TaxTMI Updates e-Newsletter
Aug 06,2024

Natural justice - remand for fresh consideration - input tax credit reversal - availability and reversal of IGST input tax credit in GSTR-3B - appropriation of bank balance pending adjudication

Natural justice - remand for fresh consideration - input tax credit reversal - availability and reversal of IGST input tax credit in GSTR-3B - appropriation of bank balance pending adjudication - Whether the impugned order confirming tax demand in respect of availment of IGST input tax credit in the GSTR-3B return for September 2022-23 (and its reversal in March 2022-23) should be set aside and remanded for fresh consideration with affordance of opportunity to the petitioner. - HELD THAT: - The Court noted the petitioner's contention that he had not received a reasonable opportunity to contest the tax demand because communications were not brought to his notice by his consultant and that he is not conversant with the GST portal. The respondent relied on issuance of ASMT 10 notice, a show cause notice and a personal hearing notice. The petitioner filed GSTR-3B returns for September and March 2022-23 which, on prima facie examination, indicate that the Input Tax Credit availed in September was reversed in March 2022-23. The petitioner also filed an affidavit stating that an amount of Rs. 6,57,647/- was appropriated from his bank account, which matches the total demand including interest and penalty; the Court treated this as securing the revenue. In view of the combination of the petitioner's non-participation in adjudicatory proceedings, the evidence that the input tax credit was reversed in a later return, and the fact that the revenue appears secured by appropriation, the Court found that a remand was justified to afford the petitioner a reasonable opportunity to respond and be heard.

Impugned order dated 26.12.2023 set aside; matter remanded to the respondent for reconsideration. Petitioner permitted to submit a reply within fifteen days of receipt of this order; respondent to provide a reasonable opportunity including personal hearing and to issue a fresh order within three months of receipt of the reply. The amount appropriated from the petitioner's bank account shall abide the outcome of the remanded proceedings.

Final Conclusion: The writ petition is allowed to the extent that the impugned order is set aside and the matter remanded for fresh consideration with directions to afford the petitioner a reply period of fifteen days and a personal hearing, and to decide afresh within three months; the amount appropriated shall abide the result of the remanded proceedings.

Maintainability of writ in presence of statutory appellate remedy - appellate remedy under Section 107 of the CGST Act - refund of Input Tax Credit - limitation under Section 54(7) of the CGST Act - distinctness of cause of action where earlier proceedings are pending

Maintainability of writ in presence of statutory appellate remedy - appellate remedy under Section 107 of the CGST Act - Writ petition not maintainable because statutory remedy of appeal is available and petitioner must approach the appellate authority. - HELD THAT: - The Court accepted the preliminary objection that the petitioner has a statutory remedy of filing an appeal before the appellate authority and therefore the writ petition was not the appropriate forum to challenge the impugned orders. The petition was disposed of with a direction to the petitioner to avail the appellate remedy. The Court noted the petitioner had spent time pursuing the writ mistakenly and therefore directed the appellate authority to consider the appeal on its merits when filed.

Petition disposed directing the petitioner to approach the appellate authority and the appellate authority to decide the appeal on merits.

Refund of Input Tax Credit - limitation under Section 54(7) of the CGST Act - distinctness of cause of action where earlier proceedings are pending - Earlier Special Appeal pending in this Court did not preclude directing the petitioner to the appellate authority because the cause of action and tax period in the earlier proceedings were different. - HELD THAT: - The Court examined the earlier proceedings and the present claim and was satisfied that the cause of action in the pending Special Appeal was different (different period and different quantum). Consequently, the existence of earlier litigation before this Court did not justify retention of the present writ petition; instead the petitioner was directed to pursue the statutory appeal for the refund claim relating to April 2020 to May 2020. The appellate authority was required to consider the fresh appeal on its merits.

Existence of a different earlier appeal did not render the statutory appellate forum unavailable; petitioner must file appeal in the appellate authority which shall decide on merits.

Final Conclusion: Writ petition dismissed by consent to statutory remedy: petitioner directed to file appeal before the appellate authority against the impugned orders; the appellate authority is directed to consider the appeal on merits.

Electronic service of show cause notice under CGST regime - Filing reply electronically to show cause notice - Validity of notice served by non-electronic mode - Abuse of process of court - Power to impose costs for abuse of process

Electronic service of show cause notice under CGST regime - Validity of notice served by non-electronic mode - Petitioner is not entitled to direction that the show cause notice under Section 74(1) CGST Act be reissued electronically and that only an electronic notice would be valid. - HELD THAT: - The Court held that the revenue is not prevented from issuing the show cause notice by email and that absence of an electronic mode of issuance does not render the notice invalid. Allowing the petitioner's prayer would compel the revenue to issue a fresh electronic notice and thereby reset limitation, which the Court declined to permit. The Court also noted that the Supreme Court had earlier recorded that the petitioner was at liberty to file replies to the show cause notices, a course which the petitioner had not pursued and instead filed the present petition. The petitioner's challenge seeking reissuance in electronic form was therefore refused as a means to delay proceedings. [Paras 3, 4, 5, 6, 7]

Prayer for electronic reissuance of the show cause notice and exclusive electronic service was refused; the nonelectronic issuance was not held invalid and the petitioner was not entitled to have limitation reset.

Filing reply electronically to show cause notice - Abuse of process of court - Power to impose costs for abuse of process - Petitioner's request to be permitted to file reply only by electronic mode was rejected and the writ petition was held to be an abuse of process, attracting costs. - HELD THAT: - The Court observed that the petitioner's present petition constituted a further round of litigation on the same cause of action and was a gross abuse of the process of law. The Court emphasised that the petitioner had been granted liberty to file replies by the Supreme Court but had not availed that liberty and instead sought fresh litigation to delay the proceedings. Exercising its power in the circumstances, the Court dismissed the writ petition and imposed costs to penalise the misuse of judicial process. [Paras 1, 2, 7, 8]

Writ petition dismissed as an abuse of process; costs imposed.

Power to impose costs for abuse of process - Costs were imposed on the petitioner to be deposited with the CGST Authorities. - HELD THAT: - Having found the petition to be a gross abuse and to have the effect of delaying statutory proceedings, the Court awarded costs as a punitive and salutary measure, directing the petitioner to pay a specified sum to the CGST Authorities. [Paras 8]

Costs of Rs.50,000 imposed on the petitioner to be deposited with the CGST Authorities.

Final Conclusion: Writ petition dismissed as an abuse of process; petitioner not entitled to direction for electronic reissuance or exclusive electronic replies; costs of Rs.50,000 directed to be deposited with the CGST Authorities.

Imposition of penalty under Section 73(9) - Reconsideration of penalty on account of prior remittance of ineligible Input Tax Credit - Effect of Section 128A on penalty for ineligible Input Tax Credit - Appropriation of amounts remitted via GSTR-3B - Right to personal hearing before fresh order on penalty

Imposition of penalty under Section 73(9) - Reconsideration of penalty on account of prior remittance of ineligible Input Tax Credit - Effect of Section 128A on penalty for ineligible Input Tax Credit - Appropriation of amounts remitted via GSTR-3B - Right to personal hearing before fresh order on penalty - Imposition of penalty set aside and remitted for fresh consideration limited to penalty - HELD THAT: - The Court found that the petitioner had remitted sums towards ineligible Input Tax Credit in 2017 and 2018 prior to issuance of the show cause notice and that the impugned order nevertheless imposed penalty without giving full effect to those remittances. In view of sub-section (9) of Section 73 and the subsequently introduced Section 128A as relied upon by the petitioner, the matter concerning imposition of penalty required reconsideration limited to whether and to what extent penalty is leviable after appropriation of amounts remitted through GSTR-3B. The Court therefore set aside the penalty portion of the order and remanded that issue to the respondent for reconsideration. The remand is confined to penalty only; the respondent is directed to afford the petitioner a reasonable opportunity, including a personal hearing, and thereafter to pass a fresh order on penalty within three months from receipt of the judgment.

Penalty portion of the order dated 22.11.2022 is set aside and remanded to the respondent for fresh consideration limited to imposition of penalty, after giving the petitioner a reasonable opportunity including personal hearing, to be disposed within three months.

Final Conclusion: Writ petition allowed insofar as the imposition of penalty is set aside and remitted for reconsideration on the limited grounds indicated; petitioner to be given a personal hearing and fresh order on penalty to be passed within three months; otherwise petition disposed without costs.

Delayed availing of Input Tax Credit - remand for fresh consideration - GST Council recommendations - condonation of delayed Input Tax Credit under Finance (No.2) Bill, 2024 (Clause 114 & 146) - liberty to file statutory appeal

Delayed availing of Input Tax Credit - condonation of delayed Input Tax Credit under Finance (No.2) Bill, 2024 (Clause 114 & 146) - GST Council recommendations - remand for fresh consideration - Portion of the demand attributable to alleged delayed availment of input tax credit remitted for fresh consideration - HELD THAT: - The Court observed that a part of the demand (Rs. 23,35,892) relates to delay in availing Input Tax Credit and that the GST Council in its 53rd Meeting and proposals in Clause 114 & 146 of the Finance (No.2) Bill, 2024, prima facie address condonation of such delayed availment for specified financial years. Given this legislative and policy context, the Court found that the impugned order cannot be sustained to the extent it relates to the delayed ITC without detailed consideration of those recommendations and proposals. Consequently, that portion of the impugned order was set aside and the matter remitted to the third respondent for fresh adjudication, instructing the authority to consider the GST Council's recommendation and the proposals in Clause 114 & 146 of the Finance (No.2) Bill, 2024 in accordance with law. [Paras 8, 9, 10]

Impugned order set aside insofar as it relates to delayed availment of input tax credit; matter remitted to the third respondent to decide afresh in light of GST Council recommendations and Clause 114 & 146 of the Finance (No.2) Bill, 2024.

Liberty to file statutory appeal - Remaining portion of the confirmed demand not remitted and the procedural avenue provided to the petitioner - HELD THAT: - The Court left undisturbed the balance of the confirmed demand (Rs. 33,76,222) and did not decide the merits of that portion. Instead, the Court afforded the petitioner a procedural remedy by granting liberty to institute a statutory appeal against that portion of the demand within thirty days from the date of the order. No substantive adjudication on the balance amount was undertaken by the Court in this writ proceeding. [Paras 11, 12]

No interference with the balance amount; petitioner granted liberty to file statutory appeal within thirty days.

Final Conclusion: The writ petition is disposed: the portion of the demand relating to delayed availment of input tax credit is set aside and remitted to the assessing authority for fresh decision in light of the GST Council recommendations and Clause 114 & 146 of the Finance (No.2) Bill, 2024; the remaining portion of the demand is left undisturbed and the petitioner is granted liberty to file a statutory appeal within thirty days.

Speaking order - reasoned order - opportunity of hearing - remand for fresh consideration - confirmation of demand - challenge to validity of notification - challenge to constitution of appellate authority

Speaking order - reasoned order - confirmation of demand - opportunity of hearing - remand for fresh consideration - Impugned orders confirming tax, interest and penalty set aside for failure to record reasons and for not considering the petitioner's reply; matter remitted for fresh decision after hearing. - HELD THAT: - The adjudicating authority confirmed the demand by the impugned orders but did not consider the petitioner's response to the show cause notice nor record reasons for rejecting the reply. The impugned order merely stated that the objections/reply were incomplete and not acceptable, without explaining why the petitioner's specific contentions - that the tax and interest had been paid and that no input tax credit was availed from the supplier in question - were rejected. For lack of a reasoned or speaking order and absence of consideration of the petitioner's reply, the orders cannot stand. The Court set aside the impugned orders and remanded the matter to the adjudicating authority to consider the petitioner's response afresh, afford an opportunity of hearing, and decide in accordance with law. [Paras 8, 9, 10, 11]

Impugned orders set aside; matter remitted to the adjudicating authority to consider the petitioner's reply afresh and decide after giving an opportunity of hearing.

Challenge to validity of notification - Challenge to notifications extending time under Section 73(9) of the CGST Act not pressed and therefore not decided on merits. - HELD THAT: - The petitioner challenged Notification No. 9/2023-Central Tax and Notification No. 56/2023-Central Tax as ultra vires Section 168A of the CGST Act but elected not to press that challenge at this stage while reserving its rights to raise it later. Since the challenge is not pressed, the Court declined to pass any orders on that contention. [Paras 12, 13]

No interim orders made on the challenge to the notifications; petitioner may pursue the challenge later if necessary.

Challenge to constitution of appellate authority - Challenges to orders regarding constitution of the appellate authority are not pressed and hence no orders are required. - HELD THAT: - The petitioner did not press its challenge to multiple orders pertaining to the constitution of the appellate authority at this stage. The Court recorded that no orders were required in respect of those challenges. [Paras 14]

No orders required in respect of the challenge to the constitution of the appellate authority.

Final Conclusion: The petition is disposed of by quashing the impugned adjudication orders for want of reasons and remitting the matter for fresh consideration after affording hearing; challenges to the notifications and to the constitution of the appellate authority were not pressed and no orders were passed on those points.

Right to be heard / principles of natural justice - service and communication by electronic means (GST portal) - invocation of penal provision for suppression of facts under Section 74 of the GST law - remand for fresh adjudication on terms subject to deposit - personal hearing as part of reasonable opportunity

Right to be heard / principles of natural justice - service and communication by electronic means (GST portal) - personal hearing as part of reasonable opportunity - Whether the confirmed tax demand could be sustained without affording the petitioner a reasonable opportunity to contest the proceedings which, the petitioner says, were communicated only via the GST portal - HELD THAT: - The court found that the impugned order confirming the tax proposal was rendered because the petitioner neither paid the demand nor filed objections. The petitioner asserted non-participation was due to lack of effective notice since communications were only uploaded on the GST portal and not otherwise brought to its attention. Having regard to the fundamental requirement to afford a reasonable opportunity to be heard, the court concluded that the interest of justice required reconsideration of the matter by putting the petitioner on terms. Consequentially the confirmed order was set aside and the matter remanded for fresh consideration after the petitioner is given an opportunity to file a reply and to be heard personally, conditional upon the short-term compliance ordered by the court. [Paras 4, 5]

Impugned order dated 27.11.2023 set aside and matter remitted for fresh consideration after the petitioner remits 10% of the disputed tax demand and is afforded a reasonable opportunity, including a personal hearing.

Invocation of penal provision for suppression of facts under Section 74 of the GST law - remand for fresh adjudication on terms subject to deposit - Whether the ingredients of the penal provision under Section 74 are satisfied and whether the tax proposal confirming demand under that provision should stand - HELD THAT: - The contest on whether the petitioner suppressed facts by claiming taxable supplies in GSTR 1 but failing to pay taxes (as relied upon by the revenue) was adverted to by the parties. The court did not adjudicate the merits of the invocation of the penal provision; instead, having set aside the earlier order for want of effective participation, it remitted the matter to the respondent to examine the show cause notice afresh. The remand is conditional - the petitioner must remit 10% of the disputed demand within two weeks and may submit a reply within that period; upon receipt of the reply and satisfaction about the deposit, the respondent must provide a reasonable opportunity including personal hearing and thereafter pass a fresh order within three months. [Paras 2, 3, 5]

Merits of invocation of Section 74 not finally decided; remitted to respondent for fresh adjudication after compliance with the terms imposed by the court.

Final Conclusion: Writ petition disposed by setting aside the order dated 27.11.2023 and remitting the matter to the respondent for fresh adjudication on terms: petitioner to remit 10% of the disputed tax demand within two weeks and may file a reply; respondent to afford a reasonable opportunity including personal hearing and pass a fresh order within three months thereafter.

Remand for fresh adjudication on merits - pre-deposit requirement for preferring appeal under Section 107(6) - defective appeal for non-payment of required pre-deposit - dismissal of appeal on ground of delay - reinstatement where subsequent proper pre-deposit paid bona fide - exclusion of maintainability and limitation from re-hearing

Defective appeal for non-payment of required pre-deposit - remand for fresh adjudication on merits - reinstatement where subsequent proper pre-deposit paid bona fide - dismissal of appeal on ground of delay - Whether the appellate orders dated 31st January, 2024 and 28th May, 2024 dismissing the appeals should be set aside and the matter remanded for fresh hearing on merits in view of an initially defective appeal and subsequent payment of the required pre-deposit. - HELD THAT: - The Court found that the determination under Section 73 had been challenged by the petitioner for the tax period July 2017 to March 2018. The first appeal was filed belatedly and was defective because only 1% of the tax in dispute was deposited instead of the 10% required under Section 107(6); that defective appeal was rejected without decision on merits. Within days thereafter the petitioner filed a subsequent appeal with the required pre-deposit and paid, in aggregate, more than the prescribed pre-deposit. The appellate authority later dismissed that subsequent appeal on the ground of delay after noting non-appearance to explain delay. The High Court found no want of bona fides in the petitioners' conduct, observed that there had been no adjudication on merits, and took into account that the petitioners had already paid in excess of the statutory pre-deposit threshold. In consequence, the Court concluded that the interests of justice required that the appellate authority rehear the matter on merits and not be foreclosed by the procedural defects in the initial filing or by the dismissal for delay, given the subsequent compliance with the pre-deposit requirement and the absence of any decision on merits earlier. [Paras 7, 8, 9]

Orders dated 31st January, 2024 and 28th May, 2024 are set aside and the matter is remanded to the appellate authority for fresh hearing on merits.

Exclusion of maintainability and limitation from re-hearing - Whether the issues of maintainability of the appeal and limitation may be reopened before the appellate authority on remand. - HELD THAT: - The Court expressly declined to examine the merits of the underlying dispute and directed that, on remand, the appellate authority shall permit the parties to raise all issues except the maintainability of the appeal and the point of limitation. The appellate authority is to decide the matter uninfluenced by the observations of this Court. [Paras 10, 11]

Maintainability and limitation are excluded from re-hearing; all other issues may be raised before the appellate authority which shall decide uninfluenced by this Court's observations.

Final Conclusion: The High Court set aside the appellate orders dated 31st January, 2024 and 28th May, 2024 and remanded the matter to the appellate authority for a fresh hearing on merits in respect of the tax period July 2017 to March 2018; maintainability and limitation issues are excluded from the re-hearing and the appellate authority shall decide the matter uninfluenced by this Court's observations.

Show cause notice under the Central Goods and Services Tax Act, 2017 seeking demand under Section 73 - unreasoned order - opportunity of being heard - remand for fresh consideration - input tax credit entitlement - cancellation of GST registration consequent to death of taxpayer

Unreasoned order - opportunity of being heard - remand for fresh consideration - Impugned adjudication order confirming demand was unsustainable for being unreasoned and for failure to consider the taxpayer's reply. - HELD THAT: - The adjudicating authority's order confirms the demand while recording only that "no proper reply/explanation have been received" despite repeated opportunities. The High Court found that the authority did not consider the substantive contentions and documents filed by the taxpayer's legal heir, including the claim of payment discharged, balance carried forward in the electronic credit ledger, contention on Rule 42/43 calculations, and entitlement to Input Tax Credit in respect of supplies from a supplier whose registration and tax payment were shown as active on the portal. An order which merely records non-receipt of a proper reply without addressing the specific submissions and evidence filed is an unreasoned order and cannot stand. The matter is therefore set aside and remitted to the adjudicating authority to consider the petitioner's contentions afresh after affording an opportunity of hearing. [Paras 8, 9, 10]

Impugned order set aside; matter remanded for fresh consideration after affording the petitioner an opportunity of being heard.

Cancellation of GST registration consequent to death of taxpayer - input tax credit entitlement - Effect of the taxpayer's death and the cancellation of GST registration on the proceedings was recorded but not finally adjudicated; related submissions must be considered on remand. - HELD THAT: - The petitioner informed the authority of the assessee's death and produced the death certificate and indicated that GST registration had been cancelled; she also made specific submissions on payment, ledger balance, segregation of taxable and non-taxable supplies, and entitlement to Input Tax Credit for supplies where supplier registration and tax payment were reflected as active. The High Court noted these averments and found that the authority failed to consider them; these factual and legal contentions therefore require fresh consideration by the adjudicating authority pursuant to the remand. [Paras 6, 7, 10]

Factual and legal contentions arising from the death of the taxpayer, cancellation of registration and claimed entitlements to ITC are to be considered afresh by the adjudicating authority on remand.

Challenge to notification extending time under Section 73(9) - Challenge to Notification No. 9/2023-Central Tax dated 31.03.2023 was not pressed and thus was not decided on merits. - HELD THAT: - The petitioner expressly did not press the challenge to the Notification extending time for passing orders under Section 73(9) for certain financial years. The Court therefore did not adjudicate the validity of the Notification and made no order on that challenge. [Paras 11]

No orders called for on the challenge to the Notification as the petitioner did not press that relief.

Final Conclusion: The High Court set aside the impugned adjudication order as unreasoned and remanded the matter to the adjudicating authority for fresh consideration after affording the petitioner an opportunity of hearing; the challenge to the Notification was not pursued and is not decided.

Refund of accumulated input tax credit - zero-rated supplies - requirement of Bank Realization Certificate for export of goods - insistence on proof of realisation not envisaged for export of goods - power to issue FORM GST RFD-08 only upon satisfaction that refund is inadmissible - recovery and refund mechanism under Rule 96B - entitlement to input tax credit subject to proof of payment to suppliers under Section 16(2)(c) - remand for verification of payments to suppliers

Refund of accumulated input tax credit - zero-rated supplies - requirement of Bank Realization Certificate for export of goods - recovery and refund mechanism under Rule 96B - insistence on proof of realisation not envisaged for export of goods - The petitioner's refund claim could not be rejected on the ground of non furnishing of Bank Realization Certificates; in any event the petitioner had produced BRCs and Rule 96B(2) permits restoration where BRCs are produced after recovery. - HELD THAT: - The Court held that export of goods is a zero rated supply and, unlike export of services, the definition of 'export of goods' does not make realisation of sale proceeds a pre condition for export. The CBIC Circular No.125/44/2019 clarifies that proof of realisation is not a mandatory pre condition for processing refund claims in case of export of goods and BRCs need not be insisted upon. Rule 92(3) requires issuance of FORM GST RFD-08 only where the proper officer is satisfied that the refund is inadmissible; it does not authorise a general document gathering enquiry in the guise of a rejection notice. Moreover, even if Rule 96B were engaged, its Sub rule (2) provides that where sale proceeds are realised and evidence is produced within three months of such realisation, amounts recovered earlier shall be refunded. The appellate authority's reasoning that granting refund would be futile because the petitioner might have to re deposit it overlooked Rule 96B(2). The impugned rejection on the ground of non production of BRCs was therefore unsustainable, and in any event the petitioner had produced BRCs as recorded in the appellate order. [Paras 23, 24, 25, 26, 27]

Rejection of the refund claim on the ground of non furnishing BRCs set aside; petitioner's production of BRCs precludes denial on that basis.

Power to issue FORM GST RFD-08 only upon satisfaction that refund is inadmissible - entitlement to input tax credit subject to proof of payment to suppliers under Section 16(2)(c) - remand for verification of payments to suppliers - Whether the petitioner made payment to suppliers for the inward supplies in respect of which ITC is claimed was not finally adjudicated and is remanded for fresh consideration. - HELD THAT: - The adjudicating authority rejected the refund claim on the basis that ledger accounts of suppliers were incomplete and payments could not be verified against bank statements; the appellate authority endorsed findings and additionally referred to Section 16(2) though no SCN alleged supplier non payment to the Government. The Court observed that the Proper Officer had not issued a deficiency memo under Rule 90(3) and that the question whether the petitioner had actually paid for inward supplies requires focused factual enquiry. Given the unresolved factual apprehension about payment for inward supplies and the procedural posture, the Court set aside the impugned orders and remanded the limited question of payment to the adjudicating authority for fresh, reasoned determination after affording the petitioner an opportunity to file bank statements, supplier ledger accounts and be heard. [Paras 28, 29, 30, 31, 32]

Matter remanded to the adjudicating authority to decide afresh, after hearing the petitioner, whether payment was made to suppliers for the inward supplies in respect of which ITC refund is claimed.

Final Conclusion: The impugned order and the order rejecting the refund claim are set aside; the challenge to refusal on BRC grounds is allowed, and the matter is remitted to the adjudicating authority to determine, after giving the petitioner an opportunity of hearing and filing bank statements and supplier ledger accounts if necessary, whether payments for inward supplies were made. Petition disposed accordingly.

Challenge to demand arising from mismatch between GSTR-3B and GSTR-2A input tax credit - prima facie insufficiency of explanation for claimed IGST credit and impermissibility of dual credit under CGST and SGST - statutory revision under Section 161 of the respective GST enactments - interim abeyance of recovery pending disposal of statutory revision

Challenge to demand arising from mismatch between GSTR-3B and GSTR-2A input tax credit - prima facie insufficiency of explanation for claimed IGST credit and impermissibility of dual credit under CGST and SGST - Whether the impugned demand confirming tax, interest and penalty based on alleged excess Input Tax Credit warranted interference. - HELD THAT: - The Court examined the impugned order confirming demand for 2018-19 arising from the difference between Input Tax Credit availed in GSTR-3B and the auto-populated GSTR-2A. The respondent records that the petitioner had no excess IGST credit and the demand was accordingly confirmed. The Court found that the petitioner's explanations and figures were prima facie inconsistent with the Electronic Credit Ledger: the ledger showed an IGST closing/opening balance of Rs. 23,72,535 whereas the petitioner claimed higher IGST amounts credited as CGST and SGST respectively, producing an impossible dual availment. On this basis the Court did not find the impugned order sufficiently irregular to be quashed; rather, it observed that the petitioner's credit position as explained appears incorrect and that a clear explanation was lacking. The Court therefore refused to set aside the demand on merits at this stage. [Paras 9, 11, 12, 13, 14]

The Court declined to interfere with the impugned order on merits while recording that the petitioner's explanation of IGST credit was prima facie incorrect.

Statutory revision under Section 161 of the respective GST enactments - interim abeyance of recovery pending disposal of statutory revision - Procedural relief to be afforded pending statutory remedy and directions regarding further proceedings. - HELD THAT: - Although the Court did not annul the demand, it granted limited interim relief in the exercise of writ jurisdiction. The respondent was directed to keep recovery proceedings in abeyance for three months. The petitioner was permitted to file a revision petition under Section 161 of the respective GST enactments within 30 days; if filed within that period the respondent is directed to consider and dispose of the revision on merits. Pending disposal of such revision, recovery shall remain in abeyance for three months. If no revision is filed within the prescribed time, the respondent is at liberty to proceed in accordance with law. These directions preserve the petitioner's statutory remedy while protecting the respondent's right to enforce the demand if statutory remedies are not pursued. [Paras 15, 16]

Recovery stayed for three months; petitioner may file revision under Section 161 within 30 days and respondent shall decide it on merits; if no revision is filed, respondent may proceed.

Final Conclusion: Writ petition disposed by declining to set aside the impugned demand on merits while granting interim relief: recovery proceedings are stayed for three months and the petitioner is permitted to file a statutory revision under Section 161 within 30 days, which the respondent must decide on merits; if no revision is filed, recovery may proceed.

Parallel proceedings in respect of the same assessment period - principles of natural justice and opportunity to be heard - interpretation of the expression 'order' in Section 73 - reconsideration and remand for fresh decision - appropriation from bank account affecting prejudice to taxpayer

Parallel proceedings in respect of the same assessment period - principles of natural justice and opportunity to be heard - reconsideration and remand for fresh decision - appropriation from bank account affecting prejudice to taxpayer - Whether the impugned order confirming tax proposals should be set aside and the matter remanded for fresh consideration because two parallel proceedings were initiated and the petitioner was thereby denied a fair opportunity to be heard, particularly after appropriation from the petitioner's bank account. - HELD THAT: - The Court accepted the petitioner's contention that two parallel proceedings were initiated arising from different perceived mismatches in returns, creating confusion that impeded the petitioner's participation. Although the respondent relied on issuance of intimation, show cause notice and reminders, the impugned order confirmed tax liability solely on the ground that the taxpayer did not reply to the show cause notice. The Court noted that a sum had already been appropriated from the petitioner's bank account and that this appropriation amounted to more than 10% of the disputed demand in the present and connected proceedings, a circumstance which called for reconsideration. In these circumstances the Court set aside the impugned order and remanded the matter for fresh consideration, directing that the petitioner be permitted to file a reply within a limited period, be afforded a reasonable opportunity including personal hearing, and that a fresh order be passed within a stipulated timeline. [Paras 4, 5]

Impugned order dated 26.12.2023 set aside; matter remanded for reconsideration with directions to permit the petitioner to reply within 15 days, to grant a reasonable opportunity including personal hearing, and to pass a fresh order within three months of receipt of the reply.

Final Conclusion: Writ petition disposed of by setting aside the impugned order and remanding the matter for fresh consideration with directions to permit filing of reply, provide opportunity of personal hearing and to pass a fresh order within three months; no order as to costs.

Continuous supply of service - time of supply - clarificatory circular - reconsideration in light of departmental circular - remand for fresh adjudication - reasonable opportunity and personal hearing

Clarificatory circular - reconsideration in light of departmental circular - continuous supply of service - time of supply - remand for fresh adjudication - reasonable opportunity and personal hearing - Validity of the impugned order dated 28.02.2024 and the need for fresh adjudication in light of Circular No.221/2024 - HELD THAT: - The Court noted that Circular No.221/2024, issued under Section 158(1) of the CGST Act, is clarificatory and records that a Hybrid Annuity Model (HAM) contract is a single contract covering construction and operation & maintenance and draws attention to sub section (5) of Section 31 dealing with continuous supply of service. Because the Circular is clarificatory and may materially affect the adjudication-particularly the characterisation of the HAM contract, the application of the concept of continuous supply and the determination of time of supply-the impugned order could not stand without taking the Circular into account. For these reasons the Court set aside the assessment order and remanded the matter for fresh consideration, directing that the adjudicating authority afford the petitioner a reasonable opportunity, including a personal hearing, and pass a fresh order after considering Circular No.221/2024. [Paras 4, 5]

Impugned order of 28.02.2024 set aside; matter remanded to the third respondent for fresh adjudication after providing reasonable opportunity including personal hearing and taking Circular No.221/2024 into account; fresh order to be issued within four months; bank attachment lifted.

Final Conclusion: The impugned assessment order dated 28.02.2024 has been set aside and the matter remanded for fresh consideration by the adjudicating authority in light of Circular No.221/2024; the petitioner shall be granted a reasonable opportunity including personal hearing and a fresh order shall be issued within four months, and the bank attachment is released.

Reversal of Input Tax Credit - Matching of Input Tax Credit and production of books of account - Opportunity to be heard / procedural fairness - Remand for fresh consideration - Assessment under Section 73(1) of the KGST/CGST Act, 2017 - Imposition of costs for non-compliance

Reversal of Input Tax Credit - Matching of Input Tax Credit and production of books of account - Opportunity to be heard / procedural fairness - Remand for fresh consideration - Assessment under Section 73(1) of the KGST/CGST Act, 2017 - Annulment of the assessment order and remand for fresh consideration permitting production of books and documents for matching and determination of ITC. - HELD THAT: - The Court accepted that the petitioner was unable to participate in the assessment proceedings due to the proprietor's ill health and temporary absence and that the Assessing Officer's conclusion proceeded in the absence of production of books of account, thereby precluding matching of ITC. The petitioner filed various documents (including audit report under Section 44AB, balance sheet for 01.04.2017 to 31.03.2018, profit and loss account, GSTR returns, ITC report and related material) which the Court held ought to be allowed to be placed before the assessing authority. In view of the Assessing Officer's reliance on non production of books for declining matching, the Court set aside the impugned order and remitted the matter for fresh consideration, directing that the petitioner be afforded an opportunity to produce the documents and that appropriate orders be passed with all contentions kept open. [Paras 11, 13]

Order at Annexure A set aside; matter remitted for fresh consideration and petitioner to appear before the first respondent on 05.08.2024; all contentions kept open.

Imposition of costs for non-compliance - Opportunity to be heard / procedural fairness - Imposition of costs on the petitioner despite remand. - HELD THAT: - The Court noted the petitioner's explanation of illness and winding up of business but observed that there was a lapse in diligently following up the proceedings. While affording the petitioner another opportunity, the Court held that the lapse warranted imposition of costs and therefore directed payment of a cost as a condition of relief. [Paras 12, 13]

Petitioner directed to pay costs of Rs.10,000 to the respondents.

Final Conclusion: The assessment order under challenge is set aside and the matter is remitted for fresh consideration; the petitioner is granted an opportunity to produce documents, must appear on 05.08.2024, and is directed to pay costs to the respondents.

Levy of Goods and Services Tax on royalty for mining - direction to keep recovery in abeyance pending decision of a higher court - consequences of higher court decision on interim orders

Levy of Goods and Services Tax on royalty for mining - direction to keep recovery in abeyance pending decision of a higher court - consequences of higher court decision on interim orders - Disposal of writ petitions by directing respondents to keep recovery in abeyance pending the outcome of the issue before the Hon'ble Supreme Court, with consequential treatment depending on that outcome. - HELD THAT: - The Court disposed of the writ petitions in light of an earlier order in W.P.(MD)No.23603 of 2023 and the pendency of the question regarding levy of GST on royalty for mining before the Hon'ble Supreme Court. The petitioners' challenge to the impugned notices is not finally adjudicated on merits; instead, the respondents are directed to refrain from recovering the tax claimed in the notices until the Supreme Court rules on the issue. The order preserves the revenue's right to recover tax if the Supreme Court upholds the levy, and provides that if the Supreme Court answers the issue against the revenue the impugned order shall be deemed quashed with effect from the date of the Supreme Court's order. [Paras 3]

Writ petitions disposed by directing that recovery be kept in abeyance pending the decision of the Hon'ble Supreme Court; if the levy is upheld recovery may proceed, and if decided against the revenue the impugned order shall be deemed quashed from the date of the Supreme Court's order.

Final Conclusion: The writ petitions are disposed of by directing respondents to keep recovery in abeyance pending the Supreme Court's decision on the levy of GST on royalty for mining; consequences of the Supreme Court's ruling are specified for recovery or quashing of the impugned order.

Registration under Section 80G(5)(vi) - Registration under Section 12AA as indicium of charitable purpose - Requirement to apply 85% of income to charitable purposes under Section 11(2) - Technical non-compliance not to defeat bona fide charitable status - Construction of public library as a charitable activity - Investment of surplus in FDRs and fixed assets vis-a -vis charitable purpose

Registration under Section 80G(5)(vi) - Technical non-compliance not to defeat bona fide charitable status - Requirement to apply 85% of income to charitable purposes under Section 11(2) - Investment of surplus in FDRs and fixed assets vis-a -vis charitable purpose - Construction of public library as a charitable activity - Registration under Section 12AA as indicium of charitable purpose - Validity of the Commissioner's refusal to renew the petitioner's registration under Section 80G(5)(vi) on the grounds of alleged non-utilisation, accumulation and defects in records - HELD THAT: - The Court examined the factual material relied upon by the Commissioner, including the Assistant Commissioner's report, earlier registrations and renewal history under Section 80G, and continuous registration under Section 12AA. The Commissioner's conclusions were founded mainly on alleged non-maintenance/defects in books, incomplete donor particulars, accumulation/investment of receipts in FDRs and fixed assets and failure to file Form 10B and reconciliations. The Court found no specific or categorical finding in the impugned order that donations had been diverted to personal gain or profit. Registration under Section 12AA and a long history of prior renewals were accepted as strong indicia of charitable purpose. The Court held that mere technical infirmities in documentation, absence of certain reconciliation details or non-production of some vouchers do not, by themselves, justify denial of renewal where there is no finding of misuse of funds. The Court further observed that investment of surplus in FDRs and application of funds towards construction of a public library fall within charitable purposes and do not ipso facto disentitle the society to exemption; the requirement of applying income for charitable purposes under Section 11(2) must be considered in that factual context. Reliance on adverse decisions was noted to be fact-specific and not laying down a rule that investment for public charitable purposes is a ground for denial. Applying these principles, the Court concluded that the Commissioner's rejection was founded on irrelevant or insufficient considerations and ought not to be sustained. The Court therefore quashed the impugned order and directed the respondents to proceed to grant renewal of registration under Section 80G(5)(vi). [Paras 15, 16, 17, 18, 20]

Impugned order rejecting renewal under Section 80G(5)(vi) quashed; respondents directed to reconsider and proceed to grant renewal

Final Conclusion: Writ petition allowed; the Commissioner's order dated 20.03.2006 is quashed and the respondents are directed to proceed to grant renewal of registration under Section 80G(5)(vi) for the period applied for, after giving effect to the principles stated by the Court.

Reopening of assessment under section 148 on "reason to believe" - change of opinion as a bar to reassessment - principle of merger and applicability of the third proviso to section 147 - audit memorandum as a basis for reopening

Reopening of assessment under section 148 on "reason to believe" - change of opinion as a bar to reassessment - principle of merger and applicability of the third proviso to section 147 - audit memorandum as a basis for reopening - Validity of the notice dated 29.03.2021 under section 148 reopening assessment for Assessment Year 2016-2017 insofar as it seeks to re-open the issue of sundry creditors already considered in the original assessment and pending on appeal. - HELD THAT: - The court found that the issue of sundry creditors totaling Rs.10,51,28,281/- was squarely considered during the regular assessment proceedings (notices dated 29.08.2018 and 05.10.2018) and the Assessing Officer had made an express addition of 20% of that amount in the assessment order under section 143(3), a matter now sub judice before the CIT(Appeals). Given that the Assessing Officer had already examined and taken a view on the same subject-matter in the original assessment, invoking section 148 to reopen on that identical issue would amount to a mere change of opinion, which is impermissible unless the Assessing Officer possesses fresh tangible material forming a live link to escapement of income. The Assessing Officer's rejection of the objections premised on the contention that the remaining 80% required further verification was contrary to the principle of merger and the third proviso to section 147; once an issue is pending on appeal, it cannot be separately reopened by the AO on the same basis. Although an audit memo was relied upon by the Revenue as furnishing information, the court held that mere reliance on the audit objection, without fresh tangible material distinct from the matters dealt with in the original assessment, did not validate the assumption of jurisdiction. Applying these principles, the court concluded that the reopening constituted a change of opinion and violated the merger principle, and therefore the notice under section 148 and the order rejecting objections were unsustainable. [Paras 11, 12, 13, 14, 15]

Impugned notice dated 29.03.2021 under section 148 quashed and set aside; order rejecting the objection dated 22.03.2022 also quashed and set aside.

Final Conclusion: Writ petition allowed; reassessment notice under section 148 and the order rejecting objections set aside on the ground that reopening amounted to a change of opinion and violated the principle of merger in respect of the sundry creditors issue for Assessment Year 2016-2017.

Faceless assessment scheme - power of Jurisdictional Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961 - authority of the National Faceless Assessment Centre to issue notice and conduct assessment - limits of the Board's powers under Section 119 and Section 120 of the Income Tax Act, 1961 - transfer power to Jurisdictional Assessing Officer under Section 144B(7) and (8) of the Income Tax Act, 1961 - circulars and instructions cannot override statutory provisions

Faceless assessment scheme - power of Jurisdictional Assessing Officer to issue notice under Section 148 of the Income Tax Act, 1961 - authority of the National Faceless Assessment Centre to issue notice and conduct assessment - Notices issued by the Jurisdictional Assessing Officer under Section 148 after commencement of the faceless assessment regime are without jurisdiction where faceless procedure under Section 144B and notification dated 29.03.2022 applies. - HELD THAT: - The Coordinate Bench's reasoning that the faceless assessment scheme (introduced under Section 151A and notified on 29.03.2022) applies from the stage of show-cause notice under Section 148 was accepted. The Court held that assessment proceedings commence from issuance of the show-cause notice and that allowing the JAO to issue notices in place of the National Faceless Assessment Centre would defeat the object of the faceless scheme. Consequently, notices issued by the JAO in these matters after the faceless regime came into force are contrary to the statutory scheme and were quashed, with liberty to proceed in accordance with the procedure prescribed by law. [Paras 10, 15, 18]

Notices issued by the Jurisdictional Assessing Officer under Section 148 were quashed for want of jurisdiction; respondents may proceed only in accordance with the faceless assessment procedure prescribed by law.

Limits of the Board's powers under Section 119 and Section 120 of the Income Tax Act, 1961 - circulars and instructions cannot override statutory provisions - Office memoranda and departmental instructions issued under Sections 119 and 120 cannot be used to circumvent or render statutory provisions under Sections 144B, 148 and related faceless assessment provisions otiose. - HELD THAT: - The Court agreed with the Coordinate Bench that circulars, instructions or office memoranda issued by the Board cannot override clear statutory language. While Sections 119 and 120 empower the Board to issue directions for administration and management of assessment work, such instructions can only supplement and not supplant or nullify statutory mandates. The Court held that authorities cannot, by exercise of administrative powers, usurp or effectively amend the statutory scheme of faceless assessments, as that would cause hardship and confusion and defeat legislative intent. [Paras 7, 10, 16]

Office memoranda and circulars cannot be relied upon to displace the statutory faceless assessment regime; such instructions are limited to supplementation and implementation of statutory provisions.

Transfer power to Jurisdictional Assessing Officer under Section 144B(7) and (8) of the Income Tax Act, 1961 - Power to transfer a case from the National Faceless Assessment Centre to the Jurisdictional Assessing Officer under Section 144B(7) and (8) exists but is exercisable only in the specific contingencies provided therein and not by issuance of a general administrative order. - HELD THAT: - The Court noted that Sections 144B(7) and (8) permit the Principal Chief Commissioner or Principal Director General in charge of the National Faceless Assessment Centre to forward references or transfer cases to the JAO in particular circumstances or at any stage with prior approval of the Board. This power is thus contingent and case-specific. The Court held that a blanket or general order purporting to assign all or classes of faceless cases to JAOs (by way of office memorandum or similar administrative direction) is impermissible as it bypasses the conditional mechanism prescribed by statute. [Paras 14, 15]

Transfer to the JAO under Section 144B(7) and (8) is permissible only in the contingencies provided therein and not by way of a general administrative dispensation.

Final Conclusion: The Court followed the Coordinate Bench and allowed the writ petitions: notices issued by Jurisdictional Assessing Officers under Section 148 and consequent proceedings conducted without adherence to the faceless assessment procedure were quashed; administrative instructions cannot override the statutory faceless assessment scheme, and transfers to JAOs are permissible only in the specific contingencies envisaged by statute, with liberty to the revenue to proceed in accordance with law.

Violation of principles of natural justice - opportunity of personal hearing - Standard Operating Procedure response time - setting aside the assessment order - relegation for fresh consideration and personal hearing - duty to consider written replies - time available under Section 163(6) of the Income Tax Act

Standard Operating Procedure response time - violation of principles of natural justice - duty to consider written replies - Validity of the assessment order in view of inadequate response time and alleged denial of adequate opportunity to reply - HELD THAT: - The show cause notice required a reply within a period shorter than that prescribed by the Standard Operating Procedure, which at N.1.3 mandates a seven-day response time; the court found that the shortened timeline rendered the replies filed by the petitioner inherently hurried and liable to cause prejudice. Although written responses were filed, the combination of an inadequate response window and the absence of an opportunity for personal hearing amounted to a breach of the principles of natural justice insofar as the process did not permit adequate consideration of the petitioner's submissions. For these reasons the assessment order, which was passed at the fag end and shortly after the replies, could not be sustained. [Paras 4, 5, 7, 8]

Impugned assessment order and the notice dated 30.04.2024 set aside for breach of natural justice caused by inadequate response time and lack of adequate opportunity to be heard.

Opportunity of personal hearing - relegation for fresh consideration and personal hearing - time available under Section 163(6) of the Income Tax Act - Relief to be afforded and further course of action on remand - HELD THAT: - The matter was remitted for fresh consideration limited to providing the petitioner an opportunity of personal hearing consequent to the written replies already filed, so that the petitioner may explain and, if necessary, furnish additional clarifications or documents. The authority is directed to take into account the time constraints under Section 163(6) of the Income Tax Act to avoid passing orders at the last moment and to afford adequate time for consideration of the petitioner's submissions. All other contentions remain open for decision after such hearing and reconsideration. [Paras 6, 7, 8, 9]

Assessment order set aside and matter remitted for personal hearing and fresh consideration, with liberty to the petitioner to furnish further clarifications and with a direction to observe the time limits under Section 163(6).

Final Conclusion: Impugned assessment order and the notice of 30.04.2024 were set aside for breach of natural justice caused by an inadequate response period; the matter is remitted for fresh consideration after affording the petitioner a personal hearing and observing the time constraints under Section 163(6) of the Income Tax Act; all other contentions are kept open.

Violation of principles of natural justice - non-consideration of objections under Section 148A(b) - non-speaking / unreasoned order - remand for fresh consideration - interplay between pending appeals and jurisdiction to issue notice under Section 148 - direction to appellate authority for expeditious disposal

Violation of principles of natural justice - non-consideration of objections under Section 148A(b) - non-speaking / unreasoned order - Impugned order dated 31.03.2023 under Section 148A(b) and Section 148 set aside for failure to consider the petitioner's detailed reply and for being unreasoned and non-speaking. - HELD THAT: - The Court found that the detailed response/objections submitted by the petitioner on 24.03.2023 were not considered before passing the impugned order dated 31.03.2023. Such non-consideration rendered the order unreasoned and non-speaking and thereby violative of principles of natural justice. For this reason alone the impugned order was held liable to be set aside and quashed, since the authority was obliged to appreciate and deal with the petitioner's submissions before proceeding further under Section 148A/148. [Paras 6]

Impugned order dated 31.03.2023 set aside and quashed; matter remitted for fresh consideration.

Remand for fresh consideration - interplay between pending appeals and jurisdiction to issue notice under Section 148 - direction to appellate authority for expeditious disposal - Matter remitted to respondents for reconsideration afresh and appellate authority directed to decide pending appeals relating to assessment years 2016-17, 2017-18 and 2018-19 within a stipulated time; respondents to proceed only after disposal of those appeals. - HELD THAT: - Having set aside the impugned order, the Court remitted the matter for fresh consideration in accordance with law. The petitioner had pointed out that appeals in respect of earlier assessment years (2016-17, 2017-18 and 2018-19) were pending and their outcomes could materially affect jurisdiction and further proceedings under Section 148A/148; accordingly the Court directed the appellate authority to dispose of those appeals within three months from receipt of this order. The respondents were directed to take up further proceedings from the stage of issuing notice under Section 148A(b) only after disposal of the said appeals, thereby preserving the appellate process and ensuring that the respondents re-examine the matter post-disposal. [Paras 6]

Matter remitted for fresh consideration; appellate authority directed to decide the specified appeals within three months; respondents to proceed only after disposal of those appeals.

Final Conclusion: Petition allowed; impugned order of 31.03.2023 set aside for non-consideration of petitioner's reply and remitted for fresh consideration; appellate authority directed to dispose pending appeals for AYs 2016-17, 2017-18 and 2018-19 within three months and respondents to proceed thereafter.

Natural justice - service of notice - opportunity to be heard - notice under Section 148A(b) - reopening of assessment - quashing of notices and orders - remand for fresh consideration

Natural justice - service of notice - opportunity to be heard - notice under Section 148A(b) - quashing of notices and orders - remand for fresh consideration - Validity of the impugned notices and orders in view of disputed service and absence of petitioner's response, and the appropriate remedy - HELD THAT: - The Court noted a factual dispute as to whether the impugned notices and orders were delivered to the petitioner. It further recorded that the petitioner had not filed any response to the notice issued under Section 148A(b) and had not participated in the proceedings which resulted in the subsequent order under Section 148A(d) and later notices and penalty orders. Adopting a justice oriented approach, the Court concluded that, in the circumstances, it was appropriate to set aside the impugned notices and orders and to remit the matter for fresh consideration. The remand requires the respondents to recommence proceedings from the stage of issuance of the Section 148A(b) notice, to afford the petitioner reasonable and sufficient opportunity to file pleadings and documents and to be heard, and thereafter to proceed in accordance with law.

Impugned notices and orders at Annexures A to A6 quashed; matter remitted for reconsideration from issuance of the Section 148A(b) notice with liberty to the petitioner to file pleadings and for the respondents to provide a fair hearing.

Final Conclusion: Petition allowed; impugned notice dated 19.03.2022, subsequent orders and notices and penalty orders quashed and the matter remitted to the respondents to recommence proceedings from the Section 148A(b) stage, giving the petitioner reasonable opportunity to file documents and be heard.

Revised return - acceptance of income offered in revised return - penalty under section 271(1)(c) for furnishing inaccurate particulars leading to concealment of income - willful intention to conceal - Form 26AS and availability of information

Revised return - acceptance of income offered in revised return - Assessee's challenge to assessment additions where the assessee himself offered additional interest income and differential rental income in a revised return filed during assessment proceedings - HELD THAT: - The Tribunal noted that the assessee, a resident and ordinarily resident for the years stated, had filed a revised return during assessment proceedings offering Rs. 6,21,662 as income from other sources and Rs. 23,71,076 as house property income, and that the Assessing Officer completed the assessment accepting the income as declared in the revised return. The Tribunal observed that the assessee cannot be regarded as aggrieved by the orders of the lower authorities where the additional income was offered by the assessee himself in the revised return and no specific contention was raised in the grounds of appeal challenging the additions. The additional ground asserting 50% assessability of rental income and supporting evidence were not pressed for admission and thus were not admitted. [Paras 6, 7]

Appeal against the assessment additions dismissed.

Penalty under section 271(1)(c) for furnishing inaccurate particulars leading to concealment of income - willful intention to conceal - Form 26AS and availability of information - Whether penalty under section 271(1)(c) is sustainable for alleged concealment where the assessee filed a revised return during assessment proceedings and rectified errors in the original return - HELD THAT: - The Tribunal examined the facts that the original return was filed based on information then available, that the assessee filed a revised return during assessment proceedings rectifying salary and interest particulars and declaring overseas rental income, and that the Assessing Officer accepted the revised return in assessment. The CIT(A) had relied on the presence of certain details in Form 26AS and the selection of the case for scrutiny to infer intent to conceal. The Tribunal found the CIT(A)'s factual premise incorrect insofar as Form 26AS did not reflect the overseas rental income and accepted the assessee's explanation of timing differences in overseas (Singapore) assessment years and the bona fide need to file the original return with best available information. Applying the principle that penalty requires conscious or dishonest breach, and having regard to the assessee's corrections by revised return and the acceptance thereof by revenue, the Tribunal held there was no willful concealment warranting penalty. [Paras 13, 14]

Penalty under section 271(1)(c) deleted; appeal allowed on penalty issue.

Final Conclusion: The Tribunal dismissed the appeal against assessment additions (accepting that the assessee himself offered the additional incomes in the revised return and no specific grounds were pressed), and allowed the appeal against the penalty, deleting the levy under section 271(1)(c) on the finding that there was no willful concealment of income.

Treatment of cash deposits as unexplained income under section 69A - taxation under section 115BBE of the Income-tax Act - burden of proof on the assessee to explain nature and source of deposits - application of Shashi Garg v. PCIT precedent on unexplained cash deposits - assessment addition deleted where explanation satisfactorily proved and not rebutted by Revenue

Treatment of cash deposits as unexplained income under section 69A - burden of proof on the assessee to explain nature and source of deposits - application of Shashi Garg v. PCIT precedent on unexplained cash deposits - Whether the cash deposits of Rs.7,51,939 in the assessee's bank account for AY 2017-18 could be treated as unexplained income and brought to tax. - HELD THAT: - The Tribunal accepted the assessee's explanation that the cash originated from a gold loan taken on 12/05/2016 and that the withdrawals were for his daughter's education (MBA admission and fees), with the residual cash thereafter deposited into the bank account. Although the deposits coincided with the period of demonetisation, the authorities below failed to bring any material to displace or rebut the assessee's explanation. The Tribunal applied the legal principle that the burden lies on the claimant assessee to prove the nature and source of deposits, and once that burden is discharged satisfactorily, the Revenue cannot treat the amount as unexplained income merely on conjecture. Reliance was placed on the precedent in Shashi Garg v. PCIT to hold that, in absence of contrary evidence, the deposits could not be treated as unexplained under section 69A or subjected to tax under section 115BBE. [Paras 4, 5, 6, 7]

Impugned addition deleted; appeal allowed.

Final Conclusion: The Tribunal held that the assessee satisfactorily explained the source and nature of the cash deposits for AY 2017-18, the Revenue failed to rebut the explanation, and accordingly set aside the orders below and deleted the addition.

Deferred (contingent) consideration - accrual of income - capital gains chargeability under section 45(1) - computation of capital gains by reference to full value of consideration received or accruing - fair market value deemed to be full value of consideration in certain cases (section 50D) - cost of acquisition-revision during assessment proceedings - credit for tax withheld (TDS) corresponding to year of accrual - Most Favoured Nation clause and treaty application to dividend taxation - remand for fresh consideration/verification

Deferred (contingent) consideration - accrual of income - capital gains chargeability under section 45(1) - Taxability of deferred (contingent) consideration in AY 2021-22 - HELD THAT: - The Tribunal examined the SPA which bifurcated the aggregate sale consideration into a Closing Date Consideration and a Deferred Consideration payable subject to achievement of specified Revenue conditions within the Deferred Consideration Period. The stage of accrual is reached only when the assessee has a legally enforceable right to receive the amount. Because the payment of the Deferred Consideration depended on the occurrence of specified revenue-performance events (and could result in no payment if targets were not met), the right was contingent and did not accrue as of the previous year relevant to AY 2021-22. Reading the charging provision of section 45(1) together with computation under section 48, and following the reasoning in the cited precedents, the Tribunal held that the AO erred in treating the deferred component as accruing in AY 2021-22 and allowed the assessee's ground. The Tribunal therefore held the deferred (contingent) consideration accrued and was taxable in AY 2022-23 when the contingency was satisfied (and has been assessed in that year). [Paras 8]

Deferred (contingent) consideration is not taxable in AY 2021-22; the claim that it accrued only in AY 2022-23 is accepted and ground 1.1 is allowed.

Credit for tax withheld (TDS) corresponding to year of accrual - Claim for corresponding credit of TDS on deferred consideration - HELD THAT: - The assessee alternatively sought credit for taxes withheld on the deferred consideration. Because the primary finding is that the deferred consideration accrued in AY 2022-23 and was assessed in that year, the Tribunal treated the alternative plea as infructuous and dismissed it on that basis. [Paras 8]

The alternative ground for TDS credit in AY 2021-22 is dismissed as infructuous.

Cost of acquisition-revision during assessment proceedings - remand for fresh consideration/verification - Claim for revised cost of acquisition of shares filed during assessment proceedings - HELD THAT: - The assessee claimed increased cost of acquisition during assessment proceedings, alleging a computational error in the return. The Tribunal found the claim to be technical and suitable for adjudication on verification of the supporting documents. Accordingly the matter was not decided on merits but remitted to the Assessing Officer for consideration afresh with opportunity to the assessee to substantiate the revised cost. [Paras 8]

Claim for increased cost of acquisition is remanded to the Assessing Officer for fresh consideration (allowed for statistical purposes).

Computation of tax, surcharge and cess - interest under sections 234A and 234B - erroneous mention of refund - remand for fresh consideration/verification - Alleged incorrect computation of tax, surcharge and cess; levy of interest; and statement regarding refund - HELD THAT: - The Tribunal treated these contentions as consequential to the primary issues and observed that they require recomputation and verification linked to the final treatment of income and credits. The Tribunal therefore did not adjudicate these matters on merits but remitted them to the Assessing Officer for reconsideration after affording the assessee a reasonable opportunity of hearing. [Paras 8]

Issues on tax/surcharge/cess computation, interest under sections 234A/234B and the alleged erroneously recorded refund are remanded to the Assessing Officer for reconsideration (allowed for statistical purposes).

Most Favoured Nation clause and treaty application to dividend taxation - remand for fresh consideration/verification - Admission and adjudication of additional ground invoking MFN clause for reduced dividend withholding rate - HELD THAT: - The assessee sought to raise an additional ground invoking the Most Favoured Nation clause in the Protocol to the India-Netherlands DTAA and reliance on the India-Slovenia DTAA to claim a lower rate on dividend taxation. The Tribunal admitted the additional ground and, noting the absence of decisive objection by Revenue, remitted the matter to the Assessing Officer for de novo adjudication so that the treaty contention and its factual matrix can be examined and determined. [Paras 8]

Additional ground invoking MFN/treaty treatment for dividend taxation is admitted and remanded to the Assessing Officer for fresh adjudication (allowed for statistical purposes).

Final Conclusion: The appeal succeeds in part: the Tribunal holds that the deferred (contingent) consideration did not accrue in AY 2021-22 and is taxable in AY 2022-23 (ground 1.1 allowed); the alternative TDS-credit plea is dismissed as infructuous; the claim for revised cost of acquisition, the consequential tax/surcharge/interest/refund issues and the admitted treaty (MFN) additional ground are remitted to the Assessing Officer for fresh consideration after affording the assessee an opportunity of hearing.

Unexplained cash credit under section 68 - exemption under section 10(38) - genuineness of share transactions on a regulated stock exchange - burden of proof in respect of sale proceeds received through stock exchange - reliance on investigation reports without independent corroboration - preponderance of probability as evidentiary test - statutory requirement of compliance with section 142(3) and the right to cross-examine - precedential value of jurisdictional High Court decisions

Unexplained cash credit under section 68 - exemption under section 10(38) - genuineness of share transactions on a regulated stock exchange - burden of proof in respect of sale proceeds received through stock exchange - reliance on investigation reports without independent corroboration - preponderance of probability as evidentiary test - Addition under section 68 in respect of sale proceeds of listed shares of PS IT disallowed and exemption under section 10(38) upheld. - HELD THAT: - The Tribunal found that the assessee produced contemporaneous and verifiable documentary evidence - bank statements, DMAT records, contract notes, allotment records, dematerialisation entries, High Court amalgamation order and tax audit reports - showing purchase (in offline mode), dematerialisation, sale on the BSE through a SEBI-registered broker with STT paid and receipt of sale proceeds into the assessee's bank account. The Assessing Officer made the addition relying on investigation wing material and the doctrine of preponderance of probability, without pointing out any defect in the documents or adducing direct cogent material linking the assessee to price rigging or accommodation entries. The Tribunal held that where transactions occur on a regulated stock exchange and the assessee furnishes unimpeached documentary evidence of purchase, delivery into DMAT and sale with banking channel receipts, the onus shifts to the revenue to establish that the credits are unexplained or bogus. Reliance solely on investigation reports or generalized suspicion, without independent corroboration or demonstration of involvement of the assessee in manipulation, does not justify an addition under section 68. The Tribunal also noted inconsistent treatment by the Assessing Officer who accepted long-term capital gains on other listed shares sold by the assessee on the same platform. Applying binding decisions of the jurisdictional High Court and principles that doubts should be resolved in favour of the assessee where competing High Court precedents conflict, the Tribunal deleted the addition and sustained the claim of exemption under section 10(38). [Paras 11, 12, 13, 14, 15]

Addition under section 68 disallowed and exemption under section 10(38) upheld; sale proceeds of listed shares of PS IT accepted as genuine.

Reliance on investigation reports without independent corroboration - consequential nature of additions - Estimated addition under section 69C as commission @5% consequential to the section 68 addition deleted. - HELD THAT: - The Tribunal treated the commission addition as consequential to and dependent upon the upheld addition under section 68. Having deleted the primary addition for sale proceeds of the alleged penny scrip on the grounds that the assessee's documentary evidence was not controverted and the revenue failed to produce cogent corroboration, the consequential estimate of commission for arranging artificial capital gains had no foundation. Accordingly, the Tribunal deleted the estimate made by the Assessing Officer. [Paras 16]

Consequential addition under section 69C deleted.

Final Conclusion: Appeal allowed: addition under section 68 deleting claimed exemption under section 10(38) set aside and consequential commission addition deleted; assessment alterations reversed for AY 2015-16.

Validity of notice under section 148 - Document Identification Number (DIN) requirement under CBDT Circular No.19/2019 - Deemed service under Section 292BB - Bank cash deposits as undisclosed income / burden of proof on source - Admissibility of unregistered agreement vis-a -vis registered sale deed under Sections 91 & 92 of the Evidence Act - Explanation 1 to section 271(1)(c) - burden to substantiate explanation - Penalty under section 271(1)(c) is civil strict liability (mens rea not required)

Validity of notice under section 148 - Document Identification Number (DIN) requirement under CBDT Circular No.19/2019 - Whether the notice issued under section 148 dated 26.02.2020 issued without mentioning DIN was invalid and vitiated assumption of jurisdiction - HELD THAT: - The Tribunal rejected the contention that absence of DIN on the notice rendered it non-existent. It noted conflicting judicial pronouncements and that the matter was sub judice before the Supreme Court (interim stay of relevant High Court/ITAT orders), and therefore declined to treat the notice as invalid on the ground of missing DIN. The reliance on the Bombay High Court decision in Hexaware was held not to assist. In that factual and procedural backdrop the Tribunal found no merit in annulment of jurisdiction for want of DIN. [Paras 15, 16]

Challenge to jurisdiction based on absence of DIN on the section 148 notice rejected; notice held not to be vitiated on that ground.

Deemed service under Section 292BB - Validity of notice under section 148 - Whether assessment was framed de hors valid service of notice under section 148 as the notice was not validly served - HELD THAT: - The Tribunal held that the assessee had participated in the assessment proceedings and had furnished material (an incomplete deed) during assessment without raising objection to service; therefore section 292BB operated to deem the notice as duly served and preclude raising service objections on appeal unless such objection was raised before completion of assessment. Consequently the plea of invalid service was rejected. [Paras 17]

Contention of invalid service of notice under section 148 rejected; assessee precluded by section 292BB from contesting service.

Bank cash deposits as undisclosed income / burden of proof on source - Admissibility of unregistered agreement vis-a -vis registered sale deed (Sections 91 & 92 Evidence Act) - Whether cash deposits of Rs. 17,92,000/- were satisfactorily explained as sale proceeds so as to negate addition of Rs. 6.62 lakhs - HELD THAT: - The Tribunal examined the assessee's claim that deposits derived from sale of agricultural land and the additional documentary material (an uncertified, unregistered 'agreement to sell'). The Tribunal found the registered sale deed, which recorded a lower consideration, to be the authoritative document under Sections 91 and 92 of the Evidence Act and held that the unregistered/uncertified agreement did not displace the registered deed. The assessee failed to satisfactorily substantiate the higher sale consideration or source of part of the deposits; therefore the addition of the unexplained portion was upheld as income from undisclosed sources. [Paras 18, 19]

Addition of the unexplained portion of cash deposits (difference between registered sale consideration and deposits) upheld; explanation based on unregistered agreement rejected.

Explanation 1 to section 271(1)(c) - burden to substantiate explanation - Penalty under section 271(1)(c) is civil strict liability (mens rea not required) - Whether penalty under section 271(1)(c) was rightly imposed in respect of additions confirmed in assessment - HELD THAT: - The Tribunal agreed with the CIT(Appeals) that the assessee failed to substantiate his explanation regarding the source of the cash deposits and did not prove the explanation to be bona fide with disclosure of all material facts. In that situation Explanation 1 to section 271(1)(c) applies and the additions are deemed to represent concealed income. The Tribunal also noted settled law that penalty under section 271(1)(c) is of civil strict liability and does not require mens rea, and therefore sustained the penalty (with direction to recompute on the confirmed addition and tax evaded). [Paras 22, 24]

Penalty under section 271(1)(c) sustained as the assessee failed to substantiate explanation; penalty to be recomputed on the confirmed addition.

Final Conclusion: Both appeals dismissed; section 148 notice upheld (DIN contention and service objection rejected), addition for unexplained cash deposits sustained relying on registered sale deed as conclusive evidence, and penalty under section 271(1)(c) upheld with direction to recompute on the confirmed addition for A.Y.2013-14.

Admissibility of statements recorded under section 132(4) - Requirement of corroborative evidence for additions based on search statements - Burden of proof for unexplained credits in the hands of the assessee under section 68 - Use and evidentiary value of seized loose papers / notebooks - Remand to Assessing Officer for verification of unconfirmed credits - Principles of natural justice - opportunity to cross examine witnesses/statements - Scope of jurisdiction under section 153C linked to presence of incriminating material

Admissibility of statements recorded under section 132(4) - Requirement of corroborative evidence for additions based on search statements - Burden of proof for unexplained credits in the hands of the assessee under section 68 - Sustainability of additions u/s 68 based primarily on sworn statements recorded u/s 132(4) and seized materials in respect of cash payments (Emirates Hindustan Builders and Developers). - HELD THAT: - The Tribunal held that statements recorded under section 132(4) constitute relevant evidence but cannot, by themselves, sustain additions unless corroborated by independent and cogent material. Voluntary admissions shift the burden to the maker to prove them incorrect, but bald retraction or absence of corroboration disentitles the assessee only if the maker fails to rebut; conversely, where corroborative evidence is absent and the assessee furnishes explanations or confirmations from contributors, additions cannot be sustained blindly. Applying these principles, the Tribunal sustained certain additions which were supported by admissions and seized material (confirmed as undisclosed by the managing partner), but accepted that parts of the cash credits were satisfactorily confirmed by partners and therefore could not be taxed in the firm's hands without further proof; consequently some additions were confirmed while other amounts were either deleted or remitted for fresh verification by the Assessing Officer to enable proof of identity, genuineness and source of the credits. [Paras 5, 8]

Additions u/s 68 partly sustained where admissions and seized material corroborated the finding; certain credited amounts confirmed as unexplained income, others deleted to the extent partners had confirmed contributions, and residual amounts remitted to the AO for fresh consideration.

Use and evidentiary value of seized loose papers / notebooks - Requirement of corroborative evidence for additions based on search statements - Principles of natural justice - opportunity to cross examine witnesses/statements - Validity of additions founded on uncorroborated loose seized papers and statements recorded u/s 132(4) (Tabesco Hindustan Infra Developers Pvt. Ltd.). - HELD THAT: - The Tribunal reiterated that loose sheets, scribblings and uncorroborated notings found during search are of little or no evidentiary value unless corroborated by independent material or enquiries (including examination/cross examination of relevant parties). A sworn statement alone cannot justify additions in absence of connecting incriminating material. Applying those settled principles to the seized vouchers, notebooks and impounded office papers, the Tribunal found the Assessing Officer had relied on uncorroborated material and statements without full proof enquiries or confronting purchasers/recipients; accordingly, additions founded solely on such material were deleted. The Tribunal noted the requirement of nexus between seized material/statements and the assessment and emphasised natural justice where cross examination was not afforded or corroboration not undertaken. [Paras 15, 18]

Additions based solely on uncorroborated seized loose papers and section 132(4) statements deleted; assessment remade on merits only if independent corroboration is established.

Remand to Assessing Officer for verification of unconfirmed credits - Burden of proof for unexplained credits in the hands of the assessee under section 68 - Remand for fresh consideration of certain unconfirmed credits and unsecured loans appearing in balance sheet where identity/genuineness/creditworthiness were not proved (Emirates and Tabesco cases). - HELD THAT: - Where the assessee failed to produce partners, bank flows or documentary proof to substantiate credited amounts and unsecured loans reflected in the balance sheet, the Tribunal declined to decide the genuineness on the appellate record and remitted those specific items to the Assessing Officer. The AO is directed to give the assessee an opportunity to substantiate the ingredients of section 68 - identity, genuineness and creditworthiness - and to verify seized material only where it is corroborative and relates to the assessee; the remand is for fresh adjudication and quantification, not a final adjudication in these proceedings. [Paras 8, 10, 11]

Specific credits and unsecured loan entries remitted to the Assessing Officer for fresh consideration and verification; assessee to produce necessary proof of identity, genuineness and source.

Admissibility of statements recorded under section 132(4) - Use and evidentiary value of seized loose papers / notebooks - Sustainability of additions in appeals of MKH Infrastructure which relied on the same seized material and sworn statements as in Tabesco/MKH group matters. - HELD THAT: - Applying identical reasoning adopted in the Tabesco appeals, the Tribunal concluded that additions based only on section 132(4) statements and uncorroborated loose slips could not be sustained. The material relied upon by the Assessing Officer was not independently corroborated, parties were not examined to verify transactions, and the seized notings lacked requisite evidentiary weight. Therefore, the Tribunal deleted the impugned additions in MKH's assessments as well. [Paras 21, 22]

Additions deleted applying the same ratio as in the related Tabesco decisions; appeals partly allowed.

Final Conclusion: The Tribunal held that statements recorded under section 132(4) are relevant but cannot, without independent corroborative material, be the sole basis for additions; uncorroborated loose papers and notebooks lack sufficient evidentiary value. Applying these principles, certain additions based on admissions and corroborative seized material were sustained, whereas other additions founded only on uncorroborated statements or loose papers were deleted. Several specific credits and unsecured loan entries were remitted to the Assessing Officer for fresh verification of identity, genuineness and source.

Determination of fair market value of capital asset - reference to Valuation Officer under Section 142A for determination of fair market value - comparability of sale deeds and selection of base-line in land valuation - acceptance of registered valuer's report versus DVO report - indexed cost of acquisition for computation of long term capital gains - admissibility of transfer related expenses (brokerage, documentation, litigation, mutation, probate) in capital gains computation

Determination of fair market value of capital asset - reference to Valuation Officer under Section 142A for determination of fair market value - comparability of sale deeds and selection of base-line in land valuation - acceptance of registered valuer's report versus DVO report - indexed cost of acquisition for computation of long term capital gains - Whether the addition based on the DVO report rejecting the assessee's registered valuer's valuation and disallowing part of the indexed cost of acquisition is justified - HELD THAT: - Tribunal examined the competing valuations: the assessee's registered valuer valued land at Rs. 89,800 per sq. yard based on a sale in D Block, Defence Colony dated 2.5.2001, while the DVO adopted a lower land rate based on a sale in SDA B Block dated 19.10.2000. The only substantive disagreement related to land value as on 01.04.2001; there was no dispute on construction cost. The Tribunal found material differences in location, land area, road width and service lane features between the subject property (Gulmohar Park) and the DVO's base line property at SDA, as well as a nearer comparable date relied upon by the assessee. Given absence of any pointed mistake in the assessee's valuation report and the tangible dissimilarities between the properties relied upon by the DVO, the Tribunal held that the DVO's comparables were not appropriately comparable and that reliance on the DVO report to reduce the indexed cost of acquisition was not warranted. Consequently the addition grounded on the DVO valuation was not sustained. [Paras 13, 14]

Assessee's valuation accepted; no addition on account of reduction in indexed cost of acquisition based on the DVO report.

Admissibility of transfer related expenses (brokerage, documentation, litigation, mutation, probate) in capital gains computation - acceptance of supporting invoices and evidence for transfer expenses - Whether brokerage, documentation fee, litigation expenses, mutation/conversion expenses and probate expenses claimed by the assessee are liable to be disallowed - HELD THAT: - The Tribunal considered the documentary evidence placed on record by the assessee, including the broker's invoice and bank payment, litigation expense confirmations and mutation/probate related payments. The Revenue produced no evidence to show that the claimed payments were bogus or not incurred. The Tribunal observed that such expenses are ordinarily incurred for regularising inheritance, transfer and sale of property and, absent contrary evidence, are allowable for computation of capital gains. Accordingly, the Tribunal directed that no disallowance be made on these heads. [Paras 15, 16]

Expenses for brokerage, documentation, litigation, mutation/conversion and probate are allowable; no disallowance called for.

Final Conclusion: Appeal allowed. The Tribunal upheld the assessee's valuation and disallowed the addition based on the DVO report; transfer related expenses claimed by the assessee were held allowable for computation of long term capital gains for Assessment Year 2020-21.

Allowability of financial expenses - allowability of depreciation - disallowance by estimation of overheads - disallowance of expenses payable at year end - disallowance under section 40(a)(ia) in respect of commission, brokerage and professional charges - disallowance by applying percentage on purchases - set off of brought forward losses and unabsorbed depreciation

Allowability of financial expenses - Deletion of disallowance of financial expenses amounting to interest and other bank charges - HELD THAT: - The Tribunal examined bank statements and ledger details filed in the assessment proceedings which showed payments of interest and other financial charges to the State Bank of India. Although the assessee contended that some records were lost due to bank possession of the factory and an FIR was lodged, the material placed on record during assessment (bank statement pages in the paper book) was sufficient to establish that the payments related to interest and financial expenditure. On this basis the disallowance made by the Assessing Officer was held to be unjustified and liable to be deleted.

Disallowance of financial expenses deleted.

Allowability of depreciation - Deletion of disallowance of depreciation claimed by the assessee - HELD THAT: - Depreciation being a statutory allowance was supported by the audited balance sheet and the tax audit report filed during assessment, which certified the claim. The Tribunal observed that depreciation allowed in earlier years on the fixed assets ought to have been recognised in the current year and that the Assessing Officer could have verified earlier records but did not do so. While no depreciation was allowed for additions where basic details were absent, the claim otherwise was found to be justified and the disallowance was not sustained.

Disallowance of depreciation deleted.

Disallowance by estimation of overheads - Confirmation of disallowance equal to 10% of manufacturing, administrative, selling and other expenses - HELD THAT: - The Assessing Officer treated the matter on the basis of lack of requisite details after repeated opportunities and made an ad hoc disallowance at 10% of total such expenses. The assessee did not press grounds challenging this addition before the Tribunal. The appellate authority sustained the disallowance, and the Tribunal, having regard to the record and the fact that the assessee did not press these grounds, confirmed the addition.

Disallowance of 10% of manufacturing, administration, selling and other expenses confirmed.

Disallowance of expenses payable at year end - Confirmation of disallowance of expenses payable at year end - HELD THAT: - The Assessing Officer disallowed certain year end liabilities for want of supporting details. The assessee did not pursue the ground before the Tribunal. The CIT(A) confirmed the disallowance and the Tribunal, on the material and the procedural history showing non availability/non production of required details, sustained the treatment.

Disallowance of expenses payable at year end confirmed.

Disallowance under section 40(a)(ia) in respect of commission, brokerage and professional charges - Confirmation of disallowance of commission, brokerage and professional charges invoking section 40(a)(ia) - HELD THAT: - Disallowances in respect of commission, brokerage and professional charges were made by the Assessing Officer under section 40(a)(ia). The assessee raised proviso based pleas but, as those grounds were not pressed before the Tribunal and required supporting evidence was not placed on record during assessment despite multiple opportunities, the appellate authority confirmed the disallowances. The Tribunal accepted the confirmation for these items on the basis of the record and absence of successful challenge by the assessee.

Disallowance of commission, brokerage and professional charges confirmed.

Disallowance by applying percentage on purchases - Confirmation of disallowance computed as 5% of total purchases - HELD THAT: - The Assessing Officer, in the absence of required details from the assessee after multiple opportunities, estimated and disallowed an amount by applying 5% on total purchases. The CIT(A) sustained this estimation and the Tribunal, noting the procedural history of non production of details and that the assessee did not press the corresponding appeals, confirmed the addition.

Disallowance of 5% of purchases confirmed.

Set off of brought forward losses and unabsorbed depreciation - Direction to allow credit for brought forward losses and unabsorbed depreciation while computing tax demand - HELD THAT: - The Tribunal noted from the returns filed by the assessee that brought forward losses and unabsorbed depreciation had been shown year to year. It directed the Assessing Officer, while calculating the tax demand, to allow credit of such brought forward losses and depreciation in accordance with the provisions of the Income Tax Act.

Credit for brought forward losses and unabsorbed depreciation to be allowed by the Assessing Officer.

Final Conclusion: The appeal is allowed in part: disallowances relating to financial expenses and depreciation are deleted; disallowances in respect of estimated overheads (10%), expenses payable at year end, commission and brokerage, professional charges, and 5% on purchases are confirmed; the Assessing Officer is directed to allow brought forward losses and unabsorbed depreciation while computing the tax demand.

No redemption fine where goods are allowed for re export - scope of redemption under the Customs Act - confiscation and re export as alternative to forfeiture - reduction of excessive penalty

No redemption fine where goods are allowed for re export - scope of redemption under the Customs Act - Whether redemption fine could be imposed where the goods were permitted to be re exported - HELD THAT: - The Tribunal held that when adjudicating authorities allow goods to be re exported, they cannot impose a redemption fine as a condition of re export. Reliance was placed on earlier tribunal decisions which interpreted the limited scope of the redemption provision and held that authorities lack power to compel re export by imposing conditional redemption. Given that the appellant had obtained and relied on a Pre Shipment Inspection Certificate and that the goods were permitted to be re exported by the adjudicating authority, the Tribunal found no fault on the part of the importer and concluded that the redemption fine imposed in those circumstances was not imposable. [Paras 10]

Redemption fine set aside.

Reduction of excessive penalty - Whether the penalty imposed on the appellant required modification - HELD THAT: - The Tribunal examined the penalty imposed under the Customs Act and concluded that the amount fixed by the adjudicating authority was on the higher side. In exercise of its appellate power the Tribunal reduced the penalty to a lesser sum as a just and proportionate response to the circumstances, including the appellant's reliance on the Pre Shipment Inspection Certificate and absence of deliberate fault by the importer. [Paras 11]

Penalty reduced to Rs.1,00,000.

Final Conclusion: Appeal allowed in part: redemption fine set aside and penalty reduced; matter disposed.

Penalty for attempt to export goods improperly (Section 114 of the Customs Act, 1962) - penalty for use of false or incorrect material (Section 114AA of the Customs Act, 1962) - penalty for contraventions under the Customs Act (Section 117 of the Customs Act, 1962) - penalty under the Foreign Exchange Management Act (Section 13) - licenced money exchanger's liability for connivance in illegal export/import - evidentiary sufficiency of voluntary admissions and call detail records - requirement to record specific reasons for imposition of penalty

Penalty for attempt to export goods improperly (Section 114 of the Customs Act, 1962) - penalty for use of false or incorrect material (Section 114AA of the Customs Act, 1962) - penalty for contraventions under the Customs Act (Section 117 of the Customs Act, 1962) - licenced money exchanger's liability for connivance in illegal export/import - evidentiary sufficiency of voluntary admissions and call detail records - requirement to record specific reasons for imposition of penalty - Sustainability of penalties imposed on the appellant under Sections 114, 114AA and 117 of the Customs Act, 1962. - HELD THAT: - The Tribunal examined whether the appellant, a licensed money exchanger, was shown to have connived in illegal export of foreign currency and illegal import of gold so as to attract penalties under Sections 114, 114AA and 117. The only material against the appellant was call detail records showing communication with the co-noticees and voluntary admissions by those co-noticees that they purchased foreign currency from the appellant without invoices. The appellant admittedly exchanged currency and failed to issue invoices, which, the Tribunal held, constituted breach of licensing conditions or regulations but did not, by itself, establish attempt to export goods improperly or use of false/incorrect material or other contraventions under the Customs Act. The call records and third party admissions proved at best that the co-noticees contacted the appellant to obtain currency; they did not prove connivance in smuggling or that the appellant benefited from the illegal import. The adjudicating authorities also failed to specify the factual basis for imposing each particular penalty. On these grounds the Tribunal found the evidence insufficient to sustain the penalties under Sections 114, 114AA and 117 and concluded those penalties were wrongly imposed. [Paras 5]

Penalties under Sections 114, 114AA and 117 of the Customs Act, 1962 imposed on the appellant are set aside.

Penalty under the Foreign Exchange Management Act (Section 13) - licenced money exchanger's liability for connivance in illegal export/import - evidentiary sufficiency of voluntary admissions and call detail records - requirement to record specific reasons for imposition of penalty - Sustainability of penalty imposed on the appellant under Section 13 of the Foreign Exchange Management Act. - HELD THAT: - The Tribunal considered whether the available material established the appellant's liability under Section 13 of FEMA. While the co-noticees had admitted purchasing foreign currency from the appellant without documentation and the appellant's premises yielded detained currency which was later released upon production of documents, the Tribunal held that these facts do not demonstrate that the appellant connived in the illegal export of currency or illicit import of gold. The order confirming the FEMA penalty was silent as to specific reasons and did not demonstrate on the record how the statutory ingredients for imposition of the FEMA penalty were satisfied. For these reasons, the Tribunal found the FEMA penalty unsustainable. [Paras 5]

Penalty under Section 13 of the Foreign Exchange Management Act is set aside.

Final Conclusion: The order under challenge confirming penalties against the appellant under Sections 114, 114AA and 117 of the Customs Act, 1962 and Section 13 of FEMA is set aside; consequentially the appeal is allowed.

Seizure under Section 110 on reasonable belief - presumptions under Section 123 of the Customs Act - smuggled goods and foreign origin - burden of proof to establish illicit import - absolute confiscation and penalty

Seizure under Section 110 on reasonable belief - smuggled goods and foreign origin - Whether Customs officers had a reasonable belief on the date of seizure that the appellant's 400 gms of gold bars were smuggled and liable for confiscation - HELD THAT: - The Tribunal accepted that, on the basis of unspecified intelligence and the presence of multiple consignments containing various types of gold and jewellery, the officers could entertain a general reasonable belief that some consignments were of an offending nature. However, in respect of the appellant's gold bars the Panchanama and covering documents (job work voucher and GST purchase invoice) were available at the time of seizure. On the material available at the seizure moment there was no sufficient tangible material to form a reasonable belief that the appellant's gold bars were smuggled or of foreign origin. The officers themselves did not specify which confiscation provisions (Section 111/113 etc.) they were relying on, and the mere later denial by the purported supplier, without recording the supplier's statement or disclosing investigative material in the show cause notice, could not convert the original position into a reasonable belief of smuggling. Accordingly, invocation of Section 123 premised on a belief of smuggling was not sustainable in the facts of this case. [Paras 18, 20, 21]

There was no reasonable belief at the time of seizure that the appellant's gold bars were smuggled goods.

Presumptions under Section 123 of the Customs Act - burden of proof to establish illicit import - Whether the presumption under Section 123 could be invoked against the appellant and whether the Department met the burden to prove illicit import subsequently - HELD THAT: - The Tribunal held that Section 123 can be invoked only where the seizure under Section 110 is grounded in a reasonable belief that the goods are smuggled (i.e., confiscable under Section 111 or 113). Since the necessary reasonable belief regarding smuggling was absent at seizure, the statutory presumption under Section 123 could not be validly invoked. Once the appellant disclosed a domestic purchase (invoice, bank payment and GSTR-2A entry), the onus shifted to the Department to conduct further investigation and conclusively establish that the goods were illicitly imported and re-melted. The Department failed to do so: it relied on the supplier's later email denying delivery without recording the supplier's statement under Section 108 or disclosing investigative material in the show cause notice, and there was no evidence that the seized bars had entered India without payment of duty or in breach of policy. The adjudicator's finding of re-melting and false marking rested on surmise and was not proved. [Paras 22, 23]

Section 123 presumptions cannot be invoked; the Department failed to discharge the burden of proving illicit import and re-melting of the appellant's gold bars.

Absolute confiscation and penalty - burden of proof to establish illicit import - Whether absolute confiscation of the seized gold bars and the penalty imposed on the appellant were legally tenable - HELD THAT: - Having found that there was no reasonable belief of smuggling at the time of seizure and that the Department did not conclusively prove the gold bars to be foreign-origin smuggled and re-melted, the Tribunal concluded that the absolute confiscation and consequent penalty were not legally sustainable. The adjudicator's reliance on the supplier's denial and on purported fake marking lacked necessary evidentiary foundation in the show cause notice and did not discharge the Department's burden. In absence of proof that the goods were liable to confiscation under the relevant provisions, absolute confiscation (with no option of fine under Section 125) and the penalty had no legal basis. [Paras 24]

The absolute confiscation and the penalty are set aside.

Final Conclusion: The appeal is allowed: the orders of absolute confiscation and penalty are set aside because the Department did not have a reasonable belief at the time of seizure that the appellant's gold bars were smuggled, Section 123 presumptions were not invokable, and the Department failed to prove illicit import or re-melting; consequential benefits, if any, are to be granted as per law.

Interim restraint of corporate action - status quo in shareholding - keeping funds in escrow - disclosure of allotment details and escrow account particulars - adjournment for consideration with pending contempt proceedings

Interim restraint of corporate action - status quo in shareholding - keeping funds in escrow - Whether the respondents should be restrained from proceeding with the second rights issue and whether status quo as to existing shareholding and funds collected should be maintained pending disposal of the main company petition CP No. 18/BB/2024. - HELD THAT: - The Tribunal held that the subsequent rights issue launched during the pendency of the main company petition falls within its purview and, in the facts and circumstances, intervention by way of interim relief is warranted. Having regard to the pending adjudication of allegations in CP No. 18/BB/2024, the Tribunal restrained the respondents from proceeding with the ongoing rights issue until disposal of the main petition. The Tribunal further directed that amounts collected since opening of the second rights issue be kept in a separate account and not be utilised until the main petition is disposed of, and ordered that existing shareholders' shareholdings be maintained status quo pending the main petition. The restraint and escrow directions were issued as interim measures to preserve the subject matter and protect stakeholders while the substantive disputes are adjudicated. [Paras 15, 16]

Respondents restrained from proceeding with the present rights issue; amounts collected to be kept in a separate account and not utilised; status quo as to existing shareholders and their shareholding to be maintained until disposal of CP No. 18/BB/2024.

Disclosure of allotment details and escrow account particulars - compliance affidavit - Whether the respondents should be directed to furnish detailed particulars of allotments made on 02.03.2024 and details of the escrow bank accounts for the rights issue. - HELD THAT: - The Tribunal found it necessary for transparency and for effective adjudication of the pending disputes that the respondents provide complete particulars of the allotments said to have been made on 02.03.2024 (including pre- and post-allotment shareholdings, entitlements, amounts paid and dates) and full details of the escrow accounts from opening of the rights issue onwards. The respondents were accordingly directed to file a compliance affidavit furnishing these details in tabular form within ten days and serve copies on the other parties. [Paras 10, 17]

Respondents directed to file a compliance affidavit within ten days giving full details of allotments of 02.03.2024 and of the escrow bank accounts, and serve the same on the other parties.

Adjournment for consideration with pending contempt proceedings - Whether the grievances in C.A. No. 72/2024 concerning alleged violation of the Tribunal's order dated 27.02.2024 (including allotment on 02.03.2024 and alleged utilisation of escrow funds) should be considered together with the pending contempt petition. - HELD THAT: - The Tribunal observed that the subject matter of C.A. No. 72/2024 substantially overlaps with allegations raised in Contempt Petition No. 06 of 2024. In order to ensure consolidated consideration and avoid conflicting adjudications, the Tribunal held that the contentions in C.A. No. 72/2024 will be considered along with the contempt petition, and listed the matters together for hearing on the specified date. [Paras 14]

Contentions in C.A. No. 72/2024 to be considered along with Contempt Petition No. 06 of 2024; matter listed for joint hearing.

Final Conclusion: Interim relief granted restraining the respondents from proceeding with the ongoing rights issue, directing that funds collected in relation thereto be maintained in a separate account and not utilised, preserving status quo of existing shareholding, directing disclosure of allotment and escrow particulars by way of compliance affidavit within ten days, and ordering that issues raised in C.A. No. 72/2024 be considered along with the pending contempt proceedings at the next listed hearing.

Pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code - Rejection of Section 9 petition where a plausible dispute exists - Adjudicating authority's duty under the Mobilox test - Admission of debt by ledger entries and emails - Effect of incomplete performance/abandonment on operational debt - Limitation in proceedings under Section 9

Pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code - Rejection of Section 9 petition where a plausible dispute exists - Adjudicating authority's duty under the Mobilox test - Existence of a pre existing dispute between the parties which warranted rejection of the Section 9 petition. - HELD THAT: - The Tribunal examined the correspondence, ledger statements and conduct of the parties and concluded that the Respondent had raised a plausible, non spurious dispute prior to issuance of the statutory demand. The exchanges of emails dated 11.09.2018 and 17.09.2018, and subsequent communications including the reply to the demand notice, demonstrate complaints about overpayment, incomplete work and alleged defects. Applying the Mobilox standard, the adjudicating authority need only be satisfied that a genuine dispute exists or that a plausible contention requiring investigation is on record; it need not decide merits. The materials on record, including the Respondent's communication of 11.09.2018 and the Appellant's reply of 17.09.2018, establish such a pre existing dispute which is not a mere smokescreen. Consequently the Adjudicating Authority was justified in rejecting the Section 9 petition on that ground. [Paras 40, 43, 49, 50, 52]

The existence of a pre existing dispute is established and the Adjudicating Authority correctly rejected the Section 9 petition.

Admission of debt by ledger entries and emails - Effect of incomplete performance/abandonment on operational debt - Limitation in proceedings under Section 9 - Whether ledger statements and prior emails constituted an admitted, due and payable operational debt in view of contractual payment schedule and incomplete performance. - HELD THAT: - The Tribunal found that ledger entries and emails acknowledging invoice entries did not amount to an unqualified admission of an immediately due operational debt because the sub contract payment schedule made final payment contingent upon completion and commissioning. The Appellant had not completed the contract (having, according to the record, abandoned site and left several gates uncompleted), and the Respondent had raised issues of defective/incomplete work and overpayment prior to the demand notice. Those contractual contingencies and the allegations of incomplete performance meant the claimed amount could not be treated as an undisputed, due debt without further inquiry. Although limitation had earlier been the basis for dismissal by the Adjudicating Authority, this Tribunal had revived the application on limitation grounds; the present appeal was decided on the existence of the pre existing dispute and not on limitation. [Paras 42, 44, 46, 47, 48]

Ledger entries and emails did not, in the circumstances, constitute an undisputed admission of a due operational debt given incomplete performance and contractual payment contingencies; limitation was not the determinative basis of the present dismissal.

Final Conclusion: On the materials and correspondence on record the Tribunal found a genuine pre existing dispute that disentitled the Appellant to relief under Section 9; the appeal is dismissed and the NCLT order dated 7.5.2024 rejecting the Section 9 petition is affirmed, with no order as to costs.

Challenge to recall of order - appeal under Section 61 of the IBC and 30-day limitation - distinct orders requiring separate challenge - consideration of one-time settlement (OTS) in light of CIRP and approved resolution plan - admission of application under Section 95

Challenge to recall of order - appeal under Section 61 of the IBC and 30-day limitation - distinct orders requiring separate challenge - Whether the appellant could raise in the present appeal a challenge to the Adjudicating Authority's order dated 16.02.2024 recalling its earlier order, when the appeal is filed against the subsequent order dated 14.03.2024. - HELD THAT: - The Tribunal held that an appeal against an order of the Adjudicating Authority lies under Section 61 of the IBC, subject to the 30-day limitation prescribed by Section 61(2). The appellant did not file a separate appeal against the recall order dated 16.02.2024 but instead participated in the rehearing which culminated in the order dated 14.03.2024. The contention that the 16.02.2024 order can be raised in the appeal against the 14.03.2024 order was rejected because the two orders are separate and, in the scheme of the IBC, require separate challenges within the statutory limitation period. The submission that the earlier order merged into the subsequent order was not accepted. [Paras 4, 5]

Appellant cannot, in the present appeal filed against the order dated 14.03.2024, raise a belated challenge to the recall order dated 16.02.2024; both orders are separate and require separate appeals within the prescribed limitation.

Consideration of one-time settlement (OTS) in light of CIRP and approved resolution plan - Whether the appellant's OTS proposal required consideration despite the approval of a Resolution Plan in the CIRP of the principal borrower. - HELD THAT: - The Tribunal noted the bank's letter which recorded that the CoC had approved a Resolution Plan for the principal borrower and that, in view of those developments, the bank could not entertain the appellant's OTS offers at that juncture. The Tribunal observed that any amount received in the CIRP of the principal borrower would have to be given credit and taken into account while finalising the Resolution Plan in respect of the personal guarantor. Accordingly, the Adjudicating Authority, when finalising the Resolution Plan for the personal guarantor, must consider all relevant aspects, including any interaction with amounts or outcomes in the principal borrower's CIRP and the status of approved plans pending before the Adjudicating Authority. [Paras 6, 7, 8]

The bank's non-consideration of the OTS in view of the principal borrower's approved Resolution Plan is factually recorded; the Adjudicating Authority must, when finalising the personal guarantor's Resolution Plan, consider all relevant aspects including crediting amounts received in the principal borrower's CIRP.

Admission of application under Section 95 - Whether the Tribunal should interfere with the Adjudicating Authority's order admitting the Section 95 application dated 14.03.2024. - HELD THAT: - Having considered the submissions and the record, the Tribunal found no error in the Adjudicating Authority's admission of the Section 95 application that would warrant interference in exercise of appellate jurisdiction. Subject to the observations made regarding the OTS and future consideration of the guarantor's Resolution Plan, no ground was made out to set aside the admission order. [Paras 9]

No interference with the Adjudicating Authority's order admitting the Section 95 application; the appeal is disposed of subject to the observations recorded.

Final Conclusion: The appeal is dismissed; the Tribunal declined to permit belated challenge to the recall order dated 16.02.2024 in this appeal, recorded that the bank's rejection of the OTS was in the context of an approved Resolution Plan in the principal borrower's CIRP and directed that the Adjudicating Authority, when finalising the personal guarantor's Resolution Plan, must consider all relevant aspects; no interference is made with the admission of the Section 95 application.

Computation of limitation from date of e-filing - re-filing after curing defects not to be treated as fresh filing - condonation of delay in refiling - requirement of certified copy directory and power to exempt procedural compliance - Registrar's scrutiny and power to return or decline to register defective filings

Computation of limitation from date of e-filing - re-filing after curing defects not to be treated as fresh filing - Registrar's scrutiny and power to return or decline to register defective filings - E filing on 25.09.2023 constituted presentation for limitation purposes and the subsequent refiling after curing defects did not convert the appeal into a fresh filing. - HELD THAT: - The Tribunal applied its administrative orders and binding precedent to hold that limitation is to be computed from the date of e filing. The sequence of Rule 22 and Rule 103 and the Registrar's powers under Rule 26 were considered together with the Registrar's administrative directions (including the order dated 24.12.2022) and the Supreme Court's analysis in Sanket Kumar Agarwal. The larger Bench authority of this Tribunal was held to be binding that curing defects and re presentation does not amount to a fresh institution. Consequently, the appeal e filed on 25.09.2023-being within 30 days of the impugned order-could not be held to be time barred merely because defects were later cured or the defect free paper was refiled on a later date. [Paras 23, 24]

The appeal e filed on 25.09.2023 is within limitation; refiled date 16.01.2024 cannot be treated as the date of filing for limitation purposes.

Requirement of certified copy directory and power to exempt procedural compliance - power to waive procedural requirements and extend time - Filing an appeal without first applying for a certified copy of the impugned order is not, by itself, a ground for dismissal of the appeal. - HELD THAT: - Rule 22(2) requires a certified copy to accompany an appeal, but Rules 14 and 15 confer power on the Tribunal to exempt compliance or extend time. The Supreme Court's decision in V. Nagarajan was considered: an application for a certified copy, if made before expiry, can exclude time under Section 12 Limitation Act; if not made, no exclusion arises. Nevertheless, the Tribunal held that non application for a certified copy does not automatically mandate dismissal; the Tribunal may, in appropriate circumstances, permit filing on the basis of uploaded copies and grant exemptions or directions to secure substantial justice. [Paras 25, 29]

An appeal filed without applying for a certified copy cannot be rejected merely for that reason; failure to apply precludes exclusion under Section 12 but does not, per se, oust the Tribunal's discretion to entertain the appeal.

Condonation of delay in refiling - power to waive procedural requirements and extend time - The Tribunal's order condoning the 86 day delay in refiling was justified and did not warrant recall. - HELD THAT: - Applying the conclusions on computation of limitation, the Tribunal found that the appellant had e filed within limitation and had shown sufficient cause for condonation of the subsequent 86 day refiling delay. The procedural history, service particulars and the Tribunal's prior directions on e filing and physical filing were considered; on that basis the earlier orders granting condonation and issuing notice were held to be correctly passed. [Paras 30]

Interlocutory Applications seeking recall of orders dated 25.01.2024 and 06.02.2024 are dismissed; the condonation of 86 days and issuance of notice stand.

Final Conclusion: The Tribunal held that limitation is computed from the date of e filing, refiling after curing defects does not amount to fresh filing, non application for a certified copy is not an automatic ground for dismissal, and therefore the applications to recall the orders condoning refiling delay and issuing notice were dismissed; the appeal remains posted for final hearing.

Maintainability of writ petition in presence of alternative statutory remedy - exercise of discretionary writ jurisdiction under Article 226 - forum conveniens and territorial jurisdiction under Section 42 PMLA - adequacy and efficacy of alternative remedy

Maintainability of writ petition in presence of alternative statutory remedy - exercise of discretionary writ jurisdiction under Article 226 - forum conveniens and territorial jurisdiction under Section 42 PMLA - adequacy and efficacy of alternative remedy - Whether the writ petition before this Court is maintainable in view of the statutory appellate remedy under Section 42 of the PMLA and whether this Court should exercise its discretion under Article 226 instead of the prescribed statutory route. - HELD THAT: - The Court undertook a preliminary jurisdictional inquiry to determine if the existence of the appeal mechanism under Section 42 PMLA precluded writ relief. Section 42 provides an appeal to the High Court within sixty days in the High Court of the place where the aggrieved party ordinarily resides or carries on business; hence, ordinarily the Bombay High Court is the forum for a petitioner based and carrying on business in Mumbai. The Court reviewed precedent in Aasma Mohammed Farooq, wherein forum conveniens considerations led the Delhi High Court to refrain from entertaining a writ and the Supreme Court affirmed that approach, and contrasted it with M/s Incred Financial Services Ltd., where intervention was permitted due to specific factual difficulties (e.g., absence or non-constitution of the appellate forum causing denial of effective relief). Applying these authorities, the Court held that the mere geographical location of the Appellate Authority within this Court's territorial limits does not justify bypassing the statutory appellate mechanism. Intervention under Article 226 is exceptional and appropriate where the alternative remedy is not efficacious or would cause manifest injustice or irreparable harm. The petitioner failed to demonstrate that the statutory remedy under Section 42 is inadequate or would be ineffective; no material showed that pursuing the appeal in the Bombay High Court would be futile or would result in irreparable prejudice. Accordingly, the Court declined to exercise discretionary writ jurisdiction and concluded that the petitioner should pursue the remedy under Section 42 before the appropriate High Court. [Paras 11, 14, 18, 20, 21]

Writ petition dismissed; petitioner directed to avail statutory appellate remedy under Section 42 of the PMLA before the appropriate High Court (Bombay High Court) and pending applications dismissed.

Final Conclusion: The petition is dismissed on grounds of non-maintainability in view of the adequate statutory remedy under Section 42 PMLA; petitioner is left to pursue appeal before the High Court having jurisdiction (Bombay High Court).

Negative List - Service (as activity carried out for consideration) - Exemption Notifications issued under Section 93 - Activity centric levy - Affiliation and allied statutory functions as non commercial acts - Renting of immovable property - taxability - Predominant object test - Writ against show cause notice - exceptions for lack of jurisdiction - Remand for fresh adjudication

Writ against show cause notice - exceptions for lack of jurisdiction - Maintainability of writ petition challenging the Show Cause Notice - HELD THAT: - The Court held that a writ petition challenging a Show Cause Notice is not impermissible as a thumb rule. Exceptional circumstances justify entertaining a writ petition - specifically where the issuing authority lacks competence, where jurisdictional facts for issuing the notice are absent, or where it is apparent that a reply would make no difference. The University's plea that its services fell outside the Act's ambit and that exemption notifications applied presented a prima facie case warranting examination on merits; accordingly the preliminary objection to maintainability was rejected.

Writ petition was maintainable in the circumstances; preliminary objection to entertain the writ failed.

Negative List - Service (as activity carried out for consideration) - Activity centric levy - Whether the respondent University is an 'educational institution' within the Service Tax law and whether its core educational services fall within the Negative List - HELD THAT: - On statutory functions, powers under the RGUHS Act (including provision of instruction, conducting examinations, conferring degrees, establishing research and constituent colleges) establish that the University is an educational institution. The Court observed that Sub clause (ii) of clause (l) of Section 66D (education as part of curriculum for obtaining a qualification recognised by law) covers the University's degree/diploma conferring activities. The Negative List is activity centric; the specified educational services rendered by the University during the relevant period are excluded from service tax.

The University qualifies as an educational institution and its specified educational services fall within the Negative List and are not taxable for the period in question.

Affiliation and allied statutory functions as non commercial acts - Service (as activity carried out for consideration) - Taxability of income derived from grant/renewal/withdrawal/denial of affiliation, and fees, late fees, fines and penalties levied in relation thereto - HELD THAT: - The Court analysed the definition of 'service' (activity carried out for another for consideration) and the nature of 'affiliation' under the RGUHS Act. Granting, renewing or withdrawing affiliation is a statutory duty performed in discharge of public law functions and lacks the contractual quid pro quo characteristic of a commercial activity 'for consideration.' Late fees, fines and penalties connected to affiliation were held to partake of the character of fees levied under statute and not to convert the affiliating act into a taxable commercial service. Consequently, the levy of service tax on such affiliation related receipts for the academic period between 2012 13 and 2016 17 was held to be unjustified.

Income from affiliation/recognition and allied fees, late fees, fines and penalties is not liable to service tax for the relevant period.

Renting of immovable property - taxability - Exemption Notifications issued under Section 93 - Predominant object test - Whether income from leasing/licensing university property for banking and canteen facilities is exempt from service tax under the Exemption Notifications - HELD THAT: - The Court examined the text of successive Exemption Notifications. Earlier notifications (2012/2013) had broader formulations including auxiliary educational services and explicitly listed certain services; later notifications (2014, 2016, 2017) retained some exemptions (e.g., catering, transport, security, conduct of examinations) but omitted 'renting of immovable property' from the exempted text. Applying ordinary meaning and the structure of the notifications, the Court concluded that renting/licensing campus space for banking (and similar commercial lets) cannot be treated as incidental/exempt educational activity and is not covered by the later exemption notifications. By contrast, leasing/licensing for canteen facilities intended for students, faculty and staff was found to be within the exempted 'catering' description and thus falls within exemption.

Leasing/licensing for banking and similar commercial services is not exempt; leasing/licensing for canteen facilities to students, faculty and staff is exempt under the Notifications.

Exemption Notifications issued under Section 93 - Remand for fresh adjudication - Binding effect and scope of Exemption Notifications and consequent procedural directions - HELD THAT: - The Court held that the Exemption Notifications issued under Section 93 are instruments of law binding on the Revenue and the University is entitled to rely on them insofar as they are applicable. Noting differences across notifications, the Court construed their terms and directed the Revenue to restructure and reissue the Show Cause Notice limited to matters not foreclosed by the judgment, treating it as having been issued on the original date, and to decide afresh after permitting the University to reply and be heard.

Exemption Notifications bind the parties; the SCN is to be reissued limited to the matters not held to be non taxable, and the matter remanded for fresh adjudication in accordance with the observations.

Remand for fresh adjudication - Issues left open for fresh consideration by the adjudicating authority - HELD THAT: - The Court expressly kept open all contentions other than those foreclosed by its observations - including questions as to requirement of registration and other taxable components not finally decided. It directed the Revenue to reissue/restructure the Show Cause Notice and to decide the matter afresh after receipt of reply and personal hearing as may be appropriate, thereby remitting the remaining disputed factual and legal determinations to the adjudicating authority.

All other contentions, including registration requirement and undisclosed taxability issues, are remitted for fresh adjudication by the Revenue.

Final Conclusion: The appeal is allowed in part: the High Court's quashing of the Show Cause Notice is set aside only insofar as it precluded adjudication on (i) levy of service tax on income from affiliation/recognition (which the Court holds not taxable for the period concerned) and (ii) taxability of rents/licences for canteen (exempt) and for banking/commercial lets (not exempt). The Show Cause Notice is to be restructured and reissued limited to the matters not foreclosed, and the Revenue shall decide the matter afresh after permitting the University to reply and be heard; other contentions, including registration, are left open for re adjudication.

Consideration - reverse charge mechanism - valuation of taxable services - Rule 5 of Valuation Rules, 2006 ultra vires - non-inclusion of freebies in taxable value - reimbursable expenses - extended period of limitation and requirement of positive act of suppression/fraud

Consideration - valuation of taxable services - Rule 5 of Valuation Rules, 2006 ultra vires - non-inclusion of freebies in taxable value - reimbursable expenses - Whether amounts paid for CISF personnel (arms and ammunition, accommodation, safety shoes, vehicles and similar expenses) are includable in the consideration for receiving security agency services and taxable under Rule 5 of Valuation Rules. - HELD THAT: - The Tribunal applied the statutory meaning of consideration under Section 67, holding that consideration-monetary or otherwise-must flow from the service recipient to the service provider and accrue to the provider's benefit; free supplies do not constitute consideration. Precedent of the larger Bench in Bhayana Builders and the decision in Intercontinental Consultants & Technocrats (finding Rule 5(i) repugnant to Sections 66/67) were followed to conclude that Rule 5 cannot be invoked to include reimbursable or free supplies in the taxable value. The demand under challenge was founded solely on Rule 5 and on treating infrastructure and supplies as part of consideration; on the authorities and reasoning stated, such amounts do not qualify as consideration and therefore cannot be included in the assessable value for service tax. [Paras 5]

Demand confirmed by invoking Rule 5 to include the impugned expenses in the taxable value is set aside; such amounts are not part of consideration and are not assessable.

Extended period of limitation and requirement of positive act of suppression/fraud - penalty - Whether the extended period of limitation was rightly invoked and whether penalty is sustainable. - HELD THAT: - The Tribunal found no evidence of a positive act of fraud, suppression or wilful misstatement by the appellant; mere non-payment or reliance on a view that no value was attributable to infrastructure does not constitute suppression. The department failed to prove concealment or deliberate nondisclosure; prior decisions favourable to the appellant and the absence of deliberate suppression led the Tribunal to hold the invocation of the extended period to be improper. For the same reasons, imposition of penalty was not sustainable. [Paras 5]

Extended period of limitation was wrongly invoked; show cause notice was time-barred in substance and no penalty is leviable.

Final Conclusion: The confirmed service tax demand based on inclusion of appellant supplied infrastructure and related expenses in the taxable value (via Rule 5) is set aside; the invocation of the extended period and the imposition of penalty are also held to be improper and the appeal is allowed.

Consideration includes reimbursable expenditure - prospective application of amendment w.e.f. 14.05.2015 - joint venture/collaborative undertaking - capital contribution and mutuality not taxable consideration - extended period of limitation not invocable where material was before Revenue and no suppression - reversal/curtailment of CENVAT credit as alternative to taxing reimbursement

Consideration includes reimbursable expenditure - prospective application of amendment w.e.f. 14.05.2015 - Whether reimbursement amounts received by the developer from the collaborator are includible in taxable consideration for service tax liability - HELD THAT: - The Tribunal applied the amended definition of "consideration" which, w.e.f. 14.05.2015, includes reimbursable expenditure. It observed the Supreme Court's ruling that such inclusion operates prospectively from the date of amendment. The factual matrix showed that the claimed reimbursable payments related to expenditure incurred and repaid after completion of construction activity and, on the material on record, there was no conclusive linkage demonstrating that the reimbursements constituted additional consideration over and above the costs on which service tax had already been discharged. The Tribunal further accepted additional documentary evidence about commencement and completion timelines and noted that the JDA indicated a joint scheme of development and cost sharing rather than a service-provider/customer relationship. On these findings, the claim that the reimbursements were taxable consideration was not sustained. [Paras 5, 6, 7]

Reimbursement amounts paid between the joint developers are not includible in taxable consideration on the evidence before the Tribunal.

Joint venture/collaborative undertaking - capital contribution and mutuality not taxable consideration - reversal/curtailment of CENVAT credit as alternative to taxing reimbursement - Whether payments between the co-venturers under the Joint Development Agreement constitute taxable services or are capital contributions/settlements within a joint venture and thus outside service tax levy - HELD THAT: - Having examined the JDA and the parties' conduct (common escrow account, shared development, cost-sharing for incentive FSI and parking), the Tribunal found the relationship to be a collaborative joint venture where each party advanced resources for the common enterprise. Relying on the principle that obligations discharged among co-venturers are contributions to the venture (not consideration for taxable services), and precedent of this Tribunal approved by the Supreme Court, the Tribunal held that repayments of amounts between joint venture members are not consideration liable to service tax. The Tribunal declined to adjudicate on proportionate CENVAT reversal because it was not the subject of the show-cause notice before the adjudicating authority. [Paras 7, 8, 10]

Payments/repayments between the joint developers are contributions/settlements within the joint venture and do not attract service tax as consideration.

Extended period of limitation not invocable where material was before Revenue and no suppression - Whether extended period of limitation could be invoked for recovery of the service tax demand - HELD THAT: - The Tribunal recorded that the Revenue, via the audit letter dated 27.03.2017, had knowledge of the transactions and modus operandi; no active investigative steps were taken for years and the department sought detailed information only in 2022. Given that material facts were available to Revenue and the appellant furnished details when called for, there was no wilful suppression or misstatement justifying invocation of the extended period. Moreover, because the underlying receipts were held not to attract service tax on the evidence, extended period invocation also fell away. [Paras 6, 11]

Extended period of limitation is not invocable; demand could not be sustained under extended period facts.

Admission of additional evidence under procedural rules - Whether documentary evidence produced before the Tribunal on compliance with its order could be admitted - HELD THAT: - The Tribunal exercised its power under Rule 23 of the CESTAT (Procedure) Rules, 1982 to accept additional evidence filed by the appellant on compliance with the Tribunal's direction. Those documents (work commencement/authorization and related records) were considered material to the determination of when services were rendered and were admitted for deciding the substantive issues. [Paras 6]

Additional documentary evidence filed before the Tribunal was admitted and taken into account.

Final Conclusion: Appeal allowed. The order-in-original confirming service tax demand and invoking extended limitation was set aside; consequential relief, if any, to follow.

Trade discount - consideration - Business Auxiliary Service - dealership agreement - principal-to-principal relationship - definition of 'service' under Section 65B(44) of the Finance Act - extended period of limitation - suppression/concealment - service tax liability

Trade discount - Business Auxiliary Service - dealership agreement - principal-to-principal relationship - definition of 'service' under Section 65B(44) of the Finance Act - consideration - Whether the discounts/incentives received by the dealer under the dealership agreement are taxable as consideration for rendering Business Auxiliary Services or are part of trading activity (trade discounts) not leviable to service tax. - HELD THAT: - The Tribunal examined the dealership agreement clauses which characterise the relationship as sale of products and resale by the dealer on a principal-to-principal basis and expressly disavow any agency relationship. On that contractual basis and following binding precedents of this Tribunal, incentives and target-related discounts granted under declared schemes were held to be trade discounts forming part of the trading consideration and not payment for any separate service. The Tribunal accepted the reasoning in earlier decisions that incentives given to encourage purchase/sale volumes are trade discounts and cannot be taxed as Business Auxiliary Services; therefore such receipts do not constitute 'consideration' for a service under the statutory definition and are not exigible to service tax. The original adjudicating authority's conclusion treating the entire amount as consideration for a taxable service was held to be contrary to these principles and was set aside. [Paras 5]

The incentives/discounts received under the dealership agreement are trade discounts arising from trading activity and not consideration for Business Auxiliary Services; no service tax liability arises on these amounts.

Extended period of limitation - suppression/concealment - service tax liability - Whether the extended period of limitation was rightly invoked by the department by alleging suppression or concealment by the appellant. - HELD THAT: - The Tribunal noted that the appellant had discharged service tax on commission and interest income and that the department produced no material establishing any act of suppression or concealment with intent to evade tax in respect of the discounts/incentives. The adjudicating authority merely assumed the receipts to be taxable and did not point to specific omissions or acts constituting suppression as required by precedent. In absence of such specific findings or evidence of concealment, invocation of the extended period was unwarranted and the show cause notice relying on it was time-barred. [Paras 5, 6]

Extended period could not be invoked; the show cause notice insofar as it relies on extended limitation is barred by time.

Final Conclusion: The Tribunal allowed the appeal, set aside the findings of the original adjudicating authority, held that the disputed incentives/discounts are trade discounts not liable to service tax, and that the invocation of the extended period was unjustified so the demand raised in the show cause notice is time-barred.

Determination of value of service portion in the execution of a works contract - Works contract service - maintenance and repair - 70% abatement under Rule 2A of Valuation Rules, 2006 - Service tax liability where supply of goods is incidental to rendering of works contract/maintenance service

Works contract service - maintenance and repair - 70% abatement under Rule 2A of Valuation Rules, 2006 - Determination of value of service portion in the execution of a works contract - Service tax liability where supply of goods is incidental to rendering of works contract/maintenance service - Appellants entitled to 70% abatement under Rule 2A for works contract (repair and maintenance) charged to M/s. MECL for Financial year 2016-17; therefore the demand based on alleged differential of assessable value is unsustainable. - HELD THAT: - The appellant produced the comprehensive annual maintenance contract and sample invoices which show that the maintenance/repair service provided to M/s. MECL included supply of spares as part of the service (clause 6 of the CAMC). The invoices and agreement indicate that the transfer of goods was incidental to the provision of the maintenance service and that consideration charged included the goods component. Rule 2A of the Valuation Rules treats works contracts for maintenance or repair so that service tax is payable on seventy percent of the total amount charged for the works contract. The Commissioner (Appeals) erred in treating the supply orders as exclusively for goods and in holding that no VAT element had been discharged; the agreement and invoices on record demonstrate that the activity was a works contract service and that the appellant was eligible for the 70% abatement. Consequently the confirmed demand based on the alleged short payment is not sustainable and requires setting aside.

Order under challenge setting aside the demand is allowed; the finding of short payment is set aside and appeal is allowed.

Final Conclusion: The Appellate Tribunal set aside the adjudicating order and allowed the appeal, holding that the appellant rendered works contract (repair and maintenance) services to M/s. MECL inclusive of supply of spares and was entitled to 70% abatement under Rule 2A for Financial year 2016-17; the departmental demand based on the alleged differential is therefore unsustainable.

Exigibility of service tax on logistics/handling charges - bundled transaction / essential character test for composite supply - pre sale charges forming part of sale value and taxable under VAT not service tax - mutual exclusivity of VAT and service tax - mandatory penalty under Section 78 of the Finance Act, 1994

Exigibility of service tax on logistics/handling charges - bundled transaction / essential character test for composite supply - pre sale charges forming part of sale value and taxable under VAT not service tax - mutual exclusivity of VAT and service tax - Receipt of logistic/handling charges by the dealer is not exigible to service tax but forms part of the sale value of goods and is taxable under sales tax/VAT. - HELD THAT: - The Tribunal examined whether amounts collected as logistics/handling charges constituted a service liable to service tax for the periods in dispute. For the pre negative list period and thereafter, the authorities and earlier Tribunal decisions indicate that handling charges incurred before transfer of goods form part of the sale price. Post 01.07.2012, an activity qualifies as a service only if the three limbs of the service definition are satisfied; here the logistics activity is intrinsically coupled with the sale and thus constitutes a bundled transaction under section 66F. The provision of logistics/handling is incidental to and naturally bundled with the sale of vehicles, the sale being the essential character of the composite transaction. Consequently such pre sale charges fall within the exclusion for transfer of title in goods in the service definition and form part of the value of goods on which VAT/sales tax applies. The CBEC Circular No. 699/15/2003-CX confirming that pre sale dealer activities are outside service tax further supports this conclusion. The mere separate accounting or separate invoicing of logistics charges does not convert pre sale expenses into a distinct taxable service; once VAT has been paid on such charges, service tax cannot be additionally demanded. [Paras 8, 9, 10, 11, 12]

Handling/logistics charges collected by the dealer form part of the sale value of the vehicle and are not exigible to service tax.

Mandatory penalty under Section 78 of the Finance Act, 1994 - The imposition of mandatory penalty under Section 78 in the impugned order is not sustainable given the finding that logistics/handling charges are not exigible to service tax. - HELD THAT: - The Commissioner (Appeals) had imposed mandatory penalty under Section 78 after the Department treated the receipts as taxable. Having held that the receipts are not exigible to service tax but form part of sale value and are subject to VAT, the basis for imposing mandatory penalty under Section 78 on the disputed demand is removed. The appellate conclusion overturns the premise on which the penalty was imposed. [Paras 13]

The impugned order imposing mandatory penalty under Section 78 is set aside.

Final Conclusion: Appeal allowed. The impugned order is set aside: logistics/handling charges collected by the dealer are not exigible to service tax but form part of the sale value of vehicles (subject to VAT), and the mandatory penalty under Section 78, imposed on the disputed demand, is quashed; consequential relief granted.

Point of Taxation Rules, 2011 - requirement of documentary evidence to substantiate reconciliation - remand for fresh adjudication - dropping of CENVAT credit demand

Requirement of documentary evidence to substantiate reconciliation - Point of Taxation Rules, 2011 - remand for fresh adjudication - Whether the demand of service tax and penalties could be sustained in the absence of corroborative documentary evidence supporting the appellant's reconciliation claims, and the appropriate course of action. - HELD THAT: - The Tribunal noted that the adjudicating authority recorded that the reconciliation chart submitted by the appellant was not supported by corroborative documentary evidence and that values in the reconciliation did not accord with those in the show cause notice. The appellant maintained that there was no short payment if advances, receipts pertaining to the pre-01.04.2011 period and other adjustments shown in the reconciliation were accepted, and relied on ST-3 returns. However, since the appellant did not produce contemporaneous documentary proof before the adjudicating authority-such as invoices issued in the relevant months, bank statements evidencing advances received, party ledgers and challans for service tax payments-the Tribunal concluded that the adjudicating authority could not finally determine the correctness of the demand on the existing record. Rather than deciding the matter on merits against the appellant, the Tribunal exercised its supervisory jurisdiction to remit the matter for fresh adjudication, directing the respondent authority to give the appellant an opportunity to place on record the specified documents and to consider them while adjudicating afresh. The Tribunal did not record a final finding on computation under the Point of Taxation Rules, 2011 or on limitation; it confined itself to remanding for verification and fresh decision-making. [Paras 6, 7]

Impugned order set aside to the limited extent of confirming the demand; appeal allowed by way of remand to the original authority to permit the appellant to submit documentary evidence (invoices, bank statements, ledgers, challans etc.) and for the authority to re-adjudicate the demand afresh.

Final Conclusion: The Tribunal remitted the matter for fresh adjudication, setting aside the confirmation of the disputed service tax demand and directing the original authority to consider documentary evidence to be produced by the appellant before deciding the liability and any penalty.

Works Contract services - receipt basis vs accrual basis of taxation (Rule 6) - chartered accountant's certificate and onus to rebut - Best Judgment assessment - penalty in revenue-neutral or non-fraud cases

Works Contract services - receipt basis vs accrual basis of taxation (Rule 6) - chartered accountant's certificate and onus to rebut - Validity of dropping the demand raised on account of alleged short payment of service tax on Works Contract Services for the periods 2007-08 to 2011-12 and 2012-13 - HELD THAT: - The Adjudicating Authority found that the amounts shown in the assessee's records were on accrual basis and that, for the relevant period, Rule 6 of the Service Tax Rules required tax to be computed on receipt basis; it relied on a Chartered Accountant's certificate (dated 19.03.2016 and 22.08.2016) certifying reconciliation of ST-3 returns and balance sheets and that tax had been discharged on receipt/billing basis as applicable. Once the assessee furnished the CA certificates and supporting records, the burden shifted to the Department to rebut those documents; the Department did not produce evidence to show the certificates were fraudulent or otherwise liable to be discarded. The Tribunal applied precedent that accepts CA certificates and documentary reconciliation unless convincingly negated by revenue, and observed that recovery based on accrual figures contrary to Rule 6 was not justified. With respect to the demand framed under Best Judgment for 2012-13, the Tribunal held that best judgment assessment must have reasonable nexus to available material and cannot be made arbitrarily where relevant information and reconciliations had in fact been furnished to the Department. Consequently, the impugned findings dropping the demands were held to be sustainable. [Paras 6, 7]

The dropping of the demands in respect of Works Contract Services for 2007-08 to 2011-12 and 2012-13 is upheld.

Penalty in revenue-neutral or non-fraud cases - chartered accountant's certificate and onus to rebut - Validity of not imposing commensurate penalties in respect of the dropped demands - HELD THAT: - The appeal challenged the non-imposition or limited imposition of penalties. The Tribunal noted that the Department failed to establish mala fide intention, fraud or suppression of facts, and that the CA certificates and reconciliations submitted by the assessee were not shown to be false. In such circumstances, and having upheld the adjudicating authority's finding that the substantive demands were not sustainable (including rejection of an inflated best-judgement demand), there was no infirmity in the impugned order insofar as penalties were concerned. The Tribunal also observed that in revenue-neutral situations or where the Department does not rebut the documentary evidence, invoking enhanced penal consequences is not warranted. [Paras 6, 7]

No error in the adjudicating authority's approach to penalty; the impugned order in that regard is sustained.

Final Conclusion: The Tribunal finds no infirmity in the impugned Order-in-Original and accordingly dismisses the Department's appeal, upholding the dropping of the demands for Works Contract Services for 2007-08 to 2011-12 and 2012-13 and sustaining the adjudicating authority's approach to penalties.

Refund claim limited to duty paid - sanctioned refund not subject to recovery by show cause if unchallenged - invocation of extended period of limitation requires establishment of fraud, suppression or wilful mis-statement - bar of limitation to demands under extended period

Refund claim limited to duty paid - Whether a refund sanction can be rejected or recovered where the refund relates to duty actually paid by the appellant even if that duty exceeds what was ultimately payable. - HELD THAT: - The Tribunal held that the controversy is no longer res integra and is covered by the Tribunal's majority view that a refund is admissible to the extent of duty actually paid by the assessee; therefore refund cannot be denied on the basis that a higher duty was paid than what was ultimately payable. The learned Member accepted the appellant's contention that the refund pertained to duty paid in cash and that self-credit reflected amounts actually paid, and followed the majority decision on identical issue as dispositive of the appeal. [Paras 6]

The refund is maintainable to the extent of duty actually paid; the impugned rejection on that basis is unsustainable.

Sanctioned refund not subject to recovery by show cause if unchallenged - Whether the department can recover a refund by issuing a show cause notice when the refund sanction order has not been challenged or set aside by the department. - HELD THAT: - The Tribunal relied on authorities holding that where a refund sanction order remains unchallenged by the Revenue, recovery by issuing a show cause notice seeking to reopen or recover the sanctioned refund is impermissible. The Member observed that the department had not impugned the refund sanction order and followed the High Court and Tribunal precedents that preclude recovery in such circumstances, including recent decisions of this Tribunal applying the jurisdictional High Court's reasoning. [Paras 7, 8]

In the absence of challenge to the refund sanction order by the department, the refund cannot be rejected or recovered by issuance of a show cause notice.

Invocation of extended period of limitation requires establishment of fraud, suppression or wilful mis-statement - bar of limitation to demands under extended period - Whether the demand raised by invoking the extended period of limitation is sustainable where the Revenue has not established the ingredients for invoking the extended period under the statute. - HELD THAT: - The Tribunal found that the department failed to establish the requisite ingredients (fraud, suppression or wilful mis-statement) necessary to invoke the extended period of limitation. Consequently, the demand sought by resort to the extended limitation period is barred. The Member held that, on this ground as well, the impugned order could not be sustained. [Paras 9]

The demand is time-barred; invocation of the extended period is unjustified in the absence of established statutory ingredients.

Final Conclusion: By applying the cited authorities and findings on limitation, the Tribunal allowed the appeal, set aside the impugned order and granted consequential relief in favour of the appellant.

Rebate on duty paid - transaction value - inclusion of amounts paid by buyer or on buyer's behalf in assessable value - extension of limitation/extended period - recoverability of erroneously granted rebate under Section 11A - imposition of penalty on officers for alleged wrongful rebate

Rebate on duty paid - transaction value - inclusion of amounts paid by buyer or on buyer's behalf in assessable value - Whether rebate under Rule 18 of the Central Excise Rules, 2002 is allowable in respect of duty paid on special protective packing included in the transaction value though the packing was arranged/paid for overseas. - HELD THAT: - The Tribunal examined Rule 18, which grants rebate on the "duty paid", and Section 4(3)(d) of the Central Excise Act, 1944 defining "transaction value" as the price actually paid or payable and expressly including amounts the buyer is liable to pay to or on behalf of the assessee. The Bench found no ambiguity in Rule 18 that would limit rebate to duty computed only on the "duty payable" exclusive of amounts borne by a third party. The transaction value concept applies even where certain components of price are borne by persons other than the manufacturer/exporter; hence amounts shown in the purchase order and invoices as part of the price (including special packing) fall within assessable value. Relying on earlier Tribunal and Supreme Court authority reasoning (as discussed in the judgment), the Tribunal held that rebate entitlement flows from duty actually paid by the exporter and that a manufacturer-exporter may claim rebate of duty paid even if a partial exemption or different duty position existed. [Paras 9]

Rebate allowable on duty actually paid which included value of the special protective packing included in the transaction value.

Recoverability of erroneously granted rebate under Section 11A - orders sanctioning rebate attaining finality - Whether a demand under Section 11A can be sustained when the orders sanctioning rebate were not challenged and have attained finality. - HELD THAT: - The Tribunal observed that the orders sanctioning rebate had not been appealed or set aside by any competent authority. It applied the legal position that an erroneous sanction of rebate which has attained finality cannot be the subject of a fresh demand under Section 11A. The Bench noted precedents of this Tribunal wherein rebate sanctioned (being "duty paid") and not set aside could not be recovered by issuing a showcause under Section 11A. The Tribunal also considered the revenue-neutral character where excess duty paid in cash was eligible for refund and that the Department had ample opportunity to verify rebate claims when granting them. [Paras 11]

Demand under Section 11A unsustainable where rebate orders remained unchallenged and final.

Extension of limitation/extended period - imposition of penalty on officers for alleged wrongful rebate - Whether the extended period for issuance of the showcause notice was rightly invoked and whether penalties on the assessee and its officers were maintainable. - HELD THAT: - The Tribunal found that Revenue had not produced evidence of suppression, collusion, misstatement or other culpable conduct by the appellants that would justify invocation of the extended period. The Bench noted that the Department had the opportunity to scrutinise and verify rebate claims when rebates were sanctioned over time and had not done so; therefore, invoking extended limitation on the basis that over-valuation was detectable only after investigation was not acceptable. In absence of requisite culpability, demands raised after expiry of normal limitation and penalties imposed on the exporter and its CFO/DGM were held to be not maintainable. [Paras 11]

Extended period not invocable; penalties on the assessee and its officers not maintainable.

Final Conclusion: The Tribunal allowed the appeals: rebate was held allowable on duty actually paid inclusive of the special protective packing included in the transaction value; demands under Section 11A were unsustainable because the rebate orders were not challenged; invocation of extended limitation and penalties on the assessee and its officers were rejected. All impugned orders were set aside.

Inclusion of bought-out items in assessable value - assessable value - valuation versus classification - transaction value in Central Excise valuation - extended period of limitation - penalty under Section 11AC

Inclusion of bought-out items in assessable value - assessable value - valuation versus classification - Value of bought-out items supplied along with prefabricated shelters is includible in the assessable value of goods cleared from the factory. - HELD THAT: - The appellants supplied prefabricated buildings to the Indian Army, although some components were procured externally. The Tribunal found that what is required to be assessed is the goods cleared from the factory gate - here the prefabricated buildings supplied (even if in disassembled form). The respondents did not establish that the bought-out items were optional, mere accessories, or supplied only on the Army's specific direction so as to exclude their value. Relying on the distinction between classification and valuation, and following the reasoning in Frick India Ltd., the Tribunal held that valuation must take into account the price of the entire package supplied to the buyer and therefore the value of bought-out items that form part of that package must be included in the assessable value. [Paras 4]

Value of bought-out items is to be included in the assessable value of the prefabricated shelters.

Extended period of limitation - Extended period cannot be invoked in the present case; duty can be confirmed only for the normal period. - HELD THAT: - Although extended period was invoked on the ground that the issue surfaced during audit and that returns were not regular, no evidence was produced to demonstrate omissions or commissions committed with intent to evade duty. Given the nature of supplies to the Indian Army and the possibility that the assessee genuinely believed bought-out items need not be included, the Tribunal observed that invocation of the extended period on routine audit grounds was not justified. The Tribunal therefore disallowed invocation of the extended period and limited confirmation of duty to the normal assessment period. [Paras 5]

Extended period held not invokable; duty confirmed only for the normal period.

Penalty under Section 11AC - Penalty imposed under Section 11AC is set aside. - HELD THAT: - In view of the finding that extended period could not be invoked and the absence of evidence of intention to evade duty, the Tribunal held that the penal provision should not be sustained. Consequently, the penalty under Section 11AC that had been imposed by the lower authority was annulled. [Paras 6]

Penalty under Section 11AC set aside.

Final Conclusion: Appeal partly allowed: value of bought-out items to be included in assessable value and duty confirmed for the normal period; invocation of extended period disallowed and penalty under Section 11AC set aside.

Definition of "purchase price" as exhaustive - exclusion of Value Added Tax from "purchase price" under the GVAT Act - turnover of purchases computed from purchase price - calculation of taxable turnover of purchases for reduction of tax credit under Section 11(3)(b) - strict construction of charging provisions in tax statutes

Definition of "purchase price" as exhaustive - exclusion of Value Added Tax from "purchase price" under the GVAT Act - turnover of purchases computed from purchase price - calculation of taxable turnover of purchases for reduction of tax credit under Section 11(3)(b) - Whether the Value Added Tax component and the value of purchases on which no tax credit was claimed or granted are to be included in the "turnover of purchases" for computing reduction of tax credit under Section 11(3)(b) of the GVAT Act. - HELD THAT: - The Court examined the statutory definition of "purchase price" in Section 2(18) of the GVAT Act and noted the use of the word "means", indicating an exhaustive and enumerative definition. The definition expressly includes duties leviable under the Central Excise Tariff Act and the Customs Act and other specified charges, but does not mention Value Added Tax. The Court applied the principle that taxing provisions (charging sections) must be strictly construed and that nothing can be taxed by implication; what is specifically omitted cannot be read into the charging provision. Since "turnover of purchases" under Section 2(32) is computed from the purchase price, the components excluded from the statutory definition of purchase price do not form part of the turnover of purchases. Applying these interpretive conclusions to Section 11(3)(b), which mandates reduction of tax credit by a percentage of the turnover of purchases in specified circumstances, the Court held that the VAT component already paid on purchases and the value of purchases in respect of which no tax credit was claimed or granted cannot be included in the taxable turnover of purchases for computing the reduction of tax credit. [Paras 15, 16, 17, 18, 19]

Value Added Tax paid on purchases and the value of purchases on which no tax credit was claimed or granted are excluded from the "turnover of purchases" and therefore not included for reduction of tax credit under Section 11(3)(b).

Final Conclusion: The judgments of the Tribunal and the High Court upholding exclusion of the VAT component and uncredited purchases from turnover of purchases were affirmed; the appeals are dismissed and the transfer cases directed to be heard along with these appeals are disposed of in light of this judgment.

Notice requiring production of documents under Section 23(2) of the MVAT Act - Best judgment assessment - Failure of pre-conditions for assessment to the best of judgment - Quashing of assessment order and demand notice

Notice requiring production of documents under Section 23(2) of the MVAT Act - Failure of pre-conditions for assessment to the best of judgment - Validity of the show cause notice and subsequent letter under Section 23(2) as compliance with the requirement to specify documents or evidence to be produced - HELD THAT: - The Court examined Section 23(2) which mandates that where the Commissioner considers it necessary to ensure that a return is correct and complete, he must serve a notice requiring the dealer to attend and produce "all documents on which such dealer relies" or "such documents or evidence as is specified in the notice", and only if the dealer fails to comply may the Commissioner assess to the best of his judgment. The impugned show cause notice and the follow-up letter were in a printed format containing only the period, date and time; they did not specify what further documents or evidence were required, nor did they refer to the documents the petitioner had already furnished. In those circumstances the statutory pre-condition of requiring production of specified documents before invoking the provision permitting a best judgment assessment was not satisfied. The absence of any description of the documents or particulars meant the notices did not meet the requirement under Section 23(2) and could not justify a best judgment assessment. [Paras 6, 7, 8]

Show cause notice and the letter did not satisfy the requirements of Section 23(2); pre-conditions for making a best judgment assessment were not fulfilled.

Best judgment assessment - Quashing of assessment order and demand notice - Sustainability of the assessment order dated 28th March 2024 and the notice of demand dated 28th March 2024 - HELD THAT: - Because the Commissioner proceeded to pass the impugned order on a best judgment basis without first issuing a notice specifying the documents required (and despite the petitioner having filed financial statements, audit report and returns for FY 2019-20), the statutory prerequisites for invoking a best judgment assessment were not met. The Court found that the impugned assessment order was founded on the defective process and therefore could not be sustained. Consequentially, the associated demand notice, being founded on the same order, also lacked validity. [Paras 6, 8, 9]

Impugned assessment order and the demand notice dated 28th March 2024 are quashed and set aside.

Final Conclusion: The High Court found the show cause notice and subsequent letter defective for failing to specify the documents required under Section 23(2) of the MVAT Act; accordingly the conditions for a best judgment assessment were not satisfied, and the assessment order and consequential demand notice dated 28th March 2024 were quashed and set aside.

Admissibility of certified copy of registered sale deed as a public document - public records of private documents - secondary evidence under Section 65(e) of the Evidence Act - production of certified copies under Section 77 of the Evidence Act - admissibility by virtue of Section 57(5) of the Registration Act - proof limited to contents and not execution - formal proof not dispensed by mere marking as exhibit

Admissibility of certified copy of registered sale deed as a public document - public records of private documents - secondary evidence under Section 65(e) of the Evidence Act - production of certified copies under Section 77 of the Evidence Act - admissibility by virtue of Section 57(5) of the Registration Act - Certified copy of a registered sale deed is admissible as secondary evidence as a public document - HELD THAT: - The Court held that although a sale deed is a private document, the entries kept in the Registering Officer's records (Book 1) constitute public records of that private document. A certified copy issued from those registration entries is therefore a certified copy of a public document within the meaning of the Evidence Act. Applying Sections 65(e) and 77 of the Evidence Act read with Section 57(5) of the Registration Act, such certified copies are admissible in evidence to prove the contents of the original registered document. The Court relied on prior judicial exposition to conclude that certified copies extracted from the registration records operate as secondary evidence of the public record and are admissible for proving contents of the original document. [Paras 8, 9, 10]

Certified copy of the registered sale deed falls within Section 74(2) and is admissible as secondary evidence to prove the contents of the original.

Formal proof not dispensed by mere marking as exhibit - proof limited to contents and not execution - Marking the certified copy as an exhibit does not dispense with formal proof of execution and admissibility must still be tested for relevance and execution - HELD THAT: - The Court emphasised that admission of a document into record by marking it an exhibit does not automatically render it admissible on all counts; the court may still examine its relevance and other aspects to test admissibility. While a certified copy proves the contents of the original, it does not prove the execution of the original document. Accordingly, production and exhibition of the certified copy permits proof of contents but does not obviate the requirement to establish execution or other facts insofar as they are material to the controversy. [Paras 5, 11]

The trial court properly admitted and exhibited the certified copy but proof of execution cannot be dispensed with; admissibility and relevance remain subject to judicial scrutiny.

Final Conclusion: The High Court affirmed the trial court's order admitting the certified copy of the registered sale deed as an exhibit, holding it to be admissible as secondary evidence of a public record (limited to proving contents and not execution); the petition under Article 227 is dismissed.

Application of Limitation Act to arbitration under a special enactment - Exclusion of Part I of the Arbitration and Conciliation Act by operation of Section 2(4) - Non applicability of the Limitation Act to arbitral proceedings under the National Highways Act - Maintainability of writ petitions under Article 226 against an arbitral decision - Remedy by challenge under Section 34 of the Arbitration and Conciliation Act

Non applicability of the Limitation Act to arbitral proceedings under the National Highways Act - Exclusion of Part I of the Arbitration and Conciliation Act by operation of Section 2(4) - Limitation under the Limitation Act does not apply to arbitration under the National Highways Act. - HELD THAT: - The National Highways Act does not prescribe any period of limitation for appointment of an arbitrator under Section 3G(5). Although Section 43 of the Arbitration and Conciliation Act provides that the Limitation Act shall apply to arbitrations, Section 2(4) of Part I of the Arbitration and Conciliation Act preserves that the provisions of Part I apply to arbitrations under other enactments only insofar as they are not inconsistent with those enactments. The Court held that, in view of Section 2(4), Section 43 (and thereby the Limitation Act) will not apply to arbitrations under the National Highways Act where that Act contains no limitation prescription. Thus, the Limitation Act does not govern arbitrations under the National Highways Act. [Paras 4, 5, 6]

Limitation Act will not apply to arbitration under the National Highways Act.

Maintainability of writ petitions under Article 226 against an arbitral decision - Remedy by challenge under Section 34 of the Arbitration and Conciliation Act - A writ petition under Article 226 is not maintainable to challenge the decision of the Arbitrator appointed under the National Highways Act; the appropriate remedy is under Section 34 of the Arbitration and Conciliation Act. - HELD THAT: - The Division Bench has considered the question of interference with a writ petition challenging the arbitrator's decision and held that such challenges must be pursued by invoking the statutory remedy of setting aside an award under Section 34 of the Arbitration and Conciliation Act. The Court therefore concluded that a writ under Article 226 is not the correct forum to assail the decision of the District Collector acting as Arbitrator under the National Highways Act, and set aside the impugned writ court order which had entertained the writ. [Paras 7]

The writ petition was not maintainable; the remedy is by invoking Section 34 of the Arbitration and Conciliation Act.

Final Conclusion: Impugned judgment allowing the writ petition was set aside and the writ appeal allowed; limitation under the Limitation Act does not apply to arbitration under the National Highways Act, and challenges to the Arbitrator's decision are to be pursued under Section 34 of the Arbitration and Conciliation Act.

Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises - binding force of Reserve Bank directions on scheduled commercial banks - identification of incipient stress and Special Mention Account (SMA) sub-categories - mandatory compliance of MSME Framework prior to classification of account as Non-Performing Asset - interaction between the MSMED Act Framework and enforcement under the SARFAESI Act - obligation on MSME to furnish authenticated and verifiable material at SMA stage - bar on belated invocation of MSME status after completion of SARFAESI enforcement

Binding force of Reserve Bank directions on scheduled commercial banks - Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises - Whether the Notification dated 29.05.2015 (Framework) and the RBI directions/revised Framework have statutory force and are binding on scheduled commercial banks. - HELD THAT: - The Court held that the Framework notified by the Central Government under Section 9 of the MSMED Act, as revised by the RBI's communication and incorporated into the Reserve Bank of India (Lending to MSME Sector) Directions, 2016 issued under Sections 21 and 35A of the Banking Regulation Act, have statutory force and are binding on all scheduled commercial banks licensed by the RBI. Section 21 and Section 35A empower RBI to determine policy and issue directions on advances and to give directions which banking companies are bound to comply with; such directions must be construed as supplementing the Banking Regulation Act and possess mandatory effect. The High Court's conclusion to the contrary was held to be erroneous and set aside. (See paras. 11-13, 18.) [Paras 11, 12, 13, 18]

The Framework and the RBI Directions carry statutory force and are binding on scheduled commercial banks.

Identification of incipient stress and Special Mention Account (SMA) sub-categories - mandatory compliance of MSME Framework prior to classification of account as Non-Performing Asset - interaction between the MSMED Act Framework and enforcement under the SARFAESI Act - obligation on MSME to furnish authenticated and verifiable material at SMA stage - bar on belated invocation of MSME status after completion of SARFAESI enforcement - Whether banks are obliged to follow the MSME Framework (including identification of incipient stress through SMA sub-categories and formation of Committees) before classifying an MSME loan account as NPA and initiating enforcement under the SARFAESI Act, and what obligations fall on the MSME borrower. - HELD THAT: - The Court ruled that the procedures in the Framework are to be carried out by banking companies before an MSME loan account is classified as a Non-Performing Asset. While the SARFAESI Act permits enforcement of security once an account is classified as NPA, classification itself must conform to the Framework's mandate of identifying incipient stress by creating SMA-0/1/2 categories and, where applicable, forming committees to decide corrective action plans. Simultaneously, the Court emphasized that banks must have authenticated and verifiable material to establish that an account is of an MSME; the Framework also permits voluntary initiation by the enterprise subject to verification by affidavit. If an MSME fails to bring its status to the bank's notice with requisite documents before classification and allows SARFAESI enforcement to conclude (or unsuccessfully challenges it), it cannot be permitted to belatedly invoke MSME protections to frustrate concluded enforcement. The Court therefore balanced the mandatory nature of the Framework with the concurrent obligation on MSMEs to be vigilant and produce supporting material at the SMA stage. (See paras. 14-17, 18.) [Paras 14, 15, 16, 17, 18]

Banks must follow the MSME Framework prior to classifying MSME loan accounts as NPAs; MSMEs must produce authenticated/verifiable material at the SMA stage and cannot belatedly invoke MSME status after SARFAESI enforcement is completed.

Final Conclusion: The High Court order dismissing the writ petitions on the ground that the MSME Framework and RBI directions are not mandatory is set aside; the Framework and RBI Directions are binding on scheduled commercial banks and must be followed prior to classifying MSME accounts as NPAs. The appeals are allowed to that extent; appellants remain free to pursue other remedies on factual issues not decided by the High Court.

Writ of mandamus - formalization of land grant - effect of appellate tribunal's order - relegation to administrative authority - applicability of amended rules - pre-amendment rates

Writ of mandamus - formalization of land grant - effect of appellate tribunal's order - relegation to administrative authority - Grant of writ of mandamus directing formalization of the grant in favour of the appellant rather than relegating him to the Assistant Commissioner. - HELD THAT: - The Single Judge had directed the appellant to approach the jurisdictional Assistant Commissioner for redressal. The Court found that there already existed a Grant Order which was affirmed by the Appellate Tribunal, and that only the question of payment remained to be determined. Given the Tribunal's order affirming the grant and leaving only quantification, relegating the appellant afresh to the Assistant Commissioner for grant was held to be unjustified. Consequently, the Court issued a writ of mandamus directing the second respondent to formalize the grant in terms of the extant rules. [Paras 4, 5]

Writ of mandamus issued directing the second respondent to formalize the grant in favour of the appellant in terms of extant rules; relegation to the Assistant Commissioner set aside.

Applicability of amended rules - pre-amendment rates - Determination that the appellant is liable to pay charges under the pre-amendment Rules of 2023 rather than at rates introduced by the 2023 amendment. - HELD THAT: - Respondents contended that payment must be made in terms of the 2023 amendment which substituted rates; the Court examined the amendment and found that the version relied upon in a published compilation was incorrect. The Court rejected the publication's 'substitution' characterization and, to avoid prejudicing citizens by a publisher's mistake, held that the appellant is liable to pay charges under the pre-amendment Rules of 2023. [Paras 5]

Appellant to pay the charges applicable under the pre-amendment Rules of 2023.

Final Conclusion: Appeal allowed; writ of mandamus issued directing formalization of the grant in favour of the appellant in terms of extant rules, with the appellant liable to pay charges under the pre-amendment Rules of 2023; registry directed to send copies of the order to specified authorities and the publisher.

Maintainability of writ petition in SARFAESI matters - Alternative remedy before Debts Recovery Tribunal (DRT) - Writ jurisdiction under Article 226 - Non-entertainment of writ where statute prescribes alternative remedy - Interim relief by High Court in presence of alternative remedy - Opportunity of hearing in proceedings under Section 14 of SARFAESI Act

Maintainability of writ petition in SARFAESI matters - Alternative remedy before Debts Recovery Tribunal (DRT) - Writ jurisdiction under Article 226 - Maintainability of the writ petition challenging actions taken under the SARFAESI Act, 2002 where an alternative remedy before the DRT exists. - HELD THAT: - The High Court held that the petitioners have an alternative efficacious remedy by approaching the Debts Recovery Tribunal and have not availed that remedy. Relying on binding Supreme Court precedent, the Court observed that matters arising under the SARFAESI Act are ordinarily to be adjudicated by the prescribed forum and that High Courts should refrain from exercising writ jurisdiction to entertain such petitions. The judgment emphasises that where a specific statutory remedy exists and is available, the writ jurisdiction under Article 226 should not be invoked to circumvent the prescribed remedy, and interim reliefs that effectively decide the matter should not be granted by the High Court in such interregnum. [Paras 8, 9, 13]

Writ petition is not maintainable in view of the alternative remedy before the DRT and is not to be entertained.

Opportunity of hearing in proceedings under Section 14 of SARFAESI Act - Interim relief by High Court in presence of alternative remedy - Validity of the contention that the Additional Collector was obliged to afford personal hearing before passing an order under Section 14 of the SARFAESI Act. - HELD THAT: - The Court noted the contention of the petitioners that no opportunity of hearing was afforded, but observed that precedent holds that the Additional Collector need not necessarily grant a personal hearing while adjudicating an application under Section 14. Coupled with the presence of an alternative remedy before the DRT and consistent Supreme Court authority discouraging High Courts from entertaining SARFAESI disputes, the petitioners' grievance on this ground did not warrant exercise of writ jurisdiction. [Paras 6, 8]

The alleged denial of opportunity of hearing does not justify entertaining the writ petition in view of settled law and the availability of the statutory remedy.

Final Conclusion: The writ petition was dismissed at the admission stage: the High Court declined to exercise its Article 226 jurisdiction in a SARFAESI dispute where an alternative remedy before the DRT exists and where Supreme Court precedent discourages entertaining such writ petitions and granting interim reliefs.

Existence of arbitration agreement - appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - scope of court's inquiry under Section 11 - no adjudication on merits - final bill clause and waiver (Condition 65 of IAFW-2249) - arbitrability of post-final-bill claims - limitation for Section 11 applications - residual period under Article 137 - post-2015 amendment narrow scope of Section 11 enquiry

Existence of arbitration agreement - scope of court's inquiry under Section 11 - no adjudication on merits - There exists an arbitration agreement and a dispute fit for reference to arbitration; the Court's role under Section 11 is limited and should not touch merits. - HELD THAT: - The Court examined whether an arbitration agreement is in place and whether a dispute has arisen between the parties. Reliance was placed on settled authorities that the limited scope of Section 11 enquiry is confined to the existence of an arbitration agreement and a prima facie dispute, and must avoid deciding the merits so as not to prejudice the arbitrator's role. The applicant had raised a specific claim concerning deduction of statutory taxes and had issued notices invoking the contract's arbitration clause; the respondents' correspondence denying the applicant's contention amounted to a denial giving rise to a dispute. On this basis the Court found that the condition precedent for appointing an arbitrator was satisfied. [Paras 8, 13]

Arbitration agreement exists and a dispute has been shown; Court will not decide merits at Section 11 stage.

Final bill clause and waiver (Condition 65 of IAFW-2249) - arbitrability of post-final-bill claims - Submission of and acceptance of the Final Bill under Condition 65 does not, at the Section 11 stage, oust the jurisdiction to refer the disputed claim to arbitration. - HELD THAT: - Respondents contended that Condition 65, which provides that no further claims shall be made after submission of the Final Bill, extinguishes post-final-bill claims and therefore bars reference. The Court held that whether a claim is barred by Condition 65 is a substantive point which goes to the merits and cannot be adjudicated in the limited Section 11 enquiry. The fact that the applicant accepted the Final Bill without reservation and later raised the tax-deduction dispute does not preclude prima facie reference; the question of waiver or extinguishment under Condition 65 is to be considered by the arbitrator. [Paras 6, 9, 13]

Alleged waiver by submission/acceptance of Final Bill does not preclude appointment of an arbitrator; the substantive effect of Condition 65 is for the arbitrator to decide.

Limitation for Section 11 applications - residual period under Article 137 - post-2015 amendment narrow scope of Section 11 enquiry - The Section 11 application is not barred by limitation; limitation for such application is governed by Article 137 and whether the substantive claim is time-barred is for the arbitrator to decide. - HELD THAT: - The Court considered limitation law applicable to Section 11 applications and held that in absence of a specific period, the residual Article 137 of the Limitation Act applies, providing three years from accrual of the right to apply. The Final Bill was settled on 06.09.2022 and the applicant invoked arbitration within the three-year residual period. The Court emphasised that post-2015 legislative position restricts the Section 11 enquiry to the existence of an arbitration agreement and that questions of limitation of the substantive claim are to be adjudicated by the arbitrator under the arbitration reference. [Paras 12, 14]

Application under Section 11 is within limitation; whether the substantive claim is time-barred is a matter for the arbitrator.

Final Conclusion: Application under Section 11(6) is allowed: an arbitrator is appointed to adjudicate the tax-deduction dispute; the Court confined its role to existence of arbitration agreement and dispute, refrained from deciding merits or limitation of the substantive claim, and directed the arbitrator to proceed and determine all permissible objections.