TaxTMI Updates e-Newsletter
Aug 12,2023

Provisional attachment under Section 83 of the CGST Act - Input Tax Credit - actual receipt of goods or services - Fictitious suppliers and denial of ITC - Interim relief - stay of coercive measures - Requirement of prima facie case for grant of interim relief - Conditional lifting of attachment on deposit

Interim relief - stay of coercive measures - Requirement of prima facie case for grant of interim relief - Whether interim protection against further coercive measures should be granted to the petitioner pending investigation under Section 83. - HELD THAT: - The Court found that the petitioner had not established a prima facie case entitling it to interlocutory protection. The overdraft account attachment has already been lifted and the petitioner can operate that account, so its business has not stood entirely suspended. The petitioner had admitted in its statement that ITC was wrongly availed and undertook to reverse it by a specified date but has not done so. Respondents' preliminary investigation indicates that purchases from 14 suppliers are from non-existent or fictitious entities, raising a substantial question whether goods or services were actually received, engaging the statutory test that ITC is available only on actual receipt. Given the ongoing investigation and the substantial amounts involved, the balance of convenience and absence of irreparable injury do not favour interim relief; accordingly the prayer for a stay of further coercive action was refused. [Paras 6, 7, 8, 9, 10]

Interim prayer for stay of further coercive measures rejected for want of prima facie case.

Provisional attachment under Section 83 of the CGST Act - Conditional lifting of attachment on deposit - Whether the provisional attachments of the bank accounts should be lifted on any interim condition. - HELD THAT: - The Court, while refusing general interlocutory relief, exercised its discretion to propose an interim compromise: if the petitioner deposits a specified sum with the respondents, the provisional attachment of all accounts shall be lifted pending final adjudication. This relief is conditional and expressly subject to further orders on the petition after final hearing. [Paras 11]

Provisional attachments to be lifted upon deposit of the specified sum, subject to further orders.

Provisional attachment under Section 83 of the CGST Act - Whether the petition raises substantive legal questions under Section 83 requiring final adjudication. - HELD THAT: - The Court observed that legal issues regarding the validity and application of provisional attachment under Section 83 require fuller hearing and consideration. Consequently the petition was admitted (Rule made absolute) for final hearing and listed for a future date, with liberty to complete further pleadings before that date. [Paras 12, 13, 14]

Petition directed to be listed for final hearing; respondents to file further pleadings as permitted.

Final Conclusion: Interim relief sought to stay further coercive measures refused for lack of prima facie case; overdraft account has already been unfrozen; provisional attachments of other accounts may be lifted only upon deposit of the specified sum, and the petition is directed to be listed for final hearing.

Detention and seizure of goods in transit - confiscation of goods and conveyance - Section 129 of the CGST/APGST Act, 2017 - Section 130 of the CGST/APGST Act, 2017 - bonafide purchaser for valuable consideration - proof of genuineness of transaction (invoice, mode of payment, mode of receipt) - release on deposit and personal/security bond pending enquiry

Section 129 of the CGST/APGST Act, 2017 - Section 130 of the CGST/APGST Act, 2017 - detention and seizure of goods in transit - confiscation of goods and conveyance - bonafide purchaser for valuable consideration - Whether the proper officer could confiscate the petitioners' goods and vehicles by proceeding against the consignor under Section 130 without initiating proceedings under Section 129 against the petitioners who were in possession of the goods in transit. - HELD THAT: - The Court examined the distinct and independent operation of Sections 129 and 130. Section 129 governs detention, seizure and release of goods in transit and the procedure to be followed when goods are intercepted, whereas Section 130 deals with confiscation and divestment of title for contraventions. Although the respondent initiated proceedings under Section 130 against the consignor whose existence and credentials were suspected, the confiscation of goods belonging to the petitioners could not be premised solely on the dubious credentials of the consignor. The 1st petitioner, claiming to be a bonafide purchaser, was required only to establish the genuineness of his own transaction - by proving he purchased for valuable consideration, verifying the consignor's registration on the official portal, and producing authenticated records as to mode of payment and receipt - and not to prove the business activities or registration legitimacy of the consignor. Therefore the proper officer was not entitled to treat the petitioners as if proceedings under Section 129 were not required and to apply the confiscation initiated against the consignor to the petitioners' goods without initiating independent proceedings against them under Section 129 and affording them an opportunity to establish their case. [Paras 16]

The respondent cannot confiscate the petitioners' goods solely on the basis of proceedings initiated against the consignor; independent proceedings under Section 129 must be initiated against the petitioners to enquire into and determine the genuineness of the petitioners' possession and transaction.

Initiation of proceedings under Section 129 - release on deposit and personal/security bond pending enquiry - opportunity of hearing - Disposition of the detained goods and vehicles and the procedural course to be followed pending enquiry. - HELD THAT: - The Court directed that the proper officer be granted liberty to initiate proceedings under Section 129 against the petitioners within a limited time and to conduct an enquiry by giving the petitioners an opportunity of hearing. Pending such enquiry, the Court ordered conditional release of the detained goods in favour of the 1st petitioner upon deposit of 25% of their value and execution of a personal bond for the balance, and release of the vehicles in favour of the 2nd petitioner on execution of personal security bonds for their value as determined by the Road Transport Authority. The direction confines the petitioners' obligation to establishing their own transactional credentials and preserves the Department's right to proceed in accordance with law after affording proper opportunity. [Paras 17]

Liberty to the respondent to initiate Section 129 proceedings within two weeks; detained goods to be released on deposit of 25% of value and personal bond for balance; vehicles to be released on execution of security bonds; enquiry to proceed with opportunity of hearing.

Final Conclusion: Writ petitions disposed by allowing petitioners' challenge to the confiscation proceedings so far as they seek to apply proceedings against the consignor to the petitioners; respondent directed to initiate Section 129 proceedings against the petitioners within two weeks and to conduct enquiry with opportunity of hearing; detained goods and vehicles to be released on the specified deposit and bonds pending such enquiry.

Opportunity of being heard - cancellation of registration under the GST Act - proviso to Section 29(2) of the GST Act - discretion of the proper officer - duty of a succeeding officer to put the assessee on notice / afford hearing - regularisation of defaulted returns

Opportunity of being heard - proviso to Section 29(2) of the GST Act - duty of a succeeding officer to put the assessee on notice / afford hearing - cancellation of registration under the GST Act - Whether the cancellation order (Ext.P2) passed by the succeeding proper officer without affording the petitioner an opportunity of being heard was invalid. - HELD THAT: - The proviso to Section 29(2) imposes an embargo that the proper officer shall not cancel registration without giving the person an opportunity of being heard. The Court accepted the line of authority under the Income-tax and Wealth-tax statutes (as followed by this Court and approved by other High Courts) that where proceedings are continued by a succeeding officer, the assessee must be put on notice so as to be able to seek re-opening or rehearing; otherwise the right to a hearing is effectively denied. Although the statutory context differs, the language of the proviso in Section 29(2) makes it incumbent on the proper officer who passes the cancellation order to afford the opportunity to the concerned person. In the present case there was no hearing by the officer who issued Ext.P2 and no notice of the succeeding officer's intention to continue or conclude the proceedings; therefore the requirement of the proviso was not complied with. Having regard to the petitioner's subsequent steps to file and regularise defaulted returns up to February 2021, the cancellation could not stand.

Ext.P2 is quashed as passed without affording the opportunity of hearing required by the proviso to Section 29(2); respondents to treat the petitioner's registration as not cancelled and issue necessary orders in view of the regularised returns.

Final Conclusion: Writ petition allowed; cancellation order quashed for failure to afford the requisite opportunity of hearing to the petitioner and registration to be treated as not cancelled in view of the regularisation of defaulted returns.

Orders of appellate authority binding on subordinate authorities - judicial discipline - lack of jurisdiction - review under Section 112(3) of the CGST Act, 2017 - interest under Section 56 of the CGST Act, 2017 - refund of input tax credit for export of services - Bank Realisation Certificate (FIRC) correlation

Orders of appellate authority binding on subordinate authorities - lack of jurisdiction - Bank Realisation Certificate (FIRC) correlation - Whether the Assistant Commissioner could revisit and reject the refund claim after the Additional Commissioner (Appeals) had allowed the petitioner's appeal on the basis of findings of correlation between invoices and FIRCs. - HELD THAT: - The Court found that the Additional Commissioner (Appeals) had conducted a fact-finding exercise, expressly recording correlation between invoice details and FIRCs and allowing the appeal. Once such findings and order were concluded and not stayed or successfully challenged, a subordinate authority like the Assistant Commissioner was not empowered to re-open those findings and effectively sit in appeal over the Appellate Authority's order. The appropriate course for the department, if dissatisfied, was to seek review or challenge the order in the prescribed higher forum under the review/appeal mechanism (as referred to in paragraph 11 of the respondents' affidavit and Section 112(3) of the CGST Act, 2017), not to have the subordinate officer re-adjudicate the same issues. Reliance on the principle of judicial discipline and the binding effect of appellate orders (as reflected in Kamlakshi and followed in Globus Petroadditions) supports that the impugned order proceeded in patent lack of jurisdiction and was therefore illegal. Having held the impugned rejection to be without jurisdiction, the Court directed sanction of the claimed refund with appropriate interest under Section 56 of the CGST Act, 2017 and specified a time frame for payment. [Paras 10, 13, 14]

The impugned order passed by the Assistant Commissioner was quashed as being in patent lack of jurisdiction for revisiting findings recorded by the Additional Commissioner (Appeals); the respondents were directed to sanction the refund with appropriate interest and to pay the amount within two weeks.

Final Conclusion: Writ petition allowed; impugned order set aside for lack of jurisdiction. Respondents directed to sanction and refund the claimed amount with interest under Section 56 of the CGST Act, 2017 within two weeks; no costs.

Cancellation of registration on grounds not specified in show cause notice - principles of natural justice - quash and set aside - issue fresh show cause notice after hearing - restoration of GST registration

Cancellation of registration on grounds not specified in show cause notice - principles of natural justice - Impugned order cancelling GST registration insofar as it is founded on grounds not raised in the show cause notice is invalid. - HELD THAT: - The Court found that the cancellation order dated 12 July 2021 was passed on a ground wholly outside the scope of the show cause notice issued to the petitioner and, therefore, the petitioner was not afforded an opportunity to meet that case. In such circumstances the order breaches the principles of natural justice and cannot be sustained. The Court relied on its earlier decision in Ramji Enterprises & Ors. where similar factual and legal circumstances led to setting aside cancellation orders. The consequence is that an order predicated on grounds not disclosed in the show cause notice must be quashed. [Paras 6]

The cancellation order is invalid for breach of natural justice and is required to be quashed and set aside.

Quash and set aside - issue fresh show cause notice after hearing - restoration of GST registration - Remedial directions following quashing: restoration of registration and procedure for fresh adjudication. - HELD THAT: - Having quashed the impugned cancellation, the Court directed that the respondent may issue a fresh show cause notice if so advised and, after affording the petitioner a hearing in accordance with law, pass an appropriate order. Timelines were fixed for issuance of the notice, filing of reply and for the Designated Officer to decide the matter after hearing. Pending the fresh process the Court ordered restoration of the petitioner's registration within one week, without prejudice to the department's right to proceed lawfully thereafter. [Paras 8, 9, 10]

Registration to be restored; liberty to issue fresh show cause notice and decide it after hearing within the prescribed timelines.

Final Conclusion: Writ petition allowed: the cancellation order dated 12 July 2021 is quashed and set aside; the petitioner's GST registration is restored; respondent permitted to issue a fresh show cause notice and decide it after hearing in accordance with the timelines directed by the Court.

Cancellation of GST registration - Quashing of administrative order for want of reasons - Restoration/revocation of GST registration - Benefit of notification extending time for compliance / amnesty scheme - Exclusion of period for limitation (15.03.2020 to 28.02.2022)

Cancellation of GST registration - Quashing of administrative order for want of reasons - Restoration/revocation of GST registration - Benefit of notification extending time for compliance / amnesty scheme - Whether the cancellation of the petitioner's GST registration should be quashed and the registration restored, with consequential directions as to filing returns and payment of tax and penalty. - HELD THAT: - The Court found the impugned cancellation order to be devoid of stated reasons and noted that the Government had, by subsequent notification, extended relief to taxpayers whose cancellations were reflected on or before 31.12.2022. Although the petitioner's registration was cancelled on 12.01.2023 and thus fell outside the literal cut-off, the Court observed that the matter of extension was pending during the relevant period and that the petitioner was prevented from filing returns due to circumstances including his accountant's ill health and unfamiliarity with the web portal. The Court also treated the petition as covered by earlier decisions granting similar relief. In view of these considerations the Court allowed the writ petition, quashed the cancellation and directed restoration of the GST registration so that the petitioner may file returns and discharge tax and penalty as per law. [Paras 4, 5]

Writ petition allowed; impugned cancellation set aside and the respondent directed to restore the petitioner's GST registration; petitioner to file returns and pay tax and penalty in accordance with law.

Final Conclusion: The High Court quashed the cancellation of the petitioner's GST registration and directed its restoration so that the petitioner may file the outstanding returns and remit tax and penalties, holding that the petitioner was entitled to relief having regard to absence of reasons in the cancellation order and to the circumstances and precedents extending benefit to similarly situated taxpayers.

Set aside and remand for fresh adjudication - right to personal hearing before passing assessment order - consideration of replies and documentary evidence on record - assessment founded on mismatch of Input Tax Credit between GSTR 3B and GSTR 2A - decisions in one assessment year not to be mechanically applied to another without fresh consideration

Consideration of replies and documentary evidence on record - right to personal hearing before passing assessment order - Impugned assessment order for Assessment Year 2020-2021 set aside and remitted for fresh adjudication after considering the petitioner's reply and affording personal hearing. - HELD THAT: - The Court found that the Assessment Order dated 30.06.2023 proceeded despite the petitioner having filed a reply on 28.06.2023 (which was acknowledged) and having the opportunity to appear for personal hearing on 30.06.2023. The assessing authority confirmed demand for AY 2020-2021 by reference to alleged irregularities in other years and without fully considering the explanation that the mismatch in ITC arose from delayed filings by suppliers. In view of the admitted filing and the petitioner's offer to be heard, the Court held that the authority should consider the reply and hear the petitioner before adjudicating the demand. Accordingly the impugned order was set aside and the matter remitted to the respondent to pass appropriate orders on merits after duly considering the reply and hearing the petitioner within the directed timeframe. [Paras 10, 11, 12, 13, 14]

Order set aside; matter remitted to respondent to decide on merits after considering the reply dated 28.06.2023 and after hearing the petitioner.

Set aside and remand for fresh adjudication - decisions in one assessment year not to be mechanically applied to another without fresh consideration - Direction as to procedural timeline and opportunity to file additional representations prior to fresh adjudication. - HELD THAT: - The Court directed that the respondent shall complete the fresh adjudicatory exercise within 45 days from receipt of the order and specifically record that the petitioner shall be heard before any order is passed. The petitioner was directed to report before the respondent on a specified date and was permitted to file additional reply/representation before that date. These procedural directions ensure the reassessment is conducted after fresh consideration of the petitioner's contentions and evidence rather than by reliance on findings from other assessment years, one of which had itself been set aside. [Paras 13, 14, 15, 16]

Respondent to reconsider and decide within 45 days after hearing the petitioner; petitioner to report on the specified date and may file additional representations.

Final Conclusion: Writ petition allowed: impugned Assessment Order for AY 2020-2021 set aside and remitted for fresh adjudication on merits after considering the petitioner's reply and affording personal hearing; respondent directed to complete the exercise within 45 days and the petitioner given opportunity to file further representations.

Condonation of delay under Section 107(4) of the GST law - 'sufficient cause' standard for extension of time (Katiji principle) - mandatory pre-deposit requirement as a condition for filing appeal under Section 107(6) - statutory right of appeal and limitation on condonation power - special statute principle excluding general Limitation Act where inbuilt mechanism exists

Condonation of delay under Section 107(4) of the GST law - 'sufficient cause' standard for extension of time (Katiji principle) - mandatory pre-deposit requirement as a condition for filing appeal under Section 107(6) - Petitioner's delay of 25 days in filing appeal was caused by sufficient cause and the appellate order rejecting the appeal on that ground was liable to be set aside. - HELD THAT: - The Court applied the justice-oriented 'sufficient cause' test as expounded in Collector, Land Acquisition v. Katiji and recognized that Section 107(4) permits condonation of delay up to one month beyond the prescribed period. The petitioner attributed the delay to an unforeseen severe financial crisis, freezing of bank accounts and blocking of input tax credit by the department, and consequent inability to make the mandatory 10% pre-deposit required by Section 107(6) at the time of filing the appeal. The appellate authority's order rejected the appeal as the reasons were 'not convincing', but the Court observed that the appellate authority did not deny the factual incidents of freezing of accounts and notices to debtors. Given that the pre-deposit requirement is mandatory yet impossible to comply with while accounts were frozen, the Court held that the inability to make the pre-deposit constituted sufficient cause within the meaning of Section 107(4). The Court further noted the legislature has provided an inbuilt condonation mechanism in Section 107(4) and, following authorities interpreting special fiscal statutes, the general Limitation Act does not displace that scheme. Applying these principles to the facts, the Court concluded that the impugned rejection was a pedantic denial of the statutory right of appeal and therefore set aside the order and directed restoration of the appeal for disposal on merits. [Paras 11, 12, 13, 17, 18]

Impugned order rejecting the appeal for the 25 day delay is set aside; the appeal is to be restored and disposed of according to law.

Final Conclusion: Writ petition allowed; impugned order dated 03.06.2023 is set aside and respondent No. 2 is directed to restore the appeal and decide it in accordance with law. No order as to costs.

Voluntary deposit under Section 73(5) of the CGST Act - pre-deposit requirement under Section 107(6) of the CGST Act - effect of procedural/technical requirements on statutory right of appeal - application of Supreme Court ratio in VVF (India) Ltd. to pre-deposit provisions

Voluntary deposit under Section 73(5) of the CGST Act - pre-deposit requirement under Section 107(6) of the CGST Act - application of Supreme Court ratio in VVF (India) Ltd. to pre-deposit provisions - Whether a voluntary deposit made under Section 73(5) of the CGST Act can be taken into account for satisfying the pre-deposit condition prescribed by Section 107(6) of the CGST Act. - HELD THAT: - The Court held that a voluntary payment under Section 73(5) is not a payment made pursuant to any demand or assessment but is a deposit made subject to contest and to be accounted for in the assessment. Procedural or technical requirements cannot be allowed to render the statutory right of appeal illusory. Applying the reasoning of the Supreme Court in VVF (India) Ltd., which treated payments made 'under protest' as available for computing the requisite pre-deposit under a materially similar statutory provision, the Court concluded that there is no statutory language excluding antecedent voluntary deposits from consideration under Section 107(6). Consequently, such voluntary deposits must be reckoned when determining compliance with the pre-deposit obligation under Section 107(6). [Paras 8, 10, 11]

The voluntary deposit made under Section 73(5) shall be taken into consideration for compliance with the pre-deposit requirement under Section 107(6) of the CGST Act.

Effect of procedural/technical requirements on statutory right of appeal - registration of appeals by electronic or manual mode - Relief to be granted consequential to the above conclusion, including filing modality, registration of appeal, and protection from limitation objection. - HELD THAT: - Having held that the voluntary deposit must be reckoned for the pre-deposit, the Court directed that the petitioner be permitted to file the appeal either electronically or manually within two weeks of receipt of the order. The Appellate Authority was directed to register compliance with Section 107(6) by taking into account the voluntary deposit under Section 73(5), and to register the appeal (electronically or manually) as appropriate. The Court further directed that, since the petitioner bona fide pursued the proceedings, any appeal filed pursuant to these directions shall be adjudicated on merits without objection as to limitation. [Paras 11]

The petitioner may file the appeal within two weeks; the Appellate Authority shall accept and register the appeal (electronically or manually) and shall treat the voluntary deposit as satisfying the pre-deposit requirement, and the appeal shall be adjudicated on merits without objection to limitation.

Final Conclusion: The writ petitions are allowed: antecedent voluntary deposit under Section 73(5) of the CGST Act must be taken into account for the pre-deposit mandated by Section 107(6); the petitioner is permitted to file the appeal (electronic or manual) within two weeks, the Appellate Authority must register the appeal taking the voluntary deposit into consideration, and the appeal shall be adjudicated on merits without a limitation objection; petitions disposed of with no costs.

Sealing of property - Residential premises used as business address - Inspection in presence of affected person - De-sealing of property - Right to possession and quiet enjoyment

Sealing of property - Residential premises used as business address - Inspection in presence of affected person - De-sealing of property - Whether the sealed residential premises should be inspected in the presence of the petitioner and de-sealed. - HELD THAT: - The Court noted the petitioner's grievance that a residential rented premises occupied by her family was sealed pursuant to action taken after GST registration at that address by the petitioner's son. The respondents stated that notices were issued to the son but no response was received. Having considered the submissions and with the respondents' consent, the Court disposed the writ petition at the admission stage by directing that the respondents conduct an immediate inspection of the property in the presence of the petitioner and thereafter de-seal the premises. The Court imposed a time-bound obligation on the respondents to complete the inspection and de-sealing exercise by the specified date and required the petitioner to co-operate during inspection. [Paras 7]

Respondents directed to inspect the sealed residential property in the presence of the petitioner and de-seal it, the exercise to be completed by the specified date; petitioner to co-operate.

Final Conclusion: Writ petition disposed at admission stage by directing inspection of the sealed residential premises in the presence of the petitioner and de-sealing thereof by the respondents within the time specified; no costs.

Provisional release of seized goods and conveyance - interim relief - compliance with conditions for provisional release - security bond for fine in lieu of confiscation - stay on further action under Section 130 of the Gujarat State Goods and Services Tax Act, 2017

Provisional release of seized goods and conveyance - interim relief - compliance with conditions for provisional release - security bond for fine in lieu of confiscation - Provisional release of the petitioner's vehicle and goods on interim terms. - HELD THAT: - The Court considered the petition seeking provisional release of the conveyance and goods seized on 21.06.2023 and the petitioner's request for provisional release under the relevant statutory provision. Relying upon earlier similar orders and the petitioner's offer to deposit penalty, fine and to furnish bonds, the Court granted interim relief subject to specified conditions. The petitioner was directed to deposit the stipulated penalty and fine amounts and to furnish fresh bonds for the specified amount. The order expressly provided that upon compliance with these conditions the authorities shall forthwith release both the goods and the vehicle. The Court further recorded that failure to comply with any of the conditions will render the interim relief liable to be vacated. [Paras 3]

Goods and vehicle to be provisionally released on deposit of penalty and fine and on furnishing the specified bond; non-compliance will result in vacation of interim relief.

Stay on further action under Section 130 of the Gujarat State Goods and Services Tax Act, 2017 - Prohibition on the respondent-authority passing any further order under Section 130 until final disposal of the petition. - HELD THAT: - As part of the interim directions the Court restrained the respondent-authority from passing any other or further order under the cited provision until the petition is finally disposed of, thereby protecting the interim accommodation granted to the petitioner pending final adjudication. [Paras 3]

Respondent-authority restrained from passing further order under Section 130 until final disposal of the petition.

Final Conclusion: Interim relief granted: the petitioner's seized goods and vehicle are directed to be provisionally released on specified deposits and bonds, and the respondent-authority is restrained from passing further orders under Section 130 of the Gujarat State Goods and Services Tax Act, 2017, until the petition is finally disposed of.

Input tax credit - tax charged in respect of such supply has been actually paid to the Government - effect of cancellation of GST registration on supplier's ability to discharge tax liability - mandamus cannot be issued contrary to statutory provisions of the GST law

Input tax credit - tax charged in respect of such supply has been actually paid to the Government - cancellation of registration - Whether the petitioner is entitled to claim input tax credit or a mandamus directing the respondent to grant relief where the supplier's GST registration had been cancelled prior to the invoice date and the supplier therefore could not have paid tax to the Government. - HELD THAT: - The court applied the statutory requirement that a registered person is not entitled to input tax credit unless the tax charged in respect of the supply has actually been paid to the Government. The supplier's GST registration was cancelled on 31.10.2018, while the invoices in question were dated 23.11.2018. Given that cancellation preceded the issuance of the invoices, the supplier could not have paid the tax to the exchequer in respect of those supplies. Consequently, the petitioner cannot claim input tax credit nor obtain a mandamus directing the tax authority to grant relief which would be contrary to the statutory provisions and rules governing input tax credit. The court noted, however, that the petitioner remains entitled to recover any amounts paid from the supplier by ordinary legal remedies. [Paras 6]

Petition dismissed; petitioner not entitled to input tax credit or mandamus as supplier had no valid registration and could not have paid the tax to the Government; petitioner may seek recovery from supplier by law.

Final Conclusion: Writ petition dismissed for lack of merit; no relief under the GST provisions can be granted where the supplier's registration was cancelled prior to the relevant invoices, but the petitioner may pursue recovery from the supplier by appropriate legal remedies; no costs.

Reversal of input tax credit under Section 17(2) read with Rule 42 - non-taxable supply and exempt supply treatment of sale of alcoholic liquor for human consumption - Article 366(12A) exclusion of alcoholic liquor from levy under GST - sale of alcoholic liquor for human consumption treated as supply but not leviable to tax - explanation to Rule 42 excluding duties/taxes under Entry 51 and 54 from turnover computation

Reversal of input tax credit under Section 17(2) read with Rule 42 - non-taxable supply and exempt supply treatment of sale of alcoholic liquor for human consumption - Article 366(12A) exclusion of alcoholic liquor from levy under GST - Whether the appellant is required to reverse input tax credit in respect of sale of alcoholic liquor for human consumption. - HELD THAT: - The Authority held that sale of alcoholic liquor for human consumption qualifies as a 'supply' under the GST Act but is specifically excluded from levy of GST by the constitutional insertion of Article 366(12A), and therefore is a supply on which tax is not leviable. A supply not leviable to tax falls within the definition of 'non-taxable supply' under Section 2(78), and 'exempt supply' under Section 2(47) (which expressly includes non-taxable supplies). Since subsection (2) of Section 17 read with Rule 42 requires reversal of input tax credit attributable to exempt supplies, the appellant is obliged to reverse ITC attributable to the sale of alcoholic liquor for human consumption. The Authority also examined the Explanation to Rule 42(1) and the Entries in the Seventh Schedule and rejected the appellant's contention that the value of liquor sales must be wholly excluded from turnover for computation; the Explanation excludes duties or taxes under the cited Entries, not the entire sales value, and does not preclude treating such sales as non taxable/exempt for the purpose of ITC reversal. The Authority therefore confirmed that ITC attributable to the non taxable/exempt supply of alcoholic liquor must be reversed. [Paras 27, 28, 29, 30, 31]

Sale of alcoholic liquor for human consumption is a non taxable supply and therefore an exempt supply; the appellant is required to reverse input tax credit in terms of Section 17(2) read with Rule 42, and the WBAAR order is confirmed.

Final Conclusion: The appeal is rejected; the Advance Ruling confirming the requirement to reverse ITC attributable to sale of alcoholic liquor for human consumption under Section 17(2) read with Rule 42 is upheld.

Adjustment of refunds against outstanding demand - refund of amounts recovered in excess of permitted adjustment - CBDT instruction limiting recovery to 20% of demand - stay of recovery pending disposal of first appeal - interest on delayed refund

CBDT instruction limiting recovery to 20% of demand - adjustment of refunds against outstanding demand - refund of amounts recovered in excess of permitted adjustment - Refund of amounts adjusted against the disputed demand for AY 2017-18 to the extent they exceed 20% of the outstanding demand, in accordance with the CBDT instruction. - HELD THAT: - The Court accepted that the outstanding demand for AY 2017-18 was Rs. 221,03,71,862/- and that, under the CBDT Office Memorandum dated 31.07.2017, recovery by adjustment against refunds is restricted to 20% of the outstanding demand. The CIT(A)'s order recording that approximately 40% of the demand had already been adjusted was noted. Applying the CBDT instruction, the Court directed the respondents to refund the amount adjusted in excess of the permissible 20%, and specifically ordered that the sum sought to be adjusted by respondent no.1 (including the amount identified in the petition) be refunded. The Court also required that the refunded amount be remitted along with applicable interest and within a specified time frame. [Paras 5, 6, 7]

Respondents to refund amounts adjusted in excess of 20% of the outstanding demand for AY 2017-18, inclusive of the amount identified in the petition, with applicable interest, within six weeks.

Stay of recovery pending disposal of first appeal - Direction for limited stay of further recovery until disposal of the pending appeal before the CIT(A). - HELD THAT: - The Court noted that an appeal against the assessment for AY 2017-18 was pending before the CIT(A) and recorded the CIT(A)'s recommendation to stay the balance demand until disposal of the first appeal. In light of the CBDT instruction limiting recovery and the pendency of the appeal, the Court directed that the respondents should not recover beyond the 20% permitted adjustment and that the CIT(A) should endeavour to dispose of the appeal at the earliest. [Paras 6, 7]

Further recovery beyond the permitted 20% is restrained until disposal of the pending appeal; CIT(A) to endeavour to dispose of the appeal expeditiously.

Final Conclusion: Writ petition disposed directing the respondents to refund amounts adjusted in excess of 20% of the outstanding demand for AY 2017-18 (including the specific sum claimed), with applicable interest, to be remitted within six weeks; respondents restrained from further recovery beyond the 20% limit pending disposal of the appeal, and the CIT(A) directed to expedite adjudication.

Deductibility of bad debts under Section 36(1)(vii) - Application of precedent in Vijaya Bank - Requirement of factual verification before applying precedent - Revisional jurisdiction of the Principal Commissioner

Application of precedent in Vijaya Bank - Requirement of factual verification before applying precedent - Whether the Tribunal was justified in allowing the assessee's appeal by applying the ratio in Vijaya Bank without verifying whether the factual situation in that precedent existed in the present case. - HELD THAT: - The Tribunal allowed the assessee's appeal solely by applying the Supreme Court's decision in Vijaya Bank which recognised that a bank may claim deduction for bad debts where it has debited the profit and loss account and simultaneously reduced the amount of loans and advances in the balance-sheet. The High Court found that the Tribunal erred in not ascertaining whether the assessee had in fact reduced the asset value in its balance-sheet by the amount of bad debts written off for the assessment year in question. The court examined the printed annual report and a supplementary schedule produced during hearing and observed that the printed balance-sheet did not evidently show a corresponding reduction in assets, while an additional schedule was claimed to demonstrate that advances were shown net of provisions. Reliance on Vijaya Bank without such factual verification was held to be impermissible; the precedent could not be mechanically applied where the foundational facts were not established on record. [Paras 5, 6, 7, 8]

Tribunal's allowance of the appeal by mere application of Vijaya Bank was unsustainable; the substantial questions are answered in favour of the revenue and against the assessee, and the Tribunal order is set aside.

Revisional jurisdiction of the Principal Commissioner - Assessment reopened and reassessed on remand - Deductibility of bad debts under Section 36(1)(vii) - Whether the Principal Commissioner's revisional order declaring the assessment erroneous and prejudicial to revenue should be restored and what further action should follow. - HELD THAT: - The High Court held that the Principal Commissioner had correctly found, on examination of records, that there was a discrepancy between provisions for NPA shown in the profit and loss account and the actual bad debts written off in the audited accounts, giving rise to a basis for revision. Having set aside the Tribunal order, the court restored the Principal Commissioner's order and directed that the Assessing Officer re-do the assessment in accordance with the directions in that revisional order. The Assessing Officer was also directed to take into account the documents produced before the High Court (including the schedule claimed to show advances net of provisions) and to verify whether the audited balance-sheet for the assessment year indeed reflected reduction in assets corresponding to bad debts/provisions written off before deciding deductibility under Section 36(1)(vii). [Paras 1, 2, 8]

Annexure (C) order of the Tribunal is set aside, Annexure (B) revisional order of the Principal Commissioner is restored, and the matter is remitted to the Assessing Officer to re-do the assessment and verify the factual position regarding reduction of assets vis-a -vis bad debts/provisions.

Final Conclusion: Appeal allowed in part: Tribunal order allowing the assessee was set aside and the Principal Commissioner's revisional order restored; assessment is remitted to the Assessing Officer to re-do the assessment in accordance with the revisional directions and after verifying on record whether the audited accounts and schedules show reduction of assets corresponding to the bad debts/provisions claimed for Assessment Year 2015-2016.

Exercise of revisional jurisdiction under Section 263 of the Income Tax Act - quashing of revisional order and its consequence on consequential assessment - infructuous appeal - withdrawal of appeal on account of tax effect

Exercise of revisional jurisdiction under Section 263 of the Income Tax Act - quashing of revisional order and its consequence on consequential assessment - infructuous appeal - Present appeal rendered academic and disposed of as infructuous in view of the quashing of the revisional order and subsequent withdrawal of the Revenue's challenge to the consequential assessment. - HELD THAT: - The Tribunal had set aside the revision order passed by the Commissioner under Section 263 and, consequently, held that the consequential assessment framed under Section 143(3) read with Section 263 would not survive. The Assessee's appeal in the related proceedings was allowed by the Tribunal, and the Revenue thereafter withdrew its challenge to that Tribunal order before this Court on the ground of the tax effect involved. In those circumstances, the complaint in the present appeal - which stems from the exercise of revisional jurisdiction under Section 263 - no longer has any practical effect. The Court accepted the parties' position that, given the quashing of the revision and the withdrawal of the Revenue's subsequent appeal, adjudication of the present appeal would be academic and disposed of the appeal as infructuous.

Appeal disposed of as infructuous; no costs.

Final Conclusion: The appeal is dismissed as academic and disposed of as infructuous in view of the Tribunal's quashing of the revisional order and the Revenue's withdrawal of its subsequent challenge; no costs.

Peak credit methodology for making additions - applicability of Section 68 to cash deposits reflected only in bank pass books - search and seizure and recorded statements as source of surrendered income - statements under Section 131/Section 132(4) and their evidentiary value

Peak credit methodology for making additions - applicability of Section 68 to cash deposits reflected only in bank pass books - Validity of additions by treating peak credits in the assessee's bank accounts as unexplained income - HELD THAT: - The Court noted that search operations were conducted and statements recorded, and that incriminating documents led to a surrender of income. The Assessing Officer made additions treating certain cash deposits as unexplained. The Commissioner (Appeals) directed computation of peak credit, and the ITAT accepted the assessee's plea that only peak credit in the bank accounts should be taxed rather than entire cash deposits. The assessee's contention that bank pass books are not 'books of account' and Section 68 was therefore inapplicable was considered, but the assessee had not produced cash-flow evidence or documentary explanation for deposits and withdrawals. Further, the assessee had accepted before the ITAT that additions to the extent of peak credit could be sustained. In view of the factual stance and acceptance and absence of explanatory evidence, the Court found no substantial question of law and upheld the direction to take peak credit into account. [Paras 8, 11, 13, 14, 15]

Appeal dismissed; no substantial question of law - additions to the extent of peak credit sustained.

Statements under Section 131/Section 132(4) and their evidentiary value - search and seizure and recorded statements as source of surrendered income - Whether amounts the assessee said were spent on construction and investments and jewellery additions based on invoices discovered at search could be equated or treated differently from the view taken below - HELD THAT: - The Court accepted the Tribunal's factual findings that the amount alleged to be spent on construction and the amount claimed as cash investment were not the same and that the assessee's attempt to equate them was a question of fact. Likewise, additions based on jewellery and invoices found during search were treated as factual disputes. Since these are questions of fact, already examined by the Assessing Officer, the Commissioner (Appeals) and the ITAT, they are not amenable to reappraisal in this appeal under Section 260-A. [Paras 18, 19, 20, 21, 22]

Factual findings upheld; appeals dismissed insofar as these factual contentions are concerned.

Final Conclusion: Both appeals are dismissed; the tribunal's approach of sustaining additions to the extent of peak bank-credit was upheld, and other contentions relating to construction/investment amounts and jewellery additions were held to be questions of fact not entertainable in these appeals.

Validity of notice under Section 148 as jurisdictional prerequisite for reassessment - Effect of substantial clerical errors on jurisdictional notices - Scope of Section 292B to rectify defects in statutory notices - Prerequisite of service of notice and copy of order under Section 148A for assumption of AO's jurisdiction

Validity of notice under Section 148 as jurisdictional prerequisite for reassessment - Effect of substantial clerical errors on jurisdictional notices - Whether the notice dated 29.07.2022 issued under Section 148 is valid despite multiple material errors and whether reassessment proceedings could commence therefrom - HELD THAT: - The court found that the impugned notice dated 29.07.2022 contained multiple serious errors - incorrect name of the entity, incorrect PAN, wrong assessment year and an incorrect DIN - which, if excised, leave no trace of a notice bearing the imprint of Section 148. Section 148 is a jurisdictional provision; service of a valid notice along with a copy of the order passed under Section 148A(d) is a precondition to the Assessing Officer assuming jurisdiction to reopen and reassess. Because the impugned notice did not, on its face, comply with these jurisdictional requirements, the Assessing Officer had not validly assumed jurisdiction and the notice could not sustain reassessment proceedings. The court therefore quashed the notice under Section 148 and held that consequential orders and notices premised on that notice collapse. [Paras 12, 16, 18, 19]

Impugned notice dated 29.07.2022 under Section 148 quashed; consequential order and subsequent notices and assessment set aside.

Scope of Section 292B to rectify defects in statutory notices - Whether the defects in the impugned Section 148 notice could be cured under Section 292B - HELD THAT: - The respondents argued that Section 292B permits correction of human errors and relied on an intimation and the proposition that the assessee had knowledge of issuance. The court applied the principle that a mistake correctable under Section 292B must be such that excision of the mistake does not alter the tenor and scope of the document or proceeding. Given the multiplicity and materiality of the errors in the notice, excision would change its tenor and scope and therefore the defects could not be cured under Section 292B. The court rejected the contention that Section 292B could validate the impugned notice. [Paras 17, 18]

Section 292B cannot cure the material defects in the impugned notice; the curative provision is inapplicable to the errors found.

Final Conclusion: The writ petition is allowed: the notice dated 29.07.2022 issued under Section 148 is quashed for want of jurisdiction and the related order(s), assessment and notices of demand and penalty premised thereon stand set aside; the petition is disposed of accordingly.

Ascertained liability - provision for liquidated damages - deductibility of provisions under income-tax law - mercantile system of accounting - remand for fresh decision on facts

Ascertained liability - provision for liquidated damages - deductibility of provisions under income-tax law - mercantile system of accounting - Whether the provision of Rs. 17,61,99,672/- for liquidated damages, as reflected in the assessee's accounts for AY 2004-05, constituted an ascertained liability for the purposes of tax deductibility or was an unascertained liability - HELD THAT: - The Tribunal's impugned order was set aside because it did not address, or record a clear finding on, whether the impugned amount represented an ascertained liability; instead it described the amount as the "actual amount" of liquidated damages without referring to the contractual clause or demonstrating that the conditions for recognising a provision as an ascertained liability had been satisfied. The earlier course-where the matter was remitted to the CIT(A) and subsequently directed by this Court to be decided by the ITAT-establishes that the determinative question is factual and contractual: whether, on the terms of the agreement and the manner the assessee consistently accounted for and adjusted payments (including waivers or remissions), the sum claimed was a liability capable of reliable estimation and therefore deductible. The Court confined the re-examination to this single aspect, directing the Tribunal to decide the question on the material already on record and to confine itself to whether the amount represented an ascertained liability, having regard to the contractual parameters and the accounting treatment followed. [Paras 17, 18, 19]

Impugned order set aside; matter remanded to the Tribunal to reexamine the material on record and return a clear finding whether Rs. 17,61,99,672/- represented an ascertained liability, confined to the liquidated damages aspect, to be decided expeditiously.

Final Conclusion: The High Court set aside the impugned ITAT order and remitted the sole disputed question-whether the provision for liquidated damages was an ascertained liability-to the Tribunal for a fresh decision on the basis of the material on record, directing that the Tribunal confine itself to that issue and decide it expeditiously.

Treatment as unexplained cash credit under Section 68 - requirement of proof of agricultural land ownership to substantiate agricultural income - taxation of unexplained cash deposits - acceptance of gift evidence - application of CBDT SOP on demonetisation cash deposits - telescoping of additions - taxation under Section 115BBE

Treatment as unexplained cash credit under Section 68 - requirement of proof of agricultural land ownership to substantiate agricultural income - Validity of disallowance of declared agricultural income as unexplained income and extent of relief. - HELD THAT: - The Assessing Officer treated the entire agricultural receipts as income from undisclosed sources and added the net agricultural income to income under the explained concept of unexplained cash credit. The CIT(A) partly reduced the addition by reference to agricultural income declared in a subsequent year and allowed agricultural income to that extent. On appeal the Tribunal examined whether primary evidence of holding agricultural land had been placed on record. The authorised representative conceded absence of any documentary proof of ownership or holding of agricultural land (such as 7/12 or equivalent), and no such evidence was filed before the lower authorities or the Tribunal. In the absence of this basic and primary proof to substantiate that the assessee carried on agriculture from owned/held land, the Tribunal declined to extend further relief beyond that already granted by the CIT(A). [Paras 12]

Dismissed; addition confirmed to the extent upheld by CIT(A) and no further relief granted.

Taxation of unexplained cash deposits - acceptance of gift evidence - application of CBDT SOP on demonetisation cash deposits - Allowability of claimed sources (gift, rental receipts from sound system and other receipts) for cash deposits made during demonetisation period and deletion of addition. - HELD THAT: - The Assessing Officer added the cash deposits on the ground that the assessee failed to substantiate the claimed sources; the CIT(A) sustained the addition. The assessee produced a gift deed before the CIT(A) purporting to show a gift from a relative and produced documents claiming rental receipts from a sound system and other receipts. The Tribunal found that the CIT(A) rejected the gift deed without conducting any investigation or seeking verification from the Assessing Officer, and therefore accepted the gift of Rs.3.50 lakhs as genuine. Further, the Tribunal applied the CBDT SOP for demonetisation-period deposits, under which cash deposits of up to Rs.2.50 lakhs in the case of individuals may be accepted, and deleted an additional amount of up to that limit by way of concession. The remaining portion of the addition was sustained because the Tribunal agreed with the finding that evidence for the sound-system rentals was not established for periods before and after the specified dates and there were discrepancies in the cash book. [Paras 13]

Partly allowed; deletion of Rs.3.50 lakhs (gift) and acceptance up to Rs.2.50 lakhs under CBDT SOP, remainder of the addition upheld.

Telescoping of additions - Claim for telescoping benefit of additions made for agricultural income and cash deposits. - HELD THAT: - The assessee claimed telescoping/set-off of additions (i.e., that additions disallowing agricultural income and additions on account of cash deposits overlap and should be set off). Having dismissed the claim for additional relief on the agricultural-income issue and having allowed substantial relief on the cash-deposit issue, the Tribunal held that no further telescoping benefit was available to the assessee beyond the relief already granted. [Paras 14]

Dismissed; telescoping claim denied.

Taxation under Section 115BBE - Challenge to charging of additions under the specific tax provision invoked by revenue. - HELD THAT: - The assessee did not make substantive or specific submissions before the Tribunal contesting the applicability of the provision under which the additions were taxed. The ground was therefore treated as not pressed and dismissed. [Paras 15]

Dismissed as not pressed.

Final Conclusion: Appeal partly allowed: the disallowance of agricultural income is upheld except to the extent reduced by the CIT(A) (no further relief due to absence of proof of land holding); cash-deposit addition is partly deleted by acceptance of the gift and allowance under the CBDT SOP, with the remaining amount sustained; the telescoping claim and challenge to taxation under the specified provision are dismissed.

Penalty under Section 271(1)(c) - reopening of assessment under Section 147 - change of opinion - deletion of quantum additions - consequential quashing of penalty where foundational additions are vacated

Penalty under Section 271(1)(c) - deletion of quantum additions - consequential quashing of penalty where foundational additions are vacated - reopening of assessment under Section 147 - change of opinion - Whether the penalty imposed under Section 271(1)(c) survives where the reassessment proceedings under Section 147 and the quantum additions which formed the basis for penalty have been quashed/deleted. - HELD THAT: - The Tribunal observed that the reassessment proceedings which gave rise to the impugned additions were initiated on the same set of documents available at the time of the original assessment, amounting to a mere change of opinion and lacking fresh tangible material; those proceedings were quashed by the Tribunal in the assessee's own appeal. Once the foundational reassessment and the quantum additions were vacated, the legal basis for imposing penalty under Section 271(1)(c) no longer existed. The Tribunal relied on settled jurisprudence holding that a penalty predicated on an addition which is subsequently deleted cannot survive, and therefore the consequential penalty must be set aside. Applying that principle to the facts, the Tribunal held that the penalty levied against the assessee is liable to be vacated and dismissed the Revenue's appeal. [Paras 6, 8]

Revenue's appeal against the deletion of penalty under Section 271(1)(c) is dismissed; the penalty is vacated as its foundation (reassessment and additions) has been quashed/deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and, as a consequence of the reassessment and quantum additions being quashed/deleted, held that the penalty under Section 271(1)(c) could not be sustained; the assessee's cross-objection was dismissed as infructuous.

Assessment barred by limitation - validity of reference to the Transfer Pricing Officer under Section 92CA(3) read with Section 92CA(3A) - extension of limitation period under Section 153(4) - limitation under Section 153(1) - 'eligible assessee' under Section 144C(15)(b)

Validity of reference to the Transfer Pricing Officer under Section 92CA(3) read with Section 92CA(3A) - extension of limitation period under Section 153(4) - 'eligible assessee' under Section 144C(15)(b) - assessment barred by limitation - Whether the transfer pricing order dated 1.11.2019 is time barred and, if so, whether the final assessment passed on 29.4.2021 is barred by limitation in view of non availability of the extended period under Section 153(4). - HELD THAT: - For A.Y. 2016 17 the basic limitation for passing the final assessment under Section 153(1) expired on 31.12.2018, and, if a valid reference to the Transfer Pricing Officer (TPO) is made, an additional 12 months would be available under Section 153(4). Section 92CA(3A) requires that the TPO pass the order under Section 92CA(3) at least 60 days prior to the expiry of the limitation under Section 153; hence the due date for the TPO order was 31.10.2019. The TPO in the present case passed the order on 1.11.2019, one day beyond that date, rendering the TPO order time barred. Because there is no variation arising from a valid TPO order, and the assessee is a resident company falling within the description in Section 144C(15)(b), the assessee is not an "eligible assessee" for the purpose of invoking the extended limitation under Section 153(4). Consequently the Assessing Officer could not rely on the extended period and the final assessment, which was required to be completed on or before 31.12.2018 but was instead passed on 29.4.2021, is barred by limitation. The Tribunal followed relevant precedents applying the same statutory scheme and quashed the assessment on that ground. [Paras 6, 9, 10]

TPO order dated 1.11.2019 is time barred; the extended period under Section 153(4) is unavailable as the assessee is not an eligible assessee under Section 144C(15)(b); final assessment passed on 29.4.2021 is barred by limitation and is quashed.

Final Conclusion: The additional ground challenging limitation is allowed; the TPO order dated 1.11.2019 is held time barred, the assessment could not validly be extended, and the final assessment order is quashed; appeal allowed.

Withdrawal of grounds pursuant to Advance Pricing Agreement - Remand for verification and reconsideration - Foreign tax credit / relief under treaty - Interest under section 234A - TDS credit - Advance tax credit - Credit for adjusted refunds

Withdrawal of grounds pursuant to Advance Pricing Agreement - Grounds relating to transfer pricing adjustments pursuant to the APA dated 23.03.2023 were withdrawn by the assessee - HELD THAT: - The assessee informed the Tribunal that it wished to withdraw the grounds relating to transfer pricing adjustment in view of the Advance Pricing Agreement dated 23.03.2023. The Tribunal recorded the withdrawal and treated ground nos. 2-4 as dismissed as withdrawn, thereby removing those transfer pricing contentions from adjudication in this appeal. [Paras 3]

Ground nos. 2-4 stand dismissed as withdrawn.

Foreign tax credit / relief under treaty - Remand for verification and reconsideration - Claim for relief under section 90 (foreign tax credit) was not decided on merits and was remanded to the assessing officer/ TPO for fresh consideration - HELD THAT: - The assessee submitted that Form 67 had been filed and that it was entitled to foreign tax credit. The Revenue relied on lower authorities. The Tribunal did not decide the substantive entitlement on the papers before it but, in the interest of justice, directed the Ld. AO/TPO to consider the assessee's claim in accordance with law and to verify the relevant documents and computations. The Tribunal allowed this ground for statistical purposes, i.e., remitted the matter rather than adjudicating it on merits. [Paras 5]

Claim remanded to the Ld. AO/TPO for consideration in accordance with law; ground allowed for statistical purposes.

Interest under section 234A - Remand for verification and reconsideration - Levy of interest under section 234A was not decided on merits and was remanded to the assessing officer for verification - HELD THAT: - The assessee contended the return was filed within the due date and therefore interest under section 234A should not have been levied. The Tribunal declined to decide the point on the materials before it and remanded the matter to the Ld. AO for verification and decision in accordance with law. The Tribunal recorded the remand and allowed the ground for statistical purposes. [Paras 6]

Issue remanded to the Ld. AO for verification and decision in accordance with law; ground allowed for statistical purposes.

TDS credit - Advance tax credit - Remand for verification and reconsideration - Claims for TDS credit and credit for advance tax paid were remitted to the assessing officer for fresh verification and decision - HELD THAT: - The assessee asserted that supporting details for TDS and advance tax were filed but not considered by the AO. The Tribunal directed the assessee to re-file all relevant details and directed the Ld. AO to verify and consider the claims in accordance with law. The Tribunal did not adjudicate entitlement on the merits and allowed these grounds for statistical purposes by remand. [Paras 7]

Claims remanded to the Ld. AO for verification and consideration in accordance with law; grounds allowed for statistical purposes.

Credit for adjusted refunds - Remand for verification and reconsideration - Claim for credit of refunds adjusted against the year under consideration was remanded to the assessing officer for verification and decision - HELD THAT: - The assessee pleaded that refunds pertaining to other assessment years had been adjusted against the year under consideration but credit for such adjustments was not granted. The Tribunal instructed the assessee to file relevant details again and directed the Ld. AO to verify and decide the claim in accordance with law. The Tribunal allowed the ground for statistical purposes by remand rather than ruling on the claim. [Paras 8]

Issue remanded to the Ld. AO for verification and decision in accordance with law; ground allowed for statistical purposes.

Final Conclusion: The appeal was partly allowed: transfer pricing grounds (2-4) were withdrawn by the assessee and dismissed as withdrawn; issues concerning foreign tax credit, interest under section 234A, TDS credit, advance tax credit and credit for adjusted refunds were remitted to the assessing officer/TPO for verification and fresh consideration in accordance with law, and those grounds were allowed for statistical purposes.

Credit for tax deducted at source - assessee in default under provisions relating to deduction and deposit of TDS - liability of principal officer for non-deduction/non-deposit of TDS - set-off of TDS against tax demand where TDS not deposited by deductor - irrelevance of subsequent corporate insolvency proceedings to earlier years

Credit for tax deducted at source - assessee in default under provisions relating to deduction and deposit of TDS - liability of principal officer for non-deduction/non-deposit of TDS - set-off of TDS against tax demand where TDS not deposited by deductor - Entitlement to claim TDS credit where the employer deducted TDS but did not deposit it, and the assessee was the managing director and principal officer of the employer company. - HELD THAT: - The Tribunal found on the material on record that the assessee was the Managing Director and Chief Executive Officer of AMW Motors Ltd and therefore was the overall administrative head and principal officer of the company (see reproduced letter and findings). Because the employer company did not deposit the purportedly deducted TDS, credit of that TDS could not be allowed to the assessee where the assessee himself was the person responsible for deduction and deposit. The Tribunal applied the legal consequence that the principal officer is liable to be treated as an assessee in default for non-deduction/non-deposit and would be answerable for recovery and penal consequences; accordingly the assessee cannot claim the benefit of a tax deposit which in fact was never made by the employer. The contention that the company was admitted into the Corporate Insolvency Resolution Process was held to be immaterial to the financial years in question and did not entitle the assessee to set-off of the TDS which was not deposited. For these reasons the claim for set-off/refund of the claimed TDS was rejected and the appeals were dismissed. [Paras 11, 12, 13]

Claim for TDS credit disallowed; appeals dismissed as the assessee, being the principal officer of the employer, cannot claim set-off of TDS not deposited by the employer.

Final Conclusion: The Tribunal dismissed both appeals for A.Y. 2018-19 and Assessment Year 2019-20, holding that the assessee, being the managing director and principal officer of the employer company, cannot claim credit or set-off for TDS which was not deposited by the employer, and that subsequent CIRP proceedings were irrelevant to the claim.

Penalty under section 271(1)(c) - Estimation of income - Genuineness of purchases and documentary evidence - Onus to rebut assessee's explanation

Penalty under section 271(1)(c) - Estimation of income - Genuineness of purchases and documentary evidence - Onus to rebut assessee's explanation - Validity of penalty under section 271(1)(c) levied on adhoc estimated additions made on alleged bogus purchases. - HELD THAT: - The Tribunal upheld the deletion of penalty on the ground that the assessment additions were made on an ad hoc estimate of gross profit (12.5%) in respect of alleged bogus purchases. The Assessing Officer did not successfully rebut the assessee's contemporaneous records and explanations: purchases, sales, opening and closing stocks, purchase and sale bills, quantitative statements and payments through banking channels remained uncontroverted and were not found to be incorrect. The authorities below correctly recognised that penalty proceedings are quasi criminal and require a higher standard of proof; where income is determined by estimation and the assessee's explanation and documentary material are not discredited, such estimated additions do not furnish a basis for imposing penalty under section 271(1)(c). The Tribunal therefore confirmed the appellate authority's reliance on settled precedent that penalty cannot be sustained where the income has been determined on estimate basis and the assessee's explanation is not rebutted. [Paras 7, 8, 9]

Penalty imposed under section 271(1)(c) deleted for both assessment years; Revenue's appeals dismissed.

Final Conclusion: The Tribunal confirmed the deletion of penalty for A.Y. 2009-10 and A.Y. 2010-11, holding that estimated additions on alleged bogus purchases, unsupported by rebuttal of the assessee's documentary evidence and explanation, cannot sustain penalty under section 271(1)(c).

Reopening of assessment after four years - Failure to truly and fully disclose material facts - Change of opinion - Deemed application of mind by the Assessing Officer - Survey under Section 133A and subsequent year scrutiny as trigger for reassessment - Minimum Alternate Tax and computation of book profits for MAT purposes

Failure to truly and fully disclose material facts - Reopening of assessment after four years - Survey under Section 133A and subsequent year scrutiny as trigger for reassessment - Validity of reopening assessment for AY 2013-2014 on the ground of failure to truly and fully disclose material facts detected during survey and scrutiny of a subsequent year - HELD THAT: - The Court examined whether the reasons furnished for reopening after the four-year period adequately alleged failure to truly and fully disclose material facts. Paragraph 5 of the reasons specifically recited that discrepancies were detected during scrutiny for AY 2016-17 and during a survey under Section 133A, and that the Assessing Officer had failed to examine taxation of capital gains and applicability of MAT for AY 2013-14. The Court held that an allegation need not mechanically repeat statutory wording; a statement of facts showing detection of undisclosed material matters in survey and subsequent scrutiny satisfies the requirement for alleging failure to truly and fully disclose. Consequently the challenge to the reopening notice on the sole ground of absence of any allegation was rejected. [Paras 9, 10]

The contention that the reasons lack an allegation of failure to truly and fully disclose material facts is rejected.

Change of opinion - Deemed application of mind by the Assessing Officer - Minimum Alternate Tax and computation of book profits for MAT purposes - Whether the reassessment for AY 2013-2014 is barred as being based on a mere change of opinion because the transaction and revaluation were disclosed and queried during earlier proceedings and no addition was made in the original assessment - HELD THAT: - The record demonstrated that the transaction (transfer to M/s. SSS Realty and Co.) and the revaluation reserve were expressly disclosed in notes to the return, related-party disclosures, and responses to notices under Section 142(1). The petitioner furnished detailed documents, valuation report and explanations during scrutiny called by notice dated 23.10.2015, and the assessment under Section 143(3) (dated 29.12.2016) made certain additions for MAT purposes but did not make any addition on the subject transaction. The Court drew on the legal proposition that repeated and pointed queries followed by framing of assessment without additions indicate that the Assessing Officer had applied his mind and formed an opinion; reopening thereafter on the same issue amounts to a change of opinion and is impermissible. The respondent's plea that material was not available until subsequent scrutiny and survey was not accepted on these facts. [Paras 12, 13, 14, 15, 16]

The proposed reassessment is vitiated as being founded on a change of opinion; reopening is impermissible.

Final Conclusion: Writ petition allowed. The notice dated 05.02.2019 under Section 148 and the order dated 08.04.2019 disposing of objections are quashed; reassessment for AY 2013-2014 cannot be sustained on the record before the Court.

Most Appropriate Method - Internal Comparable Uncontrolled Price method - Transactional Net Margin Method - Advertising, Marketing and Promotion expenditure - International transaction - Bright Line Test - Provision for warranty - ascertained liability - Unrealized foreign exchange loss - Book profit under section 115JB

Internal Comparable Uncontrolled Price method - Most Appropriate Method - Acceptance of Internal CUP as the most appropriate method for benchmarking import of parts and components in the manufacturing segment - HELD THAT: - Having considered the record and earlier coordinate-bench decisions in the assessee's own cases, the Tribunal held that the Internal CUP is the Most Appropriate Method for determining the arm's length price of imports for the manufacturing segment. The Tribunal noted that the parts/components could be identified by distinctive codes, that a majority of products were procured exclusively from associated enterprises, and that prior appellate orders in the assessee's own case (upholding CUP for multiple earlier assessment years) were applicable. The Tribunal therefore directed the TPO to apply CUP as MAM and determine ALP after affording the assessee an opportunity, and allowed the related grounds raised by the assessee; other related sub-grounds did not require adjudication in view of this conclusion. [Paras 4]

Internal CUP accepted as the Most Appropriate Method for the manufacturing segment; related TP adjustment is to be revisited by the TPO applying CUP.

Advertising, Marketing and Promotion expenditure - International transaction - Transactional Net Margin Method - Bright Line Test - Treatment of AMP expenditure in the trading segment and whether it constitutes a separate international transaction requiring a TP adjustment - HELD THAT: - Following the coordinate-bench precedent in the assessee's own case, the Tribunal concluded that the question whether AMP expenditure constitutes a separate international transaction must be examined in the light of the arm's length determination for the trading segment. The coordinate bench had remanded the issue to the TPO to determine ALP of the trading segment using a net margin approach (TNMM/Scenario 3); if the trading segment margins are found to be at arm's length, no separate addition for AMP would arise. Applying that approach, the Tribunal allowed the assessee's principal contention in the terms of the earlier orders and directed the matter to be dealt with accordingly; other merit grounds were held not to require adjudication at this stage. [Paras 7]

Issue to be considered in terms of the coordinate-bench direction: remit to TPO to determine ALP of trading segment by net margin approach; if found at arm's length, no separate AMP adjustment to be made.

Provision for warranty - ascertained liability - Allowability of provision for warranty as a deduction under section 37 and whether the provision is an unascertained contingent liability - HELD THAT: - The Tribunal accepted the assessee's methodology (machine months x repair rate x cost per claim) as a scientific basis for creating warranty provisions, noting consistent application over years and reliance on historical/technical estimates in line with accounting standards. The coordinate bench and other precedent in the assessee's own case were followed. The Tribunal found that the provision satisfied the conditions for recognition under the relevant accounting standard and Rotork Controls jurisprudence and therefore is an allowable deduction; the AO was directed to obtain year wise unutilized balances where necessary, but the methodology and deduction were accepted. [Paras 11]

Provision for warranty accepted as a deductible, scientifically computed provision; disallowance deleted and directions given for furnishing year wise unutilized balances if required.

Book profit under section 115JB - Provision for warranty - Whether the warranty provision must be added back to book profits under section 115JB as an unascertained liability - HELD THAT: - Because the Tribunal held the warranty provision to be a recognized and ascertainable liability created on a scientific basis, it concluded that the provision is not an unascertained liability for purposes of section 115JB. Following the coordinate-bench decisions in the assessee's own case, the Tribunal directed deletion of the addition to book profits that had been made by the AO. [Paras 14]

Addition of the warranty provision to book profits under section 115JB deleted.

Unrealized foreign exchange loss - ascertained liability - Book profit under section 115JB - Allowability of unrealized foreign exchange loss as business deduction and its treatment for computation of book profits under section 115JB - HELD THAT: - The Tribunal followed precedent recognising that unrealized foreign exchange loss on restatement of debtors, creditors and other trade advances (in respect of trading/current items) is a business expenditure to be accounted under accrual accounting and AS 11. Relying on appellate and High Court precedent, including Simon India and Woodward Governor principles, the Tribunal held the unrealized forex loss to be an allowable deduction under section 37 and not a speculative or unascertained liability; accordingly it should not be added back when computing book profit under section 115JB. [Paras 16, 18]

Unrealized foreign exchange loss allowed as a business deduction and not to be added to book profits under section 115JB.

Final Conclusion: The appeal is partly allowed. CUP is accepted as the Most Appropriate Method for the manufacturing segment and the TPO is directed to determine ALP accordingly; the AMP issue in the trading segment is to be dealt with in terms of coordinate bench directions (remitted to the TPO to apply a net margin approach, with no separate AMP addition if trading margins are at arm's length); provision for warranty and the unrealized foreign exchange loss are held to be allowable and are not to be added back to book profits under section 115JB.

Deeming provisions under sections 69 and 69A - Income surrendered during survey assessable as business income - Requirement to explain nature and source in survey statement - Identifiability of asset or expenditure for invoking deeming provisions - Applicability of section 115BBE as a machinery provision for deemed income - Distinction between undisclosed income and unexplained income

Deeming provisions under sections 69 and 69A - Income surrendered during survey assessable as business income - Requirement to explain nature and source in survey statement - Identifiability of asset or expenditure for invoking deeming provisions - Distinction between undisclosed income and unexplained income - Whether the amount of Rs.84,80,000/- surrendered during survey is assessable as deemed income under sections 69 and 69A or as business income. - HELD THAT: - The Tribunal held that invocation of sections 69 and 69A requires not only detection of undisclosed investments or cash but also a failure by the assessee to satisfactorily explain the nature and source of those investments/cash. The assessee's statement recorded during survey consistently identified a single source of income - the proprietorship business M/s Singla Wire & Allied Products - and explained that the surrendered amounts related to business advances, excess stock and cash discrepancies. The stock difference and advances had no separate physical identity distinct from business stock/transactions and therefore are integrally connected to the business; such unidentifiable or mixed items are to be treated as undeclared business receipts rather than independent investments attractable under the deeming provisions. The Tribunal further observed that the AO did not read the survey statement and related records holistically and failed to show why the explanations given were unsatisfactory; consequently the foundational requirement for treating the amounts as deemed income under sections 69/69A was not satisfied. Applying precedents of coordinate Benches and discussion on identifiability of assets, the Tribunal concluded that the surrendered amounts were correctly offered and assessable as business income. [Paras 19, 20, 23, 33]

The surrendered amount of Rs.84,80,000/- is not liable to be treated as deemed income under sections 69 and 69A and is assessable as business income.

Applicability of section 115BBE as a machinery provision for deemed income - Deeming provisions under sections 69 and 69A - Whether tax at the specified higher rate under section 115BBE can be applied to the surrendered amount. - HELD THAT: - The Tribunal explained that section 115BBE prescribes a special rate of tax for income which is brought to tax as deemed income under provisions such as sections 68-69A etc. Section 115BBE is therefore a rate prescribing/machinery provision contingent on the income first being held to be deemed income under the relevant deeming provisions. Since the Tribunal has concluded that the deeming provisions (sections 69 and 69A) are not attracted in the present case, section 115BBE has no application. The AO's invocation of section 115BBE merely because the surrender arose during survey was held to be legally untenable. [Paras 21, 33]

Section 115BBE does not apply; tax at the higher rate under that provision cannot be levied on the surrendered amount.

Final Conclusion: The Tribunal partly allowed the appeal: the amount surrendered during survey (F.Y. 2016-17 / A.Y. 2017-18) of Rs.84,80,000/- is to be treated and assessed as business income and not as deemed income under sections 69/69A, and consequently section 115BBE is not attracted.

Clearance of imported goods subject to compliance with BIS labelling under customs supervision - effect and enforceability of Commissioner of Customs (Appeals) order - requirement of payment of redemption fine and penalty pending appellate review - preservation of departmental right to appeal to CESTAT

Clearance of imported goods subject to compliance with BIS labelling under customs supervision - effect and enforceability of Commissioner of Customs (Appeals) order - Petitioner permitted to clear the specified imported goods after undertaking BIS labelling under customs supervision in accordance with the Commissioner of Customs (Appeals) order dated 13th June 2023. - HELD THAT: - The Commissioner of Customs (Appeals) examined the requirements under the BIS regime and directed that the impugned goods could be cleared for home consumption after the petitioner carried out labelling of the Standard Mark as per BIS requirements under customs supervision. The High Court has recorded that the appellate authority had taken into account the necessary compliance requirements and permissible supervisory labelling, and has held that respondents cannot refuse clearance where the petitioner is willing to undertake the labelling exercise as directed. The court therefore directed respondents to permit clearance in terms of the appellate order and authorised immediate clearance once labelling is completed under customs supervision within the time stated by the petitioner. [Paras 7, 9, 10]

Respondents directed to permit clearance of the goods in terms of the Commissioner of Customs (Appeals) order dated 13th June 2023, upon the petitioner completing labelling under customs supervision.

Requirement of payment of redemption fine and penalty pending appellate review - preservation of departmental right to appeal to CESTAT - Respondents cannot insist on payment of redemption fine and penalty as a precondition for clearance where the appellate authority has set aside the confiscation and found no case for such fines and penalties; departmental rights to challenge remain preserved. - HELD THAT: - The Order-In-Original had imposed confiscation, redemption fine and penalty. The Commissioner of Customs (Appeals) set aside the original order and allowed clearance subject to labelling, recording that there was no case for imposition of fine or penalty. The High Court declined the Revenue's submission that the petitioner should be required to deposit the redemption fine and penalty before clearance, observing that doing so would amount to staying the appellate order in favour of the petitioner absent any appeal filed by the Revenue. At the same time the court expressly left open the respondents' right to assail the appellate order before the CESTAT and preserved all contentions in the event an appeal or interim application is filed. [Paras 8, 11]

No payment of redemption fine or penalty shall be insisted upon as a condition for clearance in view of the appellate order; the Revenue's right to appeal to the CESTAT and seek appropriate relief remains preserved.

Final Conclusion: Writ petition allowed: petitioner directed to undertake BIS labelling under customs supervision and, upon completion, respondents to permit clearance in terms of the Commissioner of Customs (Appeals) order dated 13th June 2023; no costs; respondents' right to appeal to CESTAT expressly preserved.

Detention of goods - release on furnishing bond - cooperation with investigation - summons under Section 108 of the Customs Act, 1962 - export consignments on hold - release for domestic sale

Detention of goods - export consignments on hold - release on furnishing bond - cooperation with investigation - Whether the detained export consignments ought to be released and on what conditions. - HELD THAT: - The Court found that the Petitioners had filed shipping bills and provided the invoices and other particulars, and that the consignment had earlier received a Let Export Order. The Court accepted the Petitioners' plea that continued detention caused serious prejudice to their small export business and that they had supplied documents called for in response to summons under Section 108 of the Customs Act, 1962. While recognising the authority of Customs to investigate, the Court held that, in the peculiar facts (handmade, customised carpets and the petitioners' status as small exporters), continued detention was not warranted. The Court directed that the goods be released forthwith upon the Petitioners furnishing an appropriate bond to the Deputy Commissioner of Customs and that the Petitioners shall cooperate with the investigation. The Court recorded that the parties remain free to pursue other contentions before the authorities, but on the present record no further detention should continue.

Consignments ordered released on the Petitioners furnishing an appropriate bond within two weeks and subject to their cooperation in the investigation; alternatively, if the Petitioners do not wish to export, the goods shall be released for sale in the domestic market.

Final Conclusion: The petitions are disposed of by directing immediate release of the detained export consignments upon furnishing of an appropriate bond and cooperating with the Customs investigation; alternatively the goods may be released for domestic sale if the Petitioners choose not to export. All contentions reserved. No costs.

Right to reasonable opportunity of hearing - extension of limitation due to COVID-19 - remand for fresh adjudication on merits - procedural infirmity requiring setting aside of order

Right to reasonable opportunity of hearing - extension of limitation due to COVID-19 - procedural infirmity requiring setting aside of order - Impugned adjudication set aside on ground that petitioner was not afforded a reasonable opportunity of personal hearing in view of pandemic-related difficulties and intervening Supreme Court directions extending limitation - HELD THAT: - The High Court accepted that the petitioner had sought adjournment of the personal hearing fixed during the pandemic and that litigants faced difficulties attending proceedings in that period. The Court took judicial notice of the Supreme Court's suo motu orders restoring and extending the exclusion of the period from 15.03.2020 to 28.02.2022 for purposes of limitation and observed that, having regard to those orders and the pandemic-related adversity, the petitioner ought to be given one final opportunity to place objections and evidence. For these procedural infirmities, the impugned order dated 15.12.2020 was set aside and the matter was directed to be reheard on merits after affording the petitioner a further personal hearing on the specified date; failure to appear would result in restoration of the impugned order. [Paras 2, 3, 5]

Impugned order dated 15.12.2020 set aside; petitioner granted one final personal hearing and respondent directed to decide afresh on merits after hearing the petitioner.

Remand for fresh adjudication on merits - procedural infirmity requiring setting aside of order - Substantive allegations (connivance, status as actual exporter and liability to penalty) were not adjudicated on merits and are remanded for reconsideration during the fresh hearing - HELD THAT: - Although the adjudicating authority's order contains findings and allegations that the petitioner connived with exporters and acted as the actual exporter attracting penalty, the High Court expressly refrained from examining those substantive aspects. Instead, having found procedural unfairness in denial of adequate hearing, the Court remanded the entire matter to the respondent to decide on merits after giving the petitioner the directed opportunity to be heard and to produce supporting documents. The remand contemplates full consideration of the objections and evidence afresh by the adjudicating authority. [Paras 4, 5]

Substantive allegations and penalty contentions to be reconsidered afresh by the respondent after affording the petitioner the directed personal hearing.

Final Conclusion: Writ petitions allowed to the extent that the impugned order dated 15.12.2020 is set aside on procedural grounds; petitioner granted one final personal hearing (directed to appear on the stated date) and the respondent to decide the matter on merits after hearing, failing which the impugned order may be restored.

Absolute confiscation - release of imported goods on payment of redemption fine - redemption fine - penalty on enhanced assessable value - assessment by Chartered Engineer - precedential treatment in similar imports of used digital multifunction machines

Absolute confiscation - precedential treatment in similar imports of used digital multifunction machines - Whether the imported used digital multifunction machines were liable to absolute confiscation. - HELD THAT: - The Tribunal examined the adjudication order that had held the goods liable for absolute confiscation and noted that multiple decisions of this Tribunal and certain High Courts have consistently held that such used MFDs are not liable to absolute confiscation but are to be released on payment of a redemption fine. The Commissioner (Appeals) had taken the view that absolute confiscation was not warranted and remanded for quantification of redemption fine; the Tribunal found the trend of authority persuasive and accepted that the goods are not liable to absolute confiscation. The appellant had accepted the enhanced value as determined by the DGFT approved Chartered Engineer, and the dispute before the Tribunal related only to confiscation, redemption fine and penalty. Having regard to the consistent appellate treatment in similar cases, the Tribunal declined to uphold absolute confiscation and permitted release on payment of redemption fine and penalty. [Paras 6, 7]

Absolute confiscation not sustained; goods to be released for home consumption on payment of redemption fine and penalty.

Redemption fine - penalty on enhanced assessable value - assessment by Chartered Engineer - Quantum of redemption fine and penalty payable for release of the imported goods. - HELD THAT: - The Tribunal considered earlier orders in which used digital multifunction machines were released on payment of redemption fine of 10% and penalty of 5% of the enhanced assessable value, and observed that those decisions had been followed by this Bench and accepted by the Department in at least one matter. Noting that the appellant had accepted the enhanced value as per the Chartered Engineer's report, and that the proceedings had already been protracted for over six years, the Tribunal exercised its discretion to adopt the established, lenient benchmark applied in similar cases. Accordingly, the Tribunal reduced the redemption fine and penalty to 10% and 5% respectively of the enhanced value and directed release on those terms. [Paras 7, 8, 9]

Redemption fine fixed at 10% of the enhanced value and penalty fixed at 5% of the enhanced value; goods to be redeemed on these terms.

Final Conclusion: The appeal is partially allowed: absolute confiscation is set aside and the appellant may redeem the imported used multifunction machines for home consumption on payment of redemption fine of 10% and penalty of 5% of the enhanced assessable value as determined by the Chartered Engineer.

Classification of goods under Customs Tariff - General Rules for Interpretation - Rule 3(a) - self-assessment and reassessment under Section 17 - assessment as determination of dutiability - confiscation under Section 111(m) - penalty under Section 112(a) - recovery of duty under Section 28

Classification of goods under Customs Tariff - General Rules for Interpretation - Rule 3(a) - Imported snow goggles are classifiable under CTH 90049090 ('other' under heading 9004) and not under CTH 90041000 (sunglasses). - HELD THAT: - The Tribunal examined the contract, specifications and user instructions supplied with the imported goods and accepted the trade parlance that the goods are `Snow Goggles' intended for protection in snowy/high altitude conditions (protection against snow, glare, wind, cold and increased UV exposure) and are not sunglasses intended primarily for use while driving or general daylight sun protection. The Tribunal held that goods must be classified as imported and not by hypothetical modifications suggested by the adjudicating authority. Given that the goods do not fall within the specific subheadings (passive night vision or prismatic reading glasses) and are therefore within the residual `other' category of heading 9004, the classification under CTH 90049090 was correct and the adjudicating authority erred in treating snow goggles as sunglasses under CTH 90041000. The Tribunal applied Rule 3(a) of the General Rules for Interpretation by reference to the factual characterisation and trade usage, rather than adopting the officer's view based on possible modification. [Paras 17, 18, 19, 20, 21]

Classification under CTH 90049090 upheld; classification under CTH 90041000 rejected.

Self-assessment and reassessment under Section 17 - assessment as determination of dutiability - confiscation under Section 111(m) - penalty under Section 112(a) - recovery of duty under Section 28 - Demand of customs duty, interest, confiscation and penalty arising from the alternate classification was set aside; wrong classification in Bill of Entry does not, by itself, attract confiscation under Section 111(m) or penalty under Section 112(a). - HELD THAT: - The Tribunal held that classification is an element of assessment and that importers self-assess under Section 17 while the proper officer may verify and reassess. Mistaken classification by an importer is an opinion-based element of self-assessment and does not ipso facto render the goods liable to confiscation under Section 111(m). The Tribunal reasoned that the importer cannot be expected to anticipate the officer's view, and therefore wrong classification or incorrect claim of an exemption in the Bill of Entry-even if wholly incorrect-does not automatically attract confiscation under Section 111(m) or the consequential penalty under Section 112. Because the primary demand for duty and interest flowed from the incorrect reclassification, and that classification has been set aside, the consequent demand of duty and interest and the confiscation and penalty imposed must also be set aside. The Tribunal consequently allowed the appeal and set aside the impugned order and its consequential penal and recovery measures. [Paras 24, 25, 26, 27, 28]

Demand of duty and interest set aside; goods not liable to confiscation under Section 111(m) on the basis of the importer's classification; penalty under Section 112(a) set aside.

Final Conclusion: The appeal is allowed; the impugned order is set aside - the imported snow goggles are held classifiable under CTH 90049090, and the consequential demand of duty and interest, the finding of liability to confiscation under Section 111(m) and the penalty under Section 112(a) are quashed.

Confiscation versus release on payment of redemption fine - redemption fine - penalty under section 112(a)(i) of the Customs Act, 1962 - market value / enhanced assessable value - release of imported goods for home consumption

Confiscation versus release on payment of redemption fine - release of imported goods for home consumption - Whether the imported used Multifunction Digital Machines were liable to absolute confiscation or could be released on payment of redemption fine. - HELD THAT: - The adjudicating authority had ordered absolute confiscation after re-determining the assessable value. The Commissioner (Appeals) and this Tribunal, having considered precedents of this Tribunal and High Courts, held that the impugned MFDs are not liable to absolute confiscation and should be released on payment of a redemption fine. The Tribunal relied upon its earlier orders and the ratio of relevant High Court authority which treated such imported used MFDs as eligible for release subject to neutralisation of any economic advantage through a redemption fine. Applying that approach to the facts before it, and noting a consistent line of decisions by this Bench and other fora, the Tribunal concluded that absolute confiscation was unsustainable and directed release for home consumption upon payment of the specified redemption fine. [Paras 6, 7, 9]

Absolute confiscation set aside; goods to be released for home consumption on payment of the redemption fine fixed by the Tribunal.

Redemption fine - penalty under section 112(a)(i) of the Customs Act, 1962 - market value / enhanced assessable value - Quantum of redemption fine and reduction of penalty imposed by the adjudication authority. - HELD THAT: - While the adjudication authority had imposed 100% penalty equivalent to the re-determined value and ordered confiscation, the Commissioner (Appeals) remanded for determination of market value but upheld the penalty. This Tribunal, applying its earlier precedents where used MFDs were released after neutralising economic advantage, exercised judicial discretion to reduce the financial burden on the importer. Noting that similar matters were disposed of by this Tribunal and accepted by the Department with redemption fine fixed at 10% and penalty at 5% of the enhanced assessable value, and considering the long delay in final resolution, the Tribunal reduced the redemption fine to 10% and the penalty to 5% of the enhanced value. [Paras 7, 8, 9]

Redemption fine reduced to 10% of the enhanced assessable value and penalty reduced to 5% of the enhanced assessable value.

Final Conclusion: The appeal is partially allowed: the order of absolute confiscation is set aside; the importer may redeem the goods for home consumption on payment of a redemption fine of 10% and a penalty of 5% of the enhanced assessable value, following the Tribunal's consistent line of decisions.

Absolute confiscation of imported goods - redemption fine and penalty on enhanced assessable value - re-determination of assessable value by Chartered Engineer - release of imported used digital multifunction machines on payment of duty and reduced fines - precedential application of tribunal and High Court decisions to redeem used MFDs

Absolute confiscation of imported goods - re-determination of assessable value by Chartered Engineer - Imported used digital multifunction machines are not liable for absolute confiscation. - HELD THAT: - The Original Authority had re-determined the assessable value at the enhanced figure as per the Chartered Engineer's report and had held the goods liable for absolute confiscation. The Commissioner (Appeals) reversed absolute confiscation and directed release subject to payment of duties and fines. The Tribunal noted a consistent line of decisions of this Bench and various High Courts accepting that imported used MFDs are not liable to absolute confiscation, taking into account the lack of indigenous manufacturing capacity and the settled precedents treating such imports leniently. Applying that consistent precedent, the Tribunal concluded that absolute confiscation is not warranted in this case. [Paras 7, 8]

Absolute confiscation set aside; goods not liable for absolute confiscation.

Redemption fine and penalty on enhanced assessable value - release of imported used digital multifunction machines on payment of duty and reduced fines - precedential application of tribunal and High Court decisions to redeem used MFDs - Goods to be released for home consumption on payment of customs duty on enhanced value, redemption fine of 10% of the enhanced value and penalty of 5% of the enhanced value. - HELD THAT: - Both parties accepted the enhanced assessable value determined by the Chartered Engineer. In the absence of a specific market-value finding in the impugned order, the Tribunal applied its earlier decisions (including Final Order No. 20844/2020 and Final Order No. 20762-20763/2021) and relevant High Court authority to fix a uniform scheme of release: payment of duty on the enhanced value and redemption fine and penalty at reduced rates. Considering the prolonged delay of over six years and consistent tribunal practice in similar matters, the Tribunal exercised its discretion to direct release on payment of duty on the enhanced value and imposition of a redemption fine of 10% and penalty of 5% of that enhanced value. [Paras 8, 9]

Revenue directed to release the goods on payment of customs duty on enhanced value of Rs.21,98,071/-, redemption fine of 10% of the enhanced value and penalty of 5% of the enhanced value; respondent entitled to redeem the goods for home consumption on those terms.

Final Conclusion: Revenue appeal and cross-objection disposed; goods to be released for home consumption on payment of customs duty on the enhanced assessable value of Rs.21,98,071/-, together with a redemption fine of 10% and a penalty of 5% of the enhanced value, following the consistent tribunal and High Court precedents regarding imported used MFDs.

Absolute confiscation - release of imported goods on payment of redemption fine - redemption fine - penalty - enhanced assessable value - market value determination for quantification of redemption fine - application of precedents and consistency of tribunals' decisions

Absolute confiscation - release of imported goods on payment of redemption fine - redemption fine - penalty - enhanced assessable value - application of precedents and consistency of tribunals' decisions - Appropriate relief in respect of confiscation, redemption fine and penalty for import of used Digital Multifunctional Devices where enhanced value as per Chartered Engineer is accepted. - HELD THAT: - The Tribunal noted that multiple decisions of this Bench and other fora have held that the impugned used MFDs are not liable to absolute confiscation and have been released on payment of redemption fine and penalty. The appellant accepted the enhanced value determined by the Chartered Engineer. Having regard to earlier Final Orders of this Tribunal (including M/s Accord Digitech and M/s S.R. Enterprises) and the applicable High Court authority relied upon by the parties, the Tribunal concluded that the matter called for a lenient and consistent approach rather than absolute confiscation. Considering that more than five years had elapsed and the Department had followed the practice of releasing such goods on payment of redemption fine and penalty, the Tribunal reduced the redemption fine and penalty to 10% and 5% respectively of the enhanced assessable value and allowed redemption for home consumption on those terms.

Appeal partially allowed; redemption fine reduced to 10% and penalty reduced to 5% of the enhanced value; goods may be redeemed for home consumption on payment of those amounts.

Final Conclusion: The Tribunal allowed the appeal in part, directing release of the imported used MFDs on payment of redemption fine at 10% and penalty at 5% of the enhanced assessable value, following earlier consistent decisions and in view of the delay already suffered.

Deemed related persons under Customs Valuation Rules - transaction value accepted where relationship did not influence price - burden of proof on revenue to establish influence of relationship on price - long-term pricing agreement and market-price benchmark as indicia of arm's-length pricing

Deemed related persons under Customs Valuation Rules - Whether the importer and the foreign supplier are related persons for the purpose of customs valuation. - HELD THAT: - Having examined the Memoranda of Understanding, Joint Venture agreements and the contractual framework under which the JV (OMIFCO) was constituted, the Tribunal concluded that the statutory tests in the various limbs of Rule 2(2) of the Customs Valuation Rules, 2007 were not satisfied. The authorities did not demonstrate that the importer and the Government/OMIFCO were officers/directors of one another, legally recognised partners, or that both were directly or indirectly controlled by a third person. The mere equity participation and board representation did not establish a partnership or the requisite control contemplated by the rule. On the undisputed facts, therefore, the importer and OMIFCO cannot be treated as related persons within the specified sub-rules relied upon by the department. [Paras 9, 10, 11, 12, 13]

Importer and foreign supplier are not related persons under the specified limbs of Rule 2(2) of the Customs Valuation Rules, 2007.

Transaction value accepted where relationship did not influence price - burden of proof on revenue to establish influence of relationship on price - long-term pricing agreement and market-price benchmark as indicia of arm's-length pricing - Whether, even if a relationship exists, the declared transaction value must be rejected because the relationship influenced the price. - HELD THAT: - The Tribunal applied the principle that where buyer and seller are related the transaction value is nevertheless acceptable if an examination of the circumstances shows the relationship did not influence price. The material showed long-term off-take and ammonia agreements with fifteen-year long-term pricing (LTP) fixed by reference to defined market benchmarks and contemporaneous market trends; the Government had earlier accepted the agreed price for exemption purposes. There was no evidence that the relationship produced any flow-back or influence on the declared price. The department failed to discharge the burden of proving that the relationship affected the price; absent such proof, the declared value stands as the true transaction value. [Paras 14, 15, 16]

Declared transaction value accepted because the relationship did not influence the price; rejection of transaction value unsupported by evidence.

Deemed related persons under Customs Valuation Rules - transaction value accepted where relationship did not influence price - Consequences of findings on demand, interest, penalties and revenue's cross-appeal for confiscation/fine. - HELD THAT: - Because the charges of mis-declaration and undervaluation were found unsustainable - either on the basis that the parties were not related or, alternatively, that the relationship did not influence price - the differential duty demand, interest and penalties could not be sustained. The revenue's appeal for confiscation and fine was consequential upon confirmation of duty; having set aside the duty and ancillary demands, the revenue's grounds for confiscation and fine lacked substance and were dismissed. [Paras 18, 19]

Demand, interest and penalties set aside; revenue's appeal for confiscation/fine dismissed.

Final Conclusion: The impugned order treating the importer and foreign exporter as related and rejecting the declared transaction value is set aside; the appeals by the importer are allowed with consequential relief and the revenue's cross-appeal for confiscation/fine is dismissed.

Benefit of exemption notification subject to re-export obligation secured by bond with bank guarantee - Customs cannot, by administrative fiat, substitute security deposit for bank guarantee required by notification - No statutory authority to levy interest where notification contains no provision and full security was available on date of import - Goods not liable to confiscation and penalties where duty (and interest, if chargeable) is paid and non export occurred due to circumstances beyond importer's control

No statutory authority to levy interest where notification contains no provision and full security was available on date of import - Interest charged on the differential duty was not sustainable where the notification did not provide for interest and the security deposit equal to the differential duty was available on the date of import. - HELD THAT: - The Notification requires execution of a bond with a bank guarantee; it contains no provision authorising levy of interest on the differential duty. In the present case Customs insisted on a security deposit instead of the prescribed bank guarantee and that security deposit, equal to the differential duty, was available from the date of import. The Adjudicating Authority's levy of interest was therefore unsustainable: when the entire amount was secured and available on the date of import, charging interest on the differential duty until payment cannot be justified in the absence of any provision in the Notification permitting such levy. The Tribunal accordingly set aside the demand for interest and held that amounts paid as interest are refundable with consequential relief. [Paras 7, 9, 11, 12]

Interest confirmed in the order in original is set aside and interest paid by the appellant is refundable.

Customs cannot, by administrative fiat, substitute security deposit for bank guarantee required by notification - The requirement of the Notification for a bond with bank guarantee could not be lawfully varied by Customs officials who insisted on a security deposit instead. - HELD THAT: - The Notification's conditions expressly required execution of a bond with a bank guarantee; it did not permit Customs to demand security deposit in lieu of the bank guarantee. Insistence on a security deposit compelled the importer to arrange full duty funds at import, negating the commercial and procedural purpose of permitting bank guarantees. The Tribunal recorded that the officials' insistence on a security deposit was a departure from the Notification and effectively nullified the concession intended by the Notification. [Paras 7, 8]

Customs' insistence on a security deposit in place of the bank guarantee contravened the Notification and was not supported.

Goods not liable to confiscation and penalties where duty (and interest, if chargeable) is paid and non export occurred due to circumstances beyond importer's control - Confiscation, redemption fine and penalty imposed for failure to re export were not sustainable where the appellant offered a reasonable explanation for non export due to circumstances beyond control and the differential duty was or could be discharged. - HELD THAT: - Tribunal precedents cited and affirmed authorities establish that where goods fall outside the protection of an exemption notification once duty (and any lawful interest) is paid, they are not liable for confiscation under the provisions relied upon by Customs; consequentially, redemption fine and penalties do not survive. Applying that reasoning, and having accepted the appellant's explanation that non export arose from factors beyond its control (damage and loss during project operations), the Tribunal found no justification for confiscation, redemption fine or the penalty imposed by the Adjudicating Authority. The Tribunal therefore set aside confiscation, the redemption fine and the penalty and directed refund of amounts paid under those heads with statutory interest. [Paras 10, 13, 14, 15, 16]

Confiscation, redemption fine and penalty are set aside; amounts paid as penalty and interest are eligible for refund with statutory interest.

Final Conclusion: The appeal is allowed: the levy of interest is set aside and refundable; Customs' insistence on security deposit in place of the prescribed bank guarantee was a contravention of the Notification; confiscation, redemption fine and penalty imposed are set aside; consequential refunds with statutory interest to be made. The appeal is disposed of accordingly.

Dry weight basis - Wet weight basis - Determination of export duty on ad valorem basis - Contractual transaction value as basis for assessment - Precedential effect of Tribunal orders pending challenge in higher forum without stay

Dry weight basis - Wet weight basis - Determination of export duty on ad valorem basis - Contractual transaction value as basis for assessment - Value for levy of export duty on the exported iron ore fines is to be determined on the dry weight basis as agreed in the contract and the Supreme Court decision in Gangadhar Narsingdas Agarwal does not apply to ad valorem levy based on transaction value. - HELD THAT: - The Respondent produced the export contract providing that the price payable by the overseas purchaser is on the dry metric ton basis. The Tribunal accepted that where duty is levied on an ad valorem basis (i.e., on the transaction value), the determinative factor is the value agreed between the parties, which in this case is expressed on dry weight. The Supreme Court's decision in Gangadhar Narsingdas Agarwal addressed the computation of a specific (per ton) levy where the choice between wet and dry weight affects the quantum of duty; that reasoning is inapplicable where duty is ad valorem and the parties' contract fixes the pricing on dry quantities. Applying this principle and following earlier Tribunal precedents (Sesa Goa Ltd. and Essel Mining & Industries Ltd.) which held that post the relevant dates the goods are to be assessed on dry weight as agreed between seller and overseas buyer, the Tribunal upheld the Commissioner (Appeals)'s determination to adopt dry weight for valuation. The Revenue's reliance on Gangadhar was therefore rejected as misplaced in the facts of this case. [Paras 10, 11, 12, 16, 17]

The Tribunal upheld the Commissioner (Appeals)'s finding that valuation for export duty must follow the contractually agreed dry weight basis and dismissed the Revenue's appeals on this issue.

Precedential effect of Tribunal orders pending challenge in higher forum without stay - Tribunal and lower authorities may follow earlier Tribunal decisions which are not stayed or set aside despite the pendency of departmental appeals before higher courts. - HELD THAT: - The Tribunal considered the Revenue's contention that appeals against earlier Tribunal decisions were pending in the Supreme Court and observed that admission of an SLP does not automatically stay or render doubtful the correctness of the Tribunal's order. In the absence of any stay being granted by the Supreme Court in respect of the relevant Tribunal decision (Sesa Goa), those Tribunal rulings remain operative and may be followed. The Tribunal relied on decisions illustrating that departmental appeals pending in higher courts do not, by themselves, nullify the binding effect of prior Tribunal orders unless their operation is stayed. [Paras 13, 14, 16]

The Tribunal held that earlier Tribunal decisions not stayed by the Supreme Court are operative and directly applicable; therefore those precedents could be followed in disposing of the present appeals.

Final Conclusion: The Revenue's appeals were dismissed; the value for export duty was correctly determined on the dry weight basis as per the export contract and applicable Tribunal precedents, and the Tribunal's prior decisions which have not been stayed continue to be binding for the purpose of assessment.

Country of origin - Certificate of origin - Mis-declaration - Burden of proof to disprove marking 'Made in ...' - Admissibility of electronic evidence under Section 65B - Examiner of Electronic Evidence under Section 79A - Anti-dumping duty - Customs Valuation Rules - rejection of transaction value and rule 12 procedure

Country of origin - Certificate of origin - Mis-declaration - Burden of proof to disprove marking 'Made in ...' - Anti-dumping duty - Whether the imported batteries originated in Malaysia or China and whether there was mis declaration to evade anti dumping duty. - HELD THAT: - The Tribunal accepted the reasoning of the Commissioner (Appeals) that the evidence on record supports Malaysian origin. The Malaysian International Chamber of Commerce & Industry certificate of origin was held valid and entitled to due weight because it followed the standard proforma used for trading-company supplies and there was no tangible evidence to impugn it. Each battery bore the printing 'Made in Malaysia'; the Department bore the heavy onus to prove that such marking was forged, which it failed to discharge. Overseas enquiries by DRI were held to be either proceeded on an incorrect premise (assuming a particular Chinese manufacturer as the source) or incomplete - they did not establish that Nishica brand batteries could not be manufactured in Malaysia. The purported electronic 'chatting' records relied upon by the Department were excluded as having no evidentiary value since requirements of Section 65B of the Evidence Act and the certification under Section 79A of the Information Technology Act were not complied with, and the provenance of the extracted 'My Documents' transcript was not satisfactorily established. On the whole record the Tribunal found no valid basis to conclude that the goods originated in China or that there was mis declaration to evade anti dumping duty, and upheld the finding of the Commissioner (Appeals) that the imported batteries are of Malaysian origin. [Paras 13, 14, 15, 16, 18]

Impugned findings of Chinese origin and resultant confiscation/anti dumping liability are set aside; the imported batteries are held to be of Malaysian origin and there is no mis declaration attracting anti dumping duty.

Customs Valuation Rules - rejection of transaction value and rule 12 procedure - transaction value rejection procedure - Whether enhancement of value (RSP) by the adjudicating authority was justified and lawful. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that the adjudicating authority enhanced the RSP without following the statutory procedure under Rule 12 of the Customs Valuation Rules, 2007 and that the authority took inconsistent positions (characterising the goods as both recognized brand quality and sub standard). The Commissioner (Appeals) had correctly limited valuation to the RSP of Rs. 1.50 per piece accepted by the appellant and held that the subsequent enhancement to a higher RSP lacked authority of law. Consequently, further enhancement to Rs. 3/- per piece was set aside and the accepted RSP stands. [Paras 7]

Enhancement of value by the lower authority set aside; goods to be assessed on the RSP accepted by the appellant.

Final Conclusion: The appeals by the Revenue are dismissed; the impugned order of the Commissioner (Appeals) upholding Malaysian origin and setting aside confiscation and unlawful valuation enhancement is affirmed.

Excisability of imported goods - additional Customs duty (CVD) on import of like article - imagined manufacture test for Section 3(1) of the Customs Tariff Act - scope of 'manufactured goods' for levy of excise/CVD

Excisability of imported goods - scope of 'manufactured goods' for levy of excise/CVD - additional Customs duty (CVD) on import of like article - Aluminium Used Beverage Cans (UBC) imported as scrap are not manufactured goods and therefore not excisable; no additional Customs duty (CVD) is leviable on their import. - HELD THAT: - The Tribunal examined earlier decisions in the respondent's case and applied the settled legal principle that for the purpose of attracting additional duty under Section 3(1) of the Customs Tariff Act one must consider whether the imported article is a "manufactured or produced" article; if it is not a manufactured article it is not excisable and CVD cannot be imposed. The Tribunal accepted the view that Aluminium Used Beverage Cans (UBC) constitute scrap and are not manufactured goods and, applying the imagined-manufacture test and the precedent in the respondent's earlier proceedings, concluded that the articles are not excisable. Consequently, the demand for CVD could not be sustained and the appellate order setting aside the demand was correctly upheld. [Paras 5, 6, 7]

Appeal dismissed; impugned order setting aside demand for CVD upheld as Aluminium UBC are not excisable manufactured goods.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order and dismissed the Revenue appeal, holding that Aluminium Used Beverage Can scrap are not manufactured/excisable goods and no additional Customs duty (CVD) can be demanded on their import.

Anticipatory bail (Section 438 CrPC) - Custodial interrogation necessity - Economic offence affecting national economy - Mis-declaration/overvaluation in import valuation - Statements recorded under Section 108 of the Customs Act - Risk of tampering with evidence and witnesses - Investigation in progress and arrest for interrogation

Anticipatory bail (Section 438 CrPC) - Economic offence affecting national economy - Anticipatory bail application in respect of the accused was rejected. - HELD THAT: - The court examined the prosecutorial material and found prima facie satisfaction of offence relating to mis-declaration/overvaluation in import of rough diamonds, involvement of the accused in the transaction as indicated by statements of co-accused and other material, recovery of goods on search and intelligence regarding overvaluation. Considering the nature of the offence as economic and its potential impact on the national economy, the court held that the circumstances are not fit for grant of anticipatory bail. The applicant's contentions as to being falsely implicated and reliance on judgments on merits were held insufficient at the pre-arrest stage where investigation is ongoing. The court observed that if released on bail at this stage it may derail or impede investigation.

Anticipatory Bail Application rejected.

Custodial interrogation necessity - Statements recorded under Section 108 of the Customs Act - Risk of tampering with evidence and witnesses - Investigation in progress and arrest for interrogation - Custodial interrogation of the accused is necessary and justified; therefore pre-arrest custody should not be precluded. - HELD THAT: - On the material placed by the prosecution - valuation divergence between declared and expert-panel value, intelligence about dormant IEC and sudden high-value import, recoveries on search, statements of co-directors and customs-broker indicating the applicant's role, and absence of supporting commercial documentation - the court concluded that custodial interrogation is required for effective investigation. The court found substance in prosecution's apprehensions of evidence tampering, witness intimidation and the need to prevent repetition or concealment of the offence. The court noted that if arrest is effected, investigating authorities must follow the procedural safeguards and guidelines applicable to custody and interrogation.

Custodial interrogation justified; anticipatory bail not appropriate.

Final Conclusion: The application for anticipatory bail was rejected; on the materials produced the court found a prima facie case of mis-declaration/overvaluation in an economic offence and held that custodial interrogation of the applicant is necessary while investigation continues, subject to applicable procedural safeguards.

Absolute confiscation - redemption fine - penalty equivalent to enhanced assessable value - re-determined assessable value - market value to neutralize economic advantage - release on payment for home consumption

Absolute confiscation - redemption fine - penalty equivalent to enhanced assessable value - release on payment for home consumption - Whether the imported used digital Multifunction Devices are liable to absolute confiscation or can be released on payment of redemption fine and penalty, and if so on what quantum. - HELD THAT: - The Tribunal recorded that multiple earlier decisions of this Bench and the High Courts have held that the used Digital Multifunction Printing and Copying Machines are not liable for absolute confiscation and may be released on payment of redemption fine and penalty. The adjudicating authority had fixed an enhanced assessable value based on a Chartered Engineer's re-determination, and had imposed confiscation and 100% penalty; the Commissioner (Appeals) rejected absolute confiscation but maintained 100% penalty. The appellant accepted the enhanced value and contested only the quantum of redemption fine and penalty. Noting precedents of this Tribunal (including Final Orders in M/s Accord Digitech and M/s S.R. Enterprises) and the applicability of the ratio in the High Court of Kerala decision in Commissioner of Customs, Cochin v. Office Devices, the Tribunal held that the settled practice is to neutralize the economic advantage of importing such restricted goods by reference to market value but to adopt a lenient redemption and penalty formula where absolute confiscation is not warranted. In view of the elapsed period and consistent earlier decisions, the Tribunal exercised its discretion to reduce the redemption fine and penalty and to allow release for home consumption on payment of the reduced amounts. [Paras 6, 7, 8]

Appeal partially allowed; redemption fine reduced to 10% of the enhanced value and penalty reduced to 5% of the enhanced value; appellant permitted to redeem the goods for home consumption on these terms.

Final Conclusion: The Tribunal held that the imported used Multifunction Devices are not liable for absolute confiscation and, following prior decisions and in the interest of justice after delay, allowed redemption for home consumption on payment of redemption fine at 10% and penalty at 5% of the enhanced assessable value.

Extension of time for payment of auction sale consideration - enforcement of terms of e-auction - power to rescind, amend or modify auction terms under Clause 13.3

Extension of time for payment of auction sale consideration - enforcement of terms of e-auction - power to rescind, amend or modify auction terms under Clause 13.3 - Whether the learned Single Judge was wrong in refusing further extension of time to deposit the balance sale consideration after partially complying with the payment terms. - HELD THAT: - The Court recorded that the bidder was required by the approved e-auction terms to deposit the balance sale consideration within thirty days from intimation of confirmation (intimation dated 02.02.2023; due date 03.03.2023). The High Court has the contractual and supervisory power under Clause 13.3 of the terms to rescind, amend or modify the settled terms of the auction, and that power was exercised by the Single Judge on 02.03.2023 by granting an additional thirty days. The appellant, however, did not comply with that extension by paying the full balance and paid only a part of the consideration (Rs. 37 Crores). The Single Judge thereafter refused to grant a further extension, a decision which this Court found justified on the facts: having once exercised the power to extend time, the Court was entitled to insist on compliance with the extended timeline and to refuse any further indulgence where the appellant failed to honour the terms. The appellate court declined to interfere with the Single Judge's evaluation of the chronology and compliance, endorsing the exercise and limits of the Court's supervisory discretion under the auction terms. [Paras 4, 5, 12]

Appeal dismissed; the refusal to grant further extension of time was upheld and the Single Judge's order affirmed.

Final Conclusion: The High Court affirmed the Single Judge's refusal to grant further time to remit the balance sale consideration, holding that the Court's power to modify e auction terms had already been exercised and that non compliance by the bidder justified denial of further extension; the appeal is dismissed.

Transfer of company petition to National Company Law Tribunal under Section 434(1)(c) of the Companies Act, 2013 - Power to transfer pending winding-up proceedings to NCLT - Irreversibility of winding-up proceedings as ground to refuse transfer - Appointment of Provisional Liquidator - Obligation to clear Official Liquidator's expenses as condition for transfer

Transfer of company petition to National Company Law Tribunal under Section 434(1)(c) of the Companies Act, 2013 - Power to transfer pending winding-up proceedings to NCLT - Irreversibility of winding-up proceedings as ground to refuse transfer - Present company petition transferred to the National Company Law Tribunal. - HELD THAT: - The Court, having regard to the principle in Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd. and Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd., applied the test that transfer may be refused only where winding-up proceedings have reached an irreversible stage. No irreversible acts (such as actual sales of assets) were shown to have taken place during the pendency of the provisional liquidation. The Official Liquidator raised no objection to transfer of the proceedings to the NCLT. In these circumstances the Court allowed the application for transfer and directed that the company petition be transferred to the NCLT, while expressly reserving the parties' rights and contentions.

Company petition transferred to the NCLT; rights and contentions reserved.

Appointment of Provisional Liquidator - Obligation to clear Official Liquidator's expenses as condition for transfer - Transfer ordered subject to payment of expenses incurred by the Official Liquidator. - HELD THAT: - The Official Liquidator stated no objection to transfer provided the expenses incurred in the winding-up proceedings were paid by the petitioner. The Court accepted that position and directed the Official Liquidator to raise a demand for the expenses within one week and the petitioner to clear the same within two weeks thereafter. All pending applications were disposed of accordingly.

Transfer permitted on condition that the petitioner pays the Official Liquidator's expenses as directed.

Final Conclusion: Application for transfer of the company petition to the NCLT allowed; transfer directed subject to the petitioner paying the Official Liquidator's expenses as ordered; all pending applications disposed of and parties' rights reserved.

Civil contempt - wilful disobedience - interpretation of interlocutory orders - status quo and non-coercion directions in corporate disputes - contumacious conduct - contempt jurisdiction under Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971

Interpretation of interlocutory orders - status quo and non-coercion directions in corporate disputes - Whether the three orders of this Tribunal dated 08.07.2021, 25.11.2021 and 24.02.2022 contained specific, clear and unambiguous directions whose breach could constitute contempt. - HELD THAT: - The Tribunal examined the language, context and the parent proceedings to ascertain the scope of the three impugned orders. The order dated 08.07.2021 was confined to directions in the context of the main appeal and a general direction that the parties should not precipitate the matter; it did not contain any specific embargo on carrying on business or opening a competing showroom. The orders dated 25.11.2021 and 24.02.2022 related to I.A. Nos.1075-1076 of 2021 concerning permission to convene Board meetings under Section 173 of the Companies Act and recorded that the Tribunal was not inclined to pass orders on the I.As at that stage; the 25.11.2021 order imposed a limited restraint only on Mr. C. Ganesh Narayan not to take any coercive action in the matter of the I.A.; the 24.02.2022 order continued that limited non-coercion direction till the next date. Read in context, none of the three orders contained an unambiguous prohibition on operating an existing business from Touchstone B-Block or opening an adjacent showroom. Where an order admits of more than one reasonable interpretation, a contempt finding cannot be sustained. (Reasons and findings at paras 32-40, 43.) [Paras 37, 38, 39, 40, 43]

The three impugned orders did not contain specific and unambiguous directions forbidding the conduct alleged by the Complainants and therefore could not form the basis for contempt.

Civil contempt - wilful disobedience - contumacious conduct - Whether the Contemnors wilfully disobeyed the Tribunal's orders so as to constitute civil contempt. - HELD THAT: - The Tribunal applied the settled legal tests for civil contempt: (i) there must be disobedience of an order of the court and (ii) such disobedience must be wilful, deliberate and intentional with knowledge of the order. The Tribunal observed that mere breach, technical non-compliance or disputed questions of fact do not suffice; proof beyond reasonable doubt of a contumacious mental element is required. Given that the impugned orders were not specific as to the acts complained of and that the allegations involved disputed factual questions (including the effect of the Family Settlement Agreement and prior conduct and registrations of CKC & Co.), the element of wilfulness was not established. The Tribunal also noted that contempt jurisdiction is not a substitute for execution or other remedies where alternative forums or proceedings exist to adjudicate the underlying disputes. (Reasoning drawn from paras 34, 36, 41-42.) [Paras 34, 36, 41, 42, 43]

Wilful disobedience was not proved; therefore contempt was not made out.

Final Conclusion: Contempt Case (AT) No.13 of 2023 is dismissed for lack of merit: the impugned orders do not contain clear, specific and unambiguous prohibitions as alleged, and wilful disobedience necessary to sustain civil contempt was not established; the dismissal is confined to the contempt proceeding and does not decide the merits of CA (AT) No.65 of 2019.

Summary order. Appeals dismissed for delay: the Union of India filed the civil appeals 52 days late, exceeding the 15-day maximum condonable period under Section 62(2) of the Insolvency and Bankruptcy Code, 2016.

Condonation of delay - Natural justice - notice to parties - Recall application to adjudicatory forum

Condonation of delay - Delay in filing the petition was condoned. - HELD THAT: - The Court recorded and allowed the application for condonation of delay and proceeded to consider the substantive grievance. The order expressly states that delay is condoned, enabling the petitioner's matter to be heard despite the late filing. [Paras 1]

Delay condoned.

Natural justice - notice to parties - Recall application to adjudicatory forum - Allegation that the National Company Law Appellate Tribunal disposed of the statutory appeal without giving notice to the appellant and the appropriate remedy. - HELD THAT: - The petitioner contended that the Tribunal allowed the appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 without furnishing notice, as inferred from the array of appearances in the Tribunal's order. The Supreme Court did not decide the merits of that grievance but afforded the petitioner relief in the form of procedural guidance: the petitioner was granted liberty to take the alleged lack of notice to the National Company Law Appellate Tribunal by filing a recall application on that ground. The Court thereby left the substantive adjudication of the notice issue to the Tribunal on recall. [Paras 2, 3]

Petitioner granted liberty to raise the grievance before the National Company Law Appellate Tribunal by filing a recall application.

Final Conclusion: The petition was disposed of after condoning delay, and the petitioner was permitted to seek appropriate relief before the National Company Law Appellate Tribunal by filing a recall application regarding the alleged absence of notice; pending applications stand disposed of.

One Time Settlement (OTS) Sanction - payment of Resolution Professional's expenses during CIRP period - obligation to bear expenses post-sanction - irrelevance of settlement clause to NCLT/NCLAT jurisdiction - equitable split of outstanding RP fees and expenses - release of title deeds upon payment

One Time Settlement (OTS) Sanction - payment of Resolution Professional's expenses during CIRP period - irrelevance of settlement clause to NCLT/NCLAT jurisdiction - Clause 15 of the OTS Sanction governs payment of expenses incurred by the Resolution Professional during the CIRP period up to the date of sanction, and clause 10's saving of NCLT/NCLAT jurisdiction does not affect that contractual allocation of expenses. - HELD THAT: - The Court recorded that clause 15 of the OTS Sanction expressly provides that all expenses from the date of appointment of the Resolution Professional (03.01.2020) until the date of sanction advice (21.07.2020) are to be met by the Bank, while expenses after the date of sanction are to be borne by the borrower. Clause 10, which states that the settlement will not have any bearing on the CIRP process and recognises the jurisdiction of NCLT/NCLAT, does not negate or alter the specific contractual allocation in clause 15. Accordingly, clause 15 is operative and determinative as to responsibility for RP expenses during the stated CIRP period up to the sanction date.

Clause 15 applies to expenses incurred between 03.01.2020 and 21.07.2020 and must be given effect; clause 10 does not displace that obligation.

Equitable split of outstanding RP fees and expenses - release of title deeds upon payment - Court-directed settlement: the Bank and the borrower shall each pay 50% of the outstanding RP fees and expenses, and the Bank shall release the original title deed upon payment. - HELD THAT: - On the record, the Resolution Professional accepted that Rs.7,58,902 was due as fees and expenses (with Rs.2,36,000 stated as fees up to 04.08.2020 and additional expenses for legal fees, security, etc.). The borrower, on instructions, offered to bear 50% to end the dispute. Having taken the RP's statement on record and recorded the Bank's retention of title deeds pending resolution, the Court directed a pragmatic solution: each of the Bank and the borrower shall pay 50% of the total amount due to the RP. Specific directions were given for payment timelines and for release of the original title deed/document by the Bank to the borrower/guarantors upon receipt of the Bank's payment and the borrower's payment, with liberty to approach the Court for any difficulty or clarification.

The Bank shall pay half and the borrower shall pay half of the RP's outstanding dues within one month; upon payments, the Bank must hand over the title deed within one week.

Final Conclusion: The appeal is disposed of by upholding the contractual allocation in clause 15 that the Bank was to meet RP expenses incurred up to 21.07.2020, and by directing an equal (50:50) payment of the outstanding RP dues by the Bank and the borrower within specified timeframes, with the Bank to release the title deed upon payment.

Production of documents - compliance with court order - acknowledgment of debt - opportunity of hearing - limitation - pre-existing dispute - remand for fresh disposal

Production of documents - compliance with court order - acknowledgment of debt - Whether the adjudicating authority's order directing the corporate debtor to produce financial documents was complied with and whether that compliance was considered by the appellate authority - HELD THAT: - The Supreme Court recorded that the NCLT had directed production of the corporate debtor's trial balance, ledger accounts, financial statements and balance sheets for a stated period for the limited purpose of the interlocutory application, and that the NCLAT affirmed that order. The appellant alleged non-compliance and sought further interlocutory reliefs; the respondent asserted that the documents were filed and inspection sought. The NCLAT's impugned order contains no express finding of fact on whether the production order was in fact complied with or on the consequences of any non-compliance. The production was relevant to the appellant's contention that there was an acknowledgment of debt which could affect the question of limitation. Because the appellate authority did not record any finding on compliance, the Supreme Court held that this aspect was not adjudicated and requires fresh consideration by the appellate forum. [Paras 5, 6, 10, 11, 12]

The question of compliance with the order for production of documents was not decided by the NCLAT and is remanded for fresh consideration; the appeal is restored for disposal afresh.

Limitation - pre-existing dispute - opportunity of hearing - remand for fresh disposal - Whether the NCLAT's affirmation of dismissal of the company petition on grounds of limitation and pre-existing dispute can stand without adjudication of the production/compliance issue and without an adequate hearing on interlocutory applications - HELD THAT: - The NCLT dismissed the Section 9 petition as barred by limitation; the NCLAT affirmed primarily on grounds of a pre-existing dispute and on limitation. The appellant complained that interlocutory applications for production of documents and for contempt were taken up and reserved but no orders were passed by the newly constituted Bench and that the petition was dismissed without affording adequate opportunity to resolve those interlocutory matters. The Supreme Court noted that because the appellate order lacks any finding on compliance with the production order and because the production was material to the question of acknowledgment and limitation, it would be inappropriate to uphold the dismissal without adjudicating those aspects. The Court therefore declined to express any view on the merits of limitation or dispute but set aside the impugned order and restored the appeal so that all rights and contentions may be adjudicated afresh. [Paras 7, 8, 9, 12, 13]

The NCLAT's affirmation on limitation and pre-existing dispute is set aside for fresh adjudication; all rights and contentions of the parties are kept open and the appeal is remitted for fresh disposal.

Final Conclusion: The impugned NCLAT order dated 25 November 2022 is set aside and the Company Appeal is restored for fresh disposal; the questions relating to compliance with the production order, acknowledgment of debt and the consequences for limitation and dispute, as well as any interlocutory applications, are to be adjudicated afresh with all rights of the parties kept open.

Assignment of security interest - personal and corporate guarantees - approval of resolution plan - remittance of resolution plan to the Committee of Creditors - jurisdiction of the Adjudicating Authority to remit the plan - compliance with the requirements of section 30(2)(e) of the IBC, 2016 - use of addendum to cure objections to an approved plan

Remittance of resolution plan to the Committee of Creditors - jurisdiction of the Adjudicating Authority to remit the plan - use of addendum to cure objections to an approved plan - Adjudicating Authority's power to remit an approved resolution plan to the CoC for reconsideration of an Addendum and to permit the Successful Resolution Applicant to place an Addendum before the CoC - HELD THAT: - The Tribunal found that where a Resolution Plan approved by the requisite majority of the CoC is challenged by dissenting creditors but the Successful Resolution Applicant offers to modify the plan (by way of an undertaking/affidavit and an Addendum), the Adjudicating Authority has jurisdiction to permit the applicant to place an Addendum before the CoC and to remit the plan to the CoC for reconsideration rather than summarily reject the plan. The court observed that in the present case the Successful Resolution Applicant had undertaken not to insist on assignment of the dissenting creditors' personal and corporate guarantees and that, in the interests of revival of the corporate debtor and given the large commercial value of the approved plan relative to liquidation value, ends of justice were served by permitting the Addendum to be placed before the CoC. Consequently the impugned order of rejection was set aside and directions were issued for submission of an Addendum, CoC voting thereon, and resubmission to the Adjudicating Authority if approved by requisite majority. [Paras 11, 12, 13]

Allowed the appeal; set aside the Adjudicating Authority's order of rejection and directed that the Successful Resolution Applicant may submit an Addendum, the RP shall place it before the CoC for voting, and if approved the RP shall approach the Adjudicating Authority for fresh consideration.

Assignment of security interest - personal and corporate guarantees - compliance with the requirements of section 30(2)(e) of the IBC, 2016 - Whether the Adjudicating Authority's finding that clauses assigning securities contravened section 128 of the Indian Contract Act and section 30(2)(e) of the IBC was a bar to remitting the plan for amendment - HELD THAT: - The Tribunal recorded the Adjudicating Authority's reasoning that clauses in the plan requiring assignment of debts and security interests (including personal and corporate guarantees) were contrary to section 128 of the Indian Contract Act and in violation of section 30(2)(e) of the IBC, 2016, which formed the basis for rejection. However, because the Successful Resolution Applicant had offered an unequivocal undertaking (by affidavit) and was prepared to incorporate that undertaking as an Addendum to the approved plan, the Tribunal did not find it necessary in this appeal to finally adjudicate the legality of the assignment clauses under section 30(2)(e). Instead the Tribunal directed remittance for reconsideration so that the CoC and, if approved, the Adjudicating Authority could examine the matter afresh in the light of the Addendum. [Paras 8, 10, 11]

Remitted the matter for reconsideration; did not finally decide the legality of the assignment clauses under section 30(2)(e) and permitted the Addendum procedure directed in the order.

Final Conclusion: Appeal allowed. The Adjudicating Authority's order rejecting the Resolution Plan is set aside. The Successful Resolution Applicant is permitted to submit an Addendum incorporating its affidavit undertaking within two weeks; the Resolution Professional shall place the Addendum before the CoC for decision within four weeks, and if the CoC approves the Addendum by the requisite majority the Resolution Professional shall file the plan (with Addendum) before the Adjudicating Authority for expeditious consideration.

Resolution Professional's fees and expenses - Committee of Creditors' ratification of fees - Entitlement to fees during continuance pending substitution of RP - Reasonableness review and reduction of professional fees by Adjudicating Authority - Assessment of RP's professional conduct

Resolution Professional's fees and expenses - Committee of Creditors' ratification of fees - Entitlement to fees during continuance pending substitution of RP - Reasonableness review and reduction of professional fees by Adjudicating Authority - Whether the Resolution Professional was entitled to fees and expenses for the period 01.09.2019 to 24.04.2022 and whether reduction of the fee to Rs.1 lakh per month by the Adjudicating Authority was justified. - HELD THAT: - The Tribunal held that once the CoC in its third meeting resolved that the RP would continue on existing terms until a replacement was appointed, and no subsequent modification was made, the RP retained entitlement to claim fees and expenses for the period he continued in office; any separate alleged consent of a major creditor limited to an earlier date was inconsequential. The Adjudicating Authority's decision to reduce the previously ratified monthly fee was examined on reasonableness: by end of August 2019 the active CIRP had effectively stalled, the CoC had moved towards liquidation, the RP had not secured a resolution plan within prescribed timelines, and pandemic-related disruption and apparent non-performance by the RP (including disputes with the CoC and duplication of claimed legal expenses) were material. Applying an evaluative review of the quantum of remuneration in light of the circumstances and the RP's conduct, the Tribunal found the Adjudicating Authority's proportional reduction to be a reasoned exercise of discretion and not arbitrary. [Paras 11, 16]

The RP was entitled to claim fees and expenses for the period 01.09.2019 to 24.04.2022; the Adjudicating Authority's reduction of the fee to Rs.1 lakh per month was reasonable and is upheld.

Assessment of RP's professional conduct - Resolution Professional's duties as officer of the court - Whether the adverse/deprecatory remarks made by the Adjudicating Authority about the RP's professional conduct were sustainable. - HELD THAT: - The Tribunal recognized that an RP must act with fairness, diligence and in consonance with CoC directions as an officer of the court. Having considered the record, including instances where the RP pursued measures contrary to CoC preferences (e.g., insisting on forensic audit, orally opposing liquidation after filing for it, not acting on CoC suggestions to pursue the suspended management) and the lack of tangible progress in the CIRP over nearly three years, the Tribunal found that the Adjudicating Authority was justified in taking serious note of deficiencies in the RP's performance. While acknowledging steps taken by the RP, the overall assessment supported the Adjudicating Authority's critical observations as grounded in the material. [Paras 20]

The deprecatory remarks concerning the RP's professional conduct were justified on the record and do not warrant expunction.

Final Conclusion: The appeals are dismissed; the Adjudicating Authority's order directing payment of reduced fees to the RP from 01.09.2019 to 24.04.2022 and recording critical observations on the RP's conduct is upheld.

Project-wise CIRP - constitution of Committee of Creditors - disqualification under Section 29A of the Insolvency and Bankruptcy Code - moratorium and continuity of contractual interest - role of the resolution professional as collator of claims - commercial wisdom of the Committee of Creditors and limited judicial review under Section 30(2) - supremacy of the Code over inconsistent laws

Project-wise CIRP - constitution of Committee of Creditors - Validity of confining the CIRP to project 'Arun Auroville' and the constitution of the CoC limited to creditors of that project - HELD THAT: - The Tribunal found that the Section 7 application by Kotak Mahindra Bank sought CIRP in respect of the Arun Auroville project and the IRP accordingly constituted a project-wise CoC. The IRP's attempt to extend the CIRP to the entire company was set aside by the Adjudicating Authority by orders in IA Nos. 187 & 195/2020, which were not appealed and thus attained finality. Subsequent proceedings, CoC meetings and public announcements proceeded on the basis that the CIRP was project-specific; the appellant participated in multiple CoC meetings and did not challenge the order confining CIRP to the project. Reliance on precedents recognizing project-wise CIRP further supports the correctness of that approach. The Tribunal therefore held there was no merit in the challenge to project-wise CIRP or to the constitution of the CoC limited to Arun Auroville. [Paras 5, 6]

Project-wise CIRP and the constitution of the CoC for Arun Auroville were valid and have attained finality.

Disqualification under Section 29A of the Insolvency and Bankruptcy Code - effect of restoration of DIN by court order - Whether the Consortium of Resolution Applicants (SRA) was disqualified under Section 29A - HELD THAT: - The Tribunal recorded that the Resolution Applicants had earlier been directors of companies struck off for defaults predating 01/04/2014 but had obtained a Common Order of the Karnataka High Court on 12/06/2019 directing restoration of their DINs; that Order has attained finality and the DINs were restored and active as on the date of submission of the resolution plan. The RP conducted independent due diligence confirming the DIN restoration and the minutes and Form H note the active DIN status. In light of the High Court order and the restored active DIN, and consistent with the Supreme Court's approach that an 'active' DIN negates disqualification, the Tribunal held the SRA was not disqualified under Section 29A. [Paras 7, 9]

The SRA consortium was not disqualified under Section 29A.

Moratorium and continuity of contractual interest - role of the resolution professional as collator of claims - supremacy of the Code over inconsistent laws - Whether Kotak Mahindra Bank could charge and capitalize penal interest after admission of its claim during the CIRP period and whether moratorium barred such interest - HELD THAT: - The Tribunal held that Section 14 (moratorium) does not provide for waiver of contractual interest; it only suspends enforcement actions. The RP's function is to collate and record claims as of the CIRP commencement date for information memoranda, but the existence and quantum of contractual liabilities, including penal interest accruing until repayment, are not extinguished by initiation of CIRP. Section 238 establishes the Code's overriding effect where inconsistent, and Section 63 limits civil court jurisdiction in matters within the Code. The CoC's commercial decision to factor penal interest into settlement and plan valuation was within its commercial wisdom. Consequently, there was no illegality in the CoC accepting amounts inclusive of penal interest and in Kotak Bank capitalizing such interest for purposes of the resolution plan. [Paras 18, 19, 23, 24]

Charging and capitalization of penal interest by Kotak Bank was not barred by the moratorium and was not unlawful in the circumstances.

Commercial wisdom of the Committee of Creditors and limited judicial review under Section 30(2) - resolution plan versus liquidation value - Whether approval of the Resolution Plan violated Section 30(2) because the plan value was less than the liquidation value and whether the CoC's commercial decision could be interfered with - HELD THAT: - The Tribunal reiterated the settled principle that the commercial wisdom of the CoC is entitled to deference and is subject to limited judicial review under Section 30(2). The liquidation value is an aid to CoC decision-making but does not automatically invalidate a plan that is quantitatively lower if the CoC, in its commercial judgment, finds the plan viable and protective of stakeholders. Here, the CoC unanimously approved the plan which provided for full settlement of dues to stakeholders and the plan contemplated additional investment requirements; there was no shown contravention of Section 30(2). The Tribunal refused to disturb the CoC's commercial assessment. [Paras 25, 31]

The Resolution Plan's approval did not violate Section 30(2); the CoC's commercial wisdom stood unimpeached.

Eligibility criteria for prospective resolution applicants - no preferential treatment to promoter as MSME - Whether the appellant-promoter, being an MSME, was denied sufficient opportunity or entitled to preference in the RFRP process - HELD THAT: - The Tribunal found that the appellant failed to meet the eligibility criteria: he did not furnish a net worth statement, did not deposit the EMD, and did not participate in the second EOI or submit a resolution plan within the timelines despite attending multiple CoC meetings. The promoter's belated offers and requests after the CoC process and plan approval were not a ground to direct acceptance or preferential treatment. The Code does not prescribe special preference for an MSME-promoter when it fails to comply with the stipulated eligibility requirements, and the CoC's commercial choice in maximising value governs. [Paras 27, 30, 33]

The appellant was not entitled to preferential treatment as an MSME; no procedural or substantive unfairness was shown in the RFRP process.

Final Conclusion: The appeal is dismissed. The Tribunal upheld project-wise CIRP and the constitution of the CoC, held the SRA not disqualified under Section 29A, found no illegality in charging or capitalizing penal interest during CIRP, declined to interfere with the CoC's commercial wisdom or with approval of the resolution plan under Section 30(2), and rejected the claim for MSME preference by the promoter.

Continuation of interim bail during pendency of trial - Cancellation of bail on violation of conditions or fresh grounds - Relevance of prior incarceration and non-arrest during investigation in bail consideration - Setting aside of impugned conviction/order in favour of appellant

Continuation of interim bail during pendency of trial - Relevance of prior incarceration and non-arrest during investigation in bail consideration - Cancellation of bail on violation of conditions or fresh grounds - Interim bail granted earlier to the appellant is to continue during the pendency of trial subject to compliance with its terms and to the prosecution's right to seek cancellation on specified grounds. - HELD THAT: - The Court accepted the appeal having regard to the appellant's prior incarceration for eight years in the predicate offence and the fact that he was not arrested during the subsequent investigation commencing in 2016. The Court confirmed its earlier interim order dated 23.01.2023 and directed that the bail granted by the trial court in terms of that order shall continue for the duration of the trial. The Court clarified that continuation of bail is conditional: if the appellant violates any terms or if grounds justifying cancellation of bail arise, the prosecution is entitled to file an application for cancellation. Consequent to this direction, the impugned order/judgment was set aside and the appeal allowed.

The interim bail as ordered on 23.01.2023 shall continue during the trial, subject to compliance with its terms and permitting the prosecution to apply for cancellation if violations or fresh grounds emerge; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the interim bail granted to the appellant is confirmed to continue during the pendency of the trial, subject to its terms and to the prosecution's right to move for cancellation on proper grounds; pending applications stand disposed of.

Summary order. Civil Appeal dismissed on the ground of delay and on merits; counsel's submission that the issues were covered by Circular 80/10/2004-S.T. (dated 17.09.2004) was placed on record; pending applications disposed of.

Determination of taxability - appeal to the Supreme Court under Section 35L(2) - maintainability of appeal to the High Court under Section 35G - export of services - clarificatory amendment to Section 35L

Determination of taxability - appeal to the Supreme Court under Section 35L(2) - maintainability of appeal to the High Court under Section 35G - Whether the appeals challenging the CESTAT's confirmation of service tax demand (on agreements for media rights) are maintainable before the High Court or lie to the Supreme Court. - HELD THAT: - The Court held that the central controversy is the taxability of the services in question - specifically whether service tax could be levied on the transactions under the agreements, including the contention that they constituted "export of services." For the purposes of Chapter VI-A, Section 35L(2) clarifies that determination of any question relating to the rate of duty includes determination of "taxability" or "excisability" for assessment. A Full Bench of this Court has previously held that appeals from Tribunal orders relating to taxability/excisability (prior to the insertion of Section 35L(2)) are appealable only to the Supreme Court and that the amendment is clarificatory and retrospective. Applying these principles, the Court concluded that the present appeals raise questions of taxability and therefore are not maintainable before the High Court under Section 35G but lie to the Supreme Court under Section 35L. The Court noted authorities where, on facts showing no relation to rate of duty or valuation, appeals remained maintainable before the High Court, but on the facts and issues in these appeals the taxability question mandates forum before the Supreme Court. The Court left all substantive contentions on the merits open for determination by the Supreme Court. [Paras 9, 13]

The appeals are not maintainable before the High Court as they raise the issue of taxability; remedy is to file appeal before the Supreme Court.

Final Conclusion: Appeals dismissed for want of maintainability before this Court on the ground that they raise the question of taxability/excisability; appellant permitted to present appeals to the Supreme Court and all substantive contentions are kept open.

Power to rectify mistake apparent from the record - rectification under Section 35C(2) of the Central Excise Act as made applicable to Service Tax - export of services and receipt in convertible foreign exchange - debatable point of law does not constitute a mistake apparent from record

Export of services and receipt in convertible foreign exchange - power to rectify mistake apparent from the record - Whether the Tribunal committed a mistake apparent on the record in holding that the petitioner had not received the entirety of the consideration in foreign exchange for FY 2011-12. - HELD THAT: - The Tribunal had found, after examining the show cause notice, returns and the petitioner's own reply, that the petitioner itself had claimed export benefit only for part of the media-rights receipts and had not shown that the entire consideration was received in convertible foreign exchange. That finding involved disputed facts and discrepancies in figures which the Tribunal treated as unexplained. A claim that the Tribunal was wrong on this factual conclusion would require re appreciation of evidence and cannot be characterised as a mistake apparent from the record under Section 35C(2). The High Court held that attempting to review such contested factual findings in rectification proceedings would be impermissible. [Paras 11]

Tribunal was justified in rejecting rectification on this ground; no mistake apparent from the record.

Rectification under Section 35C(2) of the Central Excise Act as made applicable to Service Tax - power to rectify mistake apparent from the record - Whether the Tribunal erred by not allowing the petitioner's appeal for FY 2010-11 in the operative portion despite answering the legal question in the petitioner's favour. - HELD THAT: - The Tribunal's order expressly held that for the period after 27.02.2010 the benefit of export of services was extended to the petitioner to the extent payments were shown to have been received in convertible foreign exchange. That operative finding demonstrates that the Tribunal had given the benefit for the post 27.02.2010 period and therefore there was no apparent omission or clerical mistake in the operative portion requiring rectification. The matter thus did not attract the limited scope of Section 35C(2). [Paras 12]

No mistake apparent from the record; rectification rightly refused on this ground.

Debatable point of law does not constitute a mistake apparent from record - power to rectify mistake apparent from the record - Whether the Tribunal's distinguishing of the Balaji Telefilms decision amounted to a mistake apparent on the record. - HELD THAT: - The Tribunal treated the precedent as distinguishable on facts and recorded that the factual matrix differed (the nature of the feed). Whether that distinction was right or wrong would call for debate and legal appreciation and cannot be categorised as a mistake apparent from the record. The court relied on settled authorities that a debatable point of law or a contested appreciation of precedent is not rectifiable under the rectification provision. [Paras 13]

Rectification was correctly refused; distinguishing the decision does not amount to a mistake apparent from record.

Final Conclusion: All three grounds advanced in the rectification application did not disclose any mistake apparent from the record; the Tribunal was therefore justified in dismissing the rectification application and the writ petition is dismissed.

Interpretation of exemption notification - exemption by way of refund - supersession of earlier notification by later notification - limitation - date of service of show cause notice - penalty for bona fide mistake

Interpretation of exemption notification - exemption by way of refund - supersession of earlier notification by later notification - Whether Notification No. 9/2009-ST supplanted Notification No. 4/2004-ST and provides only an exemption by way of refund for services to SEZ units/developers, rather than an automatic exemption from levy. - HELD THAT: - The Tribunal held that Notification No. 9/2009-ST dated 3.3.2009 supersedes Notification No. 4/2004-ST and implements a change in policy by making the exemption available by way of refund subject to conditions enumerated in the later notification. The main part of the notification cannot be read in isolation from the proviso; the exemption is circumscribed by the proviso and must be given its plain meaning. The Tribunal relied on the proposition that plain words of a notification/statute are to be given effect to and observed that the Government is within its remit to change policy and procedure when issuing a superseding notification. The appellant's contention that the substantive exemption remained automatic and that the proviso only preserved a refund route where tax had been paid was rejected as an improper, disjointed reading of the notification. [Paras 7]

Notification No. 9/2009-ST supersedes Notification No. 4/2004-ST and grants exemption only by way of refund subject to its conditions; the appellant's contrary interpretation is rejected.

Limitation - date of service of show cause notice - Whether the demand was barred by limitation in view of the appellant's assertion that the show cause notice, though dated 11.09.2009, was received by them only on 04.05.2010. - HELD THAT: - The Tribunal observed that the question of time bar depends on the date of receipt of the show cause notice, which the appellant had not pressed before the original adjudicating authority and had not led evidence to establish earlier receipt. The Commissioner (Appeals) had examined receipt of the original order rather than the date of receipt of the show cause notice. Because the matter of receipt/date of service was not considered and requires examination of available evidence and an opportunity to the appellant, the Tribunal declined to decide the limitation point and remanded it to the original authority for fresh decision after affording the appellant adequate opportunity to comment both in writing and orally. [Paras 8, 10]

The question of whether the show cause notice is time barred is remanded to the original authority for fresh consideration with opportunity to the appellant.

Penalty for bona fide mistake - Whether penalty should be imposed for short payment of service tax in respect of amounts claimed as exempt under the earlier notification for March 2009. - HELD THAT: - The Tribunal noted that the appellant had been availing exemption under Notification No. 4/2004-ST until it was superseded by Notification No. 9/2009-ST, that the exemption availed was reflected in ST 3 returns, and that the short payment related only to March 2009 and was detected during scrutiny of returns. On these facts the Tribunal concluded that the short payment arose from a genuine mistake and there was no intention to evade tax. Applying this reasoning, the Tribunal found the imposition of penalty not sustainable and set aside the penalty imposed by the adjudicating authority. [Paras 9]

Penalty is not imposable and is set aside as the short payment resulted from a genuine mistake without evasion.

Exemption by way of refund - Whether the demand of duty and interest (subject to the limitation issue remanded) is sustainable. - HELD THAT: - Having upheld the legal effect of Notification No. 9/2009-ST and finding the demand relates to the short payment for March 2009 as per scrutiny of returns, the Tribunal held that the demand for duty and interest is in accordance with law. The Tribunal modified the impugned order by setting aside the penalty while leaving the demand and interest intact subject to the remand on limitation. [Paras 7, 10]

Demand of duty and interest is sustained as per law; penalty is set aside; the limitation point is remanded for fresh decision.

Final Conclusion: The Tribunal held that Notification No. 9/2009-ST supersedes Notification No. 4/2004-ST and grants exemption only by way of refund; the demand for duty and interest for March 2009 is sustained, but the penalty is set aside as the short payment was a bona fide mistake; the question whether the show cause notice is time barred is remanded to the original authority for fresh consideration after giving the appellant adequate opportunity.

Definition of renting of immovable property service - Exclusion of land used for educational, sports, circus, entertainment and parking purposes from "immovable property" - Distinction between "land" and "vacant land" in statutory interpretation - Refund of erroneously paid service tax where incidence of tax not passed on

Definition of renting of immovable property service - Exclusion of land used for educational, sports, circus, entertainment and parking purposes from "immovable property" - Distinction between "land" and "vacant land" in statutory interpretation - Whether the parking facility provided by the appellant on land falls within the definition of renting of immovable property service (RIPS). - HELD THAT: - The Tribunal examined Explanation 1 to Section 65(105)(zzzz) and noted that the inclusive part of "immovable property" covers buildings and land appurtenant thereto and land incidental to such building. Clause (c) of Explanation 1 expressly excludes "land used for educational, sports, circus, entertainment and parking purposes" from the definition. The use of the term "land" (as distinct from "vacant land" used in clauses (a) and (b)) must be read in context; the words "educational, sports, circus, entertainment" indicate activities which may involve structures on land, and hence the legislature deliberately employed "land" in clause (c). Accordingly, land (including areas with structures) used for parking is excluded from "immovable property" for the purposes of RIPS, and parking provided on such land does not fall within RIPS as defined for the period in dispute. [Paras 12, 14]

Parking facility on land used for parking is excluded from "immovable property" and therefore does not fall within RIPS.

Refund of erroneously paid service tax where incidence of tax not passed on - Rejection of refund claim - Whether the rejection of the appellant's refund claim is in order. - HELD THAT: - Having held that the parking area fell outside the scope of "immovable property" for RIPS during the relevant period, the Tribunal found that the adjudicating and first appellate authorities erred in rejecting the refund. The refund claim was therefore not properly refused. The decision is subject to the condition that the duty has not been passed on to the service recipients; consequential adjustments are to follow as per law. [Paras 15, 16]

Rejection of the refund claim set aside; appeal allowed subject to the duty not having been passed on and consequential benefits as per law.

Final Conclusion: The impugned orders rejecting the refund are set aside; the appeal is allowed and the refund claim accepted in principle for the period 01.11.2011 to 30.06.2012, subject to the condition that the service tax incidence was not passed on and with consequential benefits as per law.

Taxability of mark up on sale of cargo space as consideration for service - characterisation as principal to principal multi modal transport operator versus commission agent - application of the pure agent / reimbursement principle to pass through payments - relevance of Form 26AS vis a vis ST 3 reconciliation for creation of service tax liability - benefit under section 73(3) for amounts paid with interest prior to show cause notice - Place of Provision of Service (Rule 10) and export/non taxability of services with destination outside India

Taxability of mark up on sale of cargo space as consideration for service - characterisation as principal to principal multi modal transport operator versus commission agent - Place of Provision of Service (Rule 10) and export/non taxability of services with destination outside India - Whether service tax is leviable on mark up earned by the appellant on buying and selling of ocean cargo space. - HELD THAT: - The Tribunal accepted that where the freight forwarder acts as a principal (multi modal transport operator) - booking space in its own name, receiving invoices from carriers in its name, issuing bills of lading in its own name and bearing commercial risk of profit or loss - the activity of buying and selling cargo space is trading and the resultant mark up is not consideration for a taxable service. The impugned finding that the appellant had failed to substantiate MTO status was held incorrect on the appellant's production of its MTO license and satisfaction of the principal to principal criteria in the Circular dated 12.08.2016. Further, for exports the Place of Provision of Service Rules (rule 10) and the destination outside India render such transactions non taxable. On these bases the demands in respect of mark up were set aside. [Paras 14, 15, 18, 19, 20]

Demand of service tax on mark up in ocean freight set aside for the periods in dispute.

Characterisation as principal to principal multi modal transport operator versus commission agent - taxability under Business Auxiliary Services (BAS) - Whether commission income earned by the appellant is taxable as Business Auxiliary Services (BAS) on the basis that the appellant was acting as an agent of shipping lines. - HELD THAT: - The Commissioner treated commission as BAS on the premise that the appellant acted on behalf of shipping lines. The Tribunal found that the appellant in fact bought and sold space on its own account and did not act as a commission agent as defined under the law. The show cause notice did not set out sub clauses of the BAS definition and, on the material, the appellant's activities did not attract BAS treatment. Consequently, the demand under BAS could not be sustained. [Paras 21, 22]

Demand of service tax on alleged commission income under BAS disallowed.

Benefit under section 73(3) for amounts paid with interest prior to show cause notice - Whether demand for service tax on legal expenses and differences in ST 3 figures could be sustained where the impugned amounts were paid with interest before issuance of the show cause notice. - HELD THAT: - During audit the shortfall relating to legal expenses and reconciliation differences was remedied by payments made with interest prior to issuance of the show cause notice. In that factual matrix the appellant was entitled to the benefit provided by section 73(3) (Explanation (2)), and therefore no penalty or confirmed demand should have been sustained in respect of those amounts. [Paras 23, 24]

Demands in respect of legal expenses and ST 3 reconciliation differences could not be sustained and were disallowed.

Application of the pure agent / reimbursement principle to pass through payments - taxability under Business Support Service (BSS) and effect of obsolete categorisation - Whether the amounts shown as non taxable (customs duty, overseas ocean & air freight, BAF/CAF and similar charges) are taxable under Business Support Service (BSS) for the period in dispute. - HELD THAT: - The Commissioner dropped the demand on the grounds that the amounts in question were legal/statutory levies or pure reimbursements paid on behalf of clients and supported by a CA certificate showing recovery without mark up. The Tribunal noted that the demand had been framed under BSS in the third show cause notice though BSS was not the relevant/existent category for the period covered; reliance on an obsolete category and failure to invoke the proper charging provision rendered the demand unsustainable. Consequently, the amounts characterized as reimbursements qualified for non taxability and the demand was rightly dropped. [Paras 25, 26, 27]

Demand in respect of amounts shown as non taxable in the financial summary was rightly dropped.

Relevance of Form 26AS vis a vis ST 3 for levy - Whether a demand can be sustained solely on the basis of differences between figures in Form 26AS and ST 3 returns. - HELD THAT: - The Tribunal observed that Form 26AS and ST 3 are prepared by different methodologies and Form 26AS is not a statutory document for determining taxable turnover under service tax provisions. A CA certificate showed that the income reflected in Form 26AS was already included in the audited accounts; raising a second demand on the basis of reconciliation with ST 3 would be duplicative. Established precedents disallow creating a demand merely on the basis of such differences. Accordingly the Commissioner's decision to drop the reconciliation based demand was upheld. [Paras 28, 29]

Demand based solely on differences between Form 26AS and ST 3 disallowed.

Final Conclusion: Service Tax Appeals by the appellant are allowed and the impugned orders (to the extent challenged) are set aside; the Department's appeal is dismissed. The Tribunal held that mark up on trading of cargo space, commission wrongly characterised as BAS, reimbursements treated as pure agent, and reconciliation based demands could not be sustained for the periods 2009 10 to 2012 13, 2013 2014 and 2014 2015.

Business Auxiliary Service - consideration for service - weighment not a service - requirement of contract or understanding for service - burden on Revenue to prove existence of service

Business Auxiliary Service - weighment not a service - consideration for service - requirement of contract or understanding for service - burden on Revenue to prove existence of service - Whether the weighment charges deducted by the Food Corporation of India constitute consideration for 'Business Auxiliary Service' liable to service tax - HELD THAT: - The Tribunal examined the definition and sub-clauses of Business Auxiliary Service and found that the weighment activity undertaken by the appellant does not fall within any of the sub-clauses (i) to (vii). The Revenue produced no agreement, contract or mutual understanding showing that the appellant rendered any service to its suppliers or that any consideration was payable for such a service. The nature of a service must arise from contract terms or meet the statutory criteria for a named service; the Revenue failed to establish either. The Tribunal observed that weighment was performed to verify the quantity of grain delivered and therefore is not a service in the sense of rendering an auxiliary business service to the suppliers. Reliance was placed on earlier Tribunal reasoning in Northern Computer/Deepak Computers indicating that mere ownership and undertaking of weighment (dharamkanta) does not amount to providing incidental or auxiliary services of promotion, marketing or sale. Applying these principles, the Tribunal concluded that deduction of weighment charges could not be treated as payment of consideration for a taxable service. [Paras 4, 5, 6]

The demand for service tax on weighment charges was not sustained and the impugned order was set aside; the appeal was allowed.

Final Conclusion: The Tribunal held that weighment carried out by the appellant to verify supplied quantities did not amount to a 'Business Auxiliary Service' and, in absence of any contract or evidence of consideration, the service tax demand for 2004-05 to 2006-07 could not be sustained; the impugned order was set aside and the appeal allowed.

Extended period of limitation - reverse charge mechanism - service tax registration - appropriation of tax paid - penalty for non-registration - interest for extended period - suppression of facts

Extended period of limitation - service tax registration - reverse charge mechanism - Extended period of limitation invoked for recovery of service tax paid under reverse charge is not sustainable where the assessee had taken registration and voluntarily paid the tax and the facts were known to the department. - HELD THAT: - The appellants, though liable to pay service tax under the reverse charge mechanism from 2005 onwards, subsequently obtained service tax registration and, on their own motion, paid the entire tax due. The department was aware of non-payment through ST-3 returns. In these circumstances the Tribunal, applying the principle in Northern Operating Systems Private Limited, held that invocation of the extended period of limitation was not justified. The Tribunal therefore concluded that demands raised by invoking the extended period could not be sustained where there was no concealment and the department had knowledge of the facts. [Paras 7, 8]

Extended period of limitation cannot be invoked; demand under extended limitation is unsustainable.

Appropriation of tax paid - Appropriation of the service tax already paid by the appellants is confirmed. - HELD THAT: - The appeals did not dispute that the service tax had been paid by the appellants and appropriated by the department. Given that payment was made and not challenged, the Tribunal confirmed the appropriation of the tax already paid. [Paras 9]

Appropriation of the tax paid by the appellants is confirmed.

Penalty for non-registration - suppression of facts - Penalties imposed for non-registration and delayed payment are set aside where there was no suppression of facts and the appellants voluntarily regularised their position. - HELD THAT: - Relying on the absence of suppression and the appellants' voluntary obtaining of registration and payment, the Tribunal found penalties equal to the service tax to be not imposable. The Tribunal applied the reasoning in Hindustan Insecticides Limited to hold that penalties could not be sustained under the facts of the case. [Paras 9]

Penalties imposed on the appellants are set aside.

Interest for extended period - suppression of facts - Interest for the period covered by the extended period of limitation is not demandable where there was no suppression; interest is payable only for the period within limitation. - HELD THAT: - The Tribunal held that because there was no suppression of facts and the appellants had voluntarily paid the tax after obtaining registration, demand for interest computed for the extended period could not be sustained. However, interest for the period falling within the normal limitation remains payable. [Paras 10]

Interest for the extended period is not sustainable; interest is payable only for the period within limitation.

Final Conclusion: The appeals are allowed in part: invocation of the extended period of limitation and demands thereunder (including interest for the extended period) and penalties are set aside; appropriation of the tax paid is confirmed and interest within limitation is payable.

Exemption for intravenous fluids used for sugar, electrolyte or fluid replenishment - Characterisation of product by composition versus therapeutic use - Effect of minor additives on essential character of pharmaceutical preparations

Exemption for intravenous fluids used for sugar, electrolyte or fluid replenishment - Characterisation of product by composition versus therapeutic use - Effect of minor additives on essential character of pharmaceutical preparations - Whether the products manufactured by the assessees-Calcium Borogluconate and Calcium Magnesium Borogluconate injections (Large Volume Parenterals) -qualify for exemption as "Intravenous Fluids, which are used for sugar, electrolyte or fluid replenishment" under the Notifications of 01.03.2000 and 01.03.2001. - HELD THAT: - The Court accepted the approach that qualification for the exemption turns on the composition and essential character of the product rather than the incidental fact that the fluid may be administered during treatment of particular diseases. The license and material produced by the assessees established that the products predominantly comprise glucose (sugar) and electrolytes (minerals) and are thus essentially for fluid/electrolyte replenishment. The presence of boric acid and chlorocresol in minimal proportions, used to enhance shelf life, does not alter the essential purpose of the preparations. The Tribunal was therefore correct in treating the earlier Notification and its subsequent clarification as permitting exemption for such intravenous fluids and in placing weight on the regulatory correspondence and the licence particulars. The Court found no justification to restrict the exemption by focusing on therapeutic use alone or to treat minor antiseptic additives as converting the products into excluded medicinal articles.

The assessees' products retain the essential character of intravenous fluids used for sugar, electrolyte or fluid replenishment and are entitled to the exemption; the Revenue's appeals are dismissed.

Final Conclusion: The CESTAT correctly held that the injections in question, on their composition and licence particulars, qualify as intravenous fluids for sugar, electrolyte or fluid replenishment and are entitled to the exemption under the Notifications; the Civil Appeals are dismissed.

Adjournment in appeals - requirements for granting adjournment including recording reasons - proviso to Section 35C(1A) limiting adjournments - dismissal for non-prosecution under Rule 20 - professional duty of advocates to appear and avoid dilatory tactics - judicial duty to curb adjournment culture and ensure speedy disposal

Proviso to Section 35C(1A) limiting adjournments - requirements for granting adjournment including recording reasons - professional duty of advocates to appear and avoid dilatory tactics - judicial duty to curb adjournment culture and ensure speedy disposal - Adjournments could not be granted mechanically or more than three times to a party; reasons for any adjournment must be recorded and courts must guard against dilatory non appearances by advocates. - HELD THAT: - The Tribunal applied the proviso to subsection (1A) of Section 35C to hold that adjournments cannot be granted more than three times to a party during the hearing of an appeal and that reasons for granting adjournment must be recorded in writing. The Tribunal relied on the Supreme Court's observations condemning routine adjournments, emphasising the duty of advocates to appear and the obligation of courts to resist an "adjournment culture" which undermines timely justice. In the present matter the appellant and its counsel repeatedly failed to appear on listed dates and no contemporaneous adjournment requests or recorded reasons were placed on record, which exemplified the sort of mechanical adjournments and non appearance criticised by higher authority. The Tribunal therefore treated the repeated non appearances as warranting firm action to protect the right to speedy disposal of cases and the integrity of the adjudicatory process. [Paras 3, 5, 6]

Adjournments were impermissibly sought/allowed mechanically in the absence of appearance or recorded reasons and such conduct is contrary to the duty of advocates and the judicial obligation to curb delay.

Dismissal for non-prosecution under Rule 20 - adjournment in appeals - The appeal was liable to be dismissed for non prosecution under Rule 20 in view of persistent non appearance and absence of any justifying adjournment requests or recorded reasons. - HELD THAT: - Rule 20 empowers the Tribunal, where an appellant does not appear on the day fixed for hearing or any adjourned date, to dismiss the appeal for default or hear and decide it on merits. Applying this rule to the factual matrix - repeated listings where the appellant/counsel abstained from hearing and absence of requests for adjournment on successive dates - the Tribunal exercised its discretion to dismiss the appeal for non prosecution. The exercise of discretion was informed by the statutory restriction on adjournments and the imperative to check dilatory tactics, as discussed in the preceding reasoning. [Paras 6, 7, 8]

The appeal is dismissed for non prosecution in terms of Rule 20 of the CESTAT Procedure.

Final Conclusion: The Tribunal dismissed the appeal for non prosecution under Rule 20 after noting repeated non appearances by the appellant/counsel, absence of adjournment requests or recorded reasons, and the obligation on courts and advocates to prevent routine adjournments and ensure speedy disposal of litigation.

Excisable goods - marketability of goods - intermediate parts - identifiability of the final structure - turnkey supply/contract work - clearance without payment of duty

Excisable goods - marketability of goods - intermediate parts - identifiability of the final structure - turnkey supply/contract work - Whether duty was leviable on partially processed fabricated steel structures removed to site as intermediate parts for assembly into an identifiable gantry crane under a turnkey contract. - HELD THAT: - The Tribunal followed the decision of the High Court in Thungabhadra Steel Products Ltd. which examined identical factual and legal questions. The Court accepted that the fabricated components were produced to the buyer's specifications for a specific project and were intermediate parts to be assembled at site into the final identifiable structure. The determinative legal principle adopted was that goods are excisable only when they are marketable or capable of being marketed as such; parts fabricated exclusively for incorporation into an identifiable final product under a turnkey contract, not offered for sale in the market, do not attain excisable character. Applying that principle to the facts, the Tribunal held that the cleared fabricated steel structures were intermediate parts of the gantry crane and not marketable goods, and therefore no excise duty was leviable on their clearance to the project site without payment of duty. [Paras 5, 6]

The appeals are allowed; the impugned demands for excise duty on the intermediate fabricated parts are set aside and no duty is payable.

Final Conclusion: Following Thungabhadra Steel Products Ltd., the Tribunal held that specially fabricated intermediate parts removed to site for incorporation into an identifiable gantry crane under a turnkey contract are not excisable goods; the demand for duty is set aside and the appeals are allowed.

Common parlance test - classification by trade/commercial understanding - use of Harmonized System (HSN) Explanatory Notes as persuasive aid - suo-motu revisional power

Suo-motu revisional power - Validity of the Revisional Authority's exercise of suo-motu revision when action was taken after receipt of information/direction from the Commissioner/department. - HELD THAT: - The Court accepted that under the statute the Revisional Authority may act of his own motion to call for records and satisfy himself as to the legality or propriety of subordinate orders and, if satisfied, pass appropriate orders. The Court held that information prompting exercise of suo-motu powers may originate from any source, including the department or an assessee, and that receiving such information does not convert the exercise into something other than suo-motu action. Precedents were held to support that the Revisional Authority has discretion to decide whether to act on information brought to his notice and that invocation by an assessee or the department is permissible. A contrary cited decision was found inapplicable to the facts. [Paras 27, 28, 29, 30, 31]

Information received from the department (or any source) did not vitiate the Revisional Authority's suo-motu jurisdiction; the challenge to jurisdiction is rejected.

Common parlance test - classification by trade/commercial understanding - use of Harmonized System (HSN) Explanatory Notes as persuasive aid - Whether 'milk cream' sold by the assessee is covered by the tax-free entries for 'fresh milk' or 'pasteurized milk', or is a distinct, taxable milk product. - HELD THAT: - The Court declined to adopt a technical or scientific classification urged by the assessee and applied the common parlance/commercial understanding test: terms in a taxing statute lacking statutory definition must be construed according to their popular or trade meaning. The Court agreed with the Tribunal that milk cream is commonly understood as a distinct product from milk and that a purchaser seeking milk cream would not ask for milk. While Explanatory Notes to the Harmonized System may have persuasive value in appropriate cases, the Court preferred the popular meaning and commercial understanding in this context and upheld the Tribunal's conclusion that milk cream is not exempt as 'fresh milk'. The Tribunal's approach-distinguishing milk products and noting specific taxable entries for various milk products-was endorsed. [Paras 34, 35, 36, 37, 38]

Milk cream is not covered by the tax-free entries for fresh or pasteurized milk; it is a different product for tax purposes and not entitled to exemption.

Final Conclusion: The petition is dismissed; the revisional challenge fails both on the jurisdictional point and on the substantive classification of milk cream, which is held not to be covered by the tax-free entries for fresh/pasteurized milk.

Revision in High Court for question of law arising out of erroneous decision or failure to decide a question of law - Rectification under Section 47 not challengeable under Section 48 - Limitation for revision under Section 48 - 90 days - No question of law - jurisdictional bar to revision

Revision in High Court for question of law arising out of erroneous decision or failure to decide a question of law - Limitation for revision under Section 48 - 90 days - Whether the High Court could exercise revisional jurisdiction under Section 48(1) of the HP VAT Act in the present petition. - HELD THAT: - The Court held that revisional jurisdiction under Section 48(1) is confined to orders made by the tribunal under Section 45(2) or Section 46(3) and is exercisable only where an application is filed within 90 days of communication and the matter involves a question of law arising from an erroneous decision or failure to decide a question of law. The impugned proceedings before this Court did not satisfy these jurisdictional and limitation requirements and therefore Section 48(1) could not be invoked in the present petition. [Paras 10, 11]

Revision under Section 48(1) could not be entertained as the jurisdictional and limitation conditions were not met.

Rectification under Section 47 not challengeable under Section 48 - Whether the Tribunal's order in the rectification application under Section 47 could be challenged before the High Court under Section 48. - HELD THAT: - The Court observed that an order passed by the Tribunal in a rectification application under Section 47 does not fall within the class of tribunal orders which are amenable to revision under Section 48. Consequently the petitioners' challenge to the Tribunal's rectification order was not maintainable before the High Court under Section 48. [Paras 11]

The rectification order under Section 47 is not open to challenge before the High Court under Section 48.

No question of law - jurisdictional bar to revision - Whether the Tribunal's principal order dated 14.06.2017 was erroneous or amounted to non-decision of a question of law such as to permit revision. - HELD THAT: - On the merits of jurisdictional entitlement to revise, the Court found that the Tribunal's order dated 14.06.2017 was neither shown to be erroneous nor to constitute a failure to decide a question of law. As no question of law arose for the High Court's consideration, the statutory test for invoking revision under Section 48 was not satisfied and the petition therefore failed on that ground. [Paras 12]

The Tribunal's order dated 14.06.2017 was not erroneous nor a non-decision of a question of law; no revision lies.

Final Conclusion: The revision petition is dismissed: the High Court has no jurisdiction to entertain challenge to the Tribunal's rectification order under Section 48, the challenge to the principal tribunal order is time barred and, in any event, no question of law requiring revision is made out.

Levy of entry tax on goods brought into a local area for consumption, use or sale therein - exclusion of goods brought into a local area for export or sale to exporters from entry tax - treatment of sales as export under Section 5(1) and 5(3) of the Central Sales Tax Act, 1956 - non-application of mind to objections vitiating assessment proceedings - requirement of a speaking order and opportunity to be afforded before completion of assessment - remand for fresh assessment and verification of objections

Exclusion of goods brought into a local area for export or sale to exporters from entry tax - treatment of sales as export under Section 5(1) and 5(3) of the Central Sales Tax Act, 1956 - Whether entry tax can be levied on granites brought into the local area that were exported as such or sold to exporters, where the same transactions were treated as export sales under Sections 5(1) and 5(3) of the CST Act. - HELD THAT: - The Court recorded that the petitioner raised the objection that entry tax is leviable only where goods are brought into a local area for consumption, use or sale therein and not where goods are brought in for export or sale to exporters. The sale transactions had been assessed under the CST Act treating them as export sales under Sections 5(1) and 5(3). The assessing authority's impugned order does not contain any finding addressing this objection on the jurisdiction to levy entry tax. Because the question whether the goods are excluded from entry tax by reason of being exports or sales occasioning export was not examined in the assessment order, the Court did not decide the substantive legal question on the merits; instead the matter is remitted so that the Assessing Authority may consider the objection afresh, including reliance on the CST assessment and the principle in Tata Engineering & Locomotive Co. Ltd., and pass a reasoned decision after affording opportunity to the petitioner. [Paras 1, 2, 3, 6]

Remitted to the Assessing Authority for fresh consideration of the petitioner's objection that the transactions are export sales (as treated under Sections 5(1) and 5(3) of the CST Act) and therefore not liable to entry tax; petitioner permitted to file fresh objections and place reliance on the CST assessment and the cited Supreme Court authority.

Non-application of mind to objections vitiating assessment proceedings - requirement of a speaking order and opportunity to be afforded before completion of assessment - remand for fresh assessment and verification of objections - Whether the assessment/order is vitiated by failure of the Assessing Authority to consider the objections raised by the petitioner and what relief follows. - HELD THAT: - The Court found that the Assessing Authority failed to record any finding on the jurisdictional objection raised by the petitioner, namely that the goods were brought in for export or sale to exporters and thus not liable to entry tax. It is a fundamental requirement that objections raised must be dealt with; non-application of mind in this regard vitiates the proceedings. In view of the respondent's concession to redo the assessment, the Court set aside the impugned order and directed that the assessment be redone. The petitioner is allowed to file fresh objections within four weeks and the Assessing Authority must pass a speaking order dealing with the objections after affording a reasonable opportunity and complete the proceedings within six weeks from receipt of those objections. [Paras 5, 6]

Impugned order set aside for want of application of mind; assessment remitted to the Assessing Authority with directions to afford opportunity, consider objections and pass a speaking order within the stipulated time.

Final Conclusion: The High Court set aside the impugned entry tax order for failure to consider the petitioner's jurisdictional objections (including reliance on CST treatment of the transactions as export sales) and remitted the matter to the Assessing Authority to rehear and decide the objections on a speaking record after affording opportunity; petitioner may file fresh objections within four weeks and the authority shall complete the reassessment within six weeks.

Rectification of mistake apparent on the face of the record - exercise of jurisdiction under Section 24(1) of the Maharashtra Value Added Tax Act 2002 - prohibition on review or reassessment under the guise of rectification - non-issuance of Form F and consequent evidentiary consequences - application of Ambika Steels principle where transferee State does not issue Form F

Rectification of mistake apparent on the face of the record - exercise of jurisdiction under Section 24(1) of the Maharashtra Value Added Tax Act 2002 - prohibition on review or reassessment under the guise of rectification - Whether the Assistant Commissioner, by invoking Section 24(1) of the MVAT Act, validly rectified the assessment order or impermissibly reviewed/reassessed the earlier assessment. - HELD THAT: - The Court found that Section 24(1) permits correction of mistakes which are apparent on the face of the record, and not a re-evaluation or review of the assessment. On examination of the impugned order, the Assessing Officer proceeded beyond rectification: the reasons recorded show fresh examination and alteration of the turnover and tax liability rather than correction of an obvious clerical or arithmetical error. The order evidences an exercise of reassessment/review power under the cloak of rectification and thereby exceeds the jurisdiction conferred by Section 24(1). The Assessing Officer also treated the hearing and notice as formality while effectively reopening merits of the assessment, which is impermissible in a rectification exercise. For these reasons the impugned order could not be sustained and was quashed. [Paras 15, 16]

Impugned rectification order was beyond the scope of Section 24(1), amounted to an impermissible review/reassessment, and is set aside.

Non-issuance of Form F and consequent evidentiary consequences - application of Ambika Steels principle where transferee State does not issue Form F - Whether the Assessing Officer was entitled to disregard the communication that Form F would not be issued by the Coimbatore authorities and to insist on Form F despite the legal principle in Ambika Steels. - HELD THAT: - The Court noted that the petitioners placed on record the communication from the Coimbatore authority declining issuance of Form F and relied upon the Supreme Court's decision in Ambika Steels, which permits the Assessing Officer to proceed on merits where the transferee State does not issue Form F and the assessee is not at fault. The Assessing Officer failed to consider the Coimbatore authority's letter and did not apply the settled legal principle set out in Ambika Steels (as followed by this Court in Johnson Matthey). That omission formed part of the misapplication of mind in the impugned order. Because the authority declined to issue Form F and no fault was attributable to the petitioner, the Assessing Officer should have examined the transactions on merits in accordance with the cited precedent rather than insisting on Form F and enhancing turnover by way of rectification. [Paras 15]

Failure to consider the non-issuance of Form F and the Ambika Steels principle vitiated the impugned order; the insistence on Form F was not tenable and supports quashing of the rectification.

Final Conclusion: The rectification order dated 1 December 2021 was quashed as beyond the scope of Section 24(1) and passed without application of mind to the non-issuance of Form F and the binding principle in Ambika Steels; the petition is allowed and the impugned order set aside, with no costs.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Graded scheme for imposition of costs in cheque bouncing cases - Reduction of sentence on compromise - Payment to State Legal Services Authority as condition for compounding - Use of Article 142 powers to frame guidelines in legislative vacuum

Compounding of offence under Section 138 of the Negotiable Instruments Act - Graded scheme for imposition of costs in cheque bouncing cases - Reduction of sentence on compromise - Payment to State Legal Services Authority as condition for compounding - Effect of an out-of-court compromise filed at the revision stage in a conviction under Section 138 N.I. Act and the condition for modifying sentence - HELD THAT: - The Court accepted the parties' compromise filed at the stage of revision and applied the guidelines laid down by the Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. regarding a graded scheme for imposition of costs to discourage delayed compounding of cheque-bouncing offences. Noting the legislative vacuum and the authority to endorse measures that encourage early composition, the Court required the applicant to deposit costs with the State Legal Services Authority as a condition for modifying the sentence. Exercising discretion in the facts of the present case where the complainant has received the cheque amount and raises no objection to reduction of sentence, the Court fixed the cost at 3% of the cheque amount to be deposited with the State Legal Services Authority, Indore, within 15 days. Subject to such payment, the Court modified the sentence by reducing it to the period already undergone and ordered release. Failure to deposit the said amount will result in revival of the original sentence and compensation as awarded by the trial court. [Paras 4, 5, 6, 7]

On payment of costs at the rate of 3% of the cheque amount to the State Legal Services Authority, Indore, within 15 days, the sentence is reduced to the period already undergone and the applicant is directed to be released; failure to deposit will revive the original sentence and compensation.

Final Conclusion: Revision allowed in part: in view of the compromise and applying the Supreme Court's guidelines, the sentence is modified to the period already undergone subject to deposit of 3% of the cheque amount with the State Legal Services Authority within 15 days; otherwise the original sentence and compensation shall operate.

Section 138 of the Negotiable Instruments Act - dishonour of cheque - demand notice requirement - proof of proprietorship in proceedings under Section 138 - conviction and sentence under Cr.P.C.

Section 138 of the Negotiable Instruments Act - dishonour of cheque - demand notice requirement - Whether the ingredients of an offence under Section 138 NI Act were established - issuance of cheque, its presentation and dishonour, service of statutory notice and failure to make payment. - HELD THAT: - The Court accepted the trial and appellate findings that the accused issued an account-payee cheque in favour of "Sunny Traders" dated 23.09.2015; the cheque was presented and returned unpaid on account of the payee's account being closed; a demand notice dated 18.11.2015 was sent and received on 26.11.2015; and no payment was made within the statutory period. There was no denial of issuance of the cheque in discharge of debt or of the notice. On these facts the statutory prerequisites for conviction under Section 138 were found satisfied and were upheld on appeal. [Paras 18, 19]

The ingredients of Section 138 were proved and the conviction under that provision stands affirmed.

Proof of proprietorship in proceedings under Section 138 - Whether the complainant was the sole proprietor of "Sunny Traders" and entitled to maintain the complaint in that capacity. - HELD THAT: - The Court noted the documentary and oral evidence before the trial court that the complainant carried on business in the name of "Sunny Traders" and that the accused did not produce evidence to rebut the complainant's claim of proprietorship. The contention that a firm cannot have a savings account was raised but the factual finding of proprietorship by the trial and appellate courts was not displaced. Reliance was placed on the established principle that a person claiming to be a sole proprietor must prove that status, and here the complainant was found to have done so while the accused failed to adduce contrary proof. [Paras 10, 11, 22, 23]

The complainant was held to be the sole proprietor of "Sunny Traders" and competent to prosecute the complaint.

Conviction and sentence under Cr.P.C. - Whether the Sessions Court was correct in dismissing the appeal and affirming the trial court's conviction and sentence. - HELD THAT: - On review of the trial record, evidence and findings, the High Court found that the Sessions Judge correctly considered the materials and law and rightly dismissed the appeal, thereby affirming the conviction, sentence and order of compensation. No grounds for interference with the concurrent findings were shown in the revision. [Paras 6, 15, 16, 24, 25]

The appellate court's dismissal of the appeal and affirmation of the trial court's judgment and sentence are sustained; the revision is dismissed.

Final Conclusion: Revision dismissed. Conviction and sentence under Section 138 of the Negotiable Instruments Act, as affirmed by the Sessions Court, are upheld; petitioner directed to comply with the affirmed order within the time fixed or suffer consequence of default.

Reversal of acquittal-perverse or unreasonable findings - Appellate power to reappreciate and reexamine evidence - Presumption under Section 118 and Section 139 of the Negotiable Instruments Act - Validity period for presentation of cheque and its effect on offence under Section 138 of the Negotiable Instruments Act - Proof and rebuttal of presumption of issuance of cheque for legally recoverable debt

Reversal of acquittal-perverse or unreasonable findings - Appellate power to reappreciate and reexamine evidence - Proof and rebuttal of presumption of issuance of cheque for legally recoverable debt - Presumption under Section 118 and Section 139 of the Negotiable Instruments Act - Whether the trial court's acquittal of the accused was perverse or contrary to the evidence so as to warrant interference and grant of leave to appeal. - HELD THAT: - The High Court reviewed the scope of appellate interference in acquittal appeals and acknowledged that an appellate court may reappreciate evidence but must disturb an acquittal only if the trial court's conclusions do not reflect a possible view or are perverse, unreasonable or based on an erroneous understanding of law or facts. The trial court had specifically examined the evidence of the complainant and his mother and expressed doubt about the availability of the claimed sum and the factum of advancement of the loan; it also found that the accused succeeded in rebutting the statutory presumptions under Section 118/139 of the Negotiable Instruments Act. The High Court concluded that the trial court had considered the entire material and, after assigning detailed reasons, reached a conclusion that could reasonably be arrived at on the record. There was no demonstration of a patently illegal approach, perverse finding or miscarriage of justice that would justify reversal of the acquittal. [Paras 12, 13]

The trial court's acquittal is not perverse or contrary to the evidence; no leave to appeal is warranted on this ground.

Validity period for presentation of cheque and its effect on offence under Section 138 of the Negotiable Instruments Act - Effect of delayed presentation on maintainability of complaint under Section 138 - Whether the cheque was presented beyond its period of validity and consequently whether the offence under Section 138 NI Act was made out. - HELD THAT: - The cheque dated 11.02.2015 was valid for three months. The complaint and the complainant's evidence record that on 15.05.2015 the accused assured encashment and the complainant thereafter presented the cheque; this chronology indicates presentation after the three-month validity. Attempts in evidence to reframe presentation within the validity period were found to be unreliable. Reliance placed by the trial court on precedent concerning presentation within three months and relevant banking/RBI guidance supported the conclusion that, on the proved facts, the cheque was presented beyond its validity and the ingredients of Section 138 were not established. [Paras 20]

Cheque was presented after its three-month validity; therefore the offence under Section 138 NI Act is not made out.

Final Conclusion: Application for leave to appeal against acquittal is rejected and the appeal is dismissed; the trial court's acquittal is upheld as neither perverse nor contrary to the evidence, and the cheque was held to have been presented beyond its validity, negating the Section 138 offence.