TaxTMI Updates e-Newsletter
Aug 02,2024

Refund of Input Tax Credit - maintainability of writ petition - statutory remedy of appeal under section 107 - approach to appellate authority for redress - period September 2019 to January 2020

Refund of Input Tax Credit - period September 2019 to January 2020 - Disposition of writ petition challenging refusal/delay of refund claim for the period September 2019 to January 2020 - HELD THAT: - The petitioner sought writ relief challenging the show cause notice and order impugned in relation to a refund/Input Tax Credit claim for the period September 2019 to January 2020. Although the petitioner relied on statutory timelines under the refund provisions, the Court observed that a parallel special appeal in respect of a different claim was pending but involved a different cause of action, amount and period. The Court did not adjudicate the merits of the refund claim; instead it disposed of the writ petition by directing the petitioner to pursue the statutory appellate remedy so that the relevant appellate authority may consider the petitioner's grievance on merits, having regard to the time already spent by the petitioner in pursuing the writ.

Writ petition disposed; petitioner directed to approach the appellate authority which shall consider the appeal on merits.

Maintainability of writ petition - statutory remedy of appeal under section 107 - approach to appellate authority for redress - Preliminary objection based on availability of statutory remedy and propriety of invoking writ jurisdiction - HELD THAT: - Respondents contended that the petition was not maintainable because a statutory remedy by way of appeal under section 107 was available. The Court noted the existence of a pending special appeal arising from an earlier matter but concluded that the cause of action in that pending appeal differed from the present claim. Rather than entertain the writ on merits, the Court accepted that the appropriate course is to require the petitioner to invoke the appellate forum and afforded the petitioner the opportunity to have the appellate authority decide the matter on merits.

Petition disposed on maintainability grounds by directing petitioner to pursue the statutory appeal; appellate authority to decide on merits.

Final Conclusion: The writ petition is disposed of with directions to the petitioner to approach the appellate authority against the impugned orders; the appellate authority is directed to consider the petitioner's appeal on merits, having regard to the time already spent by the petitioner.

Adjudication during insolvency resolution - interim resolution professional - lifting of Insolvency and Bankruptcy Code protection - natural justice - opportunity of hearing - setting aside of order and remand for fresh adjudication

Adjudication during insolvency resolution - interim resolution professional - natural justice - opportunity of hearing - setting aside of order and remand for fresh adjudication - Validity of the order dated 26.04.2024 passed by the adjudicating authority while the petitioner was under a corporate insolvency resolution process and after having communicated appointment of an Interim Resolution Professional. - HELD THAT: - The Court recorded that the petitioner had communicated to the adjudicating authority, by partial reply dated 12.04.2024 to the show cause notice, that the corporate debtor was undergoing resolution and an Interim Resolution Professional had been appointed, requesting appropriate notice and time to seek the IRP's permission to contest proceedings. No further notice or opportunity was afforded and the impugned order was passed within a fortnight. Although the IRP appointment was subsequently set aside by the National Company Law Appellate Tribunal on 15.04.2024 (thereby lifting the IBC umbrella), that fact could not be communicated to the adjudicating authority before it passed the order on 26.04.2024. In these circumstances the Court found that passing the order during the pendency of the CIRP, without granting further opportunity to the petitioner who had informed the authority of the IRP appointment, was inappropriate. The Court therefore set aside the impugned order and remanded the matter for fresh adjudication, prescribing a timetable to ensure compliance with the principles of fair opportunity and timely disposal.

The impugned order dated 26.04.2024 is set aside; the petitioner to file detailed reply within two weeks, the adjudicating authority to fix a fresh personal hearing with at least 15 days' notice, and to pass a fresh adjudication order within two months.

Final Conclusion: Writ petition disposed by setting aside the impugned adjudication order passed during the pendency of CIRP; matter remanded for fresh adjudication in accordance with the timetable directed by the High Court.

Denial of opportunity of personal hearing - natural justice - ex parte adjudication - opportunity of hearing under Section 75(4) of the U.P. GST Act, 2017 - self imposed bar of alternative remedy/appeal in face of breach of natural justice - remand for fresh adjudication after affording hearing

Denial of opportunity of personal hearing - natural justice - opportunity of hearing under Section 75(4) of the U.P. GST Act, 2017 - ex parte adjudication - Validity of the impugned adjudication order in view of alleged denial of personal hearing and breach of principles of natural justice. - HELD THAT: - The Court examined the record and found that the notice for filing a reply fixed a date but no separate date for personal hearing was thereafter fixed and no further notice was issued. The adjudicating authority recorded replies submitted on the dates called but did not grant or fix any personal hearing before passing the impugned order. In these circumstances the order was treated as an ex parte order passed without affording the mandatory opportunity of personal hearing contemplated by Section 75(4) of the Act. The Court relied on the principle that procedural fairness under taxing statutes requires that a person be granted personal hearing before an adverse adjudication is passed, and that denial of such opportunity constitutes a gross violation of natural justice making the order unsustainable. [Paras 6, 7, 8]

The impugned order is set aside as having been passed in violation of the requirement of personal hearing and fundamental principles of natural justice.

Self imposed bar of alternative remedy/appeal in face of breach of natural justice - remand for fresh adjudication after affording hearing - Whether the availability of an alternative remedy by way of appeal ousts the writ jurisdiction where the adjudication has been passed in breach of natural justice, and the appropriate relief. - HELD THAT: - The Court held that where an adjudication proceeding has been conducted in breach of the mandatory requirement of personal hearing, the self imposed bar of an alternative statutory remedy cannot be permitted to operate so as to deny effective relief; applying the alternative remedy would be of no real use and would be counter productive to justice. Consequently, the Court set aside the impugned order and remitted the matter to the adjudicating authority for fresh decision after affording due opportunity of personal hearing. The remand is for fresh adjudication in accordance with law and not merely for quantification. [Paras 8, 9]

Writ petition allowed; the self imposed bar of alternative remedy is inapplicable in these facts and the matter is remitted for fresh adjudication after affording personal hearing.

Final Conclusion: The impugned adjudication order was set aside for denial of personal hearing and breach of natural justice; the matter is remitted to the adjudicating authority to pass a fresh order in accordance with law after affording due opportunity of personal hearing.

Error in assessment based on factual assumption - GSTR-3B inward cess reconciliation - remand for fresh consideration - opportunity of personal hearing - set aside and remit

GSTR-3B inward cess reconciliation - error in assessment based on factual assumption - remand for fresh consideration - opportunity of personal hearing - Impugned assessment orders premised on an erroneous factual assumption regarding the amount of inward cess reported in the GSTR-3B returns were set aside and remitted for fresh consideration. - HELD THAT: - The Court found that the respondent's orders proceeded on the basis that inward cess reported in the petitioner's GSTR-3B was Rs. 1,89,09,103/-, whereas the GSTR-3B produced by the petitioner showed Rs. 77,69,979/- in the cess column of table 4. Given this prima facie discrepancy, the conclusion in the impugned orders that there was short payment of cess on outward supplies lacked a correct factual foundation. In view of that factual error, the Court considered it appropriate to remit the matters for reconsideration so that the respondent can verify the correct figures, afford the petitioner a reasonable opportunity including a personal hearing, and pass fresh orders after such reconsideration. [Paras 4, 5]

Impugned orders dated 28.02.2024 set aside and matters remanded for fresh consideration; respondent to provide opportunity including personal hearing and to pass fresh orders within three months.

Final Conclusion: Writ petitions allowed in part; impugned orders set aside and remanded for fresh consideration with direction to afford the petitioner a reasonable opportunity including personal hearing and to pass fresh orders within three months; no costs.

Discretion to dispense personal attendance under Section 205 Cr.P.C. - Appearance through pleader - Adjournment of non-bailable warrant and interim abeyance

Discretion to dispense personal attendance under Section 205 Cr.P.C. - Appearance through pleader - Applicant permitted to seek to appear through pleader and to apply for bail within a limited time; trial court to consider such application and any request for appearance through pleader in accordance with law - HELD THAT: - The High Court, relying on the principle that the Magistrate has discretion to dispense with personal attendance and allow appearance through a pleader, disposed of the Section 482 Cr.P.C. application without adjudicating merits. The Court directed that the applicant shall appear before the trial court within two weeks with a certified copy of the order and apply for bail; on that appearance the trial court shall consider the bail application the same day and thereafter consider any application for appearance through a pleader in accordance with law. The Court emphasised cooperation with the trial and limited the applicant's obligation to personal attendance to instances specifically directed by the trial court. [Paras 8]

Applicant to appear within two weeks, apply for bail, and trial court to consider bail and any plea for appearance through pleader forthwith and in accordance with law; applicant to cooperate and attend when specifically directed.

Adjournment of non-bailable warrant and interim abeyance - Interim abeyance of non-bailable warrants for a limited period - HELD THAT: - Without adjudicating the substantive complaint, the Court ordered that for a period of two weeks from the date of the order the non-bailable warrants issued against the applicant shall be kept in abeyance. The direction is temporally limited to permit the applicant to appear before the trial court and seek bail and related reliefs as directed. [Paras 8]

Non-bailable warrants kept in abeyance for two weeks to enable applicant's appearance and consideration of bail/representation applications.

Final Conclusion: The petition under Section 482 Cr.P.C. is disposed of by directing the applicant to appear before the trial court within two weeks and apply for bail, permitting the trial court to consider bail and any application for appearance through a pleader forthwith; non-bailable warrants are stayed for two weeks. The Court did not adjudicate the merits of the underlying complaint.

Transitional Input Tax Credit - natural justice - personal hearing - compliance with sub section (5) of Section 140 - remand on terms - remittance as condition for grant of relief

Transitional Input Tax Credit - natural justice - personal hearing - Impugned order dated 29.12.2023 was set aside on the ground that the petitioner was not given a reasonable opportunity to contest the demand in respect of claimed transitional input tax credit. - HELD THAT: - The petitioner had filed TRAN 1 and, in response to the show cause notice dated 29.09.2023, submitted a reply on 05.10.2023 enclosing a copy of TRAN 1 and asserting that VAT and CST invoices were filed earlier. The respondent relied on non compliance with the documentary requirements of sub section (5) of Section 140 for confirmation of the tax proposal and issued a reminder. While the petitioner did not initially produce the specified VAT/CST invoices with the reply, the court accepted the petitioner's assertion that the relevant documents existed and had been filed earlier. In these circumstances the court concluded that the petitioner ought to be afforded another opportunity to place all relevant documents before the authority and to be heard personally, rather than having the proposal confirmed without full consideration of the claimed transitional credit.

Impugned order set aside and petitioner granted a further opportunity to contest the demand and to file supporting documents, including a personal hearing.

Remand on terms - remittance as condition for grant of relief - reasonable opportunity - The matter was remitted to the respondent for fresh adjudication on the petitioner being placed on terms including payment of a portion of the disputed tax demand. - HELD THAT: - On the petitioner's willingness and as a condition for remand, the court directed the petitioner to remit 15% of the disputed tax demand within fifteen days from receipt of the order. Upon receipt of the payment and an additional reply enclosing all relevant documents, the respondent is required to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh order. The fresh adjudication is to be completed within three months from receipt of the petitioner's additional reply. The court therefore fashioned relief by conditioning the setting aside of the earlier order on the specified remittance and procedural steps to ensure a meaningful opportunity to be heard while preserving the revenue's interest.

Matter remitted to the respondent to decide afresh after the petitioner remits 15% of the disputed demand, files all relevant documents and is afforded a personal hearing; fresh order to be passed within three months.

Final Conclusion: Writ petition allowed in part: the impugned order dated 29.12.2023 is set aside on terms that the petitioner remit 15% of the disputed tax demand within fifteen days, file additional documents and be afforded a personal hearing; the respondent shall thereafter decide the matter afresh within three months. No costs.

Penalty under Section 129(5) of the respective GST enactments - minor discrepancy in PIN code - e-way bill and tax invoice address mismatch - Circular No.64/38/2018-GST of the CBIC - deeming provision in Section 129(5) and effect of payment - refund or adjustment to Electronic Cash Ledger/Electronic Credit

Penalty under Section 129(5) of the respective GST enactments - minor discrepancy in PIN code - Circular No.64/38/2018-GST of the CBIC - e-way bill and tax invoice address mismatch - Validity of imposing penalty under Section 129(5) for discrepancy in PIN code/address between Tax Invoice and E-Way Bill - HELD THAT: - The Court held that the discrepancy between the PIN code and the variation in addresses arose from the difference between the head office address and the actual place of dispatch and that the Tax Invoices and the e-way bill otherwise accompanied the consignment. Reliance was placed on para 5(b)-(c) of Circular No.64/38/2018-GST which treats error in pin-code and minor address errors as situations in which proceedings under Section 129 need not be initiated. The Court characterised the variance as a technical, venial breach and concluded that such a minor discrepancy did not justify the levy of the penalty under Section 129(5). The Court thus quashed the impugned order imposing the penalty and directed remedial relief in favour of the petitioner. [Paras 16, 17, 18, 19, 20]

The penalty imposed for the minor PIN/address discrepancy is quashed; the impugned order is set aside.

Deeming provision in Section 129(5) and effect of payment - refund or adjustment to Electronic Cash Ledger/Electronic Credit - Effect of payment made under Section 129(5) and consequent relief when penalty is subsequently quashed - HELD THAT: - Although the respondent relied on the deeming provision in Section 129(5) and the acknowledged payment which, as a legal proposition, concludes proceedings specified under sub-section (3), the Court nevertheless granted relief on merits because the penalty itself was held to be unjust for a technical discrepancy. The Court observed the statutory philosophy against levying unjust tax on an otherwise compliant assessee and directed the respondent to either refund the amount paid or permit adjustment/credit in the petitioner's electronic cash/credit ledger for future tax liabilities. [Paras 11, 12, 20]

Despite payment and the deeming provision, the petitioner is entitled to refund or adjustment as the penalty has been quashed.

Final Conclusion: Writ petition allowed; impugned order imposing penalty quashed and respondent directed to refund the amount paid or allow adjustment in the petitioner's electronic cash/credit ledger; no costs.

Proceedings under Section 130 for quantification of tax where excess stock is found are impermissible - determination of tax on unaccounted goods under Section 35(6) must follow the assessment/determinative procedure under Sections 73 and 74 - penalty under Section 130 attracted only where contravention of the Act or Rules is coupled with intent to evade tax - survey findings of excess stock engage assessment proceedings under Sections 73 & 74 and not confiscation/penal provisions of Section 130

Proceedings under Section 130 for quantification of tax where excess stock is found are impermissible - penalty under Section 130 attracted only where contravention of the Act or Rules is coupled with intent to evade tax - Whether initiation of proceedings under Section 130 (and levy of penalty thereunder) is permissible where a survey discloses excess stock - HELD THAT: - The Court held that where excess stock is found on survey, the department cannot proceed to quantify tax liability and impose penalties by resorting to Section 130. Clause (ii) of sub section (1) of Section 130 applies, at best, when the liability to pay tax arises after the time of supply and the assessee has not accounted for such supplies; Clause (iv) attracts penalty only when a contravention of the Act or Rules is established together with an intention to evade payment of tax. In the present facts there was no allegation or finding of such intent or of contraventions warranting use of Section 130 for assessment/quantification. Consequently the use of Section 130 for assessing/taxing excess stock detected on survey was held unsustainable and the impugned order based on that exercise was set aside. [Paras 8, 10]

Proceedings under Section 130 could not be lawfully employed to quantify tax or levy penalty for excess stock found on survey; the impugned order based on Section 130 was set aside.

Determination of tax on unaccounted goods under Section 35(6) must follow the assessment/determinative procedure under Sections 73 and 74 - survey findings of excess stock engage assessment proceedings under Sections 73 & 74 and not confiscation/penal provisions of Section 130 - Whether tax on unaccounted or excess goods (deemed supplies) must be determined in accordance with the procedure prescribed in Sections 73 and 74 pursuant to Section 35(6) - HELD THAT: - Relying on the statutory scheme and earlier decisions, the Court recorded that Section 35(6) deems unaccounted goods to be supplies but expressly empowers the proper officer to determine the tax payable by following the procedure laid down in Sections 73 and 74. The quantification of tax for such 'deemed supplies' must therefore be conducted under Sections 73/74 (with their mandated notice, opportunity and limitation safeguards) and not by ad hoc assessment under Section 130. The Court endorsed prior rulings to this effect and held that the department's exercise of quantification must conform to Sections 73/74. [Paras 8]

Determination and quantification of tax on unaccounted goods under Section 35(6) must be undertaken in accordance with Sections 73 and 74; Section 130 cannot be used for that purpose.

Final Conclusion: The impugned order in GST Appeal No.28/2020 (Assessment Year 2018-19) founded on quantification of tax and imposition of penalty under Section 130 following a survey that found excess stock was unsustainable; the order is set aside and the writ petition is allowed.

Time of supply - Continuous supply of services - CBIC Circular No.221/15/2024-GST - input tax credit - tax liability on issuance of invoice or receipt of payment - set aside assessment orders - remand for fresh consideration

Time of supply - Continuous supply of services - CBIC Circular No.221/15/2024-GST - remand for fresh consideration - Assessment to be re-examined on the question of time of supply under the Hybrid Annuity Model (HAM) in light of the CBIC clarification - HELD THAT: - The Court recognised that the CBIC Circular No.221/15/2024-GST treats HAM contracts as a single contract for construction and operation & maintenance and treats payments staggered over the contract period as falling within the concept of continuous supply of services. The Circular clarifies that tax liability would arise on issuance of invoice or on receipt of payment, whichever is earlier, if invoices are issued on or before the contractually specified dates, or otherwise on the date of provision of service or receipt of payment, as applicable. In view of this specific administrative clarification and the concessionaire's contract terms providing staggered construction payments and annuities, the Court concluded that the impugned assessments require fresh consideration by the assessing authority applying the Circular and the relevant statutory tests for time of supply under section 13 read with section 31 of the CGST Act. Consequently the matters were remitted to the respondent to re-examine the issue in the light of the Circular and the contractual payment milestones. [Paras 5, 9, 14, 16]

Matters remitted to the respondent to re-examine and decide the time of supply and related tax liability for the HAM contract in light of CBIC Circular No.221/15/2024-GST.

Tax liability on issuance of invoice or receipt of payment - input tax credit - no prima facie liability without invoice or receipt - set aside assessment orders - Whether the petitioner is prima facie liable to tax on the entire contract value prior to issuing invoice or receiving payment and whether availment of input tax credit is precluded by subcontractor billing - HELD THAT: - The Court observed that, prima facie, the petitioner cannot be held liable to pay tax on the entire contract value where no invoice has been raised upon NHAI and no payment has been received; tax liability arises upon issuance of invoice or receipt of payment as per the statutory scheme and the CBIC clarification. The Court further held that the petitioner's availment of input tax credit in respect of taxes charged by the sub-contractor must be governed by the statute (including the time-bound conditions for claiming credit) and that completion of subcontracted work in advance and the subcontractor having issued invoices does not in itself establish that the petitioner evaded tax or disentitles it from claiming input tax credit. On these prima facie conclusions the Court found it appropriate to set aside the impugned assessment orders and direct fresh consideration. [Paras 15]

Impugned assessment orders set aside insofar as they proceed on the basis that the entire contract value is presently taxable; petitioner prima facie not liable to tax until invoice issuance or receipt of annuity payments and entitlement to input tax credit to be determined in accordance with law during reconsideration.

Final Conclusion: Impugned assessment orders for AYs 2019-20, 2020-21 and 2021-22 are set aside and the matters remitted to the assessing authority to re-examine time of supply, tax liability and input tax credit claims in light of CBIC Circular No.221/15/2024-GST; respondent to decide afresh after hearing the petitioner, preferably within three months.

GST on assignment of leasehold rights - show-cause notice - ad-interim relief - interim injunction against tax proceedings

GST on assignment of leasehold rights - show-cause notice - ad-interim relief - interim injunction against tax proceedings - Grant of interim relief restraining further proceedings pursuant to the impugned show-cause notice dated 08th April, 2024 issued for F.Y. 2019-20. - HELD THAT: - The Court issued notice on the petition and, having considered the petitioner's submission that the notice in Form DRC-01 dated 08th April, 2024 calls upon the petitioner to show cause why GST on transaction of assignment of long term leasehold right should not be levied for F.Y. 2019-20, granted ad interim relief. The ad interim relief operates to restrain continuation of any further proceedings pursuant to the impugned show cause notice until the next date of hearing. The petition is directed to be heard along with Special Civil Application No.11345 of 2023 and allied matters, and direct service by email is permitted. [Paras 3, 4, 5]

Notice issued returnable on 01st August, 2024; ad interim relief granted restraining further proceedings pursuant to the impugned show cause notice; matter to be heard with SCA No.11345 of 2023 and allied matters.

Final Conclusion: The High Court issued notice, granted ad interim relief restraining further proceedings under the impugned Form DRC 01 dated 08th April, 2024 for F.Y. 2019 20, and listed the matter to be heard with Special Civil Application No.11345 of 2023 on 01st August, 2024.

Opportunity of personal hearing - reliance on earlier reply to show cause notice - exercise of statutory remedy under Section 107 - condonation of delay in filing appeal - consideration of appeal on merits despite delay

Condonation of delay in filing appeal - exercise of statutory remedy under Section 107 - consideration of appeal on merits despite delay - Liberty granted to the petitioner to prefer an appeal and direction to the appellate authority to consider the appeal on merits without rejecting it solely on the ground of delay. - HELD THAT: - The Court, noting that the petitioner's Chartered Accountant met with an accident during the period of limitation for filing an appeal and that medical documentation was placed on record, exercised supervisory jurisdiction to afford a limited remedial opportunity. The petitioner was permitted to file an appeal before the statutory appellate authority within fifteen days from the date of the order. The appellate authority was directed to consider and decide the appeal on its merits and was expressly prohibited from rejecting the appeal merely on the ground of delay. The Court emphasised that it was disposing of the writ petition by granting this procedural remedy and did not express any opinion on the substantive merits of the underlying dispute. The direction effectively requires the appellate authority to undertake fresh consideration of the appeal notwithstanding any delay attributable to the petitioner's circumstances. [Paras 8, 9]

Petitioner permitted to prefer an appeal within fifteen days; appellate authority to consider and decide the appeal on merits and not dismiss it on account of delay; writ disposed without expressing any opinion on merits.

Final Conclusion: Writ petition disposed by granting the petitioner liberty to file an appeal within fifteen days; appellate authority directed to entertain and decide the appeal on merits and not to reject it solely for delay; no observation made on the substantive merits.

Cancellation of registration under Central Goods and Services Tax Act, 2017 - show cause notice specifying reasons - physical verification of business premises under Rule 25 of the Central Goods and Services Tax Rules, 2017 - powers of proper officer under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017 - bona fide, cooperation in inspection and withholding of information - procedural irregularity vis-a -vis validity of administrative action

Show cause notice specifying reasons - cancellation of registration under Central Goods and Services Tax Act, 2017 - The show cause notice and the grounds for cancellation disclosed a prima facie reason for initiating cancellation proceedings and the petitioner was informed of those reasons. - HELD THAT: - The Court observed that the show cause notice referred to supporting documents and conveyed a prima facie opinion that the petitioner no.1 was a fake entity created to pass irregular input tax credit without underlying supplies. The material placed with the show cause, including the communication of the Assistant Commissioner, was held to amount to disclosure of reasons for issuance of the show cause and for initiating action under Section 29. Mere terse wording in the reasons column did not negate the fact that the petitioners were furnished the basis of the proceedings and afforded an opportunity to explain. [Paras 5]

The show cause notice cannot be set aside on the ground that reasons were not disclosed.

Physical verification of business premises under Rule 25 of the Central Goods and Services Tax Rules, 2017 - procedural irregularity vis-a -vis validity of administrative action - The procedures of physical verification required by Rule 25 were not strictly followed, and the Court recognised procedural deficiencies in the inspection process. - HELD THAT: - The Court noted that Rule 25 prescribes the mode and manner for physical verification of business premises and that the petitioners were not notified of attempts to identify their place of business. The endorsement by postal authorities relied upon by respondents was held to be an inadequate and legally unfamiliar method to establish existence or non-existence of a company. Accordingly, the Court found that the respondents' procedure for verification was not strictly in accordance with Rule 25. [Paras 6]

The physical verification was not conducted strictly in accordance with Rule 25.

Powers of proper officer under Section 29(2)(e) of the Central Goods and Services Tax Act, 2017 - bona fide, cooperation in inspection and withholding of information - procedural irregularity vis-a -vis validity of administrative action - Despite procedural shortcomings, the cancellation order was not set aside because the petitioners refused to cooperate with a further inspection, raising doubts about their bona fide and justifying dismissal of the petition. - HELD THAT: - Although the Court acknowledged that the respondents' procedure may not have been strictly compliant, it declined to quash the cancellation because the petitioners would not permit a fresh inspection in accordance with Rule 25. The petitioners' refusal to allow verification led the Court to infer that they were withholding information and had not come with clean hands. Given the prima facie material indicating a fake entity and the petitioners' reluctance to facilitate further factual determination, the Court held that no relief under Article 226 was warranted. [Paras 6, 7]

The writ petition was dismissed as the petitioners' refusal to cooperate with inspection justified upholding the cancellation despite procedural irregularities.

Final Conclusion: The Court found that reasons for the show cause were communicated and that although Rule 25 verification was not strictly followed, the petitioners' refusal to permit a fresh inspection justified dismissal of the writ petition and the cancellation order was not set aside.

Non-production of hard copy of impugned order as a technical/procedural defect - processing of an appeal filed within statutory time despite non-compliance with Rule 108(3) - requirement to number/register an appeal if otherwise in order - procedural compliance versus substantive time-bar

Non-production of hard copy of impugned order as a technical/procedural defect - processing of an appeal filed within statutory time despite non-compliance with Rule 108(3) - Appeal presented within time must be processed and not rejected solely for non-filing of the physical copy of the impugned order under Rule 108(3). - HELD THAT: - The Court applied the ratio of earlier decisions treating the non-production of the hard copy of the impugned order as only a technical defect. The refund rejection order dated 19.03.2021 was impugned by an appeal presented on 18.06.2021, which was within the statutory time limit for filing the appeal. Reliance was placed on the precedent that where the appeal has been filed within time and the impugned order is available with the appellate authority, the appeal should be processed notwithstanding the subsequent or belated filing of the physical copy. In consequence, the appellate authority was directed not to reject the appeal on the ground that the physical copy was furnished late and, if the appeal is otherwise in order, to number/register it within one month from receipt of a copy of the order. [Paras 3, 5]

The writ petition is allowed by directing the first respondent to process and number the appeal if otherwise in order, and not to reject it solely for late filing of the physical copy of the impugned order.

Final Conclusion: Writ petition disposed by directing the appellate authority to process and register the appeal presented on 18.06.2021 (which was within time) notwithstanding belated filing of the physical copy of the impugned order; numbering to be done within one month if the appeal is otherwise in order; no costs.

Pre-deposit requirement under Section 107 of the GST Act - Electronic Cash Ledger versus Electronic Credit Ledger - restoration of appeal for fresh adjudication - stay of coercive action pending disposal of appeal - unblocking/lifting of bank account seizure

Pre-deposit requirement under Section 107 of the GST Act - Electronic Cash Ledger versus Electronic Credit Ledger - restoration of appeal for fresh adjudication - Impugned appellate order dismissing the appeal on ground of deposit having been made in Electronic Credit Ledger instead of Electronic Cash Ledger was liable to be set aside and the appeal restored for consideration on merits. - HELD THAT: - The Appellate Authority dismissed the appeal because the petitioner had deposited the prescribed 10% in the Electronic Credit Ledger rather than the Electronic Cash Ledger required by law. The High Court noted that although the deposit was incorrectly made, a subsequent event - namely recovery of the 10% by the respondents from the petitioner - had occurred. In view of that subsequent event and in the interest of adjudicating the controversy on merits, the Court set aside the impugned order and restored the appeal to the file of the Appellate Authority for fresh consideration in accordance with law. The Court therefore directed that the appeal be decided on its merits afresh by the First Appellate Authority. [Paras 7]

Impugned order set aside and appeal restored to Appellate Authority for consideration on merits.

Stay of coercive action pending disposal of appeal - unblocking/lifting of bank account seizure - Interim protection from coercive steps and direction to unblock the petitioner's bank account were granted until disposal of the restored appeal, and the seizure of the petitioner's bank current account was ordered to be lifted. - HELD THAT: - The petitioner sought a direction restraining respondents from taking coercive or precipitate steps until the appeal was disposed of. The Court, upon restoring the appeal for fresh adjudication, directed that respondents shall not take any coercive action against the petitioner until the Appellate Authority disposes of the appeal pursuant to this order. Further, the Court directed respondents to unblock and lift the seizure of the petitioner's bank current account, thereby restoring the petitioner's access to the account as an immediate protective measure. [Paras 7, 8]

Respondents restrained from taking coercive action till disposal of the restored appeal; bank account seizure to be lifted/unblocked.

Final Conclusion: Impugned appellate order dated 23.06.2023 set aside; appeal restored to the First Appellate Authority for fresh consideration on merits. Respondents restrained from taking coercive action till disposal of the appeal and directed to unblock and lift seizure of the petitioner's bank current account.

Input Tax Credit - mismatch between GSTR 2A and GSTR 3B - opportunity of hearing - rectification and reconsideration in accordance with law - Ext.P2 circular dated 27.12.2022

Input Tax Credit - mismatch between GSTR 2A and GSTR 3B - Ext.P2 circular dated 27.12.2022 - opportunity of hearing - rectification and reconsideration in accordance with law - Extent to which the assessment order denying Input Tax Credit on account of alleged mismatch between GSTR 2A and supplier's GSTR 3B is sustainable and the consequent direction for reconsideration. - HELD THAT: - The assessment order (Ext.P1) rejected the petitioner's claim for Input Tax Credit for the stated sum on the ground of an alleged mismatch between the petitioner's GSTR 2A and the supplier's GSTR 3B. In terms of Ext.P2 circular dated 27.12.2022, where such a mismatch exists the assessing officer is required to call upon the claimant to produce a certificate from the supplier or otherwise afford opportunity to explain and produce supporting documents showing the supply and payment of tax by the supplier. The record does not indicate that the petitioner was called upon to explain the mismatch, and the petitioner has proffered willingness to produce documents. For these reasons the Court set aside Ext.P1 only insofar as it denies the Input Tax Credit and directed that the petitioner may file an application for rectification of Ext.P1 in respect of the denied credit with supporting documents. The respondent is to consider that application and pass orders in accordance with law after affording the petitioner an opportunity of hearing. All other aspects of Ext.P1 remain unaffected. [Paras 4]

Ext.P1 is set aside insofar as it denies the Input Tax Credit for the period July 2017 to March 2018; petitioner may apply for rectification with supporting documents and the respondent shall reconsider and pass orders in accordance with law after hearing; other findings in Ext.P1 remain undisturbed.

Final Conclusion: Writ petition disposed by setting aside the assessment order only to the extent it denied the stated Input Tax Credit; petitioner may seek rectification and the respondent must reconsider that claim after affording an opportunity of hearing, while other portions of the assessment order continue to operate.

Condition for grant of stay - remittance of a percentage of assessed demand - precedential value limited to decisions of the Apex Court and the jurisdictional High Court - interim order by appellate authority under the Income Tax Act

HELD THAT:- It is stated at the Bar that these Special Leave Petitions arise out of an interim order passed by the High Court in appeals. That these appeals have itself been disposed of.

Appropriate orders may be made in these petitions.

Right to personal hearing - Interpretation of a conditional request for personal hearing u/s 144B(6)(viii) of the Income Tax Act, 1961 - Faceless assessment/appeal procedure - Extraordinary writ jurisdiction under Article 226 of the Constitution of India

HELD THAT:- We dispose of this Special Leave Petition by noting the fact that the High Court itself [2024 (4) TMI 1158 - DELHI HIGH COURT] has in paragraph ‘5’ of the impugned order stated that the impugned order was without prejudice to the rights and contentions of the writ petitioner and that it was open for him to address his case on all points in the statutory remedy that is to be availed. Therefore, the petitioner is at liberty to take all contentions that is available to him, in the statutory appeal to be filed if so advised, having regard to the fact that by the time the impugned order was passed, the assessment order had already been made.

Interest on delayed refund - Delay attributable to assessee under Section 244A(2) - Finality of Commissioner's decision under Section 244A(2) - Revisionary jurisdiction u/s 263 - delay of 265 days in preferring the Special Leave Petition

The High Court [2023 (6) TMI 1407 - BOMBAY HIGH COURT] affirmed the Tribunal's factual conclusion that the Assessing Officer adopted one of the possible views in allowing interest u/s 244A and that there was no basis to hold delay in the refund proceedings attributable to the assessee; accordingly the Section 263 order was not sustainable and the appeal was dismissed.

HELD THAT:- There is a gross delay of 265 days in preferring the Special Leave Petition. We have also perused the application seeking condonation of delay. We are totally dis-satisfied with the manner in which the said application has been drafted inasmuch as it gives an impression that a cyclostlyed and sterotyped form of application has been made use of to insert certain dates so as to adjust to the date of filing of the special leave petition(s).

The explanation offered for the said delay is also not satisfactory nor is it sufficient in law to condone the same.

Denial of exemption u/s 11 - Assessee has not carried on any charitable activities during the relevant period and, as such, violated Section 11(2) and 11(5) - Delay in filling SLP

High court [2022 (9) TMI 1603 - ANDHRA PRADESH HIGH COURT] dismissed the Revenue's appeal, affirming the Tribunal's decision that the trust's activities were charitable and that there were no violations of Sections 11 and 13 - HELD THAT:- There is a gross delay of 496 days in filing this special leave petition.

We are not satisfied with the explanation offered in order to seek condonation of delay. In the circumstances, the application seeking condonation of delay in filing special leave petition is dismissed. Consequently, the special leave petition also stands dismissed.

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

Reopening of assessment - revenue audit objections as ground for reassessment - reasonable opportunity of hearing - supply of documents and certified copies on request - procedure under Section 148A of the Income Tax Act

Reopening of assessment - revenue audit objections as ground for reassessment - procedure under Section 148A of the Income Tax Act - Validity of revenue audit objections as a permissible ground for reopening assessment and the applicability of the amended Explanation 1 to Section 148. - HELD THAT: - The Court accepted that audit objections, indicating that an assessment was not completed in accordance with the provisions of the Act, constitute a valid statutory ground for reopening an assessment. The judgment recognises that the provisions (as amended with effect from 01.04.2022) permit reliance on revenue audit objections as information justifying issuance of show cause notice and reassessment proceedings. The Court did not disturb the settled principle that detailed adjudication of evidentiary disputes is not required at the showcause stage; rather it emphasised that audit objections are not to be treated as mere change of opinion but can be statutory grounds for reopening. [Paras 15]

Revenue audit objections can be considered a valid ground for reopening an assessment under the amended provisions and related procedure under Section 148A.

Reasonable opportunity of hearing - supply of documents and certified copies on request - procedure under Section 148A of the Income Tax Act - Whether failure to supply requested documents and to grant personal hearing before passing order under Section 148A(d) vitiates the order and requires setting aside with directions for fresh consideration. - HELD THAT: - The Court found that although audit objections may justify reopening, procedural fairness mandated by the Department's Circular and the concept of reasonable opportunity required that the petitioner be furnished the audit objections and relevant records and be afforded a personal hearing before the Assessing Officer passed the order under Section 148A(d). The petitioner had specifically requested certified copies of the record and a personal hearing, which were not provided; the Court held that the Assessing Officer acted in undue haste in issuing the order without respecting these requests. Consequently, the orders under Section 148A(d) and Section 148 were set aside and the matter was remitted for fresh consideration after supplying documents, receiving the petitioner's reply, and granting a personal hearing. [Paras 14, 16, 17]

Order under Section 148A(d) and Section 148 set aside for failure to supply documents and to grant personal hearing; matter remanded for fresh consideration after compliance.

Final Conclusion: Writ petition allowed in part: orders dated 20.04.2024 under Section 148A(d) and Section 148 are set aside; respondents directed to supply the requested documents on payment of fees within one week, petitioner to file reply within one week thereafter, a personal hearing to be granted, and the Assessing Officer to pass a fresh order under Section 148A(d) after considering submissions and hearing within three weeks.

Plenary powers of the Tribunal under Section 254 - admissibility of fresh or inconsistent claims before the Tribunal - binding effect of the Return of Income on subsequent assessment by the Assessing Officer - revised return requirement for the Assessing Officer versus appellate/remedial powers of appellate fora - applicability and scope of CBDT Circular No. 549/1989 in the light of subsequent amendments to Section 143(3) - Assessing Officer's duty to comply with Tribunal's remand directions

Plenary powers of the Tribunal under Section 254 - admissibility of fresh or inconsistent claims before the Tribunal - Assessing Officer's duty to comply with Tribunal's remand directions - revised return requirement for the Assessing Officer versus appellate/remedial powers of appellate fora - Whether the Assessing Officer was justified in refusing to entertain and give effect to the additional grounds remitted by the Tribunal on the basis that the assessee's assessed income could not be reduced below the returned income or because the claim was not made by way of a revised return. - HELD THAT: - The Court held that the plenary powers conferred on the Tribunal under Section 254 permit admission and consideration of fresh or inconsistent claims in appeal, and that where the Tribunal directs the Assessing Officer to re-examine issues, the AO cannot refuse to consider those grounds on the pretext of adherence to the original Return of Income or insistence upon a revised return. The judgments of this Court and the Supreme Court (including Wipro Finance Ltd. and the principles in National Thermal Power Co. Ltd., Goetze, and related High Court authorities) establish that limitations applicable to the assessing authority do not curtail the Tribunal's and revisional authorities' power to entertain and direct reconsideration of claims; consequently, the AO was not justified in declining to re-examine the additional grounds merely because the relief would reduce taxable income below the figure declared in the return or because a revised return was not filed. [Paras 16, 17, 18, 20]

The AO's refusal to consider the Tribunal-remitted additional grounds on the ground that relief would reduce income below the returned income or that no revised return was filed was quashed; the AO must consider the additional grounds afresh in accordance with law.

Applicability and scope of CBDT Circular No. 549/1989 in the light of subsequent amendments to Section 143(3) - binding effect of the Return of Income on subsequent assessment by the Assessing Officer - Whether CBDT Circular No. 549/1989 could be relied upon by the Assessing Officer to foreclose consideration of a claim that would result in an assessed income lower than the returned income in the factual matrix where the Tribunal had remitted the issue for fresh consideration. - HELD THAT: - The Court observed that, although the Circular addressed the position under the earlier scheme of Section 143, once the Tribunal had admitted additional grounds and directed re-examination, the AO could not disregard that judicial direction by invoking the Circular. In the circumstances of this case the challenge to the Circular did not require extended adjudication; what was determinative was that the AO was obliged to comply with the Tribunal's remit and examine the additional grounds rather than treat the Circular as a bar to such reconsideration. [Paras 19]

The AO could not rely on CBDT Circular No. 549/1989 to negate or avoid consideration of the Tribunal-remitted grounds; the Circular was not a valid basis to deny the remand-ordered re-examination.

Final Conclusion: Writ petitions allowed; final assessment orders dated 30 November 2021 are quashed insofar as they negate consideration of the additional grounds remitted by the Tribunal. The AO is directed to consider the additional grounds afresh and pass fresh orders in accordance with law. The consequential demand and penalty notices dated 30 November 2021 are quashed. All rights and contentions in respect of the additional grounds are kept open to be addressed before the AO.

Amalgamation and transfer of tax liability - Effective date of amalgamation - Notice under Section 148 issued in the name of a non-existent transferor - Transferee's obligation to include transferor's income in return - Quashing of assessment orders issued against a dissolved entity

Amalgamation and transfer of tax liability - Effective date of amalgamation - Notice under Section 148 issued in the name of a non-existent transferor - Quashing of assessment orders issued against a dissolved entity - Validity of assessment orders and notices issued in the name of SPB Papers Limited after its amalgamation w.e.f. 01.04.2012 - HELD THAT: - The Court found that SPB Papers Limited ceased to exist w.e.f. 01.04.2012 by virtue of the sanctioned scheme of amalgamation and that the effective date of merger made the tax liabilities of the transferor merge into the transferee, M/s. Seshasayee Paper and Boards Limited. The regular return for Assessment Year 2013-2014 was filed by the transferee and would have included the transferor's income. Notices under Section 148 and subsequent proceedings were issued and assessment orders were passed in the name of the dissolved transferor company despite the Department having been informed of the merger and despite replies stating non-existence of the transferor. In these circumstances the Court held that proceedings and orders made against the non-existing transferor are unsustainable and liable to be quashed. [Paras 15, 16]

Impugned assessment orders issued in the name of SPB Papers Limited after its amalgamation w.e.f. 01.04.2012 are quashed.

Transferee's obligation to include transferor's income in return - Amalgamation and transfer of tax liability - Proper party liable for any short payment of tax arising from the transferor's income following amalgamation - HELD THAT: - The Court explained that once amalgamation takes effect, the transferee is obliged to include the transferor's tax liabilities. If tax attributable to the transferor was not discharged, the statutory remedy lies against the transferee which assumed the liabilities on the effective date of amalgamation. Consequently, while assessment in the name of the dissolved transferor is quashed, the Department is left with the remedy to proceed against the transferee company in accordance with law to recover any short payment of tax. [Paras 16, 17, 18]

Liberty granted to the Income Tax Department to proceed against M/s. Seshasayee Paper and Boards Limited (the transferee) in the manner known to law to recover any tax shortfall.

Final Conclusion: Writ petitions allowed; assessment orders for AY 2013-2014 and AY 2016-2017 framed in the name of the non-existent transferor company are quashed, with liberty to the Income Tax Department to proceed against the transferee company to recover any tax liability. No costs.

Non-application of mind - faceless collection of information - verification of electronic information before issuing notice under Section 148 - dispensing with Section 148A procedure on receipt of information under Section 135A - quashing of notice under Section 148 for arbitrariness

Verification of electronic information before issuing notice under Section 148 - dispensing with Section 148A procedure on receipt of information under Section 135A - Whether issuance of notice under Section 148 by dispensing with Section 148A was permissible where the Assessing Officer acted on information received under the faceless scheme and the assessee had already pointed out alleged defects in that information - HELD THAT: - The Court held that where information is generated under the faceless mechanism pursuant to Section 135A, the Assessing Officer cannot mechanically dispense with the safeguards of Section 148A without applying his mind to other material available on record, including replies and documentary material furnished by the assessee. Electronic data derived from the portal may be fallible; hence before taking the prejudicial step of issuing a notice under Section 148 by invoking the proviso that dispenses with Section 148A, the Assessing Officer is obliged to cross-check and verify the electronic information against materials provided by the assessee or otherwise available. If defects in the electronic information are pointed out, those explanations must be considered prior to obtaining prior approval and issuing the notice. Failure to undertake this basic scrutiny converts the exercise into an arbitrary action and undermines the protective purpose of Section 148A when it is sought to be dispensed with on the basis of electronically collected information. [Paras 19, 24, 26, 27, 28]

The Court found that the Assessing Officer ought to have verified and applied mind to the assessee's explanations before dispensing with Section 148A and issuing notice under Section 148.

Non-application of mind - quashing of notice under Section 148 for arbitrariness - Whether the impugned notice dated 26th March 2024 issued under Section 148 was vitiated by non-application of mind and thus liable to be quashed - HELD THAT: - On the facts, the respondents conceded by affidavit that, upon re-verification, the system reflected the correct interest figure disclosed by the petitioner and not the larger figure earlier shown. The Court observed that the assessee had, earlier in correspondence, pointed out duplication and provided explanations which required consideration before issuance of the notice. The Assessing Officer did not undertake the necessary verification and only after the petitioner approached the Court was the correct electronic figure reflected. Given this failure to apply mind to the material and the assessee's responses, the issuance of the notice was arbitrary. In consequence, the impugned notice could not be sustained. [Paras 19, 27, 28, 29, 32]

The impugned notice dated 26th March 2024 under Section 148 is quashed and set aside for arbitrariness and non-application of mind.

Final Conclusion: The writ petition is allowed on the limited ground that the notice dated 26th March 2024 under Section 148 was issued arbitrarily without appropriate verification of electronic information and without applying mind to the assessee's explanations; the notice is quashed and set aside. Other challenges, including constitutional objections to the proviso to Section 148A, are left open.

Violation of principles of natural justice - Service of notice electronically - Order under Section 148A(d) of the Income Tax Act - Notice under Section 148 of the Income Tax Act - Quashing and remand for fresh consideration - Opportunity to file additional reply - Technical accessibility of the income tax portal

Violation of principles of natural justice - Service of notice electronically - Order under Section 148A(d) of the Income Tax Act - Notice under Section 148 of the Income Tax Act - Impugned order dated 30.03.2024 under Section 148A(d) and notice dated 30.03.2024 under Section 148 quashed and matter remitted for fresh consideration - HELD THAT: - The Court found that the petitioner had electronically replied to the Section 148A(b) notice dated 13.03.2024 on 22.03.2024, but the impugned order recorded that no explanation was submitted. The judgment concludes that the electronic reply sent to the 2nd respondent was not communicated to the 1st respondent, producing a breach of the petitioner's opportunity to be heard. In these circumstances the Court interfered with the impugned order and the subsequent notice, quashing both and remitting the matter to the 1st respondent for fresh decision on merits and in accordance with law. [Paras 6]

Impugned order dated 30.03.2024 under Section 148A(d) and notice dated 30.03.2024 under Section 148 quashed; matter remitted to 1st respondent for fresh orders on merits and in accordance with law.

Opportunity to file additional reply - Quashing and remand for fresh consideration - Technical accessibility of the income tax portal - Procedural directions to enable fresh consideration and to afford the petitioner an opportunity to present submissions - HELD THAT: - The Court granted the petitioner liberty to file an additional reply within two weeks from receipt of the order and directed that the impugned order of 30.03.2024 be treated as an addendum to the show cause notice dated 13.03.2024. The respondents were ordered to ensure technical issues on the income tax portal are resolved so the petitioner can upload replies, and the 1st respondent was directed to pass orders on merits and in accordance with law expeditiously. [Paras 7]

Petitioner permitted to file additional reply within two weeks; impugned order to be treated as addendum; respondents to clear portal technical issues and 1st respondent to decide afresh expeditiously.

Final Conclusion: Writ petition disposed of by quashing the impugned order dated 30.03.2024 and the notice dated 30.03.2024; matter remitted to the 1st respondent for fresh consideration, with liberty to the petitioner to file further reply and directions to remedy portal accessibility.

Allowance of depreciation notwithstanding prior treatment of capital expenditure as application of income under section 11 - prohibition on double deduction doctrine - relationship between section 11 and section 32 - computation of income of charitable trusts on commercial principles - prospective operation of statutory amendment to section 11(6) (effective Assessment Year 2015-16) - entitlement to carry forward depreciation once allowed

Allowance of depreciation notwithstanding prior treatment of capital expenditure as application of income under section 11 - prohibition on double deduction doctrine - relationship between section 11 and section 32 - computation of income of charitable trusts on commercial principles - entitlement to carry forward depreciation once allowed - Depreciation claimed by a charitable trust for AY 2011-12 is allowable although the capital expenditure on the asset was earlier treated as application of income under section 11; such allowance does not amount to an impermissible double deduction. - HELD THAT: - The Court held that the legal position for periods prior to 1 April 2015 is settled by the Supreme Court's decision in Commissioner of Income Tax-III, Pune v. Rajasthan & Gujarati Charitable Foundation Poona, which affirmed the view of the Bombay High Court that income of a charitable trust must be computed on normal commercial principles. Where capital expenditure on an asset was treated as application of income under section 11 in the year of acquisition, that treatment does not preclude allowance of depreciation in subsequent years in computing income from the asset. The argument that allowing depreciation would result in a prohibited double deduction was rejected: section 32 and the computation principles applicable to trusts operate such that normal depreciation may be allowed, and the Legislature later amended section 11(6) effective AY 2015-16 to address the lacuna prospectively. The Court also noted that once depreciation is allowed, the assessee is entitled to carry forward depreciation as applicable. [Paras 2, 4, 5, 6]

The view of the Supreme Court was applied to hold that depreciation is allowable for AY 2011-12 despite earlier treatment of the capital outlay as application of income; consequent rights to carry forward depreciation follow.

Final Conclusion: Appeal dismissed; questions raised by Revenue were held to be covered by the Supreme Court's authoritative decision in Rajasthan & Gujarati Charitable Foundation Poona, confirming that depreciation is allowable for the assessment year in question and that the legislative amendment to section 11(6) operates prospectively from AY 2015-16.

Time-barred assessment - limitation under Section 153 - notice under Section 148 - remand for fresh consideration - opportunity of hearing before final assessment - alternate remedy before Commissioner (Appeals)

Time-barred assessment - limitation under Section 153 - notice under Section 148 - Impugned assessment order dated 27.03.2023 was set aside for reconsideration on the ground of limitation - HELD THAT: - The Court found that the assessability of the sale proceeds required examination with reference to the statutory time-limits for completion of assessment. The petitioner's case was that the normal time under Section 153 would have expired earlier and various statutory relaxations and interim judicial orders affected computation of limitation. In view of these contentions, the Court set aside the impugned assessment order to enable the assessing officer to examine whether the assessment is time-barred. The petitioner was permitted to explain the limitation position and to file additional written submissions; the assessing officer was directed to decide the limitation question expeditiously and to pass a fresh order after hearing the petitioner. [Paras 6, 10, 11]

Impugned assessment set aside and remitted to the first respondent for reconsideration limited to the question of limitation, with liberty to the petitioner to make submissions and be heard.

Remand for fresh consideration - opportunity of hearing before final assessment - alternate remedy before Commissioner (Appeals) - On remand, the assessing officer to decide merits if limitation does not result in dropping the demand, after affording opportunity to the petitioner - HELD THAT: - The Court directed that if the assessing officer, after hearing and considering the petitioner's submissions, concludes that limitation does not mandate dropping the assessment, the officer shall proceed to decide the assessment on merits. The petitioner was granted liberty to file additional written submissions and to be heard before final orders are passed. Although the respondents placed reliance on the availability of an alternate remedy before the appellate forum, the Court nevertheless exercised its discretion to grant limited relief by remanding the matter for fresh decision on limitation and, if necessary, on merits. The assessing officer was directed to dispose the matter preferably within six months from receipt of the order. [Paras 8, 10, 11]

Assessing officer to decide merits only if limitation does not lead to dropping the demand; petitioner to be heard and granted opportunity to submit additional material; decision to be made expeditiously, preferably within six months.

Final Conclusion: Writ petition disposed by setting aside the assessment order dated 27.03.2023 for Assessment Year 2013-2014 and remitting the matter to the assessing officer to examine limitation and, if required, the merits after affording the petitioner an opportunity of hearing; directions given for expeditious disposal.

Reopening of assessment - proviso to Section 147 - failure to disclose truly and fully material facts as condition for reopening after four years - change of opinion not a permissible ground for reopening - issue concluded by earlier assessment/order cannot be reopened - validity of approval for reopening by Commissioner where statutory limit has expired - Taxation and Other Loss (Relaxation of Certain Provisions) Ordinance, 2020 and notifications - no override of proviso to Section 147 in facts

Reopening of assessment - proviso to Section 147 - failure to disclose truly and fully material facts as condition for reopening after four years - change of opinion not a permissible ground for reopening - issue concluded by earlier assessment/order cannot be reopened - validity of approval for reopening by Commissioner where statutory limit has expired - Validity of notice under Section 148 and consequent reassessment proceedings for AY 2015-16 - HELD THAT: - The notice under Section 148 was issued after the expiry of four years of AY 2015-16. The proviso to Section 147 requires that, for reopening beyond four years, there must be failure by the assessee to disclose truly and fully material facts; absent such failure the assessment cannot be reopened. The Assessing Officer's stated reason challenged the indexed cost disclosed by the assessee and sought to convert an accepted capital loss into a gain, but the capital loss had been the subject-matter of earlier scrutiny and an assessment order in which the AO had accepted the loss. The Court found that the reasons relied upon amounted to a mere change of opinion and not a valid ground for reopening. The Revenue's reliance on the Taxation and Other Loss (Relaxation of Certain Provisions) Ordinance, 2020 and related notifications did not cure the jurisdictional defect; moreover the notice itself records that approval of the Commissioner of Income Tax was obtained, which is inconsistent with an attempt to treat the matter as within four years requiring different approval. For these reasons the reassessment proceedings and the order rejecting objections were without jurisdiction and liable to be quashed. [Paras 5, 6, 7, 8]

Notice under Section 148 dated 31st March 2021 and order on objections dated 19th January 2022 in respect of AY 2015-16 quashed; reassessment proceedings set aside as without jurisdiction.

Final Conclusion: Writ petition allowed; impugned notice under Section 148 and the order rejecting objections quashed and reassessment proceedings in respect of AY 2015-16 set aside as being without jurisdiction, illegal and arbitrary.

Condonation of delay under Section 119(2)(b) of the Income Tax Act - genuine hardship - liberal construction of Section 119(2)(b) - processing of belated returns

Condonation of delay under Section 119(2)(b) of the Income Tax Act - genuine hardship - liberal construction of Section 119(2)(b) - Whether the orders rejecting the applications for condonation of delay in filing returns for assessment years 2020-2021 and 2021-2022 should be interfered with - HELD THAT: - The Court held that Section 119(2)(b) permits the Board to condone delay in cases of genuine hardship and must be given a liberal construction. The petitioner, a resident of the United States, was unable to return to India during the interregnum because of the global disruption caused by the Covid-19 pandemic, family illness and bereavement, and a recorded theft of his passport. The Commissioner had rejected the condonation applications primarily on the ground that returns could have been filed via the e-filing portal, without adequately addressing the material facts demonstrating hardship. Having regard to the petitioner's overseas residence during the pandemic period and the supporting circumstances placed on record, the Court concluded that genuine hardship would result if delay were not condoned and that the impugned orders failed to give appropriate weight to those circumstances. [Paras 6, 7]

Impugned orders rejecting the condonation applications are quashed; delay in filing returns for assessment years 2020-2021 and 2021-2022 is condoned and the returns are to be processed in accordance with law.

Final Conclusion: Writ petitions allowed; orders dismissing applications under Section 119(2)(b) are quashed and the belated returns for AY 2020-2021 and AY 2021-2022 shall be processed in accordance with law.

Prosecution for failure to remit tax deducted at source - criminal liability for belated remittance of TDS - quashing of criminal proceedings - absence of wantonness or mala fides in delay as ground for quashment

Prosecution for failure to remit tax deducted at source - absence of wantonness or mala fides in delay as ground for quashment - quashing of criminal proceedings - Validity of prosecution under the penal provisions for belated remittance of tax deducted at source in the facts of the case and whether the charge sheets ought to be quashed. - HELD THAT: - The court found that there was an admitted delay in remittance of tax deducted at source but that the delay was not wanton nor motivated by mala fide intent; it was caused by the accounts staff being on maternity leave. The tax was subsequently remitted and the conduct of the petitioners thereafter showed compliance without further delay. Having regard to these facts, the court exercised its inherent/constitutional power to prevent abuse of process and concluded that criminal proceedings in the circumstances were not justified. Consequently, the court quashed the criminal proceedings initiated for the belated remittance.

Proceedings in C.C.Nos.1752, 1754, 1755 and 1753 of 2020 on the file of Judicial Magistrate No.III, Coimbatore are quashed.

Final Conclusion: The petitions are allowed and the criminal proceedings for belated remittance of tax deducted at source have been quashed on the ground that the delay was not wanton or mala fide and the tax was subsequently remitted.

Opportunity of being heard under Section 148A(b) - re-opening of assessment under Section 148 - quashing and remand for fresh hearing

Opportunity of being heard under Section 148A(b) - quashing and remand for fresh hearing - re-opening of assessment under Section 148 - Impugned order under Section 148A(d) and notice under Section 148 were invalid for failure to afford opportunity to the assessee as mandated by Section 148A(b), and the matter required remand for fresh hearing. - HELD THAT: - The petitioner filed return for Assessment Year 2018-19 and received a show-cause notice under Section 148A requiring a reply within a specified period. The Assessing Officer passed the order under Section 148A(d) and issued a notice under Section 148 without granting the petitioner the opportunity of being heard or allowing the requested extension to file a reply. The respondent conceded that no hearing was afforded and agreed that remand would avoid delay in re-assessment if required. In view of the statutory mandate to serve a notice affording not less than seven days and not exceeding thirty days (subject to possible extension) to show cause why a notice under Section 148 should not be issued, the Court held that the failure to comply with Section 148A(b) vitiated the order under Section 148A(d) and the subsequent Section 148 notice. The Court therefore quashed the impugned order and notice and remanded the matter to the Assessing Officer to give the petitioner the opportunity to file a reply and be heard in accordance with Section 148A(b). [Paras 3, 5, 6, 7]

Impugned order dated 30.03.2022 under Section 148A(d) and notice dated 31.03.2022 under Section 148 quashed; matter remanded to Assessing Officer to grant opportunity of hearing and consider reply in accordance with Section 148A(b).

Final Conclusion: The petition is allowed to the extent that the order under Section 148A(d) and the notice under Section 148 are quashed and the matter is remitted to the Assessing Officer to afford the petitioner the opportunity of hearing and to proceed thereafter in accordance with law; petition disposed of and interim relief vacated.

Summary order. Special Leave Petition dismissed as infructuous on account of issuance of notice of hearing by the Additional Commissioner; petition disposed of and pending applications, if any, disposed of.

Review petition - No error apparent on the face of the record - Dismissal for lack of merit - Condonation of delay

Condonation of delay - Delay in filing the Review Petition was condoned. - HELD THAT: - The Court, after receipt of the review petition and accompanying papers, recorded satisfaction with the explanation for delay and allowed the petition to be entertained by condoning the delay. No further factual or legal determination was made in relation to the grounds for condonation beyond recording that delay is condoned. [Paras 1]

Delay condoned.

Review petition - No error apparent on the face of the record - Dismissal for lack of merit - The Review Petition does not disclose any error apparent on the face of the record and is without merit; it was dismissed. - HELD THAT: - Having considered the Review Petition, the impugned order and the annexed papers, the Court concluded there was no error apparent on the face of the record nor any merit warranting reconsideration of the earlier order. The brief reasoning records that examination of the petition and documents failed to show any ground that would justify review, leading to dismissal of the petition. Pending applications connected with the petition were also disposed of. [Paras 2, 3, 4]

Review Petition dismissed for want of merit; pending applications disposed of.

Final Conclusion: The application for condonation of delay was allowed and, on merits, the Review Petition was dismissed as devoid of any error apparent on the face of the record; connected pending applications were disposed of.

Classification as hazardous waste - show cause notice and its statutory scope - acceptance by silence of explanation - re-determination of assessable value - confiscation and redemption under customs law - penalty for mis-declaration - Chartered Engineer valuation

Classification as hazardous waste - show cause notice and its statutory scope - acceptance by silence of explanation - Whether the adjudicating authority's failure to record a finding that the imported goods were "hazardous waste" or "waste" must be treated as acceptance of the petitioner's explanation that the goods were not hazardous waste. - HELD THAT: - The Court examined the impugned order and noted that the adjudicating authority had recorded and reproduced extensive submissions by the importer explaining why the used haemodialysis machines were not "hazardous waste" or "waste". The adjudicator's discussion and findings are silent on any conclusion that the goods were hazardous waste; there is no reasoned rejection of the petitioner's explanation. Applying the principle that where a statutory query is raised and the party replies, absence of any adverse finding on that query in the final order is to be taken as acceptance of the explanation, the Court concluded that the authority must be taken to have accepted the petitioner's case on that issue. The Court relied on analogous reasoning in earlier authority to support that omission to deal with the specific query amounts to deemed acceptance. [Paras 12]

The authority is to be taken as having accepted that the imported goods are not "hazardous waste" or "waste" in the absence of any adverse finding in the adjudication.

Re-determination of assessable value - confiscation and redemption under customs law - penalty for mis-declaration - scope of show cause notice - Chartered Engineer valuation - Whether the order rejecting the declared assessable value, re-determining value, ordering confiscation (with option of redemption) and imposing penalty could be sustained where the show cause notice had not called upon the importer to show cause for rejection of declared value or for confiscation/penalty on account of mis-declaration of value. - HELD THAT: - The Court observed that the show cause notice, as framed, alleged import of prohibited goods (used critical care medical equipment) and called for justification against confiscation and penalty on that ground. It did not, however, call upon the importer to show cause specifically why the declared assessable value should be rejected or why confiscation/penalty should be imposed for mis-declaration of value. Despite this, the adjudicating authority rejected the declared value, re-determined value relying on a Chartered Engineer certificate, ordered confiscation subject to redemption for re-export and imposed penalty purportedly for contravention under customs provisions. Because the impugned order imposed adverse consequences on grounds not put to the importer in the SCN, the Court found the adjudication procedurally infirm. In these circumstances the Court exercised its writ jurisdiction under Article 226 to set aside the impugned adjudication order. [Paras 13, 14]

The re-determination of value, the order of confiscation (with redemption option) and the penalty are set aside as unsustainable in view of the absence of requisite show-cause on mis-declaration of value; the impugned order is quashed.

Final Conclusion: Writ petition allowed; impugned order dated 21st April 2021 set aside. Court found the adjudicator had effectively accepted the petitioner's explanation that the goods were not hazardous waste by failing to record any adverse finding on that point, and the confiscation, re-determination of value and penalty could not be sustained where the show cause notice did not put the importer on notice of mis-declaration; petitioner may apply for refund of the deposit made pursuant to the interim order.

Bail - compoundable offence - custodial custody and effect on trial - surrender of passport and sureties as bail conditions

Bail - custodial custody and effect on trial - surrender of passport and sureties as bail conditions - Application for grant of bail to the accused-applicant was allowed subject to conditions. - HELD THAT: - The Court considered that the trial had not commenced, the accused's complicity was yet to be determined, the seized gold remained in departmental custody, there were no criminal antecedents on record, and the applicant had been in custody since 7.1.2024. The applicant also expressed willingness to deposit adequate customs duty. On these facts and without commenting on merits, the Court concluded that enlargement on bail would not adversely affect the trial and that the applicant had made out a case for bail. The Court therefore allowed the bail application and directed release on furnishing a personal bond and two heavy sureties to the satisfaction of the trial court, with verification of sureties and specified conditions including appearance, non-commission of similar offences, non-tampering with evidence, abstention from criminal activity, and surrender of passport. [Paras 7, 8, 9]

Bail allowed subject to personal bond, two heavy sureties, verification of sureties and enumerated conditions.

Compoundable offence - Whether the offence appears to be compoundable was regarded as a factor favouring bail. - HELD THAT: - The Court observed that the offence 'appears to be compoundable by virtue of Section 137(3) of the Customs Act' and treated this prospect, together with the custody of seized goods by the Department and other attendant considerations, as a material factor in exercising discretion to grant bail. The Court noted the absence of material showing that the applicant, if enlarged on bail, would impede the course of trial. [Paras 7]

Offence held to appear compoundable under Section 137(3), which weighed in favour of granting bail.

Final Conclusion: The bail plea of the applicant Arvind Chandrakant Kadam was allowed; he is to be released on furnishing a personal bond and two heavy sureties subject to verification and compliance with enumerated conditions, and prosecution may move for cancellation if conditions are breached.

Power to amend Foreign Trade Policy in public interest - Transitional arrangements under Para 1.05 of Foreign Trade Policy, 2023 - Retrospective effect of policy and vested rights - Doctrine of legitimate expectation - Judicial review of executive economic policy/public interest - Article 14 - arbitrariness and classification - Permissible exceptions/conditions to a prohibition on export

Power to amend Foreign Trade Policy in public interest - Permissible exceptions/conditions to a prohibition on export - Impugned Notification No.20/2023 is in conformity with the Foreign Trade Policy, 2023 and validly amends export policy by prohibiting Non-Basmati white rice subject to carved out exceptions. - HELD THAT: - A conjoint reading of Sections 3 and 5 of the FT(D&R) Act, 1992 and Para 1.02 of FTP 2023 shows the Central Government has authority to amend the FTP in public interest. Notification No.20/2023 changes the export policy for Non-Basmati white rice from 'Free' to 'Prohibited' while specifying distinct exceptions; therefore the Notification cannot be held contrary to the FTP. The court declined to strike down the Notification on the ground that it departs from the earlier unrestricted position because the change is within executive power to amend policy in public interest. [Paras 20]

Notification No.20/2023 is not contrary to the Foreign Trade Policy and is legally intra vires.

Transitional arrangements under Para 1.05 of Foreign Trade Policy, 2023 - Retrospective effect of policy and vested rights - The impugned Notification cannot be given retrospective effect so as to deprive exporters of vested rights arising under the FTP; it shall not take away rights accrued by Letters of Credit issued before 20.07.2023. - HELD THAT: - Para 1.05 of FTP 2023 and authoritative Supreme Court precedent (Asian Food Industries) establish that a statutory prohibition under the FT Act ordinarily operates prospectively and vested or accrued rights cannot be taken away retrospectively by amendment. Where irrevocable commercial Letters of Credit were issued before the date of imposition of restriction, those rights cannot be extinguished by retrospective application of the Notification. Accordingly the Notification cannot be applied to defeat such pre-existing commitments. [Paras 29]

Notification No.20/2023 shall not be given retrospective effect to impinge on rights arising from Letters of Credit issued prior to 20.07.2023.

Article 14 - arbitrariness and classification - Judicial review of executive economic policy/public interest - The classification effected by the Notification (permitting exports in specified circumstances while prohibiting others) is not arbitrary or violative of Article 14. - HELD THAT: - The conditions in Para 2 of the Notification distinguish exporters who had already completed arrangements for shipment from those who were still procuring rice; this distinction is rationally connected to the objective of controlling prices and protecting public interest. Given the limited scope of judicial review in economic policy matters and the existence of identifiable, objective differentiators, the challenge under Article 14 fails. [Paras 31]

The Notification's selective exceptions do not amount to arbitrary or discriminatory classification under Article 14.

Doctrine of legitimate expectation - Judicial review of executive economic policy/public interest - Doctrine of legitimate expectation does not bar the Notification: legitimate expectation yields to overriding public interest and no prior notice was required in the circumstances. - HELD THAT: - Although petitioners acted on the then existing policy and obtained Letters of Credit, the doctrine of legitimate expectation is not an absolute right and must yield where the public interest is compelling. Supreme Court authorities hold that legitimate expectation cannot prevent bona fide policy changes made in the larger public interest unless there is abuse of power. The court found the public interest justification sufficient and therefore rejected the contention that prior notice was mandated in the present circumstances. [Paras 35, 37]

Legitimate expectation does not preclude the Notification; prior notice was not required and the doctrine yields to public interest in this case.

Final Conclusion: Writ petitions disposed of by holding the Notification valid prospectively; petitioners are permitted to export Non-Basmati white rice in fulfilment of contracts where irrevocable Letters of Credit were issued before 20.07.2023, subject to verification of genuineness by authorities. No costs.

Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - Sea Cargo Manifest and Transhipment Regulations, 2018 - Customs Cargo Service Provider - detention/waiver certificate - prevalence of subordinate legislation over contractual obligations - maintainability of writ petitions against private service providers - Section 141 and Section 157 of the Customs Act, 1962 - provisional release under Section 110A of the Customs Act, 1962 - bailee's lien and lien/retention rights under the Indian Contract Act - subject to any other law for the time being in force - non compliance remedies: suspension, revocation and penalty under the Regulations

Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - detention/waiver certificate - Sea Cargo Manifest and Transhipment Regulations, 2018 - Binding effect of detention/waiver certificates and applicability of Regulations to CCSPs and carriers - HELD THAT: - The Court held that Regulation 6(1)(l) (HCCA Regulations) and the SCMT Regulations, as applicable, operate to make a detention/waiver certificate effective as an entitlement for the holder to claim waiver of rent/demurrage for the period specified when the adjudication ultimately favours the importer/exporter. Persons falling within the inclusive definition of Customs Cargo Service Provider are bound by the statutory responsibilities in Regulation 6(1), and a detention certificate issued by the customs authorities is not a mere paper direction but confers eligibility for the statutory relief (subject to the stated legal caveats). Where both Regulations overlap they must be harmonised; the SCMT proviso permitting carriers to demand container detention after sixty days is to be read in the context of the statutory scheme and timelines. The entitlement to waiver, however, is contingent on the outcome of adjudication: where the importer is exonerated, the waiver/claim will be enforceable; where adjudication finds a violation (confiscation, penalty, etc.), waiver cannot be granted. (See paras 26, 37-38, 45.) [Paras 26, 37, 38, 45]

Detention/waiver certificates issued under HCCA/SCMT Regulations are valid and binding on CCSPs in cases where adjudication ultimately exonerates the importer; the SCMT sixty day proviso and other statutory provisions must be harmonised with this result.

Maintainability of writ petitions against private service providers - Customs Cargo Service Provider - Maintainability of writ petitions under Article 226 against CCSPs for enforcement of statutory waiver - HELD THAT: - The Court held that writ petitions under Article 226 are maintainable against CCSPs when the relief sought is to enforce a statutory right arising under the HCCA/SCMT Regulations. Because CCSPs operate pursuant to statutory approval and perform functions and duties in a customs area under the Act and Regulations, challenges or enforcement of statutory detention/waiver certificates fall within public law domain and are amenable to writ jurisdiction rather than being relegated automatically to civil remedies. The Court rejected the categorical proposition that contractual inter se disputes always preclude writ relief where a statutory obligation to honour a detention certificate is in issue. (See paras 29-39, 45.) [Paras 39, 45]

Writ petitions to enforce statutory detention/waiver certificates against CCSPs are maintainable where enforcement of a statutory right under the Regulations is claimed.

Prevalence of subordinate legislation over contractual obligations - Section 1 saving clause of the Indian Contract Act - Whether private contract/lien rights prevail over statutory duties under HCCA/SCMT Regulations - HELD THAT: - The Court held that contractual rights between importer and CCSP are subject to the law of the land; subordinate legislation enacted under the Customs Act (HCCA/SCMT Regulations) prescribes statutory responsibilities for CCSPs and, to the extent there is repugnance, the Regulations prevail over private contractual terms. While bailee's lien and contractual remedies remain relevant to disputes on the contract, they cannot be pressed to defeat the statutory obligation imposed on CCSPs to waive charges where a valid detention/waiver certificate applies and adjudication clears the importer. The saving in the Contract Act does not enable private contract to override statutory obligations. (See paras 31-38, 45.) [Paras 38, 45]

Contractual lien/contract terms do not override the statutory duties under HCCA/SCMT Regulations where a valid detention/waiver certificate operates following adjudication in favour of the importer.

Audi alteram partem / right to be heard - detention/waiver certificate - Whether CCSPs must be afforded a hearing before customs issues a detention/waiver certificate - HELD THAT: - The Court observed that the regulations do not provide for a procedural right of CCSPs to be heard prior to issuance of a detention/waiver certificate; the entitlement to waiver is tied to the statutory adjudication process between the importer and authorities. Given the legal nature of the entitlement and that the adjudicatory process addresses culpability of the importer, the Court held that a pre issuance hearing to CCSPs would generally be unnecessary and in many cases futile where the facts and law admit only one conclusion; where non compliance by a CCSP is alleged, the Regulations provide for departmental action (suspension/revocation/penalty) with procedural safeguards. (See paras 41, 45.) [Paras 41, 45]

No general requirement to afford CCSPs a prior hearing before issuance of a detention/waiver certificate; remedies for CCSPs lie in departmental procedures if adversely affected, and any failure to comply by CCSPs can be met by appropriate departmental action.

Period of waiver and timelines (60/90 days) - provisional release under Section 110A - Temporal scope of waiver and obligation to adhere to statutory timelines for adjudication and provisional release - HELD THAT: - The Court held that timelines in the statutory scheme are material: SCMT Regulation provides a sixty day reference point for container detention charges (subject to proviso), HCCA prescribes disposal time limits and recognises a 90 day disposal norm for unclaimed goods. However entitlement to waiver turns on the facts and on adjudication results. Where adjudication establishes the importer's innocence the waiver applies for the detention period; where goods were provisionally released under Section 110A or the authorities delayed adjudication beyond reasonable time, the department may be accountable for the period of delay. The Court directed that pending waiver applications and adjudications be finalised within prescribed short timeframes and issued consequential directives for completion of provisional release/adjudication and refunds. (See paras 42-44, 45.) [Paras 42, 43, 44, 45]

Waiver periods are governed by the statutory scheme and timelines; entitlement depends on adjudication outcome, and customs authorities must dispose pending waiver applications and adjudications within the timeframes directed by the Court.

Non compliance remedies: suspension, revocation and penalty under the Regulations - refund and departmental compensation - Relief and remedies where CCSPs or carriers do not honour valid detention/waiver certificates or where delay is attributable to authorities - HELD THAT: - The Court directed that where a detention/waiver certificate is valid (adjudication in favour of importer) and CCSPs fail to comply, customs authorities may initiate actions available under the Regulations (suspension/revocation/penalty) after due process, and importers are entitled to refund of amounts realised in breach of a valid certificate; where delay in adjudication or re export was attributable to authorities, the department may be directed to make good losses to the CCSPs. The Court issued case management timelines for finalisation, refunds and consideration of interest claims by the appropriate authority. (See paras 44-46.) [Paras 44, 45, 46]

Non compliance by CCSPs with valid waiver certificates attracts departmental action and importer entitlement to refund; where authorities cause delay, department may be directed to compensate CCSPs-subject to due procedure.

Final Conclusion: The Court held that the HCCA Regulations (and, where applicable, the SCMT Regulations) create a statutory entitlement to waiver of rent/demurrage for goods detained by customs when adjudication ultimately clears the importer; such detention/waiver certificates are enforceable against Customs Cargo Service Providers and, subject to adjudication results, prevail over conflicting contractual claims. Writ jurisdiction is available to enforce statutory detention/waiver certificates against CCSPs; timelines for adjudication, provisional release and disposal must be adhered to, refunds ordered where adjudication favours the importer and departmental remedies may be invoked for CCSP non compliance. Specific directions were issued for finalisation, refunds and departmental action and numerous writ appeals/petitions were disposed of in accordance with these principles.

General Interpretative Rule 2(a) (classification of CKD/SKD as complete goods) - ITC(HS) / RITC classification follows Harmonised System of Nomenclature - Policy conditions in ITC(HS) as standalone plain text restrictions - Scope of 'motor vehicles' in Policy Condition 2(II) - limited to completely built units - Type approval under Central Motor Vehicles Rules, 1989 (Rule 126) applies to complete vehicles - Confiscation under section 111(d) of the Customs Act not attracted where FTP restriction not breached

General Interpretative Rule 2(a) (classification of CKD/SKD as complete goods) - ITC(HS) / RITC classification follows Harmonised System of Nomenclature - Applicability of GIR 2(a) to classification under ITC(HS) for goods imported in CKD condition - HELD THAT: - The Tribunal held that ITC(HS) classification, like the Customs Tariff, is based on the Harmonised System of Nomenclature and that the General Rules of Interpretation, including GIR 2(a), apply to ITC(HS) so that goods in CKD or SKD condition are to be classified as complete goods. This conclusion is supported by the universal acceptance of HSN notes and the fact that the importer itself declared the same RITC and Customs Tariff heading under GIR 2(a) in the Bills of Entry; the importer cannot adopt an inconsistent position. The Tribunal further observed that rejecting application of GIR 2(a) to ITC(HS) would cause impractical consequences and enable circumvention by splitting goods into parts, hence GIR 2(a) correctly applies to ITC(HS) classification (paras 12-16). [Paras 12, 13, 16]

GIR 2(a) applies to classification under ITC(HS); CKD imports are to be classified under the same heading as the complete goods.

Policy conditions in ITC(HS) as standalone plain text restrictions - Scope of 'motor vehicles' in Policy Condition 2(II) - limited to completely built units - Type approval under Central Motor Vehicles Rules, 1989 (Rule 126) applies to complete vehicles - Whether the port/ICD restriction in Policy Condition 2(II)(d) of Chapter 87 of ITC(HS) applies to vehicles imported in CKD condition - HELD THAT: - The Tribunal examined the Policy Note as a whole and the specific sub conditions in 2(II). It found that many preconditions for a 'new vehicle' under 2(II)(a)-(c) (e.g., functioning speedometer, conformity with Motor Vehicles Act, and type approval under Rule 126 CMVR) presuppose an assembled vehicle and cannot be met when parts are imported in CKD condition. Reliance on Olympic Exports was considered in the light of the Delhi High Court decision in Rama Krishna Sales, which clarified that Rule 126 applies to importers/manufacturers of motor vehicles and type approval is not attainable for mere parts or unassembled consignments. Reading the term 'motor vehicles' consistently across Policy Condition 2 led to the conclusion that the expression denotes completely built units (CBUs) and does not encompass CKD imports. Consequently the port/ICD restriction in 2(II)(d) is inapplicable to CKD imports (paras 18-23, 25-27). [Paras 22, 23, 25, 26, 27]

Policy Condition 2(II)(d) port/ICD restriction applies only to completely built vehicles and does not apply to vehicles imported in CKD condition.

Confiscation under section 111(d) of the Customs Act not attracted where FTP restriction not breached - Consequences of holding that CKD imports are not covered by the port restriction - validity of confiscation, redemption fine and penalty imposed on the appellant - HELD THAT: - Since the Tribunal concluded that the port restriction in Policy Condition 2(II)(d) does not apply to vehicles imported in CKD condition, the imported consignments through ICD Garhi Harasu did not contravene the FTP prohibition or restriction relied upon by the adjudicating officers. In view of absence of breach of the FTP condition, the statutory basis for confiscation under section 111(d) of the Customs Act and the consequent redemption fine and penalty under sections 125 and 112 respectively could not be sustained. The Tribunal therefore set aside the findings of violation and the penalties imposed (paras 26-28, 29). [Paras 26, 28, 29]

Confiscation, redemption fine and penalty imposed on the appellant were unsustainable and are set aside.

Final Conclusion: The appeal is allowed: GIR 2(a) applies to ITC(HS) classification (CKD items are classified as complete goods), but Policy Condition 2(II)(d) (port/ICD restriction) is limited to completely built vehicles and does not apply to CKD imports; accordingly, confiscation and penalties based on breach of that policy condition are set aside and the impugned order is quashed.

Production of false Country-of-Origin certificate - Penalty for short-levy or suppression (penalty under Section 114A) - Penalty for use of false or incorrect material (penalty under Section 114AA) - Proprietary concern and proprietor treated as one for imposition of penalty

Production of false Country-of-Origin certificate - Penalty for short-levy or suppression (penalty under Section 114A) - Whether the duty, interest and penalty under Section 114A as determined by the authorities in respect of the impugned Bills of Entry are sustainable - HELD THAT: - The appellant admitted, in response to departmental summons and in statements reproduced in the record, that incorrect or non prescribed 'Country of Origin' certificates were produced to claim the concessional benefit and did not retract those admissions. The department's investigation showed that benefit under the relevant notification was ineligible as the certificates were not in prescribed format. The appellant accepted the mis-declaration and paid the differential duty, interest and the reduced penalty. In these circumstances the Tribunal upheld the confirmation of duty, interest and the penalty already discharged under Section 114A, concluding that having admitted the mis-declaration and paid the liabilities, the demand and penalty under Section 114A stand confirmed. [Paras 5, 6]

Demand of differential duty, interest and the penalty under Section 114A as paid by the appellant are sustained and stand confirmed.

Penalty for use of false or incorrect material (penalty under Section 114AA) - Proprietary concern and proprietor treated as one for imposition of penalty - Whether imposition of a separate penalty on the proprietor under Section 114AA is sustainable when the firm had already been penalised under Section 114A for the same offence - HELD THAT: - The Tribunal analysed the principle that a proprietorship concern and its proprietor are one and the same for purposes of penalty imposition and that the same offence (production of wrong 'Country of Origin' certificate) cannot support two separate penalties on the firm and separately on the proprietor. The Tribunal relied on precedents treating imposition of separate penalties on both the firm and proprietor as impermissible and observed that the appellant had already discharged duty, interest and penalty under Section 114A. Since the offence was the same and a penalty has already been imposed and paid on the proprietorship concern, imposing an additional penalty under Section 114AA on the proprietor would amount to double punishment for the same transaction; therefore the penalty under Section 114AA could not be sustained. [Paras 10]

Penalty imposed on the appellant (proprietor) under Section 114AA is set aside; the impugned order is upheld except insofar as it imposes the Section 114AA penalty.

Final Conclusion: The appeal is disposed of by upholding the confirmed demand of differential duty, interest and the penalty under Section 114A as paid by the appellant, but setting aside the separate penalty imposed on the proprietor under Section 114AA on the ground that the proprietorship and the firm are one and the same and the same offence cannot attract two separate penalties.

Leave to continue proceedings in winding-up under Section 446 of the Companies Act, 1956 - execution proceedings as continuation of the suit - leave granted for continuance dispenses with fresh leave for execution - priority of creditors and Official Liquidator's claim-adjudication mechanism in liquidation - objections as to paucity of funds and unsecured creditor status are matters for execution stage

Leave to continue proceedings in winding-up under Section 446 of the Companies Act, 1956 - execution proceedings as continuation of the suit - leave granted for continuance dispenses with fresh leave for execution - Petitioner entitled to execute the decree of the Madras High Court having earlier obtained leave to continue the suit from this Court. - HELD THAT: - The Court held that leave granted under Section 446 to continue a suit pending at the time of the winding up operates to permit the continuation of proceedings, and execution is a continuation of the suit. Reliance on the principle in Bansidhar Shankarlal v. Mohd. Ibrahim indicates that once leave is granted to prosecute or continue the suit, there is no requirement of obtaining a fresh leave for institution or continuation of execution proceedings; the execution is treated as part of the same proceeding and the leave already obtained suffices. The Court observed that the petitioner had been granted leave on 6th May, 2004 and the Madras High Court later decreed the suit on 24th November, 2023; depriving the petitioner of the ability to execute the decree would render the prior leave and the efforts expended futile. Accordingly, the application for leave to execute was allowed. [Paras 23, 31, 32, 33, 44]

Leave granted to the petitioner to execute the decree dated 24th November, 2023 of the Madras High Court.

Priority of creditors and Official Liquidator's claim-adjudication mechanism in liquidation - objections as to paucity of funds and unsecured creditor status are matters for execution stage - Contentions of the Official Liquidator regarding the petitioner being an unsecured creditor and paucity of funds do not preclude grant of leave to execute and are to be addressed in execution proceedings. - HELD THAT: - The Court noted the OL's submission that the petitioner had not filed claims with the OL and that available funds had been distributed pro rata to secured creditors and workers. However, the Court held that such contentions relate to the merits and distribution questions which fall within the execution process and the liquidation machinery; they can be taken up at the execution stage. Staying a favourable decree despite prior leave to continue the suit would make the earlier permission and litigative efforts futile. The Court therefore declined to treat the OL's submissions as a bar to granting leave to execute, leaving the substantive contestations to execution proceedings. [Paras 15, 16, 34, 35, 36]

OBJECTIONS about unsecured creditor status and paucity of funds are not a ground to refuse leave to execute and may be raised and decided in execution proceedings.

Execution proceedings as continuation of the suit - distinguishing contrary authority on facts - Decision in Pafco 2916 Inc. & Ors. v. Official Liquidator was considered distinguishable and did not require refusing leave where prior leave to continue the suit had been granted. - HELD THAT: - The Court examined the Karnataka High Court decision cited by the Official Liquidator, which emphasized that leave under Section 446 is required for execution proceedings and expressed concern about disturbing pari passu rights of creditors. The present case was distinguished: there the decree was obtained from a foreign court and leave was sought at execution stage for recognition/enforcement in India; here the petitioner had obtained leave to continue the domestic suit in 2004 and the suit was prosecuted to decree. The Court observed that the Karnataka High Court's concerns do not alter the position that prior leave to continue the suit makes fresh leave for execution unnecessary in the circumstances of this case. [Paras 39, 40, 41, 42, 43]

Pafco decision distinguished on its facts and does not preclude grant of leave to execute in the present case.

Final Conclusion: The petition is allowed: leave is granted to the petitioner to execute the decree dated 24th November, 2023 of the Madras High Court; objections raised by the Official Liquidator concerning creditor status and fund paucity are left to be agitated and determined in the execution proceedings.

Possession of property during liquidation - liability of Official Liquidator to pay compensation/rent - entitlement of a purchaser against a company in liquidation - piercing/lifting of the corporate veil - fraudulent diversion of company funds - clean hands doctrine in equitable relief - reliance on unregistered or unproduced title documents

Possession of property during liquidation - liability of Official Liquidator to pay compensation/rent - reliance on unregistered or unproduced title documents - Relief for handing over vacant possession and payment of compensation was not granted to the applicant. - HELD THAT: - The applicant sought directions under Section 446 of the Companies Act, 1956 for delivery of vacant possession of the specified premises and payment of monthly compensation. The Court noted absence of an attested or certified copy of the sale deed relied upon by the applicant and observed that the License/Lease deed placed on record was not a registered document. Material irregularities in the applicant's title evidence and non-disclosure of revival and authorization details were highlighted. In light of these deficiencies, and having regard to the overall factual matrix of the liquidation proceedings, the Court concluded that the applicant had not established a prima facie right to the reliefs claimed against the Official Liquidator, and that the Official Liquidator was not liable to be directed to hand over possession or to make payment of compensation. [Paras 12, 13, 14, 17]

The applications for delivery of vacant possession and for payment of compensation were dismissed.

Piercing/lifting of the corporate veil - fraudulent diversion of company funds - clean hands doctrine in equitable relief - entitlement of a purchaser against a company in liquidation - The Court held that the applicant is a shell company linked to the ex-management and, on the facts, the corporate veil could be lifted; accordingly the applicant's claim was barred by its lack of clean hands. - HELD THAT: - The Court reviewed earlier findings in the winding up proceedings which record diversion of substantial funds by the ex-management from the company in liquidation to related entities. The Master Data and other material on record indicated that the applicant shared common address, shareholding links and directorial connections with entities controlled by the alleged mastermind, and that the sale deed relied upon was executed after appointment of the Provisional Liquidator. Given the admitted diversion of funds and the surrounding circumstances, the Court found sufficient grounds to infer that the applicant was a shell company benefiting from the ex-management's transactions. Applying the equitable principle that a party must come with clean hands and the doctrine permitting lifting of the corporate veil where necessary to ascertain real beneficiaries, the Court refused relief to the applicant. [Paras 12, 13, 14, 15, 16]

The Court lifted the corporate veil on the facts and dismissed the applicant's claims on the ground that it had not come to court with clean hands.

Final Conclusion: The applications by SMS Textiles Limited for delivery of vacant possession and for payment of compensation were dismissed after the Court found inadequacy of title evidence and concluded, on the factual matrix of the winding up proceedings, that the applicant was a shell company linked to the ex-management whose funds had been fraudulently diverted; equitable relief was denied and the corporate veil was lifted for that purpose.

Validity of transfer of shares and entitlement to re-allotment - locus to seek relief under section 241-242 (oppression and mismanagement) - requirement of being a registered member in the register of members - finality of earlier adjudication

Validity of transfer of shares and entitlement to re-allotment - finality of earlier adjudication - Whether the appellants (legal heirs) can succeed in a petition to set aside the transfer of 2500 shares and secure re-allotment or fair consideration. - HELD THAT: - The Tribunal held that the earlier proceedings (TP No.106/2016 and subsequent appeals) decided only the question of to whom the 2500 shares ought to be allotted (i.e., that allotment solely to Respondent No.2 was illegal) and did not establish that the original sale by the deceased was itself contested by him. The deceased had executed the sale letter dated 23.06.2015, received the sale consideration and expressly disclaimed involvement thereafter by affidavit in TP No.106/2016. Despite the Supreme Court having dismissed the appeal in 2018, no action was taken by the deceased to seek transfer of the shares in his favour before his death; the present appellants (his legal heirs) initiated proceedings only after his death. On these facts the appellants cannot now reverse the earlier adjudicatory outcomes or reinterpret TP No.106/2016 to their benefit. The petition seeking setting aside of the transfer and re-allotment in favour of the legal heirs is therefore without merit. [Paras 7, 9, 10]

The appellants' claim to set aside the transfer and to obtain re-allotment or fair consideration is rejected; the earlier adjudications are final and the appellants cannot reverse those outcomes.

Locus to seek relief under section 241-242 (oppression and mismanagement) - requirement of being a registered member in the register of members - Whether the appellants have locus to file a petition under Sections 241-242 of the Companies Act as legal heirs who are not registered members. - HELD THAT: - The Tribunal applied the principle that a petition under Section 241 of the Companies Act is maintainable only by a person whose name appears on the register of members as a shareholder. Relying on the reasoning reproduced from a prior decision, the Tribunal held that an individual not entered as a member on the register lacks the legal standing to prefer a petition under Section 241 (and consequently under Section 242). The appellants are not registered members/shareholders of the company and therefore have no locus to maintain the company petition under Sections 241-242. [Paras 10]

The appellants lack locus to file a petition under Sections 241-242 as they are not registered members; the petition is therefore not maintainable on that ground.

Final Conclusion: The appeal is dismissed. The appellants cannot overturn the earlier adjudications regarding the 2500 shares, and, being non-members not entered in the register of members, lack locus to invoke Sections 241-242 of the Companies Act; pending applications are also dismissed.

Summary order. Appeals dismissed; questions of law left open; pending applications, if any, disposed of.

Set-off of counterclaims in an arbitral award - deduction of tax at source (TDS) from a decree or arbitral award - character of a decree as a judgment debt - effect of insolvency/liquidation on enforcement of an arbitral award - refund/credit of TDS paid to Income Tax Authorities

Set-off of counterclaims in an arbitral award - effect of insolvency/liquidation on enforcement of an arbitral award - Whether the respondent could not have adjusted the amount awarded to it on counterclaims against the amount awarded to the petitioner because the respondent is in liquidation under the IBC. - HELD THAT: - The Arbitral Tribunal itself applied the counterclaim award of Rs. 2,62,93,252/- against the claim award of Rs. 5,51,95,198/- and fixed the net entitlement at Rs. 2,89,01,946/-. The court held that the petitioner cannot challenge the internal adjustment effected by the Tribunal in execution proceedings; to dispute the permissibility of that adjustment the petitioner must challenge the award itself, which it has not done. The petitioner's contention that liquidation of the respondent under the IBC precludes such adjustment was rejected on the basis that the Tribunal had already set-off the amounts in its award, and the execution must follow the award unless it is set aside. [Paras 6, 8]

The adjustment made by the Arbitral Tribunal of the respondent's counterclaim against the petitioner's claim stands and cannot be attacked in the execution petition; the petitioner's plea based on the respondent's liquidation is rejected.

Deduction of tax at source (TDS) from a decree or arbitral award - character of a decree as a judgment debt - refund/credit of TDS paid to Income Tax Authorities - Whether TDS could be deducted by the respondent from the amount payable under the arbitral award and the remedy available to the petitioner for TDS already deposited. - HELD THAT: - The court applied settled precedent that an amount payable to a decree-holder in terms of a decree becomes a judgment debt and loses the character it had for purposes of provisions such as Section 194C; in the absence of any provision permitting deduction of TDS from judgment debts, no TDS can be deducted from amounts payable under a decree or arbitral award. The respondent had deducted TDS under Section 194C, but the court followed Supreme Court and earlier High Court decisions holding such deduction impermissible in the context of a decree/judgment debt. Where the TDS has already been deposited by the judgment-debtor with the tax and other competent authorities, the decree-holder is permitted to apply to those authorities for refund/credit, and upon such application the authorities shall credit the amount to the decree-holder. [Paras 11, 13, 16, 19, 20]

TDS should not have been deducted from the amount payable under the arbitral award; the petitioner may apply to the Income Tax Authorities and the competent authority under the Building and Other Construction Workers' Welfare Cess Act, 1996 for refund/credit of the TDS already deposited, and those authorities shall credit the amount to the petitioner on such application.

Final Conclusion: The execution petition is disposed of: the Arbitral Tribunal's net award after set-off stands; deduction of TDS from the award was impermissible; the petitioner may seek refund/credit of TDS already deposited by applying to the relevant authorities, who shall credit the amounts to the petitioner.

Interim relief to facilitate liquidation sale despite Enforcement Directorate attachment - conditioning lifting of attachment on retention of sale proceeds - proceeds of sale liable for attachment - interaction between insolvency liquidation process and attachment by Enforcement Directorate

Interim relief to facilitate liquidation sale despite Enforcement Directorate attachment - conditioning lifting of attachment on retention of sale proceeds - proceeds of sale liable for attachment - Interim direction permitting lifting of Enforcement Directorate attachment on assets subject to corporate liquidation to enable the Liquidator to sell the properties, subject to conditions. - HELD THAT: - The Court granted an interim direction to lift the attachment effected by the Enforcement Directorate on properties that are subject matter of the liquidation so that the Liquidator may proceed with sale as part of the corporate insolvency process. The order is explicitly conditional: the Liquidator must ensure that the proceeds of any sale are retained in an account and such proceeds remain liable to attachment by the Enforcement Directorate; representatives of the Enforcement Directorate are to be informed of the proposed sale details. The Court refrained from adjudicating the rival legal contentions concerning the priority or effect of the non-obstante clauses but found that the parties' interests can be safeguarded by allowing the sale to proceed on the stated protective conditions. The order is also taken to be in harmony with interim directions referenced from the Supreme Court in the noted SLP. [Paras 2]

Attachment by the Enforcement Directorate on the properties subject to liquidation is lifted for the limited purpose of permitting the Liquidator to effect sale, provided the sale proceeds are retained and remain liable to attachment and the Enforcement Directorate is kept informed.

Final Conclusion: Interim relief granted to enable the Liquidator to sell assets subject to liquidation by lifting the Enforcement Directorate's attachment for that purpose, on the condition that sale proceeds are retained, remain attachable, and the Enforcement Directorate is notified; no decision recorded on the rival contentions regarding legal priority.

Summary judgment - Admitted debt under compromise - Estoppel and election to withdraw suit - Limitation as a mixed question of law and fact - Liability of company directors not party to contract - Interest entitlement under compromise

Summary judgment - Admitted debt under compromise - Entitlement to summary judgment against the first defendant for the unpaid principal of Rs.70,00,000/- under the Memorandum of Compromise dated 14.09.2019 - HELD THAT: - The Memorandum of Compromise recorded before the NCLT establishes that the first defendant agreed to pay Rs.70,00,000/- as the second instalment which was not realised because the post-dated cheque was returned dishonoured. The Court found the principal sum of Rs.70,00,000/- to be undisputed on the material placed before it and concluded that the first defendant must be put on terms to defend the suit on merits. Without expressing any opinion on other contested matters, the Court directed the first defendant to deposit Rs.70,00,000/- to the credit of the suit within two weeks, failing which summary judgment shall be entered for that amount in favour of the plaintiff. [Paras 17, 32, 37]

First defendant directed to deposit Rs.70,00,000/- within two weeks, failing which summary judgment for Rs.70,00,000/- will be entered in favour of the plaintiff.

Liability of company directors not party to contract - Summary judgment - Maintainability of summary judgment against defendants 2 to 4 (directors) who are not parties to the contracts - HELD THAT: - The Court observed that defendants 2 to 4, though directors of the first defendant company, are not parties to the construction contract or the Memorandum of Compromise which form the basis of the claim. The Court noted its earlier observation in an Order I Rule 10 application that the burden lies on the plaintiff to prove allegations against defendants 2 and 3 at trial. In view of these factors, the Court held that summary adjudication of the plaintiff's claim against the individual directors is not permissible at the interlocutory stage and that their liability can be determined only after trial. [Paras 31, 35]

Application as against defendants 2 to 4 dismissed; claim against them to be adjudicated only after trial.

Limitation as a mixed question of law and fact - Estoppel and election to withdraw suit - Whether the plaintiff's amendment and continuation of the suit despite the compromise (and consequent limitation objections) can be adjudicated in the summary judgment application - HELD THAT: - The Court found that the amendment applications to record the Memorandum of Compromise were filed on 24.07.2023 and that the defendants raised a bona fide limitation defence contending the amendments and claim may be time-barred. The question whether the Supreme Court's suo motu exclusion of the period 15.03.2020-28.02.2022 applies and whether the plaintiff's non-withdrawal of the suit constitutes estoppel or renders the suit infructuous are matters involving mixed questions of fact and law. The Court held these contentions are not amenable to final determination at the interlocutory stage and require evidence and trial. [Paras 21, 22, 24, 25, 36]

Limitation and the effect of non-withdrawal under the compromise are triable issues and cannot be decided in this interlocutory application.

Interest entitlement under compromise - Claim for interest at 15% per annum versus interest consequences under the Memorandum(s) of Compromise - HELD THAT: - The Court noted that Clause IV of the Memorandum of Compromise provides for interest at 10% per annum on the principal upon default and that a separate compromise quantified interest up to 31.03.2020 at a crystallised sum. Whether the plaintiff is entitled to interest at 15% per annum, or only to the interest provided for under the compromise(s), involves disputed construction and factual questions. The Court held that the interest dispute cannot be finally resolved in the summary judgment proceeding and must await trial. [Paras 33, 34]

Claim for interest at 15% per annum is not susceptible to summary determination and is left for trial.

Final Conclusion: The application for summary judgment is allowed as against the first defendant to the extent of the undisputed principal of Rs.70,00,000/- subject to the deposit direction; the application is dismissed as against defendants 2 to 4; issues of limitation, the consequence of non-withdrawal of the suit under the compromise, and the proper rate/quantification of interest are triable and remain for determination at trial.

Money-laundering - proceeds of crime - Hawala transactions - mens rea - prima facie satisfaction for bail under Section 45 of the PMLA - admissibility and evidentiary value of statements under Section 50 of the PMLA - economic offences and bail considerations

Prima facie satisfaction for bail under Section 45 of the PMLA - money-laundering - mens rea - economic offences and bail considerations - Whether the applicant is entitled to grant of regular bail under Section 45 of the PMLA - HELD THAT: - The Court applied the two-pronged test under Section 45 of the PMLA - whether there are reasonable grounds for believing the accused is not guilty and whether he is not likely to commit an offence while on bail. Having regard to the material on record, the Court found sufficient prima facie evidence that the applicant participated in Hawala operations connected to the proceeds of the Mahadev online betting network and was aware of the persons to/from whom the amounts were delivered. The complaint and statements disclose that the applicant and his brother received and routed large-scale Hawala funds, that promoters frequented the applicant's jewellery shop, and that properties connected to the applicant are alleged to be traceable to proceeds of crime. The Court held that economic offences of this nature warrant serious treatment in bail considerations and that the available material establishes, on broad probabilities, the requisite mens rea and involvement in layering/concealment of proceeds. On that basis the Court was not satisfied to grant bail. [Paras 10, 11, 13, 17, 18]

Bail application rejected as the Court is satisfied, on prima facie material, that the applicant was involved in money laundering and therefore grant of bail is not warranted under Section 45 of the PMLA.

Admissibility and evidentiary value of statements under Section 50 of the PMLA - Hawala transactions - Whether statements recorded under Section 50 of the PMLA can be relied upon at the stage of bail - HELD THAT: - The Court observed that while the evidentiary weight of statements recorded under Section 50 is ultimately to be tested at trial, those statements are admissible as evidence and may be considered for the limited purpose of forming a prima facie view at the bail stage. The Court noted that officers of the Enforcement Directorate exercise powers akin to civil courts for the purpose of the PMLA and that safeguards available under the Cr.P.C. to accused witnesses in police investigation are not identically applicable to ED proceedings. Accordingly, the Court treated the statements recorded under Section 50 as material in assessing the existence of a genuine case against the applicant for the purposes of Section 45. [Paras 10, 16, 17]

Statements under Section 50 of the PMLA are admissible and may be considered at the bail stage for forming a prima facie view, though their ultimate evidentiary value is for the trial court to determine.

Final Conclusion: The High Court, applying the prima facie standard under Section 45 of the PMLA and having regard to admissible statements and other material indicating the applicant's involvement in Hawala movement of proceeds of the Mahadev betting operations, refused to grant bail and dismissed the bail application.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection of SVLDRS applications - disqualification under Section 125(1)(e) of the SVLDR Scheme - redemption fine as bar to acceptance - issue of final certificate in Form SVLDRS-4 - remedy under Article 226 of the Constitution

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - redemption fine as bar to acceptance - rejection of SVLDRS applications - issue of final certificate in Form SVLDRS-4 - Validity of rejection of two SVLDRS-1 applications dated 27th December 2019 on the ground of non-payment of redemption fine - HELD THAT: - Petitioner No.1 Firm's two SVLDRS-1 applications filed on 27th December 2019 were rejected on 2nd March 2020 for failure to pay the redemption fine. The parties adopted submissions in Writ Petition No. 7653 of 2021 and the Court applied the reasoning recorded in that judgment. For the reasons recorded in Writ Petition No. 7653 of 2021, the Court held the rejection to be illegal and quashed the rejection. The respondents are directed to accept the applications and to issue the final certificate in Form SVLDRS-4 within four weeks from the date of uploading the judgment. [Paras 3]

Rejection quashed; respondents to accept the two applications and issue Form SVLDRS-4 within four weeks.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - disqualification under Section 125(1)(e) of the SVLDR Scheme - rejection of SVLDRS applications - issue of final certificate in Form SVLDRS-4 - Validity of rejection of nine SVLDRS-1 applications dated 27th December 2019 on the ground that no investigation was pending as on 30th June 2019 and earlier proceedings had resulted in an Order-in-Original - HELD THAT: - The nine applications were rejected on the premise that, because an earlier investigation had led to an Order-in-Original pending before the Court, declarations were not within the category of 'investigation' under Section 125(1)(e) and therefore were disqualified. The parties agreed that the facts here are identical to those in Writ Petition No. 7653 of 2021. Applying the Court's earlier reasoning in that petition, the disqualification under Section 125(1)(e) was held not to apply to the petitioners' facts. Consequently, the rejections were quashed and set aside. Respondents were directed to accept the nine applications, intimate any amount payable for scheme benefits within four weeks, allow payment by petitioners within four weeks thereafter, and issue Form SVLDRS-4 within four weeks of such payment being informed. [Paras 4]

Rejection quashed; respondents to accept the nine applications, communicate payable amount, and issue Form SVLDRS-4 on completion of payment within prescribed timeframes.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection of SVLDRS applications - issue of final certificate in Form SVLDRS-4 - Validity of rejection of four SVLDRS-1 applications filed by two partners which were rejected because the firm's applications were rejected - HELD THAT: - Declarations by two partners for settlement of specified penalties were rejected on the ground that the firm's declarations had been rejected. Given the Court's directions to accept the firm's applications, the foundational basis for rejecting the partners' applications no longer survived. The respondents were therefore directed to accept the four partner applications, intimate any amount payable within four weeks of judgment upload, permit payment within a further four weeks, and issue Form SVLDRS-4 within four weeks of receipt of payment notification. [Paras 5]

Rejection of the partners' applications quashed; respondents to accept the four applications and follow the same timelines for intimation, payment and issuance of Form SVLDRS-4.

Final Conclusion: Writ petition allowed in part. Rejections of the eleven applications by the firm and four applications by the partners are quashed; respondents directed to accept the applications, intimate any payable amounts, permit payment within the specified timeframes and issue final certificates in Form SVLDRS-4 as ordered.

Inclusion of reimbursed expenditure in value of taxable service - Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 - inclusion of expenditures in taxable value - constitutional validity of Rule 5(valuation) vis-a -vis provisions of valuation under Section 66/67 - pure agent - valuation under Section 67 (only service charges recovered are taxable) - reimbursement of expenditure and taxable value

Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 - inclusion of expenditures in taxable value - constitutional validity of Rule 5(valuation) vis-a -vis provisions of valuation under Section 66/67 - Sustainability of revenue's action founded solely on Rule 5(1) of the Valuation Rules after Rule 5 has been held ultra vires - HELD THAT: - The Tribunal recorded that the show cause notice and the Commissioner (Appeals) relied exclusively on Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 to include advertisement-related outlays in the gross value of franchise services. It noted the binding precedent of the Hon'ble Supreme Court (Intercontinental Consultants & Technocrats Pvt Ltd) treating Rule 5 as unconstitutional and ultra vires the charging provisions. In view of that change in legal position, the Tribunal held that the entire action of the Revenue based on Rule 5(1) was vitiated and the impugned order could not be sustained on that ground alone. [Paras 4]

Revenue's action founded on Rule 5(1) is vitiated as Rule 5 has been held ultra vires; impugned order is not sustainable on that ground.

Reimbursement of expenditure and taxable value - pure agent - valuation under Section 67 (only service charges recovered are taxable) - Whether advertisement charges collected as reimbursement by the appellant from franchisees form part of the taxable value of the franchise service under Section 67 - HELD THAT: - Independently of Rule 5, the Tribunal applied the valuation principle under Section 67 that only charges recovered for providing a service are taxable. The arrangement showed that advertisement agencies actually provided advertisement services for the franchise centres; the appellant paid those agencies and recovered the amounts from franchisees as reimbursements pursuant to the contract. The obligation to bear advertisement expense rested on the franchisees and the pooling/payment mechanism adopted for convenience did not convert the reimbursement into consideration for a taxable service provided by the appellant. The Tribunal agreed with the Adjudicating Authority's factual finding that the model was a cost sharing/trade practice and that no additional consideration or profit, qua provision of advertisement services by the appellant, was received. Accordingly, such reimbursements cannot be included in the gross value of the franchise service. [Paras 4]

Advertisement charges collected as reimbursement are not part of the taxable value of the franchise service and therefore not includible in the gross value.

Final Conclusion: The appeal is allowed: the Commissioner (Appeals) order sustaining Revenue's claim is set aside because the Revenue's case was premised on Rule 5(1) (now held ultra vires) and, alternatively, the advertisement reimbursements do not constitute taxable consideration for the franchise service under the valuation principle of Section 67; consequential relief granted.

Failure to specify applicable sub-clause of the definition of Business Auxiliary Service in SCN - Show Cause Notice must state the category of service proposed to be demanded - Reimbursable expenditure not consideration for services (Intercontinental principle) - Reimbursement for spares and labour not includible in taxable value pre-amendment of valuation provision - Extended period of limitation and penalty unsustainable in absence of suppression or mala fide conduct

Failure to specify applicable sub-clause of the definition of Business Auxiliary Service in SCN - Demand of service tax under the category of Business Auxiliary Service is unsustainable for want of specification of the applicable sub-clause in the Show Cause Notice and Order-in-Original. - HELD THAT: - The Tribunal held that when the Show Cause Notice does not indicate which particular clause of the multi-clause definition of "Business Auxiliary Service" is invoked, the notice is vague and the demand cannot be sustained. Relying on earlier Tribunal decisions, the Bench observed it is essential for the issuing authority to clearly identify the sub-clause under which the service provider's activity is taxed; absence of such specification causes prejudice to the assessee and vitiates the proceedings. Applying that principle to the facts, the SCN and the order failed to point out the relevant sub-clause of Section 65(19), and therefore the demand confirmed under Business Auxiliary Service was set aside. [Paras 9]

Demand under Business Auxiliary Service set aside for want of specification of the applicable sub-clause in the SCN/OIO.

Show Cause Notice must state the category of service proposed to be demanded - Reimbursable expenditure not consideration for services (Intercontinental principle) - Reimbursement for spares and labour not includible in taxable value pre-amendment of valuation provision - Demand of service tax under the category of Authorized Service Station Service is unsustainable because reimbursements from the principal are not taxable for the period in question and the SCN failed to specify the service category. - HELD THAT: - The Tribunal found that the amounts received by the dealer from the principal constituted reimbursements for actual spares and labour and that the principal (TML) bore these costs, incorporating them into the vehicle's assessable value for excise duty. Applying the Supreme Court's principle that reimbursable expenditure or free supplies by a service recipient are not consideration for services (as in Intercontinental), the Bench held such reimbursements could not be charged to service tax for the relevant period. The Tribunal also noted the SCN did not mention any service category and the OIO invoked Section 65(105)(zo) for the first time while confirming the demand; for these reasons, and relying on precedent, the demand under Authorized Service Station Service was held unsustainable and set aside. The Tribunal accepted that labour reimbursements became taxable only from 01.07.2012 and recorded that the appellant had discharged tax where applicable from that date. [Paras 10]

Demand under Authorized Service Station Service set aside as reimbursements are not taxable for the period and the SCN lacked specification of the service category.

Extended period of limitation and penalty unsustainable in absence of suppression or mala fide conduct - Invocation of the extended period of limitation and imposition of penalty were not sustainable in the absence of suppression of facts or surreptitious conduct by the appellant. - HELD THAT: - The Tribunal observed that performance of after-sale services by dealers was a long-standing, industry-wide practice known to the Department and that the appellant had not acted in a surreptitious manner to receive commissions or reimbursements. In the absence of any established suppression with intent to evade tax, the conditions for invoking the extended period of limitation were not satisfied. For the same reason, imposition of penalty was held unjustified. [Paras 11]

Extended limitation and penalty set aside for lack of suppression or mala fide conduct.

Final Conclusion: The appeal is allowed; the Order-in-Original dated 28.11.2014 is set aside, and the demands of service tax (under Business Auxiliary Service and Authorized Service Station Service), interest to the extent based on those demands, and penalty are quashed for the reasons stated above.

Service tax on ocean freight - reverse charge mechanism - liability of importer under CIF contracts - ultra vires rule/notification - lack of machinery provision for valuation - extraterritorial application of service tax

Service tax on ocean freight - liability of importer under CIF contracts - reverse charge mechanism - Liability of the importer to pay service tax on ocean freight under the reverse charge mechanism in CIF contracts - HELD THAT: - The Tribunal applied and followed the decision of the Gujarat High Court in Sal Steel Ltd., holding that in CIF contracts the Indian importer is neither the service provider nor the service recipient of sea transportation services. The importer has no privity of contract with the shipping line and does not make payment of ocean freight to the service provider; instead the seller/supplier located outside India is the recipient of the sea transportation service. Consequently, imposing service tax liability on the importer under reverse charge equates to recovery from a third party which is not permissible under the statutory scheme. [Paras 7, 8]

Service tax is not leviable on ocean freight from the importer in CIF contracts; the impugned levy on the appellant is set aside.

Lack of machinery provision for valuation - ultra vires rule/notification - service tax on ocean freight - Validity of Rule 6(7CA) and related Rules/Notifications insofar as they permit recovery of service tax from importers without valuation machinery - HELD THAT: - The Tribunal endorsed the High Court's reasoning that even assuming tax could be recovered from a third party, there is no machinery provision available to the importer to determine the value of the sea transportation service. The insertion of sub-rule (7CA) in Rule 6, which allows an option to pay tax as a percentage of CIF value, was held to be ultra vires because the Central Government lacks rule-making power to fix the value of services in the manner attempted and, in any event, the option-based provision leaves a void if not exercised. Thus the challenged rules and notifications enabling recovery from importers were declared beyond the powers conferred by the Finance Act. [Paras 8]

Rule 6(7CA) and the impugned Rules/Notifications are ultra vires for want of a valid machinery provision for valuation and are not enforceable to recover service tax from importers.

Binding precedent - judicial propriety - Whether the authorities below were bound to follow the Gujarat High Court decision and consequence of their failure to do so - HELD THAT: - The show cause notice and subsequent orders were issued after the Gujarat High Court's decision. The appellant relied on that decision but the Assistant Commissioner and lower authorities failed to follow the binding High Court ruling. The Tribunal noted the settled principle that lower authorities are bound by decisions of higher courts and observed that the authorities acted in disregard of judicial propriety by not applying the controlling precedent. [Paras 10, 11]

The impugned orders, having disregarded binding High Court precedent, are set aside and the appeal is allowed.

Final Conclusion: The Tribunal, following the Gujarat High Court in Sal Steel Ltd., held that service tax cannot be levied on ocean freight from importers in CIF contracts; the challenged rules and notifications enabling such recovery are ultra vires for want of valuation machinery; the orders issued after the High Court judgment that ignored that precedent are set aside and the appeal is allowed.

Insurance auxiliary service - club or association service - insurance intermediary / intermediary licence requirement - Cenvat Credit - input service nexus - extended period / time-bar

Insurance auxiliary service - insurance intermediary / intermediary licence requirement - club or association service - Classification of the appellant's activity as 'insurance auxiliary service' and requirement of IRDA licence for acting as intermediary - HELD THAT: - The Tribunal examined the statutory definitions of insurance auxiliary service under the Finance Act, 1994 and of 'intermediary' under the IRDA Act, 1999, and applied them harmoniously. The adjudicatory material did not show that the appellant was notified by or held any licence from the IRDA to act as an intermediary or agent. The documentary record (including the insurer's letter) established that the appellant purchased a group policy as a client and paid premiums on behalf of its members, and that claims, if any, were routed through the club to the insurer. There was no evidence of commission or agency activity on behalf of the insurer. The Tribunal held that where the club itself is the client of the insurer and resells insurance cover to members (retaining any margin), it does not fall within the concept of an intermediary acting for the insurer, and therefore the activity could not be classified as insurance auxiliary service. The Tribunal set aside the confirmed demand based on that classification. [Paras 11]

The appellant was not providing 'insurance auxiliary service'; the confirmed demand on that ground set aside.

Cenvat Credit - input service nexus - club or association service - Validity of Cenvat credit claimed on insurance premiums as input service for club or association service - HELD THAT: - The Tribunal considered whether the insurance services supplied by insurers were input services within the meaning of the Cenvat Credit Rules, 2004, in relation to the appellant's output of club or association service. Documentary evidence, including invoices from reputable insurance companies and ST-3 returns, established that insurance service providers charged Service Tax and issued invoices. There was a direct nexus between the insurance services (input) and the club services (output). The Tribunal found no reason to doubt authenticity of transactions and held that the requirements of input service under the Cenvat Rules were met. Accordingly, the denial of credit by the adjudicating authority was set aside. [Paras 12]

Cenvat credit taken by the appellant was valid; the confirmed demand on this ground set aside.

Extended period / time-bar - Sustainability of invocation of extended period for recovery of service tax and denial of credit - HELD THAT: - The Tribunal reviewed records showing the appellant's registration, payment of Service Tax on membership fees, filing of ST-3 returns, maintenance of books of account and income tax returns. The Department failed to produce evidence of suppression or non-maintenance of records that would justify invocation of the extended period. The Tribunal held that, in absence of such corroborative evidence, the extended period could not be invoked and the demand for the extended period was time-barred. The impugned order insofar as it invoked extended period was set aside. [Paras 13]

Invocation of the extended period was not sustainable; demands for the extended period set aside.

Final Conclusion: The appeal is allowed on merits and on limitation: the confirmed demands for alleged 'insurance auxiliary service' and for disallowance of Cenvat credit are set aside, and the invocation of the extended period is held legally unsustainable, with consequential relief as per law.

Management, Maintenance or Repair Services - Business Auxiliary Service - Job-work - exclusion of services involving manufacture - Service Tax liability - Notification 8/2005-S.T. (job-worker exemption) - CENVAT Credit Rules, 2004 (Rule 4(5)(a))

Management, Maintenance or Repair Services - Job-work - Business Auxiliary Service - exclusion of services involving manufacture - CENVAT Credit Rules, 2004 (Rule 4(5)(a)) - Notification 8/2005-S.T. (job-worker exemption) - Whether the services rendered by the assessee to M/s. Gharda Chemicals Ltd. for use of its plant and for processing inputs were taxable as 'Management, Maintenance or Repair' or were job-work/production activity outside that taxable category. - HELD THAT: - The Tribunal examined the contract and factual matrix and found that the activities amounted to processing/job-work carried out under the framework of Rule 4(5)(a) of the CENVAT Credit Rules, 2004, with inputs supplied by the principal and processed in the assessee's plant using its machinery, labour and utilities. The Tribunal noted that the ultimate outcome was manufacture/production of excisable goods and that on similar facts earlier decisions in favour of the assessee had been rendered both pre- and post-negative list period. In that light the services could not be treated as providing management, maintenance or repair of the assessee's plant to the principal; instead the transaction fell within job-work/production paradigms and, where applicable, could attract the job-worker exemption under Notification 8/2005-S.T. The Tribunal concluded the question was no longer res integra in view of consistent earlier orders deciding the identical issue in favour of the assessee and therefore the departmental demand framed as for 'Management, Maintenance or Repair' was unsustainable.

Demand of Service Tax framed on the basis that the activity constituted 'Management, Maintenance or Repair Services' is not sustainable; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for the period April-2015 to June-2017 (2015-2017), holding that the services in question amounted to job-work/production (with attendant exclusions and applicable exemptions) and not taxable 'Management, Maintenance or Repair' services, and granted consequential relief.

Value of taxable service - gross amount charged - consideration - Point of Taxation Rules - reverse charge mechanism - Cenvat credit - extended period of limitation - Service Tax (Determination of Value) Rules, 2006 - Rule 5(1)

Value of taxable service - gross amount charged - consideration - Point of Taxation Rules - Whether service tax was short paid by not taxing the gross invoice amount instead of the amount approved and paid by the service recipient - HELD THAT: - The Tribunal considered Section 67 and its explanations and held that taxable value is the gross amount charged as consideration for the taxable service, which requires a nexus between the amount charged and the service provided. An invoice amount that was a provisional/performa amount and subject to approval under the contract could not be treated as the amount "charged" unless approved and become payable by the service recipient. The contract between the parties and the practice of NHAI approving monthly itemised statements established that the sum actually approved and paid by NHAI constituted the contractual consideration. The Tribunal relied on the interpretation in Bhayana Builders and related authorities to conclude that amounts not forming part of the contractually agreed consideration cannot be unilaterally added to the taxable value. The department's reliance on Rule 5(1) was held inapplicable to supplant the contractual reality; where amounts were not charged or receivable as per the contract, they could not be included in the taxable value. Consequently, the findings of short payment on this ground were set aside except as to periods when payment rules otherwise applied (specifically receipt/accrual differences before and after Point of Taxation Rules). [Paras 12, 13, 14, 15, 16]

Demand for short payment based on taxing the unapproved invoice/grossed up amounts is unsustainable; taxable value is the amount approved/charged and paid by NHAI, and the confirmed demand on this ground is set aside.

Consideration - Service Tax (Determination of Value) Rules, 2006 - Rule 5(1) - gross amount charged - Whether the amount of tax deducted at source (TDS) formed part of the taxable value and led to short payment of service tax - HELD THAT: - The Tribunal examined the contract clauses which provided that payments were "exclusive of taxes" and the contractual mechanism for refund/adjustment of TDS. Evidence showed that in years where the appellant retained TDS (profit years) service tax was discharged on that basis, whereas in loss years the TDS was refundable to NHAI and not income of the appellant. The Tribunal noted authorities holding that statutory obligations to deduct tax do not convert the deducted amount into consideration where the parties have agreed otherwise and where the amount is refundable. The department's reliance on Rule 5(1) was rejected as inconsistent with Section 67; Rule 5(1) cannot override the contractually agreed character of the TDS amount. Accordingly, the Tribunal held TDS was not includible in the gross value when not retained by the appellant or when its reimbursement obligation existed, and the confirmed demand on this ground was unsustainable. [Paras 19, 21, 22, 23, 24]

TDS amounts not actually retained or which were contractually refundable do not form part of the taxable consideration; demand confirmed for non-inclusion of TDS is set aside.

Cenvat credit - proforma invoice - revenue neutrality - Whether Cenvat credit was rightly denied on the ground that inputs were availed on proforma invoices or for non-compliance with record/format requirements - HELD THAT: - The Tribunal found invoices and ledgers were produced and that the proviso to Rule 9(2) of the Cenvat Credit Rules permits credit where the particulars required by Rule 9(1) are present in the document even if format varies. The adjudicating authority's reliance on Rules 9(6) and 9(9) was held misplaced as those provisions deal with maintenance of records and half-yearly returns rather than prescribe a specific invoice format. The Tribunal observed that procedural lapses cannot defeat substantive entitlement where requisite particulars are available and that the documents had been supplied during audit and in response to the show cause notice. Denial of credit on the ground that invoices were proforma was therefore unsustainable. [Paras 25, 26, 27, 28]

Denial of Cenvat credit is set aside; availment cannot be denied where required particulars are present and documents were produced.

Reverse charge mechanism - abated value - Whether the appellant remained liable under reverse charge to pay service tax on legal consultancy and rent-a-cab services and whether any demand survives - HELD THAT: - The Tribunal recorded that the appellant did not contest liability for receiving legal consultancy and rent-a-cab services. For the contested periods the adjudicating authority had found that tax under RCM on rent-a-cab was payable on the abated value (40%) and that the appellant had in any event paid tax on full value for certain periods, enabling appropriation. Accordingly, no fresh recoverable demand arises where tax under RCM had already been discharged or excess payment could be appropriated. The Tribunal therefore left the RCM findings intact insofar as tax had been discharged or appropriated. [Paras 29]

Liability under reverse charge stands as adjudicated but where tax was already paid/excess paid it will be appropriated; no separate recoverable demand arises on those counts.

Extended period of limitation - willful suppression - Whether the extended period of limitation was rightly invoked by the department - HELD THAT: - The Tribunal examined whether there was affirmative evidence of willful suppression or intent to evade tax. Having found on the substantive issues that the appellant's view (tax on amounts approved/received; non-inclusion of refundable TDS; entitlement to Cenvat credit) was tenable and the controversies were primarily interpretational and contract-driven, the Tribunal concluded there was no cogent material of deliberate suppression or fraud. Relying on precedents distinguishing mere default from deliberate suppression, the Tribunal held that verbal assertions of suppression were insufficient to invoke the extended limitation. Consequently, the extended period was wrongly invoked for the show cause notice covering 2009-10 to 2013-14 and those demands were time-barred. [Paras 31, 32, 33, 34, 35]

Extended period of limitation was wrongly invoked; demands falling within the extended period are barred by limitation and set aside.

Final Conclusion: All demands and confirmations in the appeals are set aside except the adjudication on reverse charge where tax was admitted/paid and appropriation was directed; accordingly both appeals are allowed insofar as demands based on gross invoice amounts, inclusion of refundable TDS and denial of Cenvat credit are concerned, and the extended period invocation is held unsustainable.

Exemption under Section 26 of the SEZ Act - authorized operations - exemption under SEZ Rules (Rule 31) - overriding effect of the SEZ Act (Section 51) - negative list exemption for sale of space or time for advertisement - delegated legislation subordinate to parent statute - classification of signage income as renting of immovable property versus sale of space/time for advertisement

Exemption under Section 26 of the SEZ Act - authorized operations - exemption under SEZ Rules (Rule 31) - overriding effect of the SEZ Act (Section 51) - delegated legislation subordinate to parent statute - Whether signage income charged by the appellant for display space provided to SEZ units is exempt ab-initio from service tax under the SEZ Act and Rules. - HELD THAT: - The Tribunal held that exemption for services provided to SEZ developers or units flows from Section 26(1)(e) of the SEZ Act and the manner, terms and conditions for grant of that exemption are to be prescribed by rules under the SEZ Act (Rule 31). Once operations are authorised (authorised operations), inputs and input services used for such operations are exempted. Where a notification under the Finance Act imposes conditions inconsistent with the statutory exemption under the SEZ Act and Rules, the notification cannot override the statute. Applying the hierarchy of norms, delegated or executive notifications must be read so as to sub-serve the parent statute; they cannot impose conditions which negate the statute's ab-initio exemption. On the facts, the services for display/signage were used by SEZ units for their authorised operations and therefore fell within the statutory exemption; the condition of refund-only in the exemption notification is inconsistent with the SEZ Act and must give way. [Paras 11, 12, 13, 16, 17]

Signage income received from SEZ units for display space is exempt ab-initio from service tax under Section 26 read with Rule 31 and the impugned notification cannot override this statutory exemption; the adjudicating authority's denial on that ground is unsustainable.

Negative list exemption for sale of space or time for advertisement - classification of signage income as renting of immovable property versus sale of space/time for advertisement - Whether the activity in question was correctly classified by the adjudicating authority as sale of space or time for advertisement (taxable) rather than as renting of immovable property or being covered by the negative list. - HELD THAT: - The Tribunal noted that for the relevant period the negative list regime applied and clause (g) (sale of space or time for advertisement) provided exemption from service tax w.e.f. 01.07.2012. The show cause notice for 2014-15 relied on obsolete classification provisions and did not properly take into account Section 65B(44) and the negative list regime. The adjudicating authority also based its conclusion on the absence of any letter of approval on record, a ground not taken in the show cause notice and not supported by material. Given that the signage space was used by SEZ units for authorised operations and the negative list exemption applied from 01.07.2012, the classification and consequent demand were unsustainable. [Paras 16, 17, 18]

The finding that the signage income constituted taxable sale of space/time for advertisement and thus fell outside exemption is erroneous; the negative list exemption applied and the classification relied upon by the adjudicating authority was incorrect and beyond the scope of the show cause notice.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal: signage charges received from SEZ units for display space are exempt from service tax under the SEZ Act and Rules (ab-initio), the impugned notification cannot override the statutory exemption, and the classification/demand sustained by the lower authorities is unsustainable.

Waiver of penalty and fine under settlement scheme - scope of "tax dues" and "amount of duty" for scheme benefits - immunity from "any further duty, interest or penalty" on settlement - eligibility where enquiry/investigation existed and quantification before cut-off date - consequential acceptance of applications by partners

Waiver of penalty and fine under settlement scheme - scope of "tax dues" and "amount of duty" for scheme benefits - immunity from "any further duty, interest or penalty" on settlement - Rejection of declaration No. LD2612190005231 on the ground that redemption fine is not waivable under the SVLDR Scheme - HELD THAT: - The Court held that the Scheme requires payment of a prescribed percentage of the "amount of duty" (as defined) and that once the requisite duty is paid the declarant is not liable to pay any further duty, interest or penalty in respect of the declared matters. The Board's flyers and the Ministry's press note, which stated total waiver of interest, penalty and fine on settlement, support this construction. Coordinate high court decisions treating redemption fine as akin to penalty were accepted. The respondents' reliance on a different paragraph of Synpol was found inapposite because it concerned the distinct statutory phrase "amount in arrears" and not the definition of "amount of duty" applicable here. Even if redemption fine were treated as a component of "duty", the Scheme's structure entitles waiver where the basic excise duty specified by the Scheme is paid and immunity under Section 129 would extend to payments falling within "any further duty." For these reasons the rejection was quashed and the respondents directed to grant final certificate in Form SVLDRS-4. [Paras 3]

Rejection of declaration No. LD2612190005231 quashed; respondents directed to issue Form SVLDRS-4 within four weeks.

Administrative error in rejection - procedure for acceptance and issuance of SVLDRS-2 - Rejection of Form SVLDRS-1 No. LD2612190005177 on the ground that the assessee requested withdrawal - HELD THAT: - Respondents conceded that the remark of withdrawal was made in error and there was no evidence that the petitioner had sought to withdraw the application. The Court therefore found the recorded ground for rejection unsustainable and directed respondents to accept the declaration by issuing Form SVLDRS-2, permit payment within the prescribed period thereafter, and issue Form SVLDRS-4 on intimation of payment. [Paras 4]

Rejection of LD2612190005177 set aside; respondents to issue SVLDRS-2 within four weeks and follow the scheme timelines for payment and issuance of SVLDRS-4.

Eligibility where enquiry/investigation existed and quantification before cut-off date - interpretation of disqualification under the scheme - Rejection of fourteen declarations filed on 26th December 2019 on the ground that no enquiry was pending on 30th June 2019 and therefore not covered as "investigation" under Section 125(1)(e) - HELD THAT: - The Court observed that the petitioner's representative's statement was recorded on 6th July 2007, which falls within the Scheme's definition of "enquiry or investigation" (including recording of statement). Further, the Coordinate Bench's March 2007 order prescribed a formula for provisional quantification of duty, so the amount of duty was quantifiable before the 30th June 2019 cut-off. Consequently the disqualification in Section 125(1)(e) - which requires that the amount involved in the enquiry or investigation remained unquantified on or before 30th June 2019 - did not apply. The basis of respondents' rejection was therefore unsustainable and the declarations were to be accepted with directions for issuance of Form-2, payment and final Form-4 as per the Scheme timetable. [Paras 5]

Rejections of the fourteen declarations quashed; respondents directed to accept them and proceed with issuance of SVLDRS-2, payment and SVLDRS-4 in the timelines specified.

Consequential acceptance of applications by partners - derivative effect of quashing firm's rejections on partners' declarations - Rejection of sixteen SVLDR applications filed by eight partners, which were rejected because the firm's applications were rejected - HELD THAT: - The Court treated the partners' applications as consequentially affected by the wrongful rejections of the firm's declarations. Having quashed the rejections of the firm's applications, the Court held that the partners are entitled to the same relief. Accordingly respondents were directed to accept the partners' applications, intimate payment, and issue Form SVLDRS-4 on receipt of payment as per timelines. [Paras 6]

Rejections of the sixteen applications by partners quashed; respondents directed to accept them and follow the Scheme's payment and certification procedure within the prescribed periods.

Final Conclusion: The writ petition is allowed. The Court quashed specified rejections of the firm's and partners' SVLDR Scheme declarations, directed respondents to accept the declarations and to follow the Scheme procedures (issuance of SVLDRS-2 where applicable, receipt of payment, and issuance of SVLDRS-4) within the timeframes prescribed in the order.

Interest on delayed refund - entitlement under Notification No. 33/99-CE - application of Section 11BB of the Central Excise Act, 1944 - payment subject to outcome of pending Special Leave Petition - verification and determination of interest payable

Interest on delayed refund - entitlement under Notification No. 33/99-CE - application of Section 11BB of the Central Excise Act, 1944 - Claim for interest on delayed refund was allowable subject to the outcome of the pending SLP - HELD THAT: - The Court noted that the petitioners were entitled to refund under Notification No. 33/99-CE dated 08.07.1999 and that the question whether interest is payable on such delayed refunds has been considered by earlier Division Bench decisions, notably Amalgamated Plantations Pvt. Ltd., which held that Section 11B did not exclude refunds under the Notification and that interest under Section 11BB was payable. Having regard to the consistent orders of the Division Bench directing payment of interest and the pendency of the SLP before the Supreme Court, the Court interfered with the impugned order rejecting interest and directed payment, while making the grant conditional on the ultimate outcome of the SLP. [Paras 3, 4, 12]

Interest on the delayed refund is allowed, but payment is subject to the result of SLP (C) No.16322/2018

Verification and determination of interest payable - payment subject to outcome of pending Special Leave Petition - Determination, verification and release of the interest amount were directed to be carried out by the revenue authorities subject to an undertaking - HELD THAT: - The Court directed the Assistant Commissioner, Central GST Division Dibrugarh to verify and determine the interest payable on the delayed refund and to release the amount within two months from submission of a certified copy of the order. Payment was ordered to be made only upon the petitioners furnishing an undertaking that, should the Revenue succeed in SLP (C) No.16322/2018, the interest so paid will be reimbursed to the Department. The direction thus mandates quantification and conditional disbursement by the authority within a fixed time-frame. [Paras 13]

Respondent authority to verify and release the interest within two months upon an undertaking that the amount will be refunded if the Revenue succeeds in the SLP

Final Conclusion: Writ petition allowed in part: the impugned rejection of interest is set aside; the revenue is directed to verify, determine and pay the interest on the delayed refund within two months upon receipt of an undertaking that the amount will be reimbursed if the Revenue succeeds in SLP (C) No.16322/2018.

Capital goods cleared as such - Cenvat Credit on capital goods - depreciated value on clearance after use - Rule 3(5) proviso-computation of reversal of Cenvat credit on capital goods removed after use - avoidance of cascading effect of duty

Capital goods cleared as such - Cenvat Credit on capital goods - depreciated value on clearance after use - Rule 3(5) proviso-computation of reversal of Cenvat credit on capital goods removed after use - Whether capital goods removed after being put to use can be treated as capital goods "cleared as such" so as to require reversal of full Cenvat credit, or whether reversal is confined to the depreciated/used value. - HELD THAT: - The Court applied the reasoning in Commissioner of C. Ex., Chandigarh v. Raghav Alloys Ltd. and upheld the Tribunal's approach that capital goods differ from inputs as they are used over time and do not lose their character immediately upon removal after use. The object of the Cenvat Credit scheme is to avoid cascading of duty, and requiring full reversal of credit where capital goods have been used for years would frustrate that object. The Rules provide for liability where machines are cleared "as such" (i.e., without having been put to use), and subsequent legislative and administrative guidance recognises a distinction for goods removed after use: a proviso to Rule 3(5) (w.e.f. 13-11-2007) prescribes computation for reversal reducing credit by specified percentages over time, and the Board's circulars allow determination of value after allowing depreciation. Applying these principles to the facts, where the capital goods were used in manufacture and removed after substantial years of use, the appropriate duty/reversal is to be computed on the depreciated/used value rather than by treating the goods as cleared "as such" and reversing full credit. The Tribunal's contrary view was therefore inconsistent with the settled position and the authorities cited. [Paras 3, 4, 5]

Appeal allowed; Tribunal order set aside to the extent that it treated capital goods removed after use as cleared "as such" and reversed full Cenvat credit-reversal is to be confined to the depreciated/used value.

Final Conclusion: The petition is allowed; the Customs, Excise and Service Tax Appellate Tribunal's order dated 07.07.2011 is set aside insofar as it required reversal of full Cenvat credit on capital goods removed after being used, and duty/reversal is to be computed on the depreciated/used value in accordance with the law as stated.

Test of marketability - product not marketable - not excisable - captively consumed fuel - exemption under Notification No. 67/95-CE as amended by 11/97-CE - limitation / time-bar - distinguishing precedent on facts

Test of marketability - product not marketable - not excisable - captively consumed fuel - exemption under Notification No. 67/95-CE as amended by 11/97-CE - distinguishing precedent on facts - Whether LSHS consumed for generation of electricity is excisable or exempt where the product does not meet BIS specifications and is not marketable. - HELD THAT: - The Tribunal examined the Quality Control Test Report comparing the appellant's LSHS with BIS specifications and found critical parameters (notably flash point and water content) outside permissible limits, making sale/transport as LSHS unlawful and the product non-marketable. Following the reasoning in Mangalore Refinery & Petrochem. Ltd. (Tri.-Bang.), the Bench held that a product which is not marketable cannot be regarded as excisable; consequently, the captive consumption of such non-marketable LSHS for generation of electricity falls within the exemption claimed under the notification relied upon. The Supreme Court decision relied upon by the Revenue was distinguished on the factual basis that, in that case, the assessee had cleared/sold the product to third parties, which is not alleged here. Applying these factual distinctions, the Tribunal allowed the appeal on merits and set aside the confirmed demand insofar as it arose from the contention that exemption was not permissible. [Paras 9, 10, 11, 12, 13]

The captive-consumed LSHS, being non-marketable for failure to meet BIS specifications, is not excisable and the appeal is allowed on merits.

Limitation / time-bar - captively consumed fuel - awareness by department / laches - Whether the demand for the period January 2007 to March 2007 is barred by limitation. - HELD THAT: - The Tribunal noted that the department had knowledge of the appellant's captive use of LSHS for electricity generation from records and declarations filed as early as 20/03/1997, and that details were maintained in the appellant's returns and books. In view of the department's inaction and prior awareness, the Tribunal held that the demand raised for January 2007 to March 2007 was time-barred and could not be sustained. [Paras 14]

The demand for the period January 2007 to March 2007 is time-barred and is set aside.

Final Conclusion: The appeal is allowed on merits by holding the captive-consumed LSHS non-marketable and not excisable; additionally the demand for January 2007 to March 2007 is set aside as time-barred. The appellant is entitled to consequential relief in accordance with law.

Valuation of job-work goods under Rule 10A - Inclusion of value of free supplied inputs as additional consideration - Applicability of Rule 6 of Central Excise Valuation Rules for additional consideration - Extended period of limitation and requirement of suppression - Penalty for alleged short payment of duty

Valuation of job-work goods under Rule 10A - Inclusion of value of free supplied inputs as additional consideration - Applicability of Rule 6 of Central Excise Valuation Rules for additional consideration - Whether the value of inputs supplied free of cost by the principal manufacturer must be included in the assessable value of job-worked goods by applying Rule 10A(iii) read with Rule 6. - HELD THAT: - Rule 10A applies to goods produced by a job-worker on behalf of a principal manufacturer; where clauses (i) and (ii) are inapplicable clause (iii) directs that foregoing rules, wherever applicable, shall mutatis mutandis apply. The Tribunal found that clauses (i) and (ii) did not apply and therefore Rule 10A(iii) permits application of the other valuation rules. Rule 6 treats additional consideration flowing from the buyer as part of transaction value. The adjudicating authority construed the free supplied Cenvat-ed inputs as additional consideration not included by the job-worker while arriving at assessable value. The Tribunal noted that the principal manufacturer had availed Cenvat credit on the free supplies and that the intermediate goods cleared by the job-worker were captively used by the principal manufacturer, making the situation revenue neutral; however, the obligation to apply the valuation rules remains and the department's view that the value of the free materials was not included is legally sustainable for determination of duty for the normal period. [Paras 11, 12]

The value of free supplied inputs can be brought into assessable value by applying Rule 10A(iii) read with Rule 6; duty is payable for the normal period accordingly.

Extended period of limitation and requirement of suppression - Penalty for alleged short payment of duty - Whether invocation of the extended period of limitation and the imposition of penalties were justified given the facts and conduct of the assessee. - HELD THAT: - The show cause notices covered periods some of which fell within the extended period. The Tribunal observed that valuation of job-work goods was a contentious and litigated issue over a long period, there was no positive act of suppression by the appellant, and duty had been discharged albeit excluding the value of free supplies on a bona fide interpretation. Given the genuine interpretational controversy, the Tribunal concluded that extended period invocation could not be sustained. For the same reasons, imposition of penalty was not justified; the appellant remains liable to pay duty with interest for the normal period only. [Paras 13]

Invocation of extended period set aside; penalties quashed; duty with interest payable only for the normal period.

Final Conclusion: Appeals partly allowed: valuation liability under Rule 10A(iii) read with Rule 6 sustained for the normal period (duty with interest payable), but demands raised by invoking the extended period and the penalties imposed are set aside; consequential reliefs, if any, to follow.

Fraudulent availment of Cenvat Credit - Admissibility of Cenvat Credit - Burden of proof under Rule 4 of the Cenvat Credit Rules, 2004 read with Rule 9(5) - Reliance on confessional statements and corroborative documentary evidence - Confirmation of duty and interest versus imposition of personal penalty on persons responsible

Fraudulent availment of Cenvat Credit - Admissibility of Cenvat Credit - Reliance on confessional statements and corroborative documentary evidence - Whether the Cenvat credit of Rs.8,50,292/- availed by the appellant for the periods 2014-15 and 2015-16 was inadmissible and the duty and interest rightly confirmed. - HELD THAT: - The Tribunal accepted the findings of the adjudicating authorities that the supplier (M/s Blue Star Exports) and the appellant's partner made multiple admissions showing manipulation of invoices and passing of Cenvat credit without actual supply. The supplier's statements admitted purchasing prime material and selling it in the local market on cash basis while issuing cenvatable sale invoices to furnace units by changing descriptions and rates to resemble scrap. The partner of the appellant also admitted having taken Cenvat credit on cuttings (scrap) whereas manufacturers' invoices described the goods as prime finished goods and did not retract his statement. Documentary review (invoice chain showing purchase one day and re-sale with altered description) and the voluntary debit of the credit by the appellant prior to the partner's recorded statement were treated as corroborative of the departmental case. Applying the legal principle that the burden of proof as to admissibility of Cenvat credit lies upon the manufacturer under Rule 4 read with Rule 9(5) of the Cenvat Credit Rules, 2004, and noting that the decisions relied upon by the appellant were not factually on all fours, the Tribunal found no error in confirming the duty and interest. [Paras 7, 8, 9, 10, 11]

The confirmation of duty and interest in respect of the inadmissible Cenvat credit for 2014-15 and 2015-16 is upheld.

Confirmation of duty and interest versus imposition of personal penalty on persons responsible - Reliance on confessional statements and corroborative documentary evidence - Whether the Commissioner (Appeals) erred in dropping the personal penalty on the partner of the firm and whether that affects the confirmation of duty and interest against the firm. - HELD THAT: - The impugned order by the Commissioner (Appeals) had dropped the personal penalty on the partner while upholding the duty and interest. The Tribunal noted the Commissioner (Appeals) had independently considered penalty, yet the substantive findings of manipulation and wrongful availment of credit remained supported by supplier confessions, the appellant's partner's statement, and documentary invoices. The Tribunal observed that dropping the penalty on the partner does not negate the material on record establishing inadmissible credit taken by the firm; the merits of the demand are distinct from the exercise of discretion in imposing personal penalty. The Tribunal therefore found no infirmity in the Commissioner (Appeals)'s concurrent conclusion to uphold duty and interest despite dropping the personal penalty. [Paras 6, 11, 12]

The Commissioner (Appeals)'s order dropping the personal penalty on the partner but confirming the duty and interest is sustained; the dropping of penalty does not vitiate the finding of inadmissible credit against the firm.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the Commissioner (Appeals)'s confirmation of duty and interest in respect of inadmissible Cenvat credit for 2014-15 and 2015-16 and sustains the concurrent view that, notwithstanding the dropping of personal penalty on the partner, the firm remains liable for the confirmed demand.

Interest on delayed refund - Entitlement to interest from date of deposit till refund - Parimateria of interest provisions - Rate of interest confined to 12% per annum - Following judicial discipline and binding precedent

Interest on delayed refund - Entitlement to interest from date of deposit till refund - Parimateria of interest provisions - Appellants are entitled to interest on delayed refund from the date of deposit till the date of its realization. - HELD THAT: - The Tribunal held that the provisions governing interest on delayed refunds under the Income-tax Act and the Central Excise Act are parimateria and, following the reasoning in Sandvik Asia Ltd. as adopted by the Apex Court, an assessee is entitled to interest from the date the amount was deposited until the date of its refund. Applying that principle, the Tribunal found that the present appeal fell squarely within the precedent and that interest must be allowed from the date of initial deposit till realization of refund. The Tribunal noted consistent earlier decisions of the Tribunal and High Courts to the same effect and applied judicial discipline in following those precedents. [Paras 4]

Allow interest on delayed refund from date of deposit till date of refund.

Rate of interest confined to 12% per annum - Following judicial discipline and binding precedent - Interest on the delayed refund is to be paid at the rate of 12% per annum. - HELD THAT: - Having held entitlement to interest from date of deposit, the Tribunal considered authorities including Sony Pictures Networks India Pvt. Ltd. and other decisions which confined the rate of interest to 12% p.a. in similar circumstances. Relying on those decisions and the principle that where the Apex Court has fixed the appropriate rate in the absence of statutory specification lower fora should follow that quantification, the Tribunal held that interest shall be payable at 12% per annum. [Paras 3, 5]

Direct interest on the delayed refund to be paid at 12% per annum.

Final Conclusion: Impugned appellate order set aside; the Assistant Commissioner's Order-in-Original is upheld and the appeal is allowed with consequential relief permitting interest on the delayed refund from date of deposit to date of realization at 12% per annum.

Remission of duty on lost or destroyed imported goods - Remission under Section 23 of the Customs Act read with Rule 21 of the Central Excise Rules, 2002 - Requirement of insurance for the duty element as a pre-condition for remission - Negligence in safeguarding warehoused goods and effect on remission claim - EOU scheme and intended-use condition under Notification No.22/2003-CE - Effect of warehouse licence and B-17 bond on entitlement to remission

Remission of duty on lost or destroyed imported goods - Remission under Section 23 of the Customs Act read with Rule 21 of the Central Excise Rules, 2002 - Entitlement to remission of duty for goods imported by a 100% EOU and destroyed in an accidental fire. - HELD THAT: - The Tribunal found the material facts undisputed: the goods imported and warehoused under licence were destroyed in a fire; the occurrence was intimated to authorities; Mahazars were drawn; and the insurer, after investigation, settled the claim having found the fire to be unavoidable. Applying Section 23, which empowers remission where it is shown to the satisfaction of the competent officer that imported goods have been lost or destroyed before clearance for home consumption, the Tribunal held that where destruction by unavoidable accident is established, the question of demanding duty does not arise. Prior decisions of this Tribunal and the jurisdictional High Court in analogous facts (including the appellant's own earlier order) were relied upon to support the view that an admitted, unavoidable destruction entitles the assessee to remission under Section 23/Rule 21. [Paras 5, 6]

Remission of duty was allowable and the appeal was allowed.

Requirement of insurance for the duty element as a pre-condition for remission - Negligence in safeguarding warehoused goods and effect on remission claim - Whether failure to insure the goods for the duty forgone or non-observance of Board Circular No.99/1995 disentitles the appellant to remission by constituting negligence. - HELD THAT: - The Tribunal held that the mere fact that the goods were not insured for the duty element does not, by itself, establish negligence by the appellant. The insurance company's investigation and settlement, together with the departmental Mahazars and inventories, supported the conclusion that the fire was unavoidable and that adequate precautions had been taken. The Tribunal rejected the Commissioner's approach of imposing non-statutory conditions (insurance for duty element) as a prerequisite to remission under Section 23/Rule 21 and treated the Board Circular's suggestion regarding insurance as not creating an absolute bar to remission where destruction by unavoidable accident is otherwise established. [Paras 5]

Failure to insure for the duty element did not amount to negligence sufficient to deny remission.

EOU scheme and intended-use condition under Notification No.22/2003-CE - Effect of warehouse licence and B-17 bond on entitlement to remission - Whether destruction of duty-exempt goods in an accidental fire amounts to misuse or non-use under the EOU/Notification No.22/2003-CE so as to disentitle the appellant to remission. - HELD THAT: - The Tribunal observed that the conditions in the notification are intended to ensure goods procured duty-free are used for specified export purposes, and there was no material or allegation of diversion or non-fulfilment of export obligations in this case. Citing precedent, the Tribunal held that accidental destruction of goods which were intended for and had not yet been used in manufacture does not constitute misuse or non-use that would defeat entitlement to remission. Consequently, the Commissioner's characterization of the loss as misuse under the notification was rejected. [Paras 5]

Destruction by accidental fire did not amount to misuse under the EOU notification and did not bar remission.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and holding that the appellant, a 100% EOU whose imported and warehoused goods were destroyed by an unavoidable fire, was entitled to remission of duty under Section 23 read with Rule 21; failure to insure for the duty element and reliance on Board Circular No.99/1995 or characterization as misuse under the EOU notification did not defeat the claim.

Reversal of Input Tax Credit - belated filing of returns - penalty under Section 27(4) of the TNVAT Act - rectification of assessment - non-speaking order - binding precedent - personal hearing and reconsideration on remand

Reversal of Input Tax Credit - belated filing of returns - rectification of assessment - Validity of the tax assessment and reversal of Input Tax Credit insofar as based on belated filing of returns - HELD THAT: - The Court examined the impugned order and noted that the respondent recorded that returns for March 2017 were filed belatedly on 02.08.2017 and that a copy of the return was available on the web portal. The petitioner did not dispute that the return was filed on that date or assert an earlier filing. The assessing authority drew turnover and particulars from the petitioner's returns and reached its conclusion on the ITC reversal after a reasonable appraisal of the available material. In view of these findings, the Court found no ground to interfere with the tax component of the assessment concerning the reversal of ITC which was founded on the recorded belated filing of returns. [Paras 4]

Assessment and reversal of Input Tax Credit based on the belated filing of returns upheld; no interference with the tax component.

Penalty under Section 27(4) of the TNVAT Act - binding precedent - non-speaking order - personal hearing and reconsideration on remand - Appropriateness of imposition of penalty under Section 27(4) of the TNVAT Act and need for reconsideration - HELD THAT: - The petitioner relied on binding authority of the Division Bench that sub-section (4) of Section 27 should not be invoked merely for belated filing of returns. The impugned order failed to refer to or consider that judgment or the stated principle. Because the earlier order had been set aside for being non-speaking and the impugned order omits consideration of the cited precedent, the Court found interference with the penalty component warranted. The Court directed that the penalty aspect be remanded for fresh consideration after affording the petitioner a reasonable opportunity, including personal hearing, and for issuance of a fresh order within three months. [Paras 5, 6]

Imposition of penalty under Section 27(4) set aside and remanded for fresh consideration with opportunity of personal hearing; fresh order to be issued within three months.

Final Conclusion: Writ petition partly allowed: the tax assessment and reversal of ITC based on belated filing of returns is upheld; the penalty imposed under Section 27(4) is set aside and remanded for reconsideration after giving the petitioner a reasonable opportunity, including a personal hearing, and a fresh order is to be issued within three months.

Dispensation of second notice and opportunity in best-judgment assessment - Requirement of five-year limitation for best-judgment assessment - Operation and scope of a non-obstante clause - Retrospective applicability of procedural amendment

Dispensation of second notice and opportunity in best-judgment assessment - Retrospective applicability of procedural amendment - Section 28A dispenses with the requirement of a second notice, disclosure of basis and other procedural steps before making a best-judgment assessment for periods prior to 01.04.1979. - HELD THAT: - Section 28A begins with a non-obstante clause and was inserted to overcome the Supreme Court's requirement (in Indian Aluminium Cables Limited) that a second notice and an opportunity of personal hearing be given before framing a best-judgment assessment. Clause (i) of Section 28A expressly provides that no second notice shall be required under the relevant subsections, and clause (ii) removes the necessity to intimate the basis for arriving at a best-judgment assessment or to take other procedural steps prior to proceeding. The legislative intent, read in context, shows that these procedural formalities were deliberately dispensed with for assessments relating to periods prior to 01.04.1979; the provision is retrospective in operation only for those earlier periods and was meant to cure the mischief created by the earlier judicial interpretation. [Paras 15, 18]

For assessments relating to the period prior to 01.04.1979, Section 28A removes the requirement of issuing a second notice and of intimating the basis or taking other procedural steps prior to making a best-judgment assessment.

Requirement of five-year limitation for best-judgment assessment - Operation and scope of a non-obstante clause - Section 28A does not abolish or extend the five-year period prescribed by Section 28(4) for proceeding to assess to the best of the authority's judgment. - HELD THAT: - Section 28(4) places a five-year cap within which the assessing authority must proceed to make a best-judgment assessment after expiry of the returned period. Although Section 28A dispenses with procedural requirements (second notice, intimating basis, other steps), its language does not eliminate the time-limit in Section 28(4). Clause (ii) must be read as stating that those procedural steps are not necessary "for proceeding to assess to the best of judgment within the period of five years"; it does not mean that the five-year limitation itself is dispensed with. Reading Section 28A as removing the five-year limitation would require an impermissible substitution of words and would be contrary to the clear legislative language and intent. Consequently the assessing authority remains bound to take the steps to proceed to assessment within five years as specified in Section 28(4). [Paras 17, 18, 20]

Section 28A dispenses with certain procedural formalities but does not obliterate the five-year limitation under Section 28(4); the assessing authority must proceed within that five-year period.

Final Conclusion: The reference is answered holding that Section 28A dispenses with the need for a second notice and related procedural steps for assessments prior to 01.04.1979 but does not remove the five-year limitation under Section 28(4); the matter is remitted to the Tribunal to pass appropriate orders in conformity with this view.

Priority of secured creditors under Section 26E of the SARFAESI Act - Crown's debt vis-a -vis secured creditors - Bona fide auction purchaser - Mutation of revenue records consequent to sale certificate - Overriding effect of the SARFAESI Act

Priority of secured creditors under Section 26E of the SARFAESI Act - Crown's debt vis-a -vis secured creditors - Overriding effect of the SARFAESI Act - Charge of the secured creditor (bank) created and registered prior to the charge asserted by the Sales Tax Department prevails over the Sales Tax charge. - HELD THAT: - The Court held that Section 26E of the SARFAESI Act gives priority to secured creditors notwithstanding anything contained in any other law, and therefore a secured creditor's registered security interest will take precedence over unsecured Crown debts such as sales tax dues. The judgment relies on binding principles from the Supreme Court and this Court that Crown preference is confined to unsecured creditors and does not override a prior secured charge; statutory provisions creating a first charge or a secured creditor's statutory priority (as in SARFAESI) prevail over the common-law rule of Crown preference. On the facts, the Banks had registered security interests and enforced them by auction under SARFAESI, and those first charges could not be defeated by subsequent sales-tax charges. [Paras 16, 17, 18, 19, 20]

The secured creditors' charges prevail over the Sales Tax Department's charges; the Sales Tax attachment is of no legal efficacy vis-a -vis the Banks' prior secured charge.

Bona fide auction purchaser - Mutation of revenue records consequent to sale certificate - Bonafide auction purchasers who obtained sale certificates from secured creditors are entitled to mutation of revenue records and cannot be deprived of mutation on the ground of delay or alleged acquiescence of predecessors in title. - HELD THAT: - The Court observed that the petitioners are bonafide purchasers who acquired title through sale certificates issued by Banks pursuant to SARFAESI auctions and paid the sale consideration. Mutation in revenue records is a consequential act flowing from their acquired title. Allegations of delay, laches or non-challenge by the original owners do not defeat the petitioners' entitlement where the Banks' prior secured charge and sale have been lawfully effected and the purchasers hold valid sale certificates. The Court rejected the State's contention that delay disentitles the petitioners, noting that their title is unquestioned and that refusal to mutate would effectively penalize bonafide purchasers. [Paras 20, 21]

Petitioners, as bonafide auction purchasers holding sale certificates, are entitled to have their names mutated in the revenue records; delay does not bar such relief in the facts of these petitions.

Mutation of revenue records consequent to sale certificate - Crown's debt vis-a -vis secured creditors - Quashing of Sales Tax attachment/charge entries and direction to mutate petitioners' names in the revenue records. - HELD THAT: - Applying the legal conclusions that secured creditors' registered charges under SARFAESI prevail and that bonafide auction purchasers holding sale certificates are entitled to mutation, the Court directed the respondent authorities to quash and set aside any attachment or charge by the State or its authorities over the subject properties and to effect mutation of the petitioners' names in the revenue records. The remedies granted are consequential to the Court's findings on priority and title. [Paras 22]

Respondent authorities are directed to quash/state any Sales Tax attachment/charge over the properties and to mutate the petitioners' names in the revenue records; rule made absolute to that extent.

Final Conclusion: The petitions are allowed: the Court held that registered first charges of secured creditors under the SARFAESI Act prevail over subsequent Sales Tax charges; bonafide auction purchasers holding sale certificates are entitled to mutation of revenue records notwithstanding alleged delay; the Sales Tax attachments are quashed and respondents directed to effect mutation in favour of the petitioners.

Enrolment fee - delegated legislation - authority of law to levy fees - regulatory fee - charges "in respect of the enrolment" - pre-condition to enrolment - manifest arbitrariness - substantive equality - reasonable restriction under Article 19(6) - prospective effect

Enrolment fee - authority of law to levy fees - delegated legislation - Validity of State Bar Councils (SBCs) and Bar Council of India (BCI) raising enrolment fees beyond the amount prescribed in Section 24(1)(f) of the Advocates Act - HELD THAT: - The Advocates Act contains a fiscal regulatory provision prescribing the enrolment fee payable "in respect of the enrolment." Parliament fixed the fiscal policy in Section 24(1)(f) and the power to levy fees is an impost requiring legal authority. Delegated rule-making powers of the SBCs/BCI must conform to the legislative policy and cannot be used to prescribe enrolment fees inconsistent with Section 24(1)(f). Consequently, SBCs cannot lawfully prescribe or call an amount an "enrolment fee" in excess of the statutory amount; the BCI resolution directing higher enrolment fees lacked authority and is void insofar as it seeks to alter the statutory stipend. The fiscal provision is to be strictly construed and delegates may not create substantive obligations not contemplated by the parent enactment. [Paras 68, 69, 70, 71]

SBCs cannot charge "enrolment fees" beyond the express stipulation of Section 24(1)(f); the BCI's 2013 resolution lacks authority to revise the statutory enrolment fee.

Charges "in respect of the enrolment" - pre-condition to enrolment - regulatory fee - Whether miscellaneous fees charged at the time of admission (verification, application, identity card, welfare/building fund, etc.) can be demanded as separate pre-conditions to enrolment and whether such charges fall outside the statutory enrolment fee - HELD THAT: - Section 24(1)(f)'s phrase "in respect of the enrolment" comprehends the entire enrolment process. Fees demanded from candidates at the time of submission/entry that relate to the enrolment process (verification, application, ID card, processing) are part of the enrolment fee for statutory purposes. Any miscellaneous charges collected as a pre-condition to entry are thus to be treated within the ambit of the enrolment fee and cannot cumulatively exceed the statutory amount. Amounts collectible after enrolment (for example periodic contributions under Rule 40) must be collected only from advocates already on the roll and cannot be extracted at the threshold as a condition of enrolment. [Paras 77, 78, 79, 80, 105]

All fees and charges levied at the time of enrolment are to be construed as part of the enrolment fee and cannot cumulatively exceed the fee prescribed in Section 24(1)(f); such other periodic levies must be collected only after enrolment.

Manifest arbitrariness - substantive equality - reasonable restriction under Article 19(6) - Constitutional validity of the excess enrolment fees as violating Article 14 (substantive equality) and Article 19(1)(g) (right to practise) read with Article 19(6) - HELD THAT: - The requirement to pay excessive amounts at the threshold operates as a barrier to entry that disproportionately affects marginalised and economically weaker sections, undermining substantive equality. Delegated acts that are non-conforming with legislative policy and produce exclusionary effects are manifestly arbitrary. Further, levies imposed without lawful authority constitute unreasonable restrictions on the right to practise under Article 19(1)(g); where there is no valid law authorising such financial pre-conditions, the restriction cannot be justified under Article 19(6). The Court applied established tests of manifest arbitrariness and reasonableness to hold the excess levies unconstitutional. [Paras 92, 93, 94, 95, 101]

The fees and charges imposed by SBCs in excess of the statutory enrolment fee, as a pre-condition to enrolment, violate Article 14 and place an unreasonable restriction on the right to practise under Article 19(1)(g).

Prospective effect - Relief and temporal effect of the declaration that excess enrolment fees are invalid, and whether past collections must be refunded - HELD THAT: - Although excess fees charged are invalid going forward, the Court recognised the practical financial dependence of SBCs and BCI on historical collections and the long usage of such funds. Exercising restraint, the Court declined to order retrospective refunds and limited the effect of its declaration to the future. [Paras 103, 107, 108, 109]

The declaration that excess enrolment fees are invalid is given prospective effect; SBCs are not required to refund excess enrolment fees collected before the date of this judgment.

Final Conclusion: The Court held that the Advocates Act alone prescribes the enrolment fee payable "in respect of the enrolment," delegated authorities cannot lawfully increase that fee or extract additional fees as pre-conditions to enrolment, all fees charged at the time of enrolment are to be treated within the statutory enrolment fee and cannot cumulatively exceed Section 24(1)(f), the excess levies violate Articles 14 and 19(1)(g), the BCI resolution directing higher enrolment fees has no authority to amend the statutory stipend, and the declaration operates prospectively without directing refunds of amounts collected prior to this judgment.

Refund of amount deposited by purchaser - interest for delay in handing over possession - reasonableness of contractual interest rates - construction-linked payment plan - force majeure and delay in statutory approvals - principle of parity between parties

Refund of amount deposited by purchaser - construction-linked payment plan - Direction for refund of the entire amount deposited by the complainants-appellants upheld - HELD THAT: - The Commission directed refund of the entire amount deposited by the complainants-appellants because possession was not delivered within the contractual period despite near-complete payment by the purchasers and prolonged non-construction at the site. The Supreme Court found no misdirection in the Commission's conclusion that the complainants-appellants were entitled to a refund in view of inordinate delay and deprivation of possession through no fault of the purchasers, and therefore upheld the refund direction. [Paras 8, 10]

Refund directed by the Commission is maintained

Interest for delay in handing over possession - reasonableness of contractual interest rates - principle of parity between parties - Interest awarded by the Commission at 9% per annum modified to 12% per annum - HELD THAT: - The Commission had awarded interest at 9% per annum. The appellants submitted that parity and the contractual terms warranted a higher rate; the Agreement provided for the Developer's liability to pay interest at 12% per annum for delay in completion (clause 7(b)), while purchasers could be charged 24% for delayed payments. The Court held that, given the inordinate delay and the contractual stipulation for the Developer's liability, the Commission was not justified in awarding a rate lower than that agreed in the Agreement. Applying the contractual benchmark, the Court substituted the rate of 9% with 12% per annum, to be paid from the date of respective deposits until refund, and directed payment within three months. [Paras 8, 9, 10]

Interest recalculated at 12% per annum from date of deposit until refund; payment to be made within three months

Force majeure and delay in statutory approvals - Contention that delay due to late sanctioning of layout plans was covered by force majeure repelled - HELD THAT: - The Developer contended that delay in sanctioning of plans by the statutory authority brought the case within the force majeure clause. The Court rejected this contention as without substance, relying on the principle settled in the decision in DLF Home Developers Limited (earlier known as DLF Universal Limited) and Another v. Capital Greens Flat Buyers Association and Others , which stands contrary to the Developer's plea. Consequently, the force majeure defence was not accepted and did not absolve the Developer of liability for refund and interest. [Paras 8]

Force majeure plea based on delay in plan sanctioning not accepted

Final Conclusion: Appeal partly allowed: the Commission's direction for refund of the entire amount deposited is affirmed; the interest awarded is enhanced to 12% per annum from the date of respective deposits until refund, to be paid within three months; other reliefs and pending applications disposed of.