Final Conclusion: Impugned order dated 09.01.2023 is set aside. Petitioner is relegated to file an appeal before the Competent Appellate Authority which shall first determine the date of communication, decide the question of limitation in accordance with Section 107, and if within time and no other bar exists, proceed to decide the appeal on merits; petition is disposed with liberty to that effect.

Detention, seizure and release of goods under GST - challenge to order in Form GST MOV-09 - non-application of mind in administrative orders - appellate remedy under GST enactments - valuation of goods for tax purposes - e-way bill requirement and threshold

Detention, seizure and release of goods under GST - challenge to order in Form GST MOV-09 - non-application of mind in administrative orders - appellate remedy under GST enactments - Validity of the impugned order in Form GST MOV-09 detaining the consignments and the contention that the order is a cyclostyled non-speaking order warranting quashing - HELD THAT: - The High Court declined to quash the impugned order. Observing that there are several disputed questions (notably relating to value) which require consideration, the Court found that no prejudice would be caused if the petitioner availed the statutory appellate remedy. Rather than undertake a detailed merits adjudication, the Court dismissed the writ petition while granting liberty to file the statutory appeal within thirty days. The Court directed the appellate authority to dispose of the appeal as expeditiously as possible, preferably within three months. The Court further recorded that if the petitioner succeeds in the appeal, amounts deposited for release of goods shall be released or adjusted in accordance with law. [Paras 12, 13, 14, 15]

Writ petition dismissed; petitioner granted liberty to file statutory appeal within thirty days and appellate authority directed to dispose expeditiously; deposit to be released or adjusted if appeal succeeds.

Valuation of goods for tax purposes - e-way bill requirement and threshold - appellate remedy under GST enactments - Dispute as to the declared value of the tobacco leaves and the related contention that no e-way bill was required because invoice values were below the threshold - HELD THAT: - The Court noted conflicting contentions on valuation - the petitioner relying on supplier invoices showing a lower per-kilogram price and the department asserting a much higher market value - and observed a 'shadow of doubt' that cannot be resolved on writ petition. The question whether the e-way bill was required (given invoice values assertedly below the statutory threshold) and the correctness of the declared value were left to be examined in the statutory appellate/fact-finding process rather than decided in the writ proceeding. The Court therefore refrained from resolving these factual and valuation disputes and directed the petitioner to pursue the appellate remedy. [Paras 6, 10, 12, 13]

Valuation and e-way bill disputes not decided; left for consideration in the statutory appeal/appellate forum.

Final Conclusion: The writ petition challenging the detention and levy recorded in Form GST MOV-09 is dismissed; the petitioner is granted liberty to file a statutory appeal within thirty days, the appellate authority is directed to decide it expeditiously (preferably within three months), and any amounts deposited for release of goods shall be released or adjusted in accordance with law if the petitioner succeeds.

Quashing of FIR under Section 482 of the Code of Criminal Procedure - exercise of inherent powers to prevent abuse of process of law - scope of investigation by police into cognizable offences - prima facie satisfaction and refraining from adjudicating merits at investigation stage - parameters for interim relief and stay of investigation as laid down in Neeharika Infrastructure - commercial or mercantile disputes as a relevant consideration for quashing

Quashing of FIR under Section 482 of the Code of Criminal Procedure - scope of investigation by police into cognizable offences - prima facie satisfaction and refraining from adjudicating merits at investigation stage - The petition for quashing the FIR and all consequential proceedings was dismissed. - HELD THAT: - The Court applied the settled principles governing exercise of inherent powers under Section 482 Cr.P.C., including the parameters set out in Neeharika Infrastructure. Police possess the statutory right and duty to investigate cognizable offences and courts should not thwart such investigation unless the FIR discloses no cognizable offence. At the investigation stage the court must ordinarily refrain from probing reliability or genuineness of allegations and avoid adjudicating merits. The investigation in the present matter was ongoing and at a crucial stage; the allegations - relating to mis-declaration of goods, absence of e-way bills, alleged forgery and cheating with consequent evasion of GST - were such that the petitioners' involvement could not be prima facie ruled out. Given these circumstances and the need for judicial restraint, the Court concluded that this was not a fit case for exercise of the power to quash the FIR.

Petition dismissed; FIR and investigation to continue.

Final Conclusion: The High Court refused to exercise its inherent powers to quash the FIR, observing that prima facie allegations disclose cognizable offences and that the investigation, being at a crucial stage, ought not to be interfered with; the petition is dismissed.

Temporary mandatory injunction - crystallization of tax liability - undertaking to deposit disputed tax - deposit in court pending determination - withdrawal of deposited amount subject to restoration - possession of permanent alternate accommodation - expeditious adjudication of pending suit

Crystallization of tax liability - undertaking to deposit disputed tax - deposit in court pending determination - Plaintiff to deposit amount of GST in the trial court upon a demand by the competent authority being communicated by the Defendant - HELD THAT: - The Court noted that the liability to pay GST had not yet crystallized and, on the Plaintiff's undertaking to deposit any GST demanded by the competent authority, directed that the Plaintiff shall deposit the amount before the trial court within two weeks of the Defendant conveying the written demand. The undertaking was accepted as sufficient to permit interim relief while leaving the substantive question of liability to be adjudicated by the trial court. [Paras 6, 12]

Deposit of GST by the Plaintiff in the trial court on receipt of a communicated demand is directed.

Withdrawal of deposited amount subject to restoration - deposit in court pending determination - Respondent permitted to withdraw the deposited amount and deposit it with tax authorities subject to an undertaking to restore the amount if the Plaintiff succeeds - HELD THAT: - Respondent's concern about coercive action under the GST law and the accrual of interest/penalty was addressed by permitting the Respondent to apply to the trial court to withdraw the amount and deposit it with the tax authorities, provided the Respondent gives an undertaking to bring back the amount if the trial court ultimately holds for the Plaintiff. This balances the Respondent's exposure to statutory consequences with the Plaintiff's right to restoration if successful. [Paras 8, 12]

Respondent may withdraw the deposited amount for payment to tax authorities on giving an undertaking to restore it if the Plaintiff prevails.

Possession of permanent alternate accommodation - temporary mandatory injunction - Respondent to hand over possession of the permanent alternate accommodation in accordance with the agreement within two weeks - HELD THAT: - Although the City Civil Court had refused the interim application observing that mandatory relief is exceptional, the High Court, relying on the factual position that occupation certificate was obtained and the Plaintiff was denied possession under the agreement, directed handover of possession in accordance with the agreement within two weeks. The substantive entitlement to accommodation remains for final adjudication, but immediate possession was ordered on the terms imposed. [Paras 10, 12]

Respondent directed to hand over possession of the permanent alternate accommodation as per the agreement within two weeks.

Temporary mandatory injunction - undertaking to deposit disputed tax - Plaintiff to pay other amounts claimed by the Respondent in the letter dated 15 July 2022 subject to the trial court's decision - HELD THAT: - The Court left the question of other charges claimed by the Respondent (share money, society registration, meters, proportional development charges) to be determined by the trial court and directed that the Plaintiff shall pay those amounts only subject to the decision of the trial court, thereby preserving the parties' substantive rights for final adjudication. [Paras 2, 12]

Payment of other amounts claimed is ordered subject to the trial court's decision.

Expeditious adjudication of pending suit - Trial court requested to expedite hearing and endeavour to decide the suit on or before 31 March 2024 - HELD THAT: - Recognizing the need for prompt resolution given possession, payment and tax issues, the High Court requested the trial court to expedite hearing of the suit and make an endeavour to decide it by the specified date, thereby directing judicial expedition without predetermining the substantive outcome. [Paras 12]

Trial court requested to expedite hearing and aim to decide the suit by 31 March 2024.

Final Conclusion: The appeal is disposed by accepting the Plaintiff's undertaking and imposing interim terms: Plaintiff to deposit any GST demanded (within two weeks of communication); Respondent may withdraw the deposited amount for payment to tax authorities on giving an undertaking to restore if the Plaintiff prevails; Respondent to hand over permanent alternate accommodation within two weeks; payment of other claimed amounts to await trial court decision; and the trial court is requested to expedite and endeavour to decide the suit by 31 March 2024.

Advance ruling - supply being undertaken or proposed to be undertaken - admissibility of application - out of the purview of advance ruling - binding effect of advance ruling

Advance ruling - supply being undertaken or proposed to be undertaken - admissibility of application - out of the purview of advance ruling - Whether the Authority for Advance Ruling can pronounce a ruling where the questions relate to supplies already undertaken and on which GST has been paid and returns filed prior to filing the application. - HELD THAT: - The Authority examined the scope of advance ruling under the GST Chapter (Sections dealing with advance rulings) and held that its jurisdiction is confined to matters in relation to supplies that are being undertaken or are proposed to be undertaken by the applicant. The purpose of advance ruling is to provide certainty in advance about tax liability for future or proposed transactions. Where the applicant seeks clarification about transactions already undertaken, with GST paid and returns filed, those matters fall outside the authority's jurisdiction. The Authority observed that the applicant filed the application long after commencing the relevant activities and failed to disclose prior practice; the questions were therefore matters already settled in practice and not ambiguous in law. Consequently, without addressing the merits, the application was not admitted for a ruling because the questions related to past supplies.

Application not admitted for adjudication; no ruling pronounced because the questions relate to supplies undertaken prior to filing and are outside the scope of advance ruling.

Final Conclusion: The Authority declined to pronounce an advance ruling because the questions concern supplies already undertaken and GST liabilities already discharged; the matter is therefore out of the purview of the Advance Ruling Authority and no ruling on the merits is provided.

Anti-profiteering under Section 171 of the CGST Act, 2017 - benefit of input tax credit - investigation under Rule 133(5) of the CGST Rules, 2017 - determination of profiteering

Anti-profiteering under Section 171 of the CGST Act, 2017 - investigation under Rule 133(5) of the CGST Rules, 2017 - determination of profiteering - Whether the Respondent had executed any projects other than 'U Faria' and whether the provisions of Section 171 of the CGST Act, 2017 are attracted to such other projects. - HELD THAT: - Pursuant to the National Anti profiteering Authority's direction, the DGAP investigated projects other than 'U Faria' for the period stated in the report. The DGAP issued notice under the Rules and received the Respondent's assertion that no project other than 'U Faria' was executed. The DGAP verified RERA records online and obtained confirmation from the State Tax authority, each indicating no other projects under the same GSTIN. On this basis the DGAP concluded that no other construction projects were undertaken by the Respondent and that Section 171(1), requiring passing on of reduction in tax rate or benefit of input tax credit, did not apply to any other project. The Commission considered the DGAP's report and corroborative material and accepted the DGAP's findings that no other projects exist and no further profiteering enquiry under Section 171 is warranted. [Paras 6, 7, 8]

No other projects were executed by the Respondent; Section 171 is not attracted to any projects other than 'U Faria', and proceedings against the Respondent in respect of other projects are dropped.

Final Conclusion: On the DGAP's investigation and corroborative material the Commission found no projects other than 'U Faria' under the Respondent's GSTIN; consequently, no further anti profiteering action under Section 171 of the CGST Act, 2017 was required and the proceedings regarding other projects were dropped.

Section 171 of the CGST Act, 2017 - benefit of input tax credit - anti-profiteering investigation under Rule 133(5) of the CGST Rules, 2017 - RERA registration as corroborative evidence

Section 171 of the CGST Act, 2017 - benefit of input tax credit - anti-profiteering investigation under Rule 133(5) of the CGST Rules, 2017 - Whether the respondent had profiteered in projects other than 'JKG Palm Court' so as to attract the obligations under Section 171 and require further proceedings. - HELD THAT: - Pursuant to the NAA direction under Rule 133(5), the DGAP investigated projects other than 'JKG Palm Court' for the period 01.07.2017 to 30.09.2022. The DGAP issued a Rule 129 notice, received the respondent's denial of any other projects, and verified registrations on the UP RERA website. The DGAP also sought and received confirmation from the State Tax authority that no projects other than 'JKG Palm Court' were being executed by the respondent. The DGAP therefore concluded that no other projects existed and that profiteering had already been determined in respect of 'JKG Palm Court' by NAA Order No. 80/2022 dated 30.09.2022. In light of these findings, the Commission held that the statutory obligation in Section 171 to pass on the benefit of input tax credit did not arise in respect of any other projects and that no further anti-profiteering proceedings were warranted. [Paras 5, 6, 7, 8]

Proceedings in respect of projects other than 'JKG Palm Court' are dropped as Section 171 is not attracted.

Final Conclusion: On the DGAP's investigation and corroborative material (UP RERA records and State Tax reply), no project other than 'JKG Palm Court' was found; since profiteering had already been determined for 'JKG Palm Court', the Commission concluded that Section 171 did not apply to any other project and accordingly dropped the proceedings.

Benefit of Input Tax Credit - passing on of benefit to recipients under Section 171 of the CGST Act - investigation under Section 171 of the CGST Act and Rule 133(4) of the CGST Rules - binding effect of an approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code - extinguishment of pre-CIRP liabilities by an approved resolution plan - liability of a resolution applicant/new management for pre-approval statutory dues

Benefit of Input Tax Credit - passing on of benefit to recipients under Section 171 of the CGST Act - extinguishment of pre-CIRP liabilities by an approved resolution plan - binding effect of an approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code - Proceedings against M/s Puma Realtors Pvt. Ltd. under Section 171 of the CGST Act in respect of project 'Ireo Rise' after NCLT approval of the resolution plan. - HELD THAT: - The Commission held that the NCLT order dated 01.06.2021 approving the resolution plan under Section 31 of the Insolvency and Bankruptcy Code extinguishes liabilities of the corporate debtor to the extent such liabilities were not provided for in the approved resolution plan. Consequently, any claim regarding non-passing of the benefit of Input Tax Credit by M/s Puma Realtors Pvt. Ltd. for the project 'Ireo Rise' would not survive if that liability was not incorporated in the approved plan. The Commission further accepted that the Resolution Applicant (new management) cannot be held liable for actions of the pre-CIRP management where the approved resolution plan and the NCLT order operate to bind and extinguish such liabilities. [Paras 6]

Proceedings against M/s Puma Realtors Pvt. Ltd. under Section 171 are discontinued in view of the NCLT order approving the resolution plan which extinguishes the said liabilities.

Investigation under Section 171 of the CGST Act and Rule 133(4) of the CGST Rules - liability of a resolution applicant/new management for pre-approval statutory dues - benefit of Input Tax Credit - Whether M/s One Group Developers (the resolution applicant/new management) should be investigated for compliance with Section 171 of the CGST Act in respect of the 'Ireo Rise' project. - HELD THAT: - The Commission noted material showing that M/s One Group Developers took over management pursuant to the NCLT order and is collecting outstanding installments and GST from homebuyers while the project remains under execution and Completion Certificate is yet to be issued. Given that the new management is collecting consideration and availing/collecting GST, the Commission found it prima facie liable to pass on any benefit of Input Tax Credit that may have accrued to it. Accordingly, the Commission directed the DGAP to investigate M/s One Group Developers for any violation of Section 171 of the CGST Act and the Rules. [Paras 6]

DGAP directed to investigate M/s One Group Developers with regard to the project 'Ireo Rise' for any violation of Section 171 of the CGST Act and the Rules.

Final Conclusion: The Commission discontinued proceedings against the erstwhile promoter M/s Puma Realtors Pvt. Ltd. on account of extinguishment of liabilities by the NCLT approved resolution plan, and directed the DGAP to investigate the new management, M/s One Group Developers, for possible contravention of Section 171 of the CGST Act in respect of the ongoing 'Ireo Rise' project.

Assessment u/s 153C - Assumption of jurisdiction and the scope of the additions - incriminating material qua the Assessee found or not? - HELD THAT:- As stated at the Bar that the special leave petition could be disposed of in terms of the judgment of this Court in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT]

Submission of the respective parties is placed on record.

Following the aforesaid judgment/order of this Court, the special leave petition stands dismissed.

Reasonableness of limitation period where statute is silent - limitation in relation to tax deducted at source (TDS) - inference of reasonable period from scheme of the statute - legislative prescription of limitation as indicia of reasonable time - effect of remand and merger of orders

Reasonableness of limitation period where statute is silent - limitation in relation to tax deducted at source (TDS) - inference of reasonable period from scheme of the statute - Assessment orders under Sections 201(1) and 201(1A) passed after four years were liable to be set aside as beyond a reasonable period despite absence of an express statutory limitation. - HELD THAT: - The Court held that where a statute prescribes no express period of limitation, the Department is nevertheless bound not to act after the expiry of a reasonable period. The reasonable period is to be discerned from the scheme and provisions of the statute; several High Courts had treated four years as the reasonable period under the Income Tax Act in comparable cases. The subsequent legislative enactment prescribing specific limitation periods (initially four years, later extended) corroborates that four years is a reasonable timeframe and reflects Parliament's view on the matter; this legislative development, while not operative retroactively to the subject orders, supports the principle that the Department should not be permitted to operate beyond a reasonable period. In the circumstances of these appeals, the Tribunal was justified in setting aside the Assessing Officer's orders dated 27.04.2007 as being passed beyond a reasonable period for the assessments arising out of the financial years indicated. [Paras 4, 5, 7, 8, 9]

Tribunal rightly set aside the orders under Section 201 passed after four years as beyond a reasonable period; appeals by Revenue on this ground are rejected.

Effect of remand and merger of orders - Remand by the Tribunal did not operate as a merger preventing the assessee from raising the limitation contention afresh if the Assessing Officer on remand passed an order prejudicial to the assessee. - HELD THAT: - The Court agreed with the Tribunal's finding that the earlier Tribunal had noted the limitation plea and remanded the matter without deciding that point, leaving the issue open to be agitated again if an adverse order were passed on remand. Therefore there was no impermissible merger extinguishing the assessee's right to raise the contention on the subsequent adjudication. [Paras 6]

No question of law arises from the contention of merger; the Tribunal correctly left the limitation issue open on remand.

Final Conclusion: Appeals by the Revenue are dismissed; the Tribunal's order setting aside the Assessing Officer's orders as passed beyond a reasonable period is affirmed and the remand did not preclude the assessee from raising the limitation plea again.

Condonation of delay - genuine hardship under Section 119(2)(b) of the Income Tax Act - prima facie correctness and genuineness of the refund claim - natural justice - right to be heard and disclosure of adverse material - requirement that a Board order be passed and signed by the competent Member(s) - remand for de novo consideration - justice-oriented approach preferring substantive justice over technical bar

Requirement that a Board order be passed and signed by the competent Member(s) - condonation of delay - Validity of the impugned order dated 24th December 2020 insofar as it records approval by a Member of the Board but appears to have been passed and issued by a Director without the Member's consideration or signature. - HELD THAT: - The court found that the impugned order's concluding sentence claiming approval of the Member (TPS & Systems), CBDT, is not supported by the circulation list or the material, which shows the order was issued by a Director and was not sent to the Member whose approval is purported. This procedural defect indicates the order was not in fact passed by the Member and, on that ground alone, the order must be quashed and set aside. The court directed that the Board/Member who decides afresh must themselves pass and sign the order; the order cannot be passed by another officer merely with retrospective approval. [Paras 6, 11]

Impugned order quashed and set aside for want of proper authorisation; matter remitted for fresh decision by the competent Member who must sign the order.

Genuine hardship under Section 119(2)(b) of the Income Tax Act - prima facie correctness and genuineness of the refund claim - natural justice - right to be heard and disclosure of adverse material - justice-oriented approach preferring substantive justice over technical bar - Whether the Board correctly rejected the petitioner's request to condone delay in filing the return and to consider the refund claim on merits. - HELD THAT: - The court held that the Board failed to consider the condonation request in its proper perspective. The impugned order relied on field authority remarks adverse to the petitioner without disclosing those statements or giving the petitioner an opportunity to respond; principles of natural justice required disclosure and an opportunity to be heard (including personal or video hearing). Citing precedent, the court observed that "genuine hardship" under Section 119(2)(b) must be construed liberally to advance substantive justice and that authorities need only be satisfied that the applicant has a prima facie correct and genuine refund claim (not to prejudge merits). Given these deficiencies, the court remitted the matter to the Board to decide afresh the questions of hardship and the prima facie correctness and genuineness of the refund claim, keeping all rights and contentions open and directing that a personal hearing be granted. [Paras 7, 8, 9, 10]

Rejection of condonation was set aside; matter remitted for de novo consideration of hardship and prima facie correctness of the refund claim with disclosure, opportunity of personal hearing and application of a justice-oriented, liberal approach to 'genuine hardship'.

Final Conclusion: Order dated 24th December 2020 is quashed and set aside; the matter is remitted to the Board for de novo consideration of condonation and the refund claim, with disclosure of adverse material, grant of personal hearing, and the fresh order to be passed and signed by the competent Member of the Board; all rights and contentions are kept open.

Non-application of mind - validity of approval under Section 153D - mechanical approval - quashing of assessment under Section 153A read with Section 143(3) - substantial question of law

Validity of approval under Section 153D - non-application of mind - mechanical approval - Approval granted by the Additional Commissioner of Income Tax under Section 153D was invalid because it was given mechanically and without application of mind. - HELD THAT: - The Tribunal found that the Addl. CIT granted approval after perusing only the draft assessment order and without examining assessment records or search material, thereby failing to notice material discrepancies in the figures relied upon by the Assessing Officer. The High Court accepted these factual findings as recorded by the Tribunal and agreed that the approval was given in a mechanical manner and without application of mind; consequently, the approval under Section 153D was held to be invalid and vitiated the consequent assessment order framed under Section 153A read with Section 143(3). The Court treated the issue as one of fact and endorsed the Tribunal's conclusion that the defect could not be cured as a mere immaterial error. [Paras 15]

Approval under Section 153D was invalid due to non-application of mind and mechanical approval, rendering the assessment order vitiated.

Substantial question of law - quashing of assessment under Section 153A read with Section 143(3) - Whether a substantial question of law arises for the High Court's consideration in respect of the Tribunal's quashing of the assessment. - HELD THAT: - The High Court examined the Tribunal's findings, which were factual in nature, notably the conclusion that the Addl. CIT did not apply his mind in granting approval under Section 153D. Having regard to those findings of fact and the legal effect attributed to them by the Tribunal (i.e., that the assessment order must be quashed), the Court concluded that no substantial question of law was presented for its consideration. The Court therefore declined to interfere with the Tribunal's order. [Paras 14, 15, 16]

No substantial question of law arises; the High Court will not interfere with the Tribunal's order quashing the assessment.

Final Conclusion: The High Court dismissed the revenue's appeal, upheld the Tribunal's finding that approval under Section 153D was given mechanically and without application of mind thereby vitiating the assessment under Section 153A read with Section 143(3), and held that no substantial question of law arises for interference.

Reopening of assessment under Section 147 - change of opinion - valid reasons to believe that income has escaped assessment - failure to disclose material facts necessary for assessment - internal audit objection / factual error pointed out by internal party - acceptance of income in original assessment after scrutiny - precedent of CIT v. Kelvinator India Limited

Reopening of assessment under Section 147 - change of opinion - internal audit objection / factual error pointed out by internal party - acceptance of income in original assessment after scrutiny - Reopening the assessment for AY 2014-15 was invalid as it amounted to a change of opinion where the Assessing Officer had earlier examined and accepted the claimed expenses in the original assessment. - HELD THAT: - The Assessing Officer had scrutinised the assessee's submissions and documents and completed the assessment under Section 143(3), expressly noting examination and acceptance of the income returned. The subsequent initiation of proceedings under Section 147 was founded only on an audit objection/factual error pointed out by the internal audit. As the court observed, settled law requires the Assessing Officer to have 'reasons to believe'-based on new material or a failure to disclose material facts-that income has escaped assessment; mere re-examination or verification prompted by an audit objection, where the original assessment had already accepted the claims after scrutiny, constitutes impermissible change of opinion. Applying the principle in CIT v. Kelvinator India Limited , the Tribunal correctly held that the reopening lacked the necessary legal foundation and was therefore invalid. [Paras 7, 8]

Reopening of assessment was a change of opinion and invalid; the Tribunal's order annulling the reopened assessment is upheld.

Final Conclusion: The tax case appeal is dismissed; the Tribunal rightly held that reopening the assessment for AY 2014-15, prompted only by an internal audit objection after the original assessment had accepted the claims, amounted to an invalid change of opinion.

Writ of Mandamus - payment in installments - settlement of tax dues by a wound-up company - official liquidator - assessment order under Section 143(1)(a) of the Income Tax Act, 1961 - interest under Section 220(2)

Payment in installments - settlement of tax dues by a wound-up company - interest under Section 220(2) - Petitioner permitted to pay assessed tax and interest in installments as per respondent's calculation sheet, with modification of the first installment into two parts - HELD THAT: - The petitioner company, which has been wound up and whose affairs are under the official liquidator, was unable to discharge the tax demand raised by the assessment order for AY 2021-2022. The Court accepted the petitioner's bona fides and, in the interest of justice, allowed the writ petition to enable repayment by installments. The respondent's calculation sheet (which includes interest under Section 220(2)) was adopted as the basis for repayment. Finding the first total installment as calculated by the respondent unduly burdensome, the Court split that payment: the interest component of the first installment is to be paid immediately as the first installment and the balance is treated as an additional (11th) installment. The Court recorded that any default in payment of even one installment would terminate the concession. No costs were awarded. [Paras 9, 10, 11]

Writ petition allowed; petitioner permitted to pay as per respondent's calculation sheet with the first installment split into two payments (interest portion first and the balance as an 11th installment); default will terminate the concession; no order as to costs; connected petition closed.

Final Conclusion: The writ petition is allowed and the petitioner (a wound-up company) is permitted to repay the assessed tax for AY 2021-2022 in installments on the basis of the respondent's calculation sheet, subject to the Court's modification splitting the first installment into two payments; failure to pay any installment will terminate this concession; no costs.

Violation of principles of natural justice - reassessment under Section 148 - time limit under Section 149(1)(b) - ten year limitation for reassessment - examination of alleged escape of income in reassessment proceedings - opportunity of hearing and consideration of reply before passing final order

Violation of principles of natural justice - opportunity of hearing and consideration of reply before passing final order - Ext.P7 order did not violate principles of natural justice. - HELD THAT: - The Court found that Ext.P7 was preceded by a show cause notice and that the petitioner filed a reply and was personally heard before the order was passed. The petitioner's contention that the reply was not properly considered was rejected on the facts: the order records that the contentions require detailed examination during reassessment and that the officer considered the submissions. Authorities relied upon by the petitioner were distinguished as involving different factual circumstances (orders where replies were not considered or insufficient time was given), and therefore do not aid the petitioner. On these findings, there was no procedural unfairness warranting interference under Article 226.

Ext.P7 is not in violation of principles of natural justice and will not be interfered with.

Reassessment under Section 148 - time limit under Section 149(1)(b) - ten year limitation for reassessment - examination of alleged escape of income in reassessment proceedings - The reassessment proceedings in respect of Assessment Year 2016-17 are within time under Section 149(1)(b). - HELD THAT: - The Court accepted the Department's contention that the case falls within the ten-year limitation provided by Section 149(1)(b), and that the notice issued and continuation of proceedings to examine whether any income has escaped assessment are therefore within statutory time limits. The officer recorded that the transactions and bank-account-related issues set out in the show cause notice require detailed scrutiny in reassessment, justifying continuation of proceedings.

Reassessment proceedings for AY 2016-17 are within the ten-year limitation and may continue.

Final Conclusion: Writ petition dismissed; Ext.P7 upheld and reassessment proceedings in respect of Assessment Year 2016-17 permitted to continue.

Penalty under section 271(1)(c) - reassessment under section 147 - jurisdiction to reopen assessment - addition as unexplained money under section 69A - information under Article 28 of the India-France DTAA

Penalty under section 271(1)(c) - reassessment under section 147 - jurisdiction to reopen assessment - Sustainability of the penalty levied under section 271(1)(c) when the addition on which the penalty was founded was held to be beyond the jurisdiction of the Assessing Officer under section 147. - HELD THAT: - The Tribunal examined whether the penalty under section 271(1)(c) could survive when the underlying addition, made in assessments completed under section 147, was subsequently held to be beyond the jurisdiction of the Assessing Officer. The coordinate bench of the Tribunal in the assessee's further appeal allowed the assessee's petition under Rule 27 and held that the AO had no jurisdiction to make the addition under section 147. Because the penalty was levied on the basis of that very addition, and that foundational addition was held to be ultra vires the AO's jurisdiction, the Tribunal found no basis to sustain the penalty. The learned CIT(A)'s deletion of the penalty was therefore held to be correct and was upheld. [Paras 8]

Deletion of the penalty under section 271(1)(c) is upheld as the addition on which it was founded was held to be beyond the jurisdiction of the AO under section 147.

Final Conclusion: Revenue's appeal dismissed; impugned order deleting the penalty under section 271(1)(c) is upheld because the addition underpinning the penalty was found to be beyond the AO's jurisdiction.

Computation under clause (f) of Explanation 1 to section 115JB(2) - Disallowance under section 14A read with Rule 8D - Book profit under section 115JB - Application of a Special Bench decision as precedent

Computation under clause (f) of Explanation 1 to section 115JB(2) - Disallowance under section 14A read with Rule 8D - Book profit under section 115JB - Whether book profit under section 115JB is to be computed by resorting to disallowance computed under section 14A read with Rule 8D. - HELD THAT: - The Tribunal followed the Special Bench decision in Vireet Investment (P) Ltd., which holds that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation envisaged under section 14A read with Rule 8D. On that basis the Tribunal directed the Assessing Officer to compute book profit under section 115JB without applying the section 14A/Rule 8D disallowance, displacing the addition made to book profit by rectification under section 154. The Tribunal thus accepted the Special Bench's authoritative view and gave effect to it by remitting computation to the AO to proceed without invoking section 14A/Rule 8D. [Paras 8]

Book profit to be computed under section 115JB without resorting to disallowance under section 14A read with Rule 8D; grounds 3 and 4 allowed.

Order under section 154 - Assessee's grounds challenging the propriety of the order under section 154 and its invocation were not pressed. - HELD THAT: - Grounds 1 and 2, which challenged the section 154 rectification on procedural and debatable-law grounds, were not pressed before the Tribunal. The Tribunal recorded that these grounds were not urged at the hearing and accordingly dismissed them as not pressed, without deciding the substantive merits. [Paras 9]

Grounds 1 and 2 dismissed as not pressed.

Final Conclusion: The appeal is partly allowed: the AO is directed to recompute book profit under section 115JB for Assessment Year 2015-16 without applying the disallowance under section 14A read with Rule 8D; the procedural/contention grounds regarding the section 154 rectification were not pressed and are dismissed.

Validity of penalty notice under section 271(1)(c) - Requirement to specify concealment or furnishing inaccurate particulars - Vitiation of penalty proceedings for failure to strike off twin charges in notice - Obligation on assessing officer to make clear election between concealment and furnishing inaccurate particulars - Application of Mohd. Farhan A. Shaikh v. CIT

Validity of penalty notice under section 271(1)(c) - Requirement to specify concealment or furnishing inaccurate particulars - Vitiation of penalty proceedings for failure to strike off twin charges in notice - Whether the penalty imposed under section 271(1)(c) is vitiated because the notice did not specify or strike off whether penalty was for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Assessing Officer issued notices under section 274 read with section 271(1)(c) but did not strike off either of the twin charges (concealment of particulars of income, or furnishing inaccurate particulars of income). The Tribunal examined those notices and found the defect of non election apparent on the face of the penalty notices. Relying on the Larger Bench decision of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh v/s CIT, which holds that failure to strike off the irrelevant charge in the notice vitiates penalty proceedings, the Tribunal applied that principle to the facts of the case. Given that the AO made no clear election between the two distinct bases for penalty, the penalty proceedings were held invalid and the penalty order could not stand. [Paras 7]

Penalty order under section 271(1)(c) quashed for failure to specify/strike off whether penalty was for concealment or for furnishing inaccurate particulars of income.

Final Conclusion: The appeal is allowed; the penalty levied under section 271(1)(c) is quashed because the penalty notices failed to elect between or strike off the twin charges, following the decision in Mohd. Farhan A. Shaikh v/s CIT.

Rejection of books of account and invocation of Section 145(3) - Estimation of taxable income / net profit on rejection of books - Violation of Section 40A(3) and consequential disallowance - Bogus purchases and unverifiable sundry creditors - Treatment of interest on fixed deposits as business receipts for estimation - Presumptive taxation under Section 44AD not a universal benchmark for estimation

Rejection of books of account and invocation of Section 145(3) - Estimation of taxable income / net profit on rejection of books - Bogus purchases and unverifiable sundry creditors - Whether the CIT(A) correctly held the books unreliable, invoked Section 145(3) and reasonably estimated net profit of contractor business at 10% of turnover after rejecting claimed expenses - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that, on the totality of circumstances - large and growing 'other sundry creditors', partial non-cooperation, infirmities in bills, statements recorded during search and extensive cash payments - the assessee failed to discharge the onus to prove genuineness of purchases and other expenses. The AO's wholesale disallowance was found to be manifestly excessive and speculative in parts; the CIT(A) therefore validly rejected the books under Section 145(3) and, as a reasonable exercise in estimation, fixed net profit from contract business at 10% of receipts to avoid absurd and unrealistic assessed profit ratios. The Tribunal found the CIT(A)'s approach objective and not perverse, declining to disturb the 10% estimation on first principles. [Paras 21, 22, 23, 29]

CIT(A)'s rejection of books under Section 145(3) and estimation of net profit at 10% of contract receipts affirmed; assessee's and Revenue's challenges on this core approach dismissed insofar as estimation methodology is concerned.

Treatment of interest on fixed deposits as business receipts for estimation - Whether interest on fixed deposits and similar discount/finance receipts should be included as part of business receipts for the purpose of estimating net profit after rejection of books - HELD THAT: - Having regard to the nature of the contract business - where fixed deposits were maintained to meet guarantee/security needs and working capital contingencies rather than as idle surplus - the Tribunal accepted the assessee's contention that interest on such FDRs and similar discount receipts are integrally connected to the business. Consequently, such interest/discount receipts are to be combined with contract receipts and subjected to the same 10% estimation. Interest on income-tax refunds and NSC interest, however, were held not to qualify for the estimation and remain taxable as other income in law. [Paras 25, 29]

Interest on FDRs and similar business-related receipts to be included with contract receipts and estimated at 10%; interest on IT refunds and NSC excluded from this estimation and taxable as other income.

Presumptive taxation under Section 44AD not a universal benchmark for estimation - Whether the statutory presumptive profit rate under Section 44AD (8%) should be applied as the benchmark for estimating profits after rejection of books - HELD THAT: - The Tribunal rejected the assessee's submission that the 8% rate under Section 44AD (and authorities applying that rate) is sacrosanct or universally applicable to estimation exercises under Section 145(3). Estimations are fact-sensitive and in the realm of probabilities; the CIT(A)'s choice of 10% was reasoned on the specific facts including quality of evidence, scale of cash payments and alleged discrepancies. There was no perversity or arbitrariness in applying 10% instead of 8% in the particular factual matrix. [Paras 23, 24]

Assessee's plea to substitute 8% (Section 44AD benchmark) rejected; 10% estimation sustained as fact-specific and reasonable.

Violation of Section 40A(3) and consequential disallowance - Bogus purchases and unverifiable sundry creditors - Whether the AO's disallowances for alleged violation of Section 40A(3), bogus purchases and unverified employee expenses should be restored in full or reduced as done by the CIT(A) - HELD THAT: - The Tribunal found parts of the AO's disallowances to be speculative and excessive, while recognizing material in the search proceedings supporting some violations of Section 40A(3) and concerns about genuineness of creditors. The CIT(A)'s calibrated approach - sustaining disallowances but restricting their quantum so that net profit from contract business is capped at 10% of turnover - was held to be a fair and balanced reconciliation of competing considerations. Revenue's challenge to restore full AO disallowances was dismissed. [Paras 13, 16, 30]

CIT(A)'s reduction of AO's disallowances and consequent relief to assessee upheld; Revenue's appeals dismissed.

Final Conclusion: For Assessment Years 2015-16 to 2020-21 the Tribunal affirmed the CIT(A)'s rejection of books under Section 145(3) and the reasoned estimation of net profit at 10% of contract receipts (with identical treatment across the stated years), held that interest on FDRs and similar business-related receipts are to be included in business receipts for the purpose of estimation (excluding interest on IT refunds and NSC), refused to substitute the Section 44AD benchmark of 8%, partly allowed the assessee's appeals to that extent and dismissed the Revenue's cross-appeals.

Maintainability of direct appeal against penalty order - Jurisdiction of Tribunal under Section 253 - Penalty u/s 271FA - Alternative remedy and liberty to pursue same

Maintainability of direct appeal against penalty order - Jurisdiction of Tribunal under Section 253 - Penalty u/s 271FA - Tribunal lacks jurisdiction to entertain direct appeals filed by the assessee against penalty orders passed under section 271FA. - HELD THAT: - The Tribunal held that Section 253 of the Act prescribes an exhaustive list of orders which may be challenged before it and that sub section (1) does not provide for a direct appeal by the assessee against penalty orders passed under section 271FA. Consequently, appeals filed directly before the Tribunal against such penalty orders are not maintainable. The Tribunal noted consistent treatment of the issue by another Bench (Pune) which dismissed similar appeals and referred to the Hon'ble Rajasthan High Court decision in Director of IT vs. Ravi Vijay & Anr., granting liberty to pursue the alternative remedy indicated in that judgment. The Tribunal applied this reasoning to the present batch of appeals and dismissed them for want of jurisdiction, while affording liberty to the assessee to avail any alternative remedy as per the said authority. [Paras 3, 4]

All appeals dismissed for want of jurisdiction to entertain direct appeals against penalty orders under section 271FA; liberty granted to the assessee to pursue the alternative remedy indicated in the cited authority.

Final Conclusion: Appeals against penalty orders under section 271FA for assessment years 2007-08 to 2016-17 dismissed by the Tribunal as not maintainable for want of jurisdiction under Section 253; assessee granted liberty to pursue the alternative remedy indicated in the authorities referred to.

Addition under section 69A for unexplained cash deposits - admission and consideration of additional evidence - estimation of income from unexplained deposits - ex parte assessment and its evidentiary consequences

Admission and consideration of additional evidence - confirmation letters as proof of loans - Admissibility and effect of additional evidence (confirmation letters) filed by the assessee to explain cash deposits. - HELD THAT: - The Tribunal considered the assessee's petition for admission of additional evidence comprising confirmation letters from persons alleged to have advanced loans. The Revenue objected to admission. The Tribunal admitted and examined the additional evidence but found that, although the assessee claimed loans from friends and relatives, he could not substantiate the claim with sufficiently credible evidence. At the same time, the Assessing Officer had not produced conclusive reasons to categorically treat the entire deposits as unexplained income. On this basis the Tribunal treated the confirmation letters as not fully establishing the source for the entire quantum of deposits but as relevant to quantify a portion that could reasonably be regarded as loans. [Paras 4, 5]

Additional evidence was admitted and considered but found insufficient to fully discharge the onus of proving source for the entire cash deposits.

Addition under section 69A for unexplained cash deposits - estimation of income from unexplained deposits - Whether the entire cash deposits of Rs. 15,92,000 could be treated as unexplained income u/s 69A and the correct quantification of addition. - HELD THAT: - The Tribunal noted that the Assessing Officer had reopened assessment and made an ex parte addition treating total cash deposits as unexplained under section 69A. Finding deficiencies on both sides - the assessee's inability to conclusively prove source and the AO's lack of conclusive reasons to declare the whole amount unexplained - the Tribunal exercised its power to estimate. Applying a pragmatic assessment of the materials and the admitted but not fully proved confirmations, the Tribunal held it was not reasonable to treat the entire deposits as unexplained. It therefore apportioned the deposits: allowing relief to the extent of Rs. 8,00,000 on the basis that that portion could reasonably be treated as loans from friends and relatives, and sustaining additions to the extent of Rs. 7,92,000 as unexplained income under section 69A. The Tribunal directed the Assessing Officer to give effect to this apportionment. [Paras 5, 6]

Entire deposits cannot be treated as unexplained; relief allowed to the extent of Rs. 8,00,000 as loans, and addition of Rs. 7,92,000 sustained under section 69A.

Final Conclusion: The appeal is partly allowed: the Tribunal admitted and considered additional evidence but found it insufficient to fully explain the cash deposits; it apportioned the deposits by allowing relief of Rs. 8,00,000 as loans and sustaining an addition of Rs. 7,92,000 under section 69A, and directed the Assessing Officer to give effect to this order.

Rejection of books and computation under section 145(3) - application of net profit rate - allowance of indirect expenses in computing net profit - prevention of double deduction of indirect expenses - acceptance of net profit declared in revised return

Rejection of books and computation under section 145(3) - application of net profit rate - allowance of indirect expenses in computing net profit - prevention of double deduction of indirect expenses - acceptance of net profit declared in revised return - Whether the addition on account of applying 13% on gross receipts was sustainable given indirect expenses reflected in audited books and the assessee's declaration of net profit at 10% in the revised return. - HELD THAT: - The Tribunal found no dispute as to quantification of total contract receipts. The AO had invoked section 145(3) to reject trading results and applied a 13% rate on total receipts, treating it effectively as gross-profit, and disallowed the benefit of indirect expenses. The CIT(A) accepted the genuineness of indirect expenses shown in audited books and computed that after reducing such indirect expenses from a 13% gross margin the effective net profit on total receipts worked out to 3.45%, but nonetheless bifurcated receipts and applied 13% to cash receipts outside books to avoid perceived double deduction. The Tribunal held that computing net profit as 3.45% on the aggregate receipts (both book and outside-book receipts) does not result in double allowance of indirect expenses; when viewed as percentages of the respective receipt components, the indirect expenses are not being deducted twice. Given that the assessee had already offered income at a net profit rate of 10% on total contract receipts-which exceeds the 3.45% net rate determined after allowing indirect expenses-the Tribunal concluded there was no basis for further addition. On identical facts for subsequent assessment years, the same conclusion was applied mutatis mutandis. [Paras 14, 15, 16, 17, 19]

Net profit rate of 10% declared by the assessee on total contract receipts is accepted; additions sustained by lower authorities are deleted.

Final Conclusion: All appeals are allowed. The net profit rate of 10% on total contract receipts is accepted for A.Ys. 2013-14 to 2019-20 and the additions made by the AO / upheld by the CIT(A) are directed to be deleted.

Section 68 - cash credits (identity, creditworthiness and genuineness) - share application money treated as undisclosed income under Section 68 - unsecured loan treated as cash credit under Section 68 - admissibility of additional evidence in appellate proceedings - corpus of Supreme Court precedents (Lovely Exports, Adamine, Godavari Tie-up, Rohtak Chain) on deletion of additions under Section 68

Section 68 - cash credits (identity, creditworthiness and genuineness) - share application money treated as undisclosed income under Section 68 - admissibility of additional evidence in appellate proceedings - precedent of Lovely Exports and subsequent Supreme Court decisions - Deletion of addition of share capital and share premium of Rs.1,70,00,000 treated as unexplained cash credit under Section 68 - HELD THAT: - The Tribunal examined the material placed before the Commissioner (Appeals) and the remand report from the Assessing Officer. During appellate proceedings the existence of the five share applicants was verified, authorised representatives of four companies appeared before the investigation wing and confirmed payment of share application money; audited accounts and bank statements of the investors were placed on record. In respect of the fifth investor, the assessee furnished evidence of change of registered office and documents showing the payment through banking channels and subsequent amalgamation, which the CIT(A) admitted as additional evidence on a plausible explanation that the assessee was dependent on third parties for certain documents and had limited time during assessment. Applying the legal principle that once identity, genuineness and creditworthiness of investors are established by documentary proof and inquiries, the amount cannot be treated as income of the investee company, and having regard to binding Supreme Court precedents relied upon by the appellate authorities, the Tribunal found no infirmity in the CIT(A)'s conclusion deleting the addition under Section 68. [Paras 8]

Deletion of addition of share capital and share premium under Section 68 is affirmed.

Section 68 - cash credits (identity, creditworthiness and genuineness) - unsecured loan treated as cash credit under Section 68 - admissibility of additional evidence in appellate proceedings - Deletion of addition of unsecured loan of Rs.1,00,82,664 from M/s. Jeenma Business Pvt. Ltd. treated as unexplained cash credit under Section 68 - HELD THAT: - The assessee produced, before the CIT(A), incorporation certificate, acknowledgement of return, assessment order of the lender, ledger account, confirmation of account and bank statements showing payments. The CIT(A) accepted the assessee's explanation that certain documents could only be procured from the third party lender and admitted the additional evidence as plausible. On examination, the documents demonstrated identity and genuineness of the transaction; the lender's audited balance sheet and scrutiny assessment supported its creditworthiness. The Tribunal found that the Assessing Officer produced no contrary material before it and, applying the applicable legal standards, upheld the CIT(A)'s deletion of the addition under Section 68. [Paras 9]

Deletion of addition in respect of the unsecured loan under Section 68 is affirmed.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal affirms the CIT(A)'s deletion of the additions made under Section 68 in respect of share application money and the unsecured loan for A.Y. 2010-11.

Refund of Special Additional Duty (SAD) where payment made in scrips - Requirement of cash payment for entitlement to SAD refund - Publication on official departmental website as sufficient public notice - Mandamus for refund claims under trade circulars

Requirement of cash payment for entitlement to SAD refund - Refund of Special Additional Duty (SAD) where payment made in scrips - Entitlement to refund of 4% SAD where the importer paid SAD by scrips instead of in cash in terms of Circular No.18/2013-Cus. - HELD THAT: - The Court recorded that Circular No.18/2013-Cus prescribed that exporters seeking refund of 4% SAD must make the SAD payment in cash and that re-crediting would not be allowed where payment was made using scrips. The petitioner admittedly paid the SAD component by scrips for the Bills of Entries in the relevant period and thus did not comply with the cash-payment requirement set out in the Circular. The court concluded that non-compliance with the cash-payment mandate disentitled the petitioner to the refund claimed under the Circular. The determinative legal reasoning is that entitlement to the statutory/administrative refund is conditional upon compliance with the payment mode prescribed by the Circular, and absent such compliance no refund arises. [Paras 7]

The petitioner was not entitled to refund of 4% SAD because the amount was paid by scrips and not in cash as required by the Circular.

Publication on official departmental website as sufficient public notice - Mandamus for refund claims under trade circulars - Whether non-issuance of a separate public notice at the port rendered Circular No.18/2013-Cus inapplicable to the petitioner or absolved the petitioner from the Circular's cash-payment requirement. - HELD THAT: - The Court accepted the respondents' position that publication of the Circular on the official DGFT website constituted adequate public notice. The petitioner's contention that the Cochin Port should have issued a separate public notice or standing order was rejected: the Court held that publication on the official departmental website amounted to communication of the Circular to the trade and staff, and therefore the petitioner could not claim ignorance of the Circular on the ground that no separate port-level notice was issued. Consequently, lack of a port-specific notice did not relieve the petitioner from the obligation to comply with the Circular's requirement. [Paras 7]

Publication of the Circular on the DGFT official website constituted sufficient public notice; absence of a separate port-level notice did not excuse non-compliance with the Circular.

Final Conclusion: The writ petition seeking mandamus to sanction refund of 4% SAD for the Bills of Entries in the relevant period is dismissed; interim orders, if any, are vacated.

Reassessment of bill of entry - recall of bill of entry - CBIC circular permitting rectification of inadvertent errors in assessment - jurisdiction to entertain writ petition despite existence of alternative statutory remedy - correction of assessment to remedy bona fide mistake

CBIC circular permitting rectification of inadvertent errors in assessment - reassessment of bill of entry - recall of bill of entry - The respondent is directed to recall and reassess Ext P2 bill of entry in accordance with law and Ext P4 (CBIC) circular. - HELD THAT: - The Court found that the petitioner had made a bona fide inadvertent error in the bill of entry which resulted in exemption of IGST. The petitioner brought the mistake to the respondent's notice and relied upon the CBIC circular laying down the procedure for such situations. Applying the principle in Dimension Data (supra) and in view of Ext P4, the Court held that the proper course was to recall the bill of entry and allow reassessment after affording the petitioner an opportunity of being heard, since such reassessment would correct the genuine mistake without causing prejudice to the respondent and would do complete justice to both parties. [Paras 8, 9]

Ext P2 bill of entry is recalled and the respondent is directed to reassess it in accordance with law after giving the petitioner an opportunity of being heard.

Jurisdiction to entertain writ petition despite existence of alternative statutory remedy - correction of assessment to remedy bona fide mistake - The Court entertained the writ petition notwithstanding the availability of an alternative statutory remedy of appeal and exercised its discretion to grant relief. - HELD THAT: - Although the respondent contended that the petitioner had an alternative statutory remedy of appeal and that reassessment requires modification under the Customs Act, the Court noted the bona fide nature of the mistake and the applicability of the CBIC circular. The Court concurred with the reasoning in Dimension Data (supra) and held that, notwithstanding the availability of appeal, it was appropriate in the circumstances to exercise writ jurisdiction to direct recall and reassessment so as to remedy the inadvertent error. [Paras 5, 6, 9]

The writ petition is maintainable and is allowed despite the existence of an alternative statutory remedy; the Court directed reconsideration and reassessment.

Final Conclusion: Writ petition allowed: Ext P2 bill of entry recalled and respondent directed to reassess it in accordance with law and Ext P4 circular after affording the petitioner an opportunity of being heard; petition entertained despite existence of alternative statutory remedy.

Appellate powers to enhance valuation without notice - rule against worsening appellant's position on appeal without cross-appeal - notice requirement for reassessment under Section 128A - valuation of imported second-hand goods - confiscation and redemption fine under Section 125 of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962

Appellate powers to enhance valuation without notice - rule against worsening appellant's position on appeal without cross-appeal - notice requirement for reassessment under Section 128A - Validity of the Commissioner (Appeals)'s enhancement of the declared value of the imported car without giving notice or in the absence of a departmental appeal - HELD THAT: - The Tribunal found that the original adjudicating authority had accepted the declared value of the second-hand car. The Commissioner (Appeals) enhanced the value to quantify differential duty without giving the appellant notice or an opportunity to meet the case on enhanced valuation. The Tribunal relied on the principle that an appellant should not be put in a worse position by an appellate order in the absence of a cross-appeal by the Department and that reassessment or enhancement affecting the assessee's liability requires notice and opportunity to defend, as contemplated by Section 128A procedures. In the absence of a departmental appeal and without notice to the importer on the enhanced valuation, the Commissioner (Appeals) exceeded permissible appellate intervention and the enhancement could not be sustained. [Paras 9, 10, 12]

The enhancement of the car's value by the Commissioner (Appeals) is set aside.

Confiscation and redemption fine under Section 125 of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 - Whether the redemption fine and the penalty as fixed by the Commissioner (Appeals) should be disturbed - HELD THAT: - The Commissioner (Appeals) had reduced the penalty originally imposed by the adjudicating authority to a specified lesser amount and confirmed the redemption fine. The Tribunal, after hearing the parties, declined to interfere with the Commissioner (Appeals)'s order insofar as the redemption fine and the reduced penalty are concerned, finding no reason to alter the relief granted by the appellate authority. [Paras 11]

The redemption fine and the reduced penalty as fixed by the Commissioner (Appeals) are affirmed.

Final Conclusion: The appeal is partly allowed: the Tribunal sets aside the Commissioner (Appeals)'s enhancement of the imported car's value for differential duty (for want of notice and absent departmental appeal) but affirms the redemption fine and the reduced penalty imposed by the Commissioner (Appeals).

Confiscation under Section 111(d) of the Customs Act - Minimum Import Price (MIP) - exemption for 100% Export Oriented Unit (EOU) - discretion to redeem goods on payment of fine under Section 125 of the Customs Act - prospective operation of trade policy changes - redeem goods on payment of fine in lieu of confiscation for re export

Minimum Import Price (MIP) - confiscation under Section 111(d) of the Customs Act - Imported Arecanut did not meet the prescribed MIP on the date of import and were therefore prohibited goods liable to confiscation. - HELD THAT: - On the date of import the extant DGFT notifications made Arecanut 'prohibited' where declared CIF fell below the prescribed MIP. There was no contemporaneous DGFT exemption relieving 100% EOUs from MIP applicability for Arecanut; the subsequent Notification dated 14.02.2023 effected an exemption but contained no provision making it retrospective. In view of the settled position in the EXIM policy that policy changes operate prospectively unless otherwise provided, and the absence of ambiguity in the notifications relied upon, the Tribunal upheld the finding that the goods were prohibited at the relevant time and correctly liable to confiscation under Section 111(d). [Paras 11, 12]

Goods were prohibited on the date of import for not meeting MIP and were liable to confiscation.

Prospective operation of trade policy changes - exemption for 100% Export Oriented Unit (EOU) - The DGFT clarification/notification issued after the imports did not have retrospective effect and therefore did not cure the imports made below MIP. - HELD THAT: - The Tribunal applied the EXIM policy principle that changes in trade policy are prospective unless expressly made retrospective. Although the Ministry of Commerce issued a later clarification and the appellants had sought relief from DGFT, the formal notification exempting EOUs from MIP for Arecanut dated 14.02.2023 did not provide for retrospective operation; hence it could not be relied on to validate earlier imports. [Paras 11, 12]

Post facto DGFT notification/clarification did not apply retrospectively to the imports in question.

Discretion to redeem goods on payment of fine under Section 125 of the Customs Act - redeem goods on payment of fine in lieu of confiscation for re export - Adjudicating Authority erred in refusing to exercise discretion under Section 125 to offer the option of redemption by payment of fine; matter remanded to grant option for re export subject to conditions and payment of an appropriate fine. - HELD THAT: - Section 125 confers discretionary power to permit redemption of prohibited goods on payment of fine. The Tribunal examined the reasons recorded by the Adjudicating Authority and concluded that those reasons were not supported by relevant material: the imports were by a 100% EOU for job work and re export, there was no finding of mala fide, mis declaration or diversion, and appellants had bona fide belief engendered by representations to the Ministry of Commerce. The Adjudicating Authority's presumption about diversion and policy intent was not based on cogent evidence and, in light of mitigating factors, discretion should have been exercised to permit redemption for the limited purpose of re export. The Tribunal therefore directed the Original Authority to give the option, to fix a reasonable fine and to finalise the exercise within one month, failing which goods will stand absolutely confiscated. [Paras 18, 19, 20, 23, 24]

Discretion should have been exercised in favour of allowing redemption for re export; matter remanded to Original Adjudicating Authority to grant option and determine fine and conditions.

Penalty assessment and quantum - The penalty imposed by the Original Authority is excessive and is accordingly reduced. - HELD THAT: - Having found no mala fide, mis declaration or mis classification and noting that the assessable value in the show cause notice was not redetermined by Customs (tariff value being different from MIP), the Tribunal held the penalty of Rs. 10,00,000 imposed by the Adjudicating Authority to be excessive in the circumstances. Taking mitigating factors into account, the Tribunal reduced the penalty to Rs. 2,00,000. [Paras 21, 22]

Penalty reduced to Rs. 2,00,000.

Final Conclusion: Appeal partly allowed: confiscation held sustainable as the goods were prohibited at the time of import, but the adjudicating authority erred in refusing to exercise its discretion under Section 125. The matter is remanded to the Original Adjudicating Authority to grant the appellants an option to redeem the goods on payment of a reasonable fine for re export (subject to statutory conditions) within one month; penalty reduced to Rs. 2,00,000.

Proviso to Section 129A - jurisdiction of the Appellate Tribunal in baggage matters - definition of "baggage" under Customs Act - imported goods carried as baggage - appeal to the Revisionary Authority

Definition of "baggage" under Customs Act - imported goods carried as baggage - Characterisation of the seized gold as baggage imported by the passenger. - HELD THAT: - The Tribunal found on the admitted facts that the gold jewellery and bars were detected on the person of the appellant immediately upon arrival from abroad and before customs clearance. Applying Rule 2(2) of the Baggage Rules 2016 and the Customs Act definitions, the Bench held that goods brought into India by a passenger, including unaccounted baggage, fall within the statutory concept of "baggage" and are "imported goods" until cleared for home consumption. The Tribunal observed that exclusion from duty concessions under the Baggage Rules does not alter the intrinsic character of such items as baggage; even dutiable or prohibited articles carried by a passenger remain baggage for statutory purposes. Earlier tribunal and High Court precedents treating passenger-borne seized articles as imported baggage were relied upon to support this characterization. [Paras 6, 7, 8, 9]

The seized gold was held to be baggage imported by the appellant.

Proviso to Section 129A - jurisdiction of the Appellate Tribunal in baggage matters - appeal to the Revisionary Authority - Maintainability of the appeal before the Appellate Tribunal in respect of an order relating to goods imported as baggage. - HELD THAT: - Relying on the statutory proviso to Section 129A and consistent tribunal and High Court authorities, the Bench concluded that the proviso bars the CESTAT from entertaining appeals against orders of Commissioner (Appeals) insofar as those orders "relate to any goods imported or exported as baggage." Having held the seized items to be baggage, the Tribunal found it lacked jurisdiction to decide the appeal. The Bench noted that some cited decisions on the appellant's side were distinguishable or rendered in circumstances where jurisdictional objection had not been taken or were subsequently set aside by higher authority. The Tribunal also observed that the appellant could, if she wished, prefer an appeal to the statutory Revisionary Authority. [Paras 11, 12, 13, 14]

The appeal is not maintainable before the Tribunal and is dismissed; the appellant may approach the Revisionary Authority.

Final Conclusion: The Tribunal held that the gold seized from the passenger constituted baggage imported into India and, consequently, under the proviso to Section 129A the Appellate Tribunal has no jurisdiction; the appeal was dismissed as not maintainable, with the appellant permitted to seek remedy before the Revisionary Authority.

Obligation to record and communicate reasons for rejecting declared transaction value - right to a speaking order on re-assessment / assessment - self-assessment and re-assessment under Section 17 - mandate of Rule 12(2) - opportunity to be heard - principles of natural justice in customs valuation - remand for passing a speaking order after hearing

Obligation to record and communicate reasons for rejecting declared transaction value - mandate of Rule 12(2) - opportunity to be heard - principles of natural justice in customs valuation - Proper officer's duty to give cogent reasons and an opportunity of being heard before rejecting the declared transaction value under Customs Valuation Rules. - HELD THAT: - The Tribunal applied the decisions of the Supreme Court and the statutory scheme to hold that Rule 12(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 imposes a mandatory obligation on the proper officer to communicate in writing the grounds for doubting the truth or accuracy of the declared value and to afford a reasonable opportunity of hearing before taking a final decision. The Tribunal noted that formation and communication of reasons is the statutorily prescribed route to proceed to valuation under Rules 4 to 9 once transaction value is rejected. Where the department rejects the declared value without recording or communicating cogent grounds and without permitting the importer to place objections or evidence, the action is contrary to Section 14 read with the Rules and violates principles of natural justice as explained by the Supreme Court in the cited precedents. [Paras 7, 8]

Proper officer must record and communicate cogent reasons for rejecting the declared value and provide an opportunity of being heard; failure to do so renders the assessment legally unsustainable.

Right to a speaking order on re-assessment / assessment - self-assessment and re-assessment under Section 17 - remand for passing a speaking order after hearing - Whether the importer's acceptance of an enhanced assessed value (given to avoid detention/demurrage) precludes the importer from seeking a speaking order or appeal, and the appropriate remedial course. - HELD THAT: - Relying on the Supreme Court authorities cited, the Tribunal rejected the contention that acceptance of an enhanced value for the purpose of expedient clearance or to avoid demurrage necessarily bars the importer from requesting a speaking order or from prosecuting an appeal. Section 17 and the appellate provisions permit challenge to assessment orders, including self-assessments and re-assessments, and the requirement to pass a speaking order where re-assessment is contrary to self-assessment applies when the importer has not validly and irrevocably confirmed the re-assessment. Given that the appellant had specifically stated that the enhanced value was accepted to avoid detention/demurrage and had requested a speaking order, the Tribunal held that the impugned non-speaking dismissal was not sustainable and remitted the matter to the original authority to pass a speaking order on merits after hearing the appellant. [Paras 5, 8, 9]

Acceptance of an enhanced value for pragmatic reasons does not automatically preclude the importer from seeking a speaking order or appellate remedy; matter remanded to original authority to pass a speaking order after hearing the appellant.

Final Conclusion: The impugned order is set aside. Appeals are allowed by way of remand and the matter is directed to be placed before the original authority for passing a speaking/ reasoned order on merits after affording the appellant an opportunity of hearing.

General Rules for Interpretation of Import Tariff - principal function test - composite machines / Section XVI Note 3 - classification under heading 8518 (loudspeakers / smart speakers) - classification under heading 8517 (apparatus for transmission or reception of voice or data) - Rule 3 GRI - equally meriting headings and last in numerical order - definition of "hearable devices" for concessional notification - limits of Advance Rulings - effective rate of duty - confidentiality of advance ruling

General Rules for Interpretation of Import Tariff - principal function test - classification under heading 8518 (loudspeakers / smart speakers) - composite machines / Section XVI Note 3 - Classification of Echo Dot (5th Gen) and Echo Dot (5th Gen) with clock - HELD THAT: - Applying Rule 1 and Rule 3 of the GRI and Note 3 to Section XVI, the Authority examined the goods' features, public descriptions and product specifications. Although the devices perform multiple functions (voice interaction, streaming, smart-home control, clock), the product literature and public presentation emphasise sound reproduction and speaker functionality. The additional communication capabilities (Wi Fi/Bluetooth and interaction with cloud services) were held to be ancillary features that add value but do not alter the essential character. Thus, guided by the principal function test and composite machine note, the devices are to be classified as loudspeakers (smart speakers) under heading 8518. The Authority accordingly placed the goods under sub heading 85182210. [Paras 9, 10]

Echo Dot (5th Gen) and Echo Dot (5th Gen) with clock are classifiable under Sub heading 85182210 of the First Schedule to the Customs Tariff Act, 1975.

Definition of "hearable devices" for concessional notification - classification under heading 8518 (loudspeakers / smart speakers) - Applicability of concessional rate under Notification No. 12/2022 Cus. (serial number 10) on account of 'hearable devices' - HELD THAT: - Notification No. 12/2022 Cus. grants concessional rates to goods other than 'hearable devices' falling under certain sub headings. The notification defines 'hearable devices' as portable Bluetooth speakers with battery power and certain output limits. The Authority accepted the applicant's admission that the Echo Dot devices are Bluetooth/Wi Fi enabled but are mains powered (not battery powered) and on the facts found that the devices fall within the meaning of 'hearable devices' as contemplated by the notification. Consequently, the concessional benefit under serial number 10 is not admissible for these imports. [Paras 11]

Exemption/concessional rate under serial number 10 of Notification No. 12/2022 Cus. dated 01.02.2022 is not admissible for the Echo Dot devices.

Applicability of Notification No. 57/2017 Cus. serial number 20 - classification under sub heading 85176290 - Claim for exemption under serial number 20 of Notification No. 57/2017 Cus. - HELD THAT: - Serial number 20 of Notification No. 57/2017 Cus. confers benefit only on goods falling under sub headings 85176290 and 85176990. Since the Authority has classified the goods under sub heading 85182210, the goods do not fall within the eligible sub headings for that notification. The exemption claim under serial number 20 was therefore held to be not admissible. [Paras 11]

Exemption under serial number 20 of Notification No. 57/2017 Cus. dated 30.06.2017 is not admissible for the Echo Dot devices.

Limits of Advance Rulings - effective rate of duty - Whether the Authority would pronounce the effective rate of duty on import of the Echo Dot devices - HELD THAT: - The Authority observed that the statutory framework for advance rulings (Chapter VB of the Customs Act, 1962) does not oblige the Authority to determine the effective rate of duty for specific goods. Having provided classification and ruled on applicability of the cited notifications, the Authority declined to pronounce an effective rate of duty under the advance ruling exercise. [Paras 12]

The Authority will not give a ruling on the effective rate of duty for the Echo Dot devices under Chapter VB of the Customs Act, 1962.

Confidentiality of advance ruling - Applicant's request to keep the ruling confidential - HELD THAT: - The applicant sought confidentiality under the proviso to regulation 27 of the CAAR Regulations, 2021 on the ground that the devices were not commercially launched in India. The authorized representative, however, admitted that the goods were being commercially imported. Given that commercial importation was already underway, the Authority found the confidentiality proviso inapplicable and declined the request to withhold the ruling from publication. [Paras 3, 13]

Request for confidentiality of the advance ruling is refused; publication is not withheld.

Final Conclusion: The Authority ruled that Echo Dot (5th Generation) and Echo Dot (5th Generation) with clock are classifiable as smart loudspeakers under Sub heading 85182210; consequently, the applicant is not entitled to exemptions under serial number 20 of Notification No. 57/2017 Cus. or serial number 10 of Notification No. 12/2022 Cus., the Authority will not state an effective rate of duty under the advance ruling exercise, and the request for confidentiality of the ruling was refused.

Penalty under Section 112(b) of Customs Act, 1962 - Penalty under Rule 209A of Central Excise Rules, 1944 - liability of a broker for dealing in excisable goods - knowledge of forged or fake licences - binding effect of Larger Bench precedent on penalty for non-dealing with goods - strict construction of penal provisions

Penalty under Section 112(b) of Customs Act, 1962 - Penalty under Rule 209A of Central Excise Rules, 1944 - liability of a broker for dealing in excisable goods - Whether the penalties imposed on the appellant as a broker under Section 112(b) of the Customs Act, 1962 and Rule 209A of the Central Excise Rules, 1944 are sustainable. - HELD THAT: - The Tribunal found that although the appellant acted as a broker in transactions involving advance licences alleged to be forged or fraudulently obtained, there was no cogent evidence establishing that the appellant dealt with excisable goods or had awareness of the licences being forged. The Bench noted a majority decision of the Tribunal in an earlier appeal by the same appellant where, on identical facts, penalties under Rule 209A and Section 112(b) were set aside by a majority. The earlier decision-after examination of oral statements, investigation efforts and precedents-held that imposition of penalty under Rule 209A requires proof that the person dealt with excisable goods with knowledge of liability of confiscation; absent such dealing or awareness, penal provisions could not be sustained. The present Bench applied that majority decision and relevant Larger Bench precedent to conclude that penal provisions must be strictly construed and that, on the facts before it, penalties could not be sustained against a broker who neither dealt in goods nor was shown to have knowledge of forged licences.

Penalties under Section 112(b) and Rule 209A set aside; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties imposed under Section 112(b) of the Customs Act, 1962 and Rule 209A of the Central Excise Rules, 1944 on the ground that, on identical facts and in view of a majority Tribunal decision and binding precedent, the appellant neither dealt with excisable goods nor was shown to have knowledge of forged licences, and penal provisions require strict construction.

Transfer of winding-up proceedings to the NCLT under Section 434 of the Companies Act, 1956 - stage of winding up and transferability of proceedings - custodia legis and disposal of movable and immovable assets - release/disclaimer of property by the Official Liquidator subject to removal or disposal of company machinery - reimbursement of security and safeguarding expenses incurred by the Official Liquidator

Transfer of winding-up proceedings to the NCLT under Section 434 of the Companies Act, 1956 - stage of winding up and transferability of proceedings - Transfer of the company petition and related proceedings to the National Company Law Tribunal (NCLT). - HELD THAT: - Having regard to the proviso to Section 434 and the principle in Action Ispat (relied on by the Court), where winding up has not reached an irreversible stage (no auctions conducted, no claims invited and no actual sales of assets), the High Court may transfer the winding up proceedings to the NCLT. The Court found that the provisional liquidator was appointed in 2017 but the winding up is not at an advanced or irreversible stage and the process could consume considerable time; accordingly the petition and entire record are to be remitted in electronic form to the Registrar, NCLT, and listed before the NCLT (with parties permitted to appear on the listed date). The Official Liquidator is to continue exercising control over the company's properties subject to future NCLT orders. [Paras 19, 20, 21]

The petition and connected matters are transferred to the NCLT; the record is remitted and the OL remains in control of assets until NCLT orders.

Release/disclaimer of property by the Official Liquidator subject to removal or disposal of company machinery - custodia legis and disposal of movable and immovable assets - Entitlement of verified landowners/licensees to release of seized land, conditional on removal or orderly disposal of company machinery lying thereon by appropriate authority. - HELD THAT: - The Official Liquidator verified the title documents of applicants seeking release/disclaimer of land and reported that titles were in order. The Court accepted the OL's report(s) and directed that the land be released to the respective applicants once the heavy machinery/parts of rigs located thereon are dealt with. The Court directed that the NCLT (or the IRP/RP) is to pass appropriate orders in respect of the heavy machinery/parts of rigs, and upon their disposal/sale the land shall be returned to the applicants. Where identity and title are not in dispute, release is contingent only upon removal or judicial/tribunal-directed disposal of movables preventing de-sealing. [Paras 7, 10, 11, 12, 13]

OL's verification reports accepted; land to be released to verified owners/licensees only after NCLT/IRP/RP deals with the heavy machinery/rig parts located thereon.

Reimbursement of security and safeguarding expenses incurred by the Official Liquidator - custodia legis and disposal of movable and immovable assets - Allocation and interim payment of expenses incurred in securing the company's assets during transfer to NCLT. - HELD THAT: - The Official Liquidator reported substantial expenses incurred to safeguard properties. The Court directed that expenses incurred by the OL up to 1st August, 2023 shall be paid by the OL initially and reimbursed by State Bank of India and Punjab National Bank by the specified date; SBI and PNB are permitted to claim such amounts as part of their debt against the company. Until the NCLT passes orders to secure the assets, SBI and PNB shall bear expenses of the security agencies. The NCLT is to pass appropriate orders regarding securing the assets after transfer. [Paras 18, 23]

OL to pay expenses up to the cut-off date, to be reimbursed by SBI and PNB who may claim the amounts as debt; until NCLT orders, SBI and PNB to bear security agency expenses.

Final Conclusion: The High Court transferred the winding-up petition and connected applications to the NCLT as the winding up is not at an irreversible stage; accepted the OL's verification of titles and directed release of verified lands only after appropriate orders for removal/disposal of company machinery by the NCLT/IRP/RP; and directed interim arrangements for reimbursement and bearing of security expenses by SBI and PNB pending NCLT orders.

Regular bail - twin-conditions under section 212(6) of the Companies Act - concept of 'incarceration' versus being 'in custody' - judicial remand and requirement of application of mind - reasoned opposition by the investigating agency for remand - likelihood of flight, tampering with evidence or influencing witnesses

Regular bail - twin-conditions under section 212(6) of the Companies Act - concept of 'incarceration' versus being 'in custody' - likelihood of flight, tampering with evidence or influencing witnesses - reasoned opposition by the investigating agency for remand - Whether the petitioner, who was never arrested during investigation and appeared before the court on summons, was entitled to regular bail and whether the twin-conditions in section 212(6) of the Companies Act applied at that stage. - HELD THAT: - The court held that the twin-conditions in section 212(6) operate only after an accused is already under incarceration; mere presence 'in custody' by appearing on summons before the court does not amount to 'incarceration' so as to automatically invoke the additional conditions. The investigating officer had not arrested the petitioner during the more-than-six-year investigation, had not sought police or judicial custody, and did not file any reasoned opposition or material showing that the petitioner was a flight risk or likely to tamper with evidence or influence witnesses. The learned Special Judge, on taking cognizance, issued summons (not warrants) and remanded the petitioner to judicial custody without recording any articulated reasons or relying on material justifying such remand; that remand was therefore effected without the necessary application of mind. Prior authorities and principles emphasising that arrest during investigation is not mandatory where there is no justification, that remand is a judicial function requiring reasons, and that seriousness of allegations alone does not preclude bail, were applied to conclude that the twin-conditions did not get actuated and that the petitioner could not be denied regular bail on that basis. Having regard to prolonged pre-trial custody, absence of allegations of tampering or flight, and the procedural course followed, the court found it appropriate to admit the petitioner to bail subject to stringent conditions to safeguard the investigation and trial. [Paras 27, 28]

Petition allowed; petitioner admitted to regular bail on furnishing bond and sureties and on conditions including surrender of passport, non-contact with witnesses and certain persons, provision of contact number and issuance of look-out circular.

Final Conclusion: The High Court granted regular bail to the petitioner, holding that the additional twin-conditions in section 212(6) did not apply because the petitioner had never been arrested or put under incarceration prior to being summonsed; the judicial remand to custody was unsustained by reasoned material and therefore bail was appropriate subject to specified protective conditions.

Pre-existing dispute - admission under the Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process - concurrent findings of fact - liberty to pursue alternative remedies

Pre-existing dispute - admission under the Insolvency and Bankruptcy Code, 2016 - concurrent findings of fact - Concurrent findings that a pre-existing dispute existed, and consequently the application under the Insolvency and Bankruptcy Code, 2016 for initiation of the corporate insolvency resolution process was not admitted. - HELD THAT: - The Supreme Court upheld the concurrent factual conclusion reached below that there was a pre-existing dispute between the parties. On that factual basis the adjudicatory authorities declined to entertain the proceedings under the Insolvency and Bankruptcy Code, 2016 for initiating the corporate insolvency resolution process. The Court found no error in those concurrent findings of fact and affirmed the refusal to admit the insolvency application.

Concurrent findings upheld and the insolvency application was not admitted; the appeal is dismissed.

Liberty to pursue alternative remedies - observations of adjudicatory orders not affecting merits - Appellant permitted to pursue other legal remedies and prior observations in NCLT/NCLAT orders will not prejudice the merits of any fresh claim. - HELD THAT: - While dismissing the appeal, the Court granted the appellant liberty to avail other remedies available in law. It clarified that any observations made in the orders of the National Company Law Tribunal and the National Company Law Appellate Tribunal shall not affect the merits of any subsequent claim the appellant may pursue.

Appellant given liberty to pursue other remedies; prior adjudicatory observations will not preclude reconsideration of the merits in those proceedings.

Final Conclusion: The Supreme Court dismissed the appeal, upheld the concurrent finding of a pre-existing dispute which warranted non-admission of the insolvency application under the Insolvency and Bankruptcy Code, 2016, and granted the appellant liberty to pursue alternative remedies without prejudice from earlier NCLT/NCLAT observations; pending applications disposed of.

Judicial restraint and forum competence of appellate tribunal - discretion to permit withdrawal of appeal - plea of limitation as a defence before the appellate forum - mis disclosure in applications for condonation of delay - liberty to approach the High Court for appropriate relief

Mis disclosure in applications for condonation of delay - judicial restraint and forum competence of appellate tribunal - Whether the Special Leave Petition filed against the High Court's review order should be entertained or dismissed and whether the matter ought to be remitted to the NCLAT for decision on merits. - HELD THAT: - The Court declined to entertain the SLP. Although objections were raised about alleged mis disclosure in the condonation application, the Court was not persuaded to grant relief on that ground and chose not to interfere with the impugned order. The petitioner's remedy lies by prosecuting its appeal before the NCLAT; the appellate tribunal should take the appeal on its merits. Parties opposing the appeal before the NCLAT, including respondent No.1, retain all available defences, notably the plea of limitation. The Court accordingly dismissed the SLP and left the controversy for adjudication by the NCLAT.

SLP dismissed; matter left to NCLAT to decide the petitioner's appeal on merits and respondent No.1 may raise all defences including limitation.

Discretion to permit withdrawal of appeal - judicial restraint and forum competence of appellate tribunal - plea of limitation as a defence before the appellate forum - Whether the Civil Appeal should be entertained in view of the background that the NCLAT had been remitted the question of respondent's right to withdraw an appeal and whether the appellant's independent appeal must be decided by the NCLAT. - HELD THAT: - The Court refused to entertain the civil appeal given the factual and procedural backdrop, including the remit to the NCLAT concerning the right to withdraw the appeal and the permission granted to withdraw. The appellant's contention that it has an independent appeal was not a ground for this Court to intervene; the NCLAT is the appropriate forum to examine that appeal on its merits. Respondent Nos.1 and 2 before the NCLAT will continue to have all defences available, including limitation. In these circumstances the Civil Appeal was dismissed.

Civil Appeal dismissed; NCLAT to examine the appellant's appeal on merits and respondents may raise defences including plea of limitation.

Final Conclusion: Both the Special Leave Petition and the Civil Appeal are dismissed; the matters are left for the NCLAT to decide on their merits, with the parties free to advance all available defences including the plea of limitation.

Condonation of delay - limitation period for appeals under Section 61(2) of the Code - no power to condone delay beyond fifteen days - effect of pursuing alternative remedy on limitation - appeal not duly constituted if delay not condoned

Condonation of delay - limitation period for appeals under Section 61(2) of the Code - no power to condone delay beyond fifteen days - Whether sufficient cause has been shown to condone the delay in filing the appeal beyond the statutory period and the fifteen day extension under Section 61(2) of the Code. - HELD THAT: - The Tribunal examined the statutory scheme under Section 61(2) which prescribes a 30 day period to file an appeal and permits a maximum extension of fifteen days upon satisfaction of 'sufficient cause'. Reliance was placed on the settled proposition that delay beyond the maximum fifteen days is uncondonable. Even assuming, for the sake of argument, that the limitation should be counted from the dismissal by the Supreme Court on 06.04.2023, the thirty day period expired on 06.05.2023 and the maximum fifteen day extension expired on 21.05.2023. The appeal was filed on 22.05.2023, i.e., after the unextendable fifteen day grace period. The Appellant's explanation - that it had been pursuing an alternative remedy - did not furnish satisfactory reasons to justify why the appeal could not have been filed within the statutory period or within the fifteen day extension, particularly when the Appellant is a bank with adequate resources. Applying the reasoning in the cited authority, the Tribunal found no legal basis to condone delay beyond fifteen days and held that no sufficient cause was made out. [Paras 11, 12, 13, 14]

Application for condonation of delay dismissed for want of sufficient cause; delay beyond the statutory fifteen day extension under Section 61(2) cannot be condoned.

Appeal not duly constituted if delay not condoned - Whether the appeal is maintainable/duly constituted in view of the dismissal of the application for condonation of delay. - HELD THAT: - Because the application to condone the delay was dismissed, the appeal was not filed within the permissible time and therefore was not duly constituted. The Tribunal had no jurisdiction to entertain an appeal that had not been timely instituted under the statutory time limits and their unextendable maximum extension. [Paras 14]

Appeal dismissed as not duly constituted for want of timely filing.

Final Conclusion: The application for condonation of delay is dismissed for failure to show sufficient cause to excuse filing beyond the unextendable fifteen day period under Section 61(2); consequently the appeal is not duly constituted and is dismissed. No costs.

Condonation of delay under Section 61(2) proviso - Limitation for appeals to the National Company Law Appellate Tribunal - Sufficient cause for extension of time - Statutory bar on extension beyond fifteen days - Article 142 cannot override statutory limitation

Condonation of delay under Section 61(2) proviso - Sufficient cause for extension of time - Statutory bar on extension beyond fifteen days - Application for condonation of delay in filing the appeal was dismissed. - HELD THAT: - The Appellate Tribunal examined the appellant's plea for condonation of a 15-day delay beyond the primary 30-day limitation under the proviso to Section 61(2). The appellant, not a party to the underlying proceeding, learned of the impugned order on 26.03.2023 and filed the appeal on the last day of the 15-day extended period without having applied for the certified copy or taken steps within the original 30-day window. The Tribunal reiterated that Section 61(2) permits extension only upon satisfaction of sufficient cause and that extension cannot exceed fifteen days. Reliance was placed on the settled principle that sympathy or inadvertence does not constitute sufficient cause and that powers under Article 142 cannot be used to contravene the statutory bar on condoning delay beyond the prescribed period. The appellants' explanation for delay-collecting relevant documents after learning of the order-was held inadequate to establish sufficient cause for extension. [Paras 8, 9]

Application for condonation of delay dismissed for lack of sufficient cause.

Limitation for appeals to the National Company Law Appellate Tribunal - Condonation of delay under Section 61(2) proviso - The appeal was dismissed as not duly constituted after refusal to condone delay. - HELD THAT: - Because the application for condonation of delay was dismissed, the appeal could not be entertained as timely filed and therefore was not duly constituted. The Tribunal recorded that in view of dismissal of the condonation application the appeal cannot be heard and accordingly the appeal stands dismissed.

Appeal dismissed as not duly constituted.

Final Conclusion: The application for condonation of delay under the proviso to Section 61(2) was dismissed for failure to show sufficient cause, and consequently the appeal was dismissed as not duly constituted.

Summary order. Civil Appeals dismissed; delay condoned; pending applications disposed of.

Remand for fresh adjudication - Classification of taxable services - Exemption by subsequent statutory amendment - Burden of production of contracts and documents - Application of judicial precedents - Extended period of limitation

Remand for fresh adjudication - Classification of taxable services - Exemption by subsequent statutory amendment - Burden of production of contracts and documents - Application of judicial precedents - Whether the matter should be remanded to the Adjudicating Authority for fresh examination in light of documents produced before the Tribunal, statutory amendments and subsequent judicial decisions - HELD THAT: - The Tribunal found that the Adjudicating Authority had issued the show cause notice for the period 2005-2010 but recorded at several places that contracts were not provided, leading the Authority to classify many services under Management, Maintenance or Repair Service without examining contracts (para.10). During proceedings before the Bench the appellant furnished several contracts, account excerpts and documents which the Adjudicating Authority had not considered (para.11), and also filed a rejoinder with year wise reconciliation filed after the hearing (para.12). The Tribunal further noted that the Adjudicating Authority had not considered amendments effected by insertion of Section 97 and Section 98 by the Finance Bill, 2012, nor subsequent case law on the questions of classification and exemption (para.12). In view of these omissions and the availability of additional documents and changed legal position, the Tribunal concluded that the matter ought to be examined afresh by the Adjudicating Authority, applying the amendments and relevant judicial precedents and determining classification and exemption on the basis of contracts and documentary evidence furnished. [Paras 10, 11, 12, 13]

Appeal allowed by way of remand to the Adjudicating Authority to re examine and decide the matter afresh in light of documents submitted before the Tribunal, the statutory amendments and relevant judicial decisions; Adjudicating Authority to decide within sixteen weeks and the appellant to cooperate.

Final Conclusion: The appeal is allowed by way of remand: the Adjudicating Authority is directed to re adjudicate the demand for the period 2005-2010 after considering the contracts, reconciliations, statutory amendments and applicable case law, and to pronounce a fresh decision within sixteen weeks.

Composite contract/non-vivisectable works - Classification as Works Contract services - Abatement of 67% for construction/works contract service - Taxability before and after 01.06.2007 - Show-cause notice raised under wrong service head - Extended period of limitation / time-bar of show-cause notice

Composite contract/non-vivisectable works - Classification as Works Contract services - Taxability before and after 01.06.2007 - Abatement of 67% for construction/works contract service - Appellants rendered composite works contract services and classification as Works Contract services governs taxability and entitlement to abatement. - HELD THAT: - The Tribunal found, applying the decision of the Hon'ble Apex Court in Larsen & Toubro, that the appellants executed finishing/renovation works along with supply of material under a composite contract and that material formed part of the composite service. Consequently, for the period prior to 01.06.2007 services under such composite contract were not taxable; for the period after 01.06.2007 the services merit classification as Works Contract services and, where material is part of the composite service, the appellants are entitled to the abatement of 67% and to pay service tax on the remaining value. The Bench also relied on an earlier final order in respect of the same appellant/identical facts reaching the same conclusion and followed that ratio. The appellants' factual concession that materials constituted a substantial portion and that they had availed only 67% abatement (though materials were around 80%) did not lead to a claim for refund and did not affect the classification outcome. [Paras 6, 7]

Services characterised as composite works contract; not taxable prior to 01.06.2007; from 01.06.2007 classified as Works Contract services with entitlement to 67% abatement.

Show-cause notice raised under wrong service head - Extended period of limitation / time-bar of show-cause notice - Demands raised for the post-01.06.2007 period were invalid where the show-cause notices invoked a wrong service head and earlier notices rendered later notices time-barred. - HELD THAT: - The Tribunal observed that the departmental demand for the subsequent period was founded on an incorrect service classification ('wrong Head'), and that in earlier proceedings show-cause notices had already been issued for overlapping periods. Relying on the earlier final order in like facts and on the principle that earlier show-cause notices preclude invocation of extended limitation for the same issue, the Tribunal held that the demand for the later period could not be sustained and that the show-cause notice was time-barred where applicable. [Paras 6, 7]

Demand for the post-01.06.2007 period unsustainable as raised under wrong head and, insofar as overlapping earlier notices exist, time-barred.

Final Conclusion: Appeal allowed: appellants held to have rendered composite works contract services not taxable before 01.06.2007; for the period after 01.06.2007 the services classify as Works Contract services with entitlement to 67% abatement; departmental demands for the subsequent period were unsustainable being raised under a wrong head and, where overlapping earlier notices existed, time barred.

Business Auxiliary Service - Export of service - Place of consumption versus place of performance - Recipient located abroad - Payment received in convertible foreign exchange - Liability to service tax

Business Auxiliary Service - Export of service - Recipient located abroad - Place of consumption versus place of performance - Whether the appellant was liable to pay service tax on commission received from PML as Business Auxiliary Service or whether such service qualified as export of service and was not taxable in India. - HELD THAT: - The Tribunal applied existing decisions holding that agents and sub-agents who deliver remittances in India pursuant to contracts with an overseas principal provide services to the overseas principal and not to the recipients of the money in India. The determinative test is the place of consumption and identity of the recipient, not the place of performance. Where the payment for the service is received in India in convertible foreign exchange and the recipient of the service is located abroad, the activity qualifies as an export of service and is not taxable as a domestic business auxiliary service. The Tribunal noted that the appellant's agreement clauses were identical to those considered in earlier Tribunal decisions (including Paul Merchants Ltd., Muthoot FinCorp Ltd. and Kerala State Financial Enterprises Ltd.), which held that such money-transfer activities constituted business auxiliary services rendered to Western Union abroad and thereby amounted to export of service. Relying on those precedents and the Export of Services Rules, the Tribunal held the impugned demand for service tax unsustainable and set aside the order of the Commissioner (Appeals).

The appeal is allowed; the impugned order confirming service tax demand is set aside, the activity being treated as export of service rather than a taxable domestic business auxiliary service.

Final Conclusion: Following earlier Tribunal precedents, the money transfer services provided by the appellant to the overseas principal were held to be export of service (recipient abroad; payment in convertible foreign exchange) and the demand for service tax was quashed for the period specified.

VAT paid on sale of goods precludes levy of service tax on the same consideration - handling and forwarding charges treated as part of sale value - exclusion of value of goods (including handling charges) from taxable value of services - composite transaction: sale of goods versus rendering of services

VAT paid on sale of goods precludes levy of service tax on the same consideration - handling and forwarding charges treated as part of sale value - Whether handling and forwarding charges shown as part of the sale invoice and on which VAT was paid can be subjected to service tax. - HELD THAT: - The Tribunal found it undisputed that the appellant included handling and forwarding charges in the sale invoice and paid VAT on the total value (basic price plus handling and forwarding charges). Applying the principle that where VAT has been paid on the sale of goods the question of claiming service tax on that consideration does not arise, the Tribunal relied on the authority of CST vs. UFO Moviez India Limited as laying down this proposition. The Tribunal further placed reliance on earlier Tribunal decisions which held that where parts or handling charges are included in the value of goods and sales tax/VAT is discharged thereon, those amounts are not includible in the taxable value of any ancillary service (illustrated by decisions in Ketan Motors Ltd. , Automotive Manufacturers Pvt. Limited and CCE vs. Seva Automotive Pvt. Limited ). The court therefore declined to dissect the composite invoice to treat a portion as service consideration once VAT had been paid on the aggregate sale value and held that service tax could not be demanded on such amounts. [Paras 6, 8]

Demand of service tax on handling and forwarding charges that were shown as part of the sale value and on which VAT was paid is not sustainable; impugned order set aside and appeal allowed.

Final Conclusion: The appeal is allowed: handling and forwarding charges included in the sale invoice and subjected to VAT cannot be the basis for a service tax demand; the impugned order is set aside.

Scope of show cause notice - department cannot travel beyond the show cause notice - classification of service - steamer agent service - clearing and forwarding agent service - extended period of limitation

Scope of show cause notice - department cannot travel beyond the show cause notice - steamer agent service - clearing and forwarding agent service - Impugned confirmation of demand under steamer agent service by Commissioner (Appeals) when original show cause notice related only to clearing and forwarding agent service. - HELD THAT: - The Tribunal found that the original show cause notice dated 21.10.2010 and the Order-in-Original proceeded on the case that the appellant had rendered clearing and forwarding agent services. The Commissioner (Appeals) in the impugned order accepted that ocean freight was not leviable but nevertheless confirmed demand by re classifying terminal handling charges and bill of lading charges under steamer agent service. Relying on binding precedents, including the Supreme Court decisions cited by the parties, the Tribunal applied the settled legal principle that the Department cannot traverse beyond the scope of the show cause notice to raise a new classification or charge which was not the subject-matter of the notice. Applying that principle to the facts, the Tribunal held that confirming a demand under steamer agent service when the SCN and original order were confined to clearing and forwarding agent service was impermissible, and accordingly the confirmation could not be sustained. The Tribunal expressly set aside the impugned confirmation on this ground without deciding other contested contentions, including those relating to limitation.

Impugned confirmation of demand under steamer agent service set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals)'s confirmation of demand under steamer agent service on the ground that the Commissioner (Appeals) travelled beyond the scope of the original show cause notice, and granted consequential relief without adjudicating other issues.

Summary order. The appeal is dismissed on the ground of low tax effect as conceded by the Appellant/Revenue; pending applications, if any, are disposed of.

Entitlement to interest on delayed refund of amounts deposited under protest which are neither duty nor interest - Implied embargo on payment of interest under Section 11B of the Central Excise Act, 1944 - Appropriate rate of interest for delayed refund (12% per annum) - Appellate Tribunal's factual and discretionary findings not to be interfered with on appeal

Entitlement to interest on delayed refund of amounts deposited under protest which are neither duty nor interest - Implied embargo on payment of interest under Section 11B of the Central Excise Act, 1944 - Whether the assessee was entitled to interest on the refund where the initial deposit had been made under protest and was not on account of duty or interest - HELD THAT: - The Court accepted the Tribunal's view that the deposit was made before any quantified demand, show cause notice or adjudication and therefore was not a deposit on account of duty or interest. Consequently the implied embargo read into Section 11B, which applies to refund of duty or interest, did not apply. The Tribunal's conclusion that the refund was not of duty or interest was a permissible factual and legal view on the material before it and did not call for interference in this appellate jurisdiction. The Court therefore held that the assessee was entitled to interest on the delayed refund. [Paras 5, 6, 7, 11, 13]

Assessee entitled to interest on the refund because the deposit was not on account of duty or interest and Section 11B's implied embargo did not apply; Tribunal's finding upheld.

Appropriate rate of interest for delayed refund (12% per annum) - Appellate Tribunal's factual and discretionary findings not to be interfered with on appeal - Whether the rate of interest awarded by the Tribunal (12% per annum) was sustainable - HELD THAT: - The Tribunal, as a specialised adjudicatory body for excise matters, considered decisions of the Supreme Court, various High Courts and its own precedents in fixing the rate at 12% per annum. The High Court found that there was some basis for the rate adopted by the Tribunal on the facts and authorities relied upon and that the Tribunal's exercise of discretion on quantum did not merit interference in this appellate review. [Paras 8, 11, 13]

Tribunal's award of interest at 12% per annum sustained; no interference with appellate order on quantum.

Final Conclusion: The appeals challenging the Tribunal's orders dated April 11, 2022 and October 28, 2022 are dismissed insofar as they seek to deny interest; the Tribunal's grant of interest at 12% per annum is upheld. The Department is directed to pay the interest due within four weeks from the date of the order, failing which the assessee may pursue further remedies; no order as to costs.

Clandestine removal of goods - onus on Revenue to prove clandestine manufacture and clearance by direct, affirmative and corroborative evidence - requirement of corroborative evidence such as raw material receipts, details of manufacture (installed capacity, electricity consumption, labour), transport documents and statements of buyers/transporters - SSI exemption under Notification No.8/2003-CE for units below threshold turnover

Clandestine removal of goods - onus on Revenue to prove clandestine manufacture and clearance by direct, affirmative and corroborative evidence - requirement of corroborative evidence such as raw material receipts, details of manufacture (installed capacity, electricity consumption, labour), transport documents and statements of buyers/transporters - Whether the demand for duty on account of alleged clandestine removal of goods for the period 19.06.2016 to 31.03.2017 could be sustained on the basis of records seized from the accountant's residence without further corroborative evidence. - HELD THAT: - The Tribunal held that the sole reliance on records seized from the residence of the appellant's accountant and his statements did not suffice to sustain the serious charge of clandestine removal. Clandestine manufacture and clearance must be established by tangible, direct and incontrovertible evidence - for example, receipt of raw materials not accounted in statutory records, evidence of utilisation in manufacture (with reference to installed capacity, electricity consumption, labour and payments), discrepancies in stocks, transport/lorry receipts, gate/security records, statements of transporters and buyers, and flow of sale proceeds. The Revenue produced none of these corroborative materials nor examined persons named in the seized records; it proceeded on assumptions and presumptions without the clinching evidence required by precedent. Applying these principles, the Tribunal found the demand unsustainable. [Paras 6, 7, 8, 9]

Demand based on alleged clandestine removal cannot be sustained and is set aside.

SSI exemption under Notification No.8/2003-CE for units below threshold turnover - Whether the appellant was entitled to SSI exemption under Notification No.8/2003-CE for the relevant period in view of its turnover. - HELD THAT: - The Tribunal noted that the appellant's annual turnover for the financial year 2016-17, as reflected in returns, was below the threshold prescribed for SSI exemption under the notification relied upon. Having held that the clandestine removal charge was not established, the Tribunal observed that the appellant fell within the exemption parameters and therefore the impugned demand could not be sustained. [Paras 10, 11]

Appellant entitled to avail the SSI exemption; impugned demand set aside.

Final Conclusion: The appeal is allowed: the demand for duty on account of alleged clandestine removal for 19.06.2016 to 31.03.2017 is set aside for lack of direct and corroborative evidence, and the appellant is entitled to SSI exemption under the notification relied upon.

Penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 - wrongful availment and utilization of CENVAT credit - liability of the manufacturer/service provider for wrongful CENVAT credit - depot/dealer not availing or utilizing CENVAT credit

Penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 - wrongful availment and utilization of CENVAT credit - liability of the manufacturer/service provider for wrongful CENVAT credit - depot/dealer not availing or utilizing CENVAT credit - Whether the penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 is sustainable against a depot/dealer which has issued cenvatable invoices but has not availed or utilized CENVAT credit. - HELD THAT: - Rule 15(2) contemplates penalty where CENVAT credit in respect of input or capital goods has been taken or utilized wrongly on account of fraud, willful misstatement, collusion or suppression of facts, or contravention of provisions with intent to evade duty; it further contemplates liability of the manufacturer (or service provider) who has wrongly availed or utilized the credit. The appellant in the present case is a depot/dealer which issued invoices passing on CENVAT credit but there is no allegation in the show cause notice or findings that the appellant itself availed or utilized CENVAT credit. The mischief addressed by Rule 15(2) - wrongful availment or utilisation of credit by the person liable to avail or utilise it - is therefore not made out against the depot/dealer. In the absence of any finding that the appellant availed or utilised credit, the statutory scheme does not support imposing penalty under Rule 15(2) on the appellant. [Paras 7, 8]

The penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 cannot be sustained against the appellant depot/dealer which has not availed or utilised CENVAT credit; the impugned order imposing penalty is set aside and the appeal is allowed with consequential relief, if any.

Final Conclusion: The tribunal set aside the penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004, holding that the provision applies to wrongful availment or utilisation of CENVAT credit by a manufacturer or service provider and is not sustainable against a depot/dealer that only issued invoices and did not itself avail or utilise credit.

Rule 6 of Cenvat Credit Rules, 2004 - reversal of cenvat credit - manufacture (definition under Section 2(f)) - excisable goods and non-excisable goods - exempted goods (including Explanation 1 to Rule 6) - inclusion of non-excisable goods within exempted goods by amendment - CBIC Circular No. 1027/15/2016 and its subsequent rescission - ratio in Union of India v. DSCL Sugar Ltd.

Rule 6 of Cenvat Credit Rules, 2004 - manufacture (definition under Section 2(f)) - excisable goods and non-excisable goods - Whether iron ore fines emerging from screening/sieving of iron ore lumps are manufactured (excisable) goods so as to attract reversal under Rule 6. - HELD THAT: - The Tribunal found on the materials and authorities placed before it that the iron ore fines emerging in the course of screening/sieving are inevitable smaller fragments or waste and do not result from a process amounting to manufacture. Relying on the principle that Rule 6 applies only where there is a manufacture of final or exempted products, and following the reasoning in DSCL and subsequent decisions, the Bench held that in the absence of manufacture the iron ore fines cannot be treated as manufactured or excisable goods and therefore Rule 6 is not attracted for such clearances. The Revenue did not establish that the process amounted to manufacture; accordingly the demand based on treating the fines as manufactured/excisable goods was unsustainable. [Paras 20, 21, 26]

Iron ore fines are not manufactured/excisable goods in the facts of the case and Rule 6 does not apply to their clearance.

Exempted goods (including Explanation 1 to Rule 6) - inclusion of non-excisable goods within exempted goods by amendment - CBIC Circular No. 1027/15/2016 and its subsequent rescission - Whether the post-amendment inclusion of non-excisable goods within the definition of 'exempted goods' (Explanation 1 to Rule 6) makes Rule 6 applicable to non-excisable iron ore fines cleared for consideration. - HELD THAT: - The Tribunal acknowledged the legislative amendment and the CBIC circular which treated certain non-excisable by products as falling within the phrase 'exempted goods' for reversal purposes. However, it followed the line of authority which holds that the deeming inclusion cannot convert an item into a 'manufactured' product where no manufacture has occurred. The court noted the subsequent rescission of the earlier circular and the consistent judicial view that Explanation 1 cannot be used to override the foundational requirement of a manufacturing process under the definition of 'manufacture'. Therefore, even after the amendment, non excisable iron ore fines which are not products of manufacture do not attract Rule 6 reversal. [Paras 6, 24, 25, 26]

Amendment and administrative circulars treating non-excisable goods as 'exempted goods' do not render Rule 6 applicable to non-excisable iron ore fines which are not manufactured products.

Reversal of cenvat credit - Rule 6 of Cenvat Credit Rules, 2004 - Whether the demand, including interest and penalties, based on reversal under Rule 6 in respect of iron ore fines is sustainable. - HELD THAT: - As the primary requirement for invoking Rule 6-namely that the cleared goods be manufactured or final/exempted products-was not met in the facts of the case, the Tribunal held that the underlying demand for reversal of credit could not be sustained. Consequential claims for interest and penalties were also held to fall with the substantive demand, since those liabilities flowed from an unsustainable claim on merits. The Tribunal therefore set aside the orders confirming the demands and allowed the appeals. [Paras 26, 27]

The demand for reversal of credit, and consequential interest and penalties, is set aside as unsustainable on merits.

Final Conclusion: The Tribunal allowed the three interlinked appeals, holding that iron ore fines produced by screening/sieving are not manufactured/excisable goods and that neither the pre-amendment nor the post-amendment regime sustains reversal under Rule 6 in the absence of manufacture; accordingly the demands (including interest and penalty) were set aside and the impugned orders were quashed.

Principles of natural justice - right of personal hearing - quashing and remand for fresh consideration - opportunity to raise objections available under law - final order within specified time-frame

Principles of natural justice - right of personal hearing - Impugned assessment orders were passed without affording the petitioner personal hearing and thereby violated principles of natural justice. - HELD THAT: - The Court accepted the petitioner's submission that no personal hearing was afforded before passing the assessment orders and that on merits the petitioner had not been given an opportunity to make submissions, having only relied on the pendency of Special Leave Petitions. Applying the approach in the earlier Division Bench order extracted in the judgment, the Court held that the denial of personal hearing and opportunity to place objections amounted to a breach of principles of natural justice, warranting interference. [Paras 4, 5]

Impugned assessment orders quashed on ground of violation of principles of natural justice and remitted for fresh consideration.

Quashing and remand for fresh consideration - opportunity to raise objections available under law - final order within specified time-frame - Remand directions: respondent to grant personal hearing, permit all objections, and pass fresh final orders within a specified period. - HELD THAT: - The Court directed that on remand the Assessing Officer shall give the petitioner reasonable opportunity of personal hearing and permit the petitioner to raise all objections available under law. The respondent is required to pass final orders in accordance with law within the time stipulated by this Court. The remand is for fresh consideration and determination on merits after affording the statutory and natural justice opportunities to the petitioner. [Paras 5, 6]

Matters remanded for fresh consideration; respondent to grant personal hearing, entertain objections and pass final order within three weeks from receipt of this order.

Final Conclusion: The writ petitions are allowed to the extent that the impugned assessment orders are quashed for breach of natural justice and remitted to the Assessing Officer for fresh consideration after granting personal hearing and permitting all objections; final orders to be passed within the period specified by the Court.

Successive presentation of cheque within period of validity - prosecution based on second or successive dishonour of cheque - proviso to Section 138 - notice within thirty days and complaint after fifteen days - purposive interpretation of Section 138

Successive presentation of cheque within period of validity - prosecution based on second or successive dishonour of cheque - Whether a criminal complaint under Section 138 of the Negotiable Instruments Act can be founded on a second or successive presentation of a cheque which was earlier dishonoured. - HELD THAT: - The Court applied binding precedent to hold that successive presentation of a cheque within its validity is permissible and a prosecution based on a second or successive dishonour is not impermissible merely because a complaint was not filed after the first dishonour. The reasoning adopts a purposive approach: the object of Section 138 is to compel drawers to honour commitments, and there is no legal prohibition against reprising presentation and initiating prosecution after subsequent dishonour. The Court distinguished decisions that set aside prosecutions where second presentation was a transparent device to evade limitation where, on the facts, assurances to re-present were specifically pleaded and the trial was at an initial stage, making factual examination inappropriate for quashing the complaint at this stage. [Paras 8, 11, 12, 13]

Prosecution based on a second or successive dishonour within the cheque's validity is permissible and not a ground for quashing the complaint.

Proviso to Section 138 - notice within thirty days and complaint after fifteen days - purposive interpretation of Section 138 - Whether the demand notice and subsequent complaint were in compliance with the proviso to Section 138 when the cheque was re-presented and dishonoured a second time, and whether that non-compliance warranted quashing. - HELD THAT: - The Court examined the proviso requiring presentation within validity and that the payee give written demand within thirty days of receiving information from the bank of the cheque's return, followed by filing complaint if payment is not made within fifteen days of notice. It held that when successive presentation is permissible, the holder is entitled to rely on the fresh information of dishonour and issue notice within thirty days of that information; once demand notice is issued, the drawer must be afforded fifteen days to pay. Applying these principles to the facts, the Court found the notice was issued after the second dishonour and within the statutory timeframe, so no procedural defect emerged to justify quashing the complaint. The Court declined to interfere at the summoning stage because factual disputes (such as assurances and reasons for re-presentation) require trial adjudication. [Paras 9, 14]

Demand notice issued after the second dishonour and complaint founded on that presentation satisfied the proviso to Section 138 and did not justify quashing the proceedings.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking quashing of the complaint and the summoning order was dismissed; the Court held successive presentation and prosecution on second dishonour within the cheque's validity are permissible and the statutory notice requirements were satisfied on the case presented.