TaxTMI Updates e-Newsletter
Aug 14,2019

Power of arrest under GST - Exercise of arrest power with circumspection - Requirement of prior adjudication before launching prosecution - Protection under Article 21 and Article 22 - Reliance on judicial safeguards laid down in D.K. Basu

Power of arrest under GST - Exercise of arrest power with circumspection - Requirement of prior adjudication before launching prosecution - Protection under Article 21 and Article 22 - Interim restraint against coercive steps of arrest and directions for service and listing pending adjudication of the writ petition. - HELD THAT: - The Court noted precedents emphasizing that arrest powers under the fiscal enactments must be exercised with great care and not in a perfunctory manner. It accepted the principle that prosecution and extreme coercive measures should ordinarily follow a determination of liability or be taken after the adjudicatory process under the relevant provisions, and that until such determination the position is of an apprehended evasion. The Court referred to constitutional safeguards under Article 21 and Article 22 and the guidelines in D.K. Basu, and relied on the ratio of earlier High Court decisions affirmed by the Supreme Court which require following procedural safeguards before resorting to arrest. Applying these principles to the present petition, the Court issued notice, directed that no coercive arrest be made against the applicant in the interim, permitted direct service and directed priority listing for the returnable date so that the matter could be taken up for final hearing.

Notice issued; interim direction that no coercive steps of arrest shall be taken against the writ applicant until the returnable date; direct service permitted and matter to be notified on top of the Board for the returnable date.

Final Conclusion: The High Court issued interim relief by staying any coercive arrest of the petitioner and issuing notice to respondents, directing service and priority listing for final hearing, while recording the legal principle that arrest powers under the GST regime must be exercised with circumspection and ordinarily after adjudication.

Interim relief restraining encashment of bank guarantee - Release of detained goods upon furnishing bank guarantee under Section 129 of the CGST Act - Imposition of penalty for technical contraventions under Section 129 of the CGST Act - Availability of statutory remedies against adjudication - Equitable interim protection pending challenge to adjudication order

Interim relief restraining encashment of bank guarantee - Release of detained goods upon furnishing bank guarantee under Section 129 of the CGST Act - Equitable interim protection pending challenge to adjudication order - Whether the court should grant interim restraint on encashment of the bank guarantee furnished for release of detained goods pending adjudication under Section 129 of the CGST Act. - HELD THAT: - The writ petition was filed after release of goods on the petitioner furnishing a bank guarantee in compliance with Section 129. The Single Judge correctly observed that an interim direction restraining encashment would amount to an anticipatory determination that the adjudication will result in penalty and would defeat the conditions on which release was ordered. The petitioner retains statutory and judicial remedies to challenge any eventual adjudication order. In the interest of equity, and without prejudicing the statutory scheme under which release was secured by a bank guarantee, the Court directed a limited protective measure: respondents shall not encash the bank guarantee, if penalty is ultimately imposed, until the expiry of 14 days from service of the adjudication order imposing penalty, thereby preserving the petitioner's opportunity to seek prompt interim relief against encashment in appropriate proceedings. [Paras 4, 5, 6]

Interim restraint on encashment of the bank guarantee is not warranted as a matter of anticipatory relief undermining the release under Section 129; however, respondents are directed not to encash the bank guarantee, if penalty is imposed, until 14 days after service of the adjudication order imposing penalty, and the petitioner remains free to challenge any adjudication order and seek appropriate interim relief.

Final Conclusion: Writ petition dismissed insofar as seeking a blanket restraint on encashment of the bank guarantee; limited equitable protection granted permitting the petitioner 14 days from service of any adjudication order imposing penalty to obtain appropriate relief before the bank guarantee is encashed.

Challenge to summons under the Central Goods and Services Tax Act, 2017 - Investigation of cognizable offence - Requirement of registration of FIR and CrPC procedure (Section 154/155) before investigation - Pre-arrest relief / protection from arrest - High Court bound by Supreme Court precedent

Investigation of cognizable offence - Requirement of registration of FIR and CrPC procedure (Section 154/155) before investigation - Pre-arrest relief / protection from arrest - Validity of summons issued under the CGST Act and entitlement to protection from arrest where investigation into a cognizable offence is said to be pending without prior registration of FIR or Magistrate's permission under CrPC - HELD THAT: - The petitioner challenged the summons on the ground that the investigating authority could not proceed without first following the procedure under CrPC (registration of FIR where offence is cognizable, or Magistrate's permission where non-cognizable). The affidavit in reply avers that the petitioner is materially involved in a scheme of fictitious companies, fake invoices and fraudulent input tax credit, and that the offence under the CGST Act is cognizable and under active preliminary investigation. The High Court noted that the Supreme Court has recently declined interference in closely comparable matters and, being bound by that precedent, was not inclined to grant pre-arrest protection or intervene in the investigative process. On this basis the Court refused the petition seeking relief from arrest and protection from the consequences of investigation.

Petition dismissed; no protection from arrest granted and summons under the CGST Act upheld for the purposes of investigation in view of the factual allegations and binding Supreme Court precedent.

Final Conclusion: The High Court dismissed the petition challenging the summons issued under the CGST Act and declined to grant protection from arrest in a cognizable investigation, relying on the factual averments in the investigative affidavit and the binding view of the Supreme Court.

Maintainability of writ petition - statutory remedy under Section 107 of the Goods and Services Tax Act - invocation and encashment of bank guarantee pending appeal - interim restraint on encashment of bank guarantee

Maintainability of writ petition - statutory remedy under Section 107 of the Goods and Services Tax Act - Writ petition seeking to challenge the assessment order is not maintainable and the petitioner is relegated to the statutory remedy of appeal under Section 107. - HELD THAT: - The Court observed that the explanation relied on by the petitioner regarding documents and delay is a matter of record which requires verification by the competent authority. In view of the availability of a specific appellate remedy under Section 107 of the Goods and Services Tax Act, the Court declined to entertain the writ petition on merits and directed the petitioner to file the statutory appeal and, if necessary, a stay petition before the appellate authority. The writ petition was accordingly disposed of by relegation to the appellate remedy rather than adjudication of the substantive contention. [Paras 3]

Writ petition dismissed insofar as maintainability; petitioner relegated to file appeal under Section 107.

Invocation and encashment of bank guarantee pending appeal - interim restraint on encashment of bank guarantee - Respondents directed not to encash the bank guarantee for a limited period to enable the petitioner to pursue appellate remedies. - HELD THAT: - While declining to entertain the writ on merits, the Court granted limited interim protection to prevent irreparable prejudice: the respondents were restrained from encashing the bank guarantee for a period of 90 days from the date of the order. The Court also permitted the petitioner to seek appropriate relief from the appellate authority and directed that any stay petition filed thereon be considered and disposed of before the expiry of the three month period granted by this Court. [Paras 3]

Respondents restrained from encashing the bank guarantee for 90 days; petitioner permitted to move the appellate authority and any stay petition shall be considered before expiry of that period.

Final Conclusion: The writ petition was not entertained on merits and the petitioner was relegated to the statutory appellate remedy under Section 107; meanwhile the respondents were directed not to encash the bank guarantee for 90 days and the appellate authority was to consider any stay petition before the expiry of that period.

Interim release of detained conveyance and goods - Deposit as condition for release - Enforcement under Section 129 and Section 130 of the GST Act, 2017

Interim release of detained conveyance and goods - Deposit as condition for release - Enforcement under Section 129 and Section 130 of the GST Act, 2017 - Release of the petitioner's truck and the goods seized in transit was ordered on interim terms. - HELD THAT: - The Court, having considered the materials on record and the submissions, and noting that the matter falls within broader challenges to the operation of the provisions of the GST Act, 2017 (Sections 129 and 130), granted an interim order. While the larger batch of writ-applications raising common questions is being kept for further consideration, the petitioner was held entitled to a conditional interim relief. The determinative condition imposed for immediate release was the deposit of the specified amount with the concerned authority. The Court recorded that service on the respondents was waived by the learned AGP and permitted direct service.

Conveyance and goods to be released immediately upon deposit of Rs. 3,11,016 with the concerned authority; direct service permitted; rule returnable on 28/08/2019.

Final Conclusion: The petition succeeds to the extent of an interim direction: the detained truck and goods are ordered released forthwith on deposit of Rs. 3,11,016 with the concerned authority, with the broader legal questions under Sections 129 and 130 kept for further adjudication.

Invocation of bank guarantee under the GST Act - interim restraint on encashment of bank guarantee - communication of decision under Section 129 of the GST Act - appeal under Section 107 of the GST Act

Invocation of bank guarantee under the GST Act - interim restraint on encashment of bank guarantee - appeal under Section 107 of the GST Act - communication of decision under Section 129 of the GST Act - Direction restraining encashment of the bank guarantee and requiring communication of the Section 129 decision within a fixed time. - HELD THAT: - The petitioner challenged the prospective invocation of a bank guarantee furnished during proceedings under Section 129 of the Kerala GST Act and submitted that substantial grounds exist to challenge the order and that the remedy is by way of appeal under Section 107. The High Court, having considered the record and submissions, was satisfied that interim protection was appropriate. The court granted a limited injunction restraining the respondents from encashing the bank guarantee for four weeks from the date of the order and directed the respondents to communicate the decision taken under Section 129 within one week. The relief is interlocutory and calibrated to permit the petitioner to pursue the statutory remedy while ensuring prompt communication of the impugned decision by the respondents. [Paras 4]

Respondents restrained from encashing the bank guarantee for four weeks and directed to communicate the decision under Section 129 within one week.

Final Conclusion: Writ petition disposed by granting interim protection: encashment of the bank guarantee restrained for four weeks and respondents directed to communicate the Section 129 decision within one week; petitioner may pursue the remedy of appeal under Section 107.

Stay of coercive proceedings pending appeal - condonation of delay in filing appeals - deposit as condition for interim relief - freezing of bank accounts and interim protection - balance of convenience

Stay of coercive proceedings pending appeal - freezing of bank accounts and interim protection - balance of convenience - Interim protection against recovery from frozen bank accounts pending disposal of the delay condonation petitions and appeals. - HELD THAT: - The Court, applying a measured exercise of discretion based on the balance of convenience, accepted that the petitioner's appeals with delay condonation applications were pending before the second respondent and that interim preservation of the petitioner's ability to pursue statutory remedies was warranted. Having regard to the competing interests of the Department and the petitioner, the Court directed that respondents shall not recover or realise the amount from the frozen bank accounts for a limited period of three weeks from the date of the order, thereby granting temporary protection while the statutory appeals and condonation petitions are processed. The Court emphasised that this interim protection is limited in time and does not amount to a determination on the merits of the underlying assessment orders or on the bonafides of the petitioner.

Respondents restrained from recovering or realising the amount from the frozen bank accounts for three weeks from the date of the order.

Deposit as condition for interim relief - stay of coercive proceedings pending appeal - Requirement of a security deposit by the petitioner as a precondition for interim relief. - HELD THAT: - To strike a fair balance and to demonstrate bonafides while enabling the appellate remedy, the Court directed the petitioner to deposit 10% of the tax amount determined in the assessment orders within one week. The deposit was made a precondition to obtain the interim protection from recovery, and to facilitate immediate consideration of the delay condonation petitions by the second respondent. The Court treated the deposit as a conciliatory measure protecting the revenue while permitting the petitioner to proceed with statutory remedies.

Petitioner directed to deposit 10% of the tax amount within one week as condition for interim relief.

Condonation of delay in filing appeals - stay of coercive proceedings pending appeal - Direction to the appellate authority to consider and dispose of the delay condonation petitions within a specified time-frame. - HELD THAT: - Recognising that the appeals were statutory remedies which should not be foreclosed without consideration, the Court directed the petitioner, on producing proof of the deposit and a copy of the judgment, to appear before the second respondent within one week and request disposal of the delay condonation petitions. The second respondent was directed to consider and dispose of those condonation petitions within two weeks from the petitioner's appearance. This direction entrusts the second respondent to exercise jurisdiction in accordance with law and confines the Court's role to ensuring timely adjudication of the pending statutory applications; the Court did not express any view on the merits of the condonation or the appeals themselves.

Second respondent directed to consider and dispose of the delay condonation petitions within two weeks of the petitioner's appearance, following proof of deposit and production of this judgment.

Final Conclusion: Writ petition disposed by granting limited interim protection: petitioner to deposit 10% of the tax demand within one week, appear before the appellate authority with proof within one week thereafter, the appellate authority to decide the delay condonation petitions within two weeks, and respondents restrained from realising amounts from the frozen bank accounts for three weeks from the date of the order.

Draft assessment order under Section 144C(1) - reliance on Transfer Pricing Officer's report under Section 92CA - non-curability of omission under Section 292B - Dispute Resolution Panel procedure

Draft assessment order under Section 144C(1) - reliance on Transfer Pricing Officer's report under Section 92CA - non-curability of omission under Section 292B - Whether the Assessing Officer can pass a final assessment order on the basis of the TPO's report without first passing a draft assessment order as required by Section 144C(1), and whether such failure is curable. - HELD THAT: - The Court reaffirmed its consistent view that where an assessment has been set aside with a direction for a fresh determination of arm's length price, the Assessing Officer must issue a draft assessment order under the procedure mandated by Section 144C(1) before passing a final assessment. Proceeding straightaway on the basis of the Transfer Pricing Officer's report without issuing the draft order violates the statutory requirement. The Court noted prior decisions establishing that such failure is not a curable defect under Section 292B. An order in another proceeding, recorded on concession in court that a final assessment may be treated as a draft for purposes of invoking the Dispute Resolution Panel, does not lay down a binding precedent and cannot override the clear statutory mandate.

Failure to issue the draft assessment order under Section 144C(1) renders the subsequent final assessment order invalid; the defect is not curable under Section 292B.

Final Conclusion: The impugned assessment order dated 30th October, 2017 is set aside; the writ petition is allowed, affirming that the statutory draft-assessment procedure under Section 144C(1) must be followed before a final assessment based on the TPO report.

Deduction under Section 80IB/80IC - trading income qualifying as profits derived from industrial undertaking - apportionment of depreciation on head office assets - apportionment of expenses on product development - adjustment on account of corporate guarantee as a book transaction - Arm's Length Price (ALP) determination - disallowance under Section 14A

Deduction under Section 80IB/80IC - trading income qualifying as profits derived from industrial undertaking - Validity of including trading income from sale of boxes in computing deduction under Section 80IB/80IC which was claimed for manufacture of electric meters - HELD THAT: - The Court examined whether income from sale of boxes (used to house electric meters) could be treated as part of the profits derived from the industrial undertaking qualifying for deduction under Section 80IB/80IC, given that the statutory deduction was claimed for manufacture of electric meters. The Court found that manufacture and supply of such boxes are intrinsically connected with the qualifying manufacturing activity and facilitate the use of the meters; hence they form part of the business qualifying for deduction. On this basis the question whether such trading income must be excluded for computing the deduction was held not to arise.

Income from sale of boxes, being intrinsically connected with manufacture of electric meters, falls within the activity qualifying for deduction under Section 80IB/80IC; the question of exclusion does not arise.

Apportionment of depreciation on head office assets - Justifiability of the tribunal's deletion of apportionment of depreciation on head office assets used for activities of different eligible industrial undertakings - HELD THAT: - Having regard to the concurrent findings of the authorities below, the Court observed that the question raised about apportionment of depreciation on head office assets-where such assets are used for activities of different eligible industrial undertakings-was not required to be entertained by the Court. The appellate court therefore declined to re-open or decide the matter, treating the concurrent factual findings as dispositive.

The issue of apportionment of head office depreciation does not arise for reconsideration by this Court in view of the concurrent findings.

Apportionment of expenses on product development - Justifiability of deletion of apportionment of product development expenses across activities of different eligible industrial undertakings - HELD THAT: - The Court noted concurrent findings on the matter and concluded that the contention regarding apportionment of product development expenses for computing deduction under Section 80IB/80IC did not require fresh adjudication. In view of those findings, the question was treated as not arising for the Court's determination.

The question of apportionment of product development expenses does not arise for reconsideration by this Court.

Arm's Length Price (ALP) determination - disallowance under Section 14A - Whether issues of ALP determination and disallowance under Section 14A require fresh consideration - HELD THAT: - The Court observed that the matters pertaining to ALP determination and disallowance under Section 14A are covered by higher or earlier authoritative decisions. The question of disallowance under Section 14A is governed by the Supreme Court's decision in Godrej & Boyce Manufacturing Company Ltd. , and ALP adjustment is covered by this Court's earlier decision in Pr. Commissioner of Income Tax, Udaipur v. M/s Secure Meters Ltd. . In consequence, these questions do not arise for fresh consideration in the present appeals.

Both ALP determination and disallowance under Section 14A are not open for reconsideration in these appeals as they are covered by prior authoritative decisions.

Adjustment on account of corporate guarantee as a book transaction - Justifiability of adjustment on account of corporate guarantee provided by the assessee to its associated enterprise - HELD THAT: - The Court treated the corporate guarantee given by the assessee to its associated enterprise as part of the assessee's commercial activity and observed that no out-of-pocket cost was incurred by the assessee in providing this benefit. On the material before it, the Court regarded the guarantee to be a book transaction and therefore held that the question of adjustment on that account did not arise for imposition.

Adjustment on account of corporate guarantee does not arise, the guarantee being a book transaction with no cost incurred by the assessee.

Final Conclusion: The Court admitted the appeals but held that the principal substantive questions either do not arise for reconsideration or are covered by prior authoritative decisions: income from sale of boxes is part of the qualifying manufacturing activity for Section 80IB/80IC purposes; apportionment issues on depreciation and product development expenses require no fresh adjudication in view of concurrent findings; ALP and Section 14A issues are governed by earlier decisions and are not open; and adjustment for a corporate guarantee is not warranted as it is a book transaction.

Validity of notice under Section 153C of the Income Tax Act - Prospective applicability of amended provisions of Section 153C - Computation of six assessment years under Section 153A as trigger for notices - Jurisdictional limit of notices under Section 153C where they exceed six assessment years - Alternative period of limitation contemplated by statute

Prospective applicability of amended provisions of Section 153C - Validity of notice under Section 153C of the Income Tax Act - Amended provisions of Section 153C enacted with prospective effect from 01.06.2015 are not to be applied to searches initiated prior to that date and notices issued under Section 153C in the present petitions are liable to be quashed. - HELD THAT: - The coordinate bench addressed whether the amendment to Section 153C, effective 01.06.2015, could be applied to searches initiated before that date and concluded that the Legislature intended the amendment to operate prospectively. Application of the amended provisions to searches prior to 01.06.2015 would affect substantive rights of persons brought within the amended ambit; accordingly the amended provisions are not applicable to searches conducted before 01.06.2015. Applying those principles to the present petition, the Court adopted the coordinate bench's reasoning and held that the impugned notice at Annexure 'A' issued under Section 153C was without jurisdiction and therefore liable to be quashed. The Court made absolute the rule and quashed the impugned notice; where assessment orders under Section 153C had been passed, those orders were also quashed insofar as they rested on the jurisdictional foundation of the impugned Section 153C proceedings. [Paras 3, 4, 5, 7]

Petition allowed; impugned notice under Section 153C quashed and set aside; any assessment orders passed under Section 153C also quashed.

Computation of six assessment years under Section 153A as trigger for notices - Jurisdictional limit of notices under Section 153C where they exceed six assessment years - Alternative period of limitation contemplated by statute - The trigger date for computing the six assessment years under Section 153A is the assessment year relevant to the previous year in which the search under Section 132 or requisition under Section 132A is conducted; notices issued for assessment years beyond those six years are beyond jurisdiction and liable to be quashed. A statutory alternative period of limitation is to be respected where provided. - HELD THAT: - The coordinate bench explained that a notice under Section 153A (and consequently the scope for notices under Section 153C arising from search) is triggered by a search under Section 132 or a requisition under Section 132A; the relevant date for computing the six assessment years is the assessment year relevant to the previous year in which the search is conducted. Examples were given: for a search on 4.9.2013 the six assessment years are 2013-14 back to 2008-09; for searches on 4.12.2014 and 13.3.2015 the six assessment years are 2015-16 back to 2009-10. The Court accepted the coordinate bench's view that notices issued for assessment years beyond those six years do not fall within the jurisdiction contemplated by Section 153A/153C and are therefore without jurisdiction. The Court also endorsed the coordinate bench's conclusion that where the statute provides an alternative period of limitation, the mere expiry of the first-mentioned period does not render the notice barred if the alternative period applies. [Paras 4, 5]

Notices under Section 153C that exceed the six assessment years computed from the assessment year relevant to the previous year of the search are beyond jurisdiction and are quashed; limitation is governed by the alternative statutory period where provided.

Final Conclusion: The petition is allowed; the impugned notice issued under Section 153C is quashed and set aside and, consequentially, any assessment order passed under Section 153C is also quashed. Rule is made absolute with no order as to costs.

Prospective application of amended provisions of Section 153C - Maintainability of writ petitions challenging notices issued under Section 153C - Alternative period of limitation provided by statute as barring or not barring notices - Computation of the six assessment years under Section 153A - trigger is the assessment year relevant to the previous year in which search/requisition is made - Notices under Section 153C issued beyond the six assessment years as beyond jurisdiction - Quashing of notices and assessment orders issued under Section 153C when proceedings are without jurisdiction

Prospective application of amended provisions of Section 153C - Alternative period of limitation provided by statute as barring or not barring notices - Maintainability of writ petitions challenging notices issued under Section 153C - The court applied the coordinate bench's conclusions that the amended provisions of Section 153C operate prospectively from 01.06.2015, that writ petitions challenging issuance of notices under Section 153C are maintainable, and that a statutory alternative period of limitation provided by the statute does not render notices invalid merely because an earlier period has elapsed. - HELD THAT: - The court accepted and applied the reasoning of the coordinate bench which held that the Legislature expressly made the amended Section 153C applicable prospectively from 01.06.2015 and that exclusion of the amendment from searches initiated prior to that date would affect substantive rights. The court also followed the coordinate bench's conclusion that writ petitions attacking the legality of notices under Section 153C are maintainable. With regard to limitation, the court endorsed the view that where the statute provides an alternative period, lapse of the first-specified period does not automatically render notices time-barred when the statute itself prescribes an alternative temporal span. [Paras 4, 6]

Coordinate-bench rulings on prospective application, maintainability and statutory limitation are applied to the present petition.

Computation of the six assessment years under Section 153A - trigger is the assessment year relevant to the previous year in which search/requisition is made - Notices under Section 153C issued beyond the six assessment years as beyond jurisdiction - The court adopted the coordinate bench's construction that the six assessment years for which notices may be issued under Section 153A (and hence the temporal scope for consequential notices under Section 153C) are computed with reference to the assessment year relevant to the previous year in which the search under Section 132 or requisition under Section 132A is conducted; notices issued for assessment years outside those six years are beyond jurisdiction. - HELD THAT: - Relying on the coordinate bench's plain reading of Section 153A, the court recorded that the trigger for issuance of notice is a search under Section 132 or requisition under Section 132A and that the relevant date for computing the six assessment years is the assessment year relevant to the previous year in which the search/requisition occurred. Applying that rule to the examples considered by the coordinate bench, notices issued for assessment years beyond the six-year window so computed do not fall within the statutory ambit and are therefore without jurisdiction. [Paras 4]

Notices issued beyond the six assessment years computed as above are beyond jurisdiction.

Quashing of notices and assessment orders issued under Section 153C when proceedings are without jurisdiction - The impugned notice in the present petition and any assessment order passed under Section 153C consequential to such notice are quashed on the ground that proceedings under Section 153C were without jurisdiction. - HELD THAT: - Applying the coordinate bench's determinations to the facts of this petition, the court concluded that the impugned notice falls within the category of notices held to be invalid. Consequently, any assessment order founded on such jurisdictionally infirm proceedings under Section 153C must also be set aside. The court therefore allowed the petition and set aside the impugned notice and any resultant assessment order. [Paras 7, 8]

Impugned notice is quashed; any assessment order under Section 153C based on that notice is also quashed.

Final Conclusion: The petition is allowed: the impugned notice is quashed and set aside, and any assessment order passed under Section 153C consequential to that notice is likewise quashed, the court applying and following the coordinate bench's determinations on prospective application, limitation, computation of the six assessment years and jurisdiction.

Discretion under Section 220(6) of the Income Tax Act - prima facie case for stay of recovery - interim deposit in appeals against assessment orders - validity of assessments under Section 153A read with Section 153C - residence for assessment under Section 6(3)

Discretion under Section 220(6) of the Income Tax Act - prima facie case for stay of recovery - interim deposit in appeals against assessment orders - Validity and reasonableness of the Principal Commissioner's order under Section 220(6) directing the Petitioners to deposit approximately 14% of the total demand pending appeals. - HELD THAT: - The Court examined whether the impugned order, which required an instalment deposit approximating 14% of the total demand (being Rs. 40 crores less Rs. 10 crores already paid), was a mechanical application of the rule or a reasoned exercise of discretion under Section 220(6). Having considered the documents and submissions, the Court found that the PCIT had not mechanically imposed a standard percentage but had exercised discretion and reached a reasoned determination of the amount payable. The Court declined to enter into the merits of the underlying assessments or the Petitioners' contentions about residence under Section 6(3) or the legality of assessments under Sections 153A/153C, since those contentions are before the Commissioner (Appeals). In light of that limited review, the impugned order was held not to be unreasonable and did not warrant interference. [Paras 4, 5, 6]

The challenge to the PCIT's order under Section 220(6) was dismissed; the order directing deposit of approximately 14% of the total demand was held not to be unreasonable.

Validity of assessments under Section 153A read with Section 153C - residence for assessment under Section 6(3) - Whether the Court should adjudicate the merits of the Petitioners' contentions regarding residency and the validity of assessments under Sections 153A/153C at the writ stage. - HELD THAT: - The Court expressly refrained from adjudicating the substantive merits of the Petitioners' arguments that certain assessments were unsustainable because the Petitioners were not resident in India within the meaning of Section 6(3), and that assessments framed under Section 153A read with Section 153C were invalid. Those questions are pending before the Commissioner (Appeals) and the Court left them to be decided in that forum, observing that it would not express any opinion on those merits in the present proceedings. [Paras 5, 6, 7]

Substantive objections to the assessments on residency and on the validity of proceedings under Sections 153A/153C were not decided and were left to be decided by the Commissioner (Appeals) uninfluenced by the present order.

Interim deposit in appeals against assessment orders - Modification of the impugned order's instalment schedule in respect of the due date falling on 25th July, 2019. - HELD THAT: - While dismissing the petitions against the PCIT's order, the Court granted a limited modification to the instalment schedule by permitting the instalment due on 25th July, 2019 to be paid on or before 5th August, 2019. No other modification of the order was made and the petitions were otherwise dismissed. [Paras 8]

The instalment due on 25th July, 2019 was permitted to be paid by 5th August, 2019; otherwise the petitions were dismissed and pending applications disposed of.

Final Conclusion: The writ petitions challenging the PCIT's order under Section 220(6) were dismissed: the PCIT's reasoned determination requiring deposit of approximately 14% of the total demand was held not to be unreasonable; the substantive challenges to the assessments on residency and under Sections 153A/153C were left to the Commissioner (Appeals) for decision; a limited extension was granted for the instalment due on 25th July, 2019 to be paid by 5th August, 2019.

Non-speaking order - stay of demand - conditional stay - requirement to assign reasons - remand for reconsideration

Non-speaking order - requirement to assign reasons - stay of demand - Validity of the ITAT order dated 22.02.2019 rejecting the petition for stay of demand - HELD THAT: - The High Court found the impugned ITAT order to be cryptic and non-speaking as it rejects the stay application without assigning valid reasons or demonstrating application of mind. The court observed that an outright dismissal of a stay petition in respect of recovery of outstanding demand is impermissible without consideration of available legal avenues. The ITAT ought to have considered whether an absolute stay was warranted and, if not, whether a conditional stay could be granted by applying appropriate parameters to the facts. Because the ITAT did not record such reasoning or examine conditional relief, its order cannot be sustained. [Paras 5]

The impugned ITAT order rejecting the stay petition is set aside for being non-speaking and for failure to apply mind.

Remand for reconsideration - conditional stay - stay of demand - Direction to remit the matter to the ITAT for fresh consideration and manner of reconsideration - HELD THAT: - The High Court remanded the proceedings to the ITAT for fresh consideration in accordance with law. The ITAT is directed to reconsider the stay application, to apply its mind to all possible avenues including the grant of an absolute stay or appropriate conditional stay, and to take a decision expeditiously. The court specified a preferable timeline for disposal but left all rights and contentions of the parties open for determination by the ITAT on merits. [Paras 6]

Proceedings remitted to the ITAT for reconsideration in accordance with law and to be decided preferably within six weeks; parties' rights and contentions left open.

Final Conclusion: The writ petition is allowed in part: the ITAT order dated 22.02.2019 is set aside as non-speaking and the matter is remitted to the ITAT to reconsider the stay application (including scope for conditional stay) in accordance with law, preferably within six weeks; all substantive rights and contentions remain open.

Reopening of assessment under Section 147 - substantial question of law under Section 260A - finality of Tribunal's merits decision - academic issue doctrine

Reopening of assessment under Section 147 - substantial question of law under Section 260A - finality of Tribunal's merits decision - academic issue doctrine - Disposition of the appeals without answering the framed substantial question of law in view of the Tribunal's decision on merits and absence of Revenue's appeal. - HELD THAT: - The appeals under Section 260A were admitted on a substantial question of law concerning the Assessing Officer's jurisdiction to reopen assessments. The Court recorded that the Tribunal had granted relief to the assessee on the merits, and the Revenue had not preferred any appeal against that merits finding. In those circumstances the question framed became academic. The Court, exercising discretion, declined to answer the substantial question of law and disposed of the appeals as unnecessary to decide, noting the finality of the Tribunal's decision on the merits and the absence of challenge by the Revenue. [Paras 5, 6]

The appeals are disposed of as the substantial question of law is academic in view of the Tribunal's merits decision and absence of Revenue's appeal; the substantial question is left open and no costs are awarded.

Final Conclusion: Appeals disposed of as academic; the substantial question of law framed is left unanswered in view of the Tribunal's merits decision in favour of the assessee and non-prosecution by the Revenue.

Unexplained cash credit under Section 68 - requirement of speaking reasons for quasi-judicial orders - appreciation of documentary evidence - remand for fresh adjudication

Unexplained cash credit under Section 68 - appreciation of documentary evidence - requirement of speaking reasons for quasi-judicial orders - remand for fresh adjudication - Whether the additions of hand loans of Rs. 18,86,000/- as unexplained cash credit were sustainable in view of the letters of confirmation produced by the assessee and whether the orders of the Assessing Officer and the Commissioner (Appeals) were reasoned. - HELD THAT: - The Assessing Officer recorded that the assessee was unable to provide details of parties and added Rs. 18,86,000/- as unexplained cash credit; the Commissioner (Appeals) likewise noted absence of documentary evidence and confirmed the addition. The High Court found that both Authorities did not apply their minds to the specific documentary confirmations submitted by the assessee and issued cryptic findings without addressing the ground raised in the appeal memo. The Court reiterated that reasons are the lifeblood of a quasi judicial order and that absence of consideration of the documents and absence of speaking reasons renders the orders void. In view of this deficiency, the Court did not decide the meritorious question of genuineness of the loans on evidence but held that the matter requires fresh consideration by the Assessing Officer who must examine the documents, hear the parties and pass a speaking order dealing with the confirmations produced by the assessee. [Paras 6, 7, 8, 9]

Orders of the Assessing Officer and the Commissioner (Appeals) setting aside the claim of hand loans are quashed for want of speaking reasons; the matter is remitted to the Assessing Officer for redetermination after considering the documentary confirmations and after hearing the parties, by passing a speaking order.

Final Conclusion: Impugned orders are quashed and the assessment proceedings are restored for fresh adjudication by the Assessing Officer who shall consider the documents furnished by the assessee, hear the parties and pass a speaking order; directions were given for the assessee to appear before the Assessing Officer for expeditious disposal.

Levy of fee under section 234E - amendment to section 200A prospective effect from 1st June 2015 - invalidity of intimation/demand under section 200A insofar as related to fee under section 234E for periods prior to 1st June 2015 - recomputation and fresh demand in terms of section 234E read with section 200A

Levy of fee under section 234E - amendment to section 200A prospective effect from 1st June 2015 - invalidity of intimation/demand under section 200A insofar as related to fee under section 234E for periods prior to 1st June 2015 - Levy of late fee under section 234E for TDS periods prior to 1st June 2015 is without authority and cannot be sustained by intimations issued under section 200A for those periods. - HELD THAT: - The court held that Section 234E was introduced effective 01.07.2012 but the mechanism to process and levy the fee through Section 200A was amended to come into effect only on 01.06.2015. In light of the Division Bench decision in Fatheraj Singhvi (quoted), intimations/demands issued under Section 200A purporting to compute or demand fees under Section 234E for tax-deduction periods prior to 01.06.2015 are without authority and therefore invalid. The court recorded that the question of constitutional validity of Section 234E was not adjudicated and remains open, because once the demands under Section 200A are set aside for the pre-01.06.2015 period, the challenge to Section 234E becomes academic for the present proceedings.

Intimations/demands under Section 200A insofar as they relate to computation or demand of fee under Section 234E for periods prior to 1st June 2015 are set aside as without authority.

Recomputation and fresh demand in terms of section 234E read with section 200A - Proceedings restored for recomputation and raising of demand in accordance with Section 234E read with Section 200A and the court's observations. - HELD THAT: - Having held the earlier intimations/ demands invalid for the pre-01.06.2015 period, the court directed that the records be returned to the assessing authority to recompute and, if applicable, raise demands in conformity with the law as interpreted in the judgment and the temporal effect of the amendments. The court remitted the matter for fresh computation rather than adjudicating on the substantive constitutional challenge to Section 234E, leaving that issue open.

Proceedings are restored to respondent No.2 for recomputation and issuance of demand, if any, in terms of Section 234E read with Section 200A and the observations of the court; prior demands set aside.

Final Conclusion: Writ petitions allowed; demands/intimations issued under Section 200A insofar as they relate to fee under Section 234E for the financial years 2012-13 and 2013-14 (periods prior to 1st June 2015) are set aside, and the matter is remitted to the respondent for recomputation and fresh action in accordance with Section 234E read with Section 200A and the Court's observations; constitutional challenge to Section 234E left open.

Sufficient cause under Section 5 of the Limitation Act - condonation of delay - liberal construction of limitation - decide lis on merits rather than technicalities - absence of mala fides or dilatory strategy - compensation by costs when condoning delay

Sufficient cause under Section 5 of the Limitation Act - liberal construction of limitation - absence of mala fides or dilatory strategy - Whether the Income Tax Appellate Tribunal erred in refusing to condone the delay of 132 days by construing the expression "sufficient cause" narrowly. - HELD THAT: - The Court applied the settled principle that the expression "sufficient cause" in Section 5 is to be construed liberally so as to advance substantial justice and to decide disputes on merits rather than on technicalities. The assessee's affidavit attributed delay to the advocate being out of station and subsequent illness of the secretary; although no medical certificate was produced, medical proof is not invariably necessary. There was no finding or material indicating mala fides or a deliberate dilatory tactic on the part of the assessee, and the assessee would not have derived any advantage by the delay. In these circumstances the Tribunal's conclusion that no sufficient cause was shown was erroneous because it did not apply a liberal approach and failed to appreciate that the explanation, not tainted by mala fides, warranted condonation to enable adjudication on merits. [Paras 5, 8, 9, 10]

The Tribunal erred in its construction of "sufficient cause" and the delay of 132 days should have been condoned.

Condonation of delay - compensation by costs when condoning delay - decide lis on merits rather than technicalities - The consequences to follow on finding that the delay should be condoned. - HELD THAT: - Having held that the delay ought to be condoned, the Court directed conditional restoration of the appeal to the Tribunal for fresh disposal on merits. The Court observed the salutary practice that when delay caused by laches is condoned, the opposite party should be compensated for loss or hardship; accordingly, the Court required payment of costs to the department as a pre-condition for restoration. Upon remittance of the directed costs within the stipulated time, the appeal is to be restored and the Tribunal is to decide the appeal afresh on merits. [Paras 10, 11]

Delay condoned on payment of costs; appeal to be restored to the Tribunal and disposed of afresh on merits upon compliance.

Final Conclusion: The appeal is allowed: the delay of 132 days in filing the appeal before the Tribunal is condoned; the assessee is directed to remit Rs. 10,000 as costs to the department within two weeks, upon which the appeal shall be restored to the Income Tax Appellate Tribunal, Cochin Bench for fresh disposal on merits.

Condonation of delay - Transferable Development Rights as capital asset - period of holding for capital gains - speculative transaction under section 43(5) - exemption under section 54EC

Condonation of delay - Delay in filing appeal before the Tribunal was condoned and the appeal was admitted. - HELD THAT: - The assessee filed a petition explaining a delay of 658 days due to ill-health including hospitalisation and operations; although no corroborative documentary evidence was placed on record, the Tribunal found the sworn affidavit and the age and health of the assessee persuasive. Relying on the need to take a liberal view in such circumstances and on the Supreme Court authority cited by the assessee, the Tribunal concluded that the cause shown constituted sufficient cause for condonation of delay. [Paras 4]

Delay in filing the appeal was condoned and the appeal was admitted for hearing.

Transferable Development Rights as capital asset - speculative transaction under section 43(5) - Surplus arising from transfer of right in TDR is long-term capital gain and not speculative business income. - HELD THAT: - The Tribunal examined the nature of the right in TDR and observed that TDRs are inextricably linked with immovable property and flow from acquisition of immovable property by the municipal authority; consequently, a right in TDR qualifies as a capital asset under the Act. The Tribunal disagreed with the CIT(A)'s conclusion that the transactions were speculative under section 43(5), noting that neither authority disputed that the assessee transferred the right in TDR to a third party. On the facts, the Tribunal found the CIT(A) erred in treating the surplus as speculative business profit. [Paras 9]

The CIT(A)'s finding that the surplus was speculative income was set aside; the surplus is to be treated as capital gains.

Period of holding for capital gains - Period of holding for the right in TDR is to be reckoned from the date of original acquisition of the underlying property by the municipal authority, and thus the gain is long-term. - HELD THAT: - The Assessing Officer treated the period of holding as shorter than 36 months on the basis that the assessee had sold the right in 1996 and later cancelled that MOU then transferred the right again in 2004. The Tribunal held that cancellation of the earlier deed cannot be treated as a repurchase for the purpose of computing period of holding. The right in TDR accrued from the date the municipal authority acquired the property (1986), so the holding period exceeds 36 months and the surplus qualifies as long-term capital gain. [Paras 10]

Holding period is to be computed from original acquisition by municipal authorities; surplus is long-term capital gain.

Exemption under section 54EC - Claim for exemption under section 54EC was not finally adjudicated and is remanded to the Assessing Officer for verification of investment in NABARD bonds. - HELD THAT: - Although the assessee produced copies of NABARD capital gain bonds, neither the AO nor the CIT(A) examined whether the investment was made within the prescribed period and met the statutory conditions for section 54EC exemption. Because the substantive characterisation of the surplus as capital gains has been affirmed, the Tribunal directed a limited remand to the AO to verify factual compliance with section 54EC and to grant the exemption if conditions are satisfied. [Paras 11]

Issue remitted to the Assessing Officer for limited verification of the investments in NABARD bonds and grant of exemption under section 54EC if conditions are met.

Final Conclusion: Delay in filing the appeal was condoned; the Tribunal held that the right in TDR is a capital asset and the surplus on its transfer is long-term capital gain (holding period to be reckoned from original acquisition by municipal authorities); the matter of exemption under section 54EC is remanded to the Assessing Officer for factual verification and appropriate relief. Appeal allowed for statistical purposes.

Annual Lettable Value - Notional Rent - Self-occupied House Property - Municipal Rateable Value as basis for ALV - Determination of annual value under section 23 - Co-owned property and indivisibility leading to notional self-occupation

Annual Lettable Value - Municipal Rateable Value as basis for ALV - Co-owned property and indivisibility leading to notional self-occupation - Determination of annual value under section 23 - Validity of the assessing officer's computation of notional rental value (ALV) for Flat No. 31B and Flat No. 171B, Maker Tower, Mumbai for AY 2013-14 and correctness of the Commissioner (Appeals) in deleting the additions. - HELD THAT: - For AY 2013-14 the Tribunal examined the AO's adoption of notional rent @8% of cost for the subject flats while the assessee had relied on the Annual Rateable Value certified by the housing society. The first appellate authority had held that where a property is covered by the Rent Control regime or where municipal rateable value is available and unchallenged, ALV cannot exceed the standard/ratable value and accepted the society-certified rateable value. The Tribunal found the factual matrix supported treating the co-owned flat (31B) as notionally self-occupied by the assessee because the son physically occupied the property and the living space was indivisible; consequently the assessor could not reasonably expect the assessee's share to be let out at market rent. The Tribunal also noted that municipal rateable value is an accepted basis for determining ALV and that the AO's estimate based on local enquiries was not in accordance with law. On these grounds the Tribunal upheld the CIT(A)'s deletion of the additions made on account of notional rent. [Paras 5, 7, 8]

Appeal dismissed; additions for notional rental value for AY 2013-14 deleted and CIT(A)'s order upheld.

Annual Lettable Value - Municipal Rateable Value as basis for ALV - Determination of annual value under section 23 - Correctness of deletion of addition on account of notional rental value for Flat No.171B, Maker Tower for AY 2014-15. - HELD THAT: - Facts for AY 2014-15 were pari materia with the earlier year except that only Flat No. 171B was in issue. The Tribunal applied the same reasoning as for AY 2013-14: where municipal rateable value or certifiable standard rent is available and not controverted, that value is an appropriate basis for ALV; the CIT(A)'s deletion of the AO's notional rent-based addition followed the authorities relied upon and there was no reason for interference. Accordingly the Tribunal dismissed the revenue's appeal for this year as well. [Paras 9, 10]

Appeal dismissed; deletion of addition for notional rent for AY 2014-15 upheld.

Final Conclusion: Both revenue appeals for AY 2013-14 and AY 2014-15 are dismissed; the Tribunal upholds the CIT(A)'s deletion of additions computed as notional rental value, accepting municipal rateable value and the concept of notional self-occupation of a co-owned, indivisible residence where applicable.

Applicability of section 43A to exchange differences on foreign currency borrowings - Capital versus revenue character of foreign exchange loss on conversion of loans - Allowability under section 37 as business expenditure - Accounting Standards AS-11 and AS-16 treatment of exchange differences and borrowing costs

Applicability of section 43A to exchange differences on foreign currency borrowings - Section 43A is not applicable where the assets were purchased in India and the exchange fluctuation arises on conversion of loan currency rather than on payment for an asset acquired from outside India. - HELD THAT: - The Tribunal analysed the scope of section 43A and observed that the provision applies when an asset is acquired from a foreign country and, by reason of change in the rate of exchange, there is an increase or reduction in the liability as expressed in Indian currency as compared to the liability at the time of acquisition and at the time of payment. In the present case the assessee's fixed assets were acquired domestically and the foreign currency exposure arose from conversion of the rupee loan into FCNRB and back to rupee; therefore the statutory scheme of section 43A is not engaged. [Paras 7]

Section 43A does not apply to the exchange difference on conversion of the FCNRB loan in the facts of this case.

Capital versus revenue character of foreign exchange loss on conversion of loans - Allowability under section 37 as business expenditure - Accounting Standards AS-11 and AS-16 treatment of exchange differences and borrowing costs - The exchange difference arising on conversion of the FCNRB loan into rupee loan is a business loss of revenue character and is allowable as expenditure under section 37. - HELD THAT: - The Tribunal held that the assessee initially converted its rupee term loan into FCNRB to obtain an interest advantage and knowingly exposed itself to foreign exchange risk; reconversion and the consequent exchange difference were commercial/business decisions. The original rupee loan obligation remained substantively unchanged and the fixed assets were acquired in Indian currency, so there was no alteration in the capital value of the assets. Given these facts, the exchange loss resulting from conversion is a business expense within the ambit of section 37 rather than a capital loss to be capitalised. While the assessee referred to AS-11 and AS-16 treatment, the Tribunal based its tax conclusion on the commercial nature of the transaction and statutory principles relating to capital v. revenue characterisation. [Paras 7]

The exchange difference on reconversion of the FCNRB loan is revenue in nature and allowable as a business expenditure under section 37; the assessee's appeal is allowed on this point.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2012-13, holding that section 43A is not attracted and that the exchange difference on conversion of the FCNRB loan is a revenue/business expense allowable under section 37.

Application of presumptive taxation under section 44BBB - estimation of profits by assessing officer - associated enterprise - international transaction - applicability of transfer pricing documentation and provisions - onus on assessing officer to establish sham or non-genuineness

Application of presumptive taxation under section 44BBB - estimation of profits by assessing officer - Whether the assessing officer was justified in applying Section 44BBB and computing deemed profit at 11.11% of cost to determine taxable income of the assessee - HELD THAT: - The Tribunal held that Section 44BBB applies to foreign companies engaged in civil construction/erection/testing/commissioning in specified turnkey projects and does not apply to a domestic company such as the assessee. The assessing officer erred in relying on Section 44BBB as the statutory scheme does not permit him to alter the percentage prescribed or to change the base of computation from receipts to cost, and there was no justification for extrapolating the prescribed rate to 11.11%. The AO failed to point to any defects in the books of account or to displace the assessee's explanation for the loss. In the absence of material showing that the statutory provision applied to the assessee, the CIT(A) rightly deleted the addition pursuant to the AO's Section 44BBB-based computation.

Application of Section 44BBB and the AO's computation of profit at 11.11% of cost set aside; addition deleted.

Associated enterprise - international transaction - applicability of transfer pricing documentation and provisions - Whether the parties to the contract (including M/s Mont Blanc Trading Company) were Associated Enterprises and whether transfer pricing provisions (sections requiring documentation and Form 3CEB/3CEB-like filings) applied - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the assessee's only associated enterprise was its 99.99% shareholder and that the contracting parties were not associated enterprises of that shareholder. The contract consideration was received in Indian rupees directly from SAIL and, on the facts found, did not constitute an international transaction between the assessee and the foreign parties. The AO did not obtain any transfer pricing authority opinion nor pointed to material establishing association or an international transaction; accordingly, the requirements under transfer pricing provisions and related documentation sections were not attracted.

Transactions not held to be international transactions with associated enterprises; transfer pricing provisions and documentation requirements not applicable.

Estimation of profits by assessing officer - onus on assessing officer to establish sham or non-genuineness - Whether the assessing officer's inference that the assessee was not acting independently and that expenditures (leading to loss) were not allowable was justified - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO's conclusions were based on conjecture and inferences unsupported by inquiry or evidential material. The assessee furnished explanations for the losses (tendering delays, price escalation, chartering of vessel causing higher freight) and the AO did not demonstrate specific defects in books or other convincing evidence to brand the arrangements as sham. Absent cogent material to the contrary, mere suspicion or speculative reallocation of receipts was insufficient to uphold the AO's addition.

AO's adverse inferences and resultant disallowance set aside; deletion of addition upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the addition: Section 44BBB was inapplicable to the domestic assessee, the contract parties were not held to be associated enterprises for transfer pricing purposes, and the AO's estimation and adverse inferences were unsupported by material.

Detention certificate - detention and release of goods - administrative certificate for limited commercial purpose - use of certificate to seek waiver or reduction of demurrage charges - issuance of certificate without creating liability or cause of action

Detention certificate - use of certificate to seek waiver or reduction of demurrage charges - issuance of certificate without creating liability or cause of action - Whether the first respondent is required to issue a certificate recording the detention and subsequent release of the petitioner's goods for the period specified, for the limited purpose of enabling the petitioner to seek waiver or reduction of demurrage charges. - HELD THAT: - The Court accepted the limited object for which the petitioner sought a certificate - namely, to present evidence to the shipping agency/cargo custodian in support of an application for waiver or reduction of demurrage charges - and noted the petitioner's express undertaking that it would not use any certificate to proceed against the respondents. Although the respondents contended there is no established procedure to issue such a certificate and that they are not obliged in law to furnish it, the Court found that the categorical refusal was not fully substantiated on record. Having regard to the narrow and commercial purpose for which the certificate was sought, and the absence of any intention by the petitioner to treat the certificate as creating liability against the respondents, the Court considered it appropriate to direct issuance of a certificate recording the dates of detention and the release order in respect of the specified containers. The Court imposed temporal and purposive limits: the certificate is to be issued on presentation of the Court's order and request by the petitioner, within the timeframe directed, and its issuance shall not give rise to any liability or cause of action against the respondents but may be used only for claiming waiver or reduction of demurrage charges from the shipping agency or cargo custodian. [Paras 11, 12]

Petitioner granted liberty to request a certificate from the first respondent; upon such request the first respondent shall issue a certificate referring to the dates of detention and the release order within three days; issuance of the certificate shall not create any liability or give cause of action against the respondents and may be used solely for seeking waiver or reduction of demurrage charges.

Final Conclusion: Writ petition disposed of by directing the first respondent to issue, on request accompanied by a copy of this judgment, a certificate recording the detention and subsequent release for the period from 12.04.2019 to 12.06.2019 within three days; the certificate is limited to evidentiary use before the shipping agency/cargo custodian and does not impose liability or confer a cause of action against the respondents.

Condonation of delay - remand for fresh adjudication - jurisdictional inquiry - restoration of appeal to appellate forum for fresh disposal on merits - non-consideration of a High Court decision stayed by the Supreme Court

Condonation of delay - The application for condonation of delay in filing the appeal for 492 days. - HELD THAT: - The Court examined the application seeking condonation of delay and the reasons advanced therefor. Having considered the explanation as set out in the application, the Court found it appropriate to exercise its discretion in favour of the appellant and condoned the delay of 492 days in filing the appeal.

Delay of 492 days in filing the appeal is condoned and the application is allowed.

Remand for fresh adjudication - jurisdictional inquiry - restoration of appeal to appellate forum for fresh disposal on merits - non-consideration of a High Court decision stayed by the Supreme Court - Validity of the CESTAT order remanding the matter to the Original Adjudicating Authority to decide jurisdiction after waiting for this Court's decision in Mangli Impex Ltd., and the appropriate forum and scope for disposal of the appeal. - HELD THAT: - The CESTAT had remanded the appeal to the Original Adjudicating Authority to first decide the question of jurisdiction after awaiting this Court's decision in Mangli Impex Ltd. The High Court observed that where a High Court decision relied upon by the CESTAT has been stayed by the Supreme Court, it is inappropriate to base a remand or further proceedings on that stayed decision. Following the Court's earlier orders in similar matters (Vipul Overseas and Forech India), and with the respondent's counsel not objecting, the High Court set aside the impugned CESTAT order and directed that the appeal be restored to the CESTAT for fresh disposal on merits. The CESTAT was directed to decide the appeal on its merits without taking into consideration the decision of this Court in Mangli Impex Ltd., and to ensure service of notice upon the respondent before proceeding.

The impugned CESTAT order dated 12th July, 2017 is set aside; Customs Appeal C/58698/2013 is restored to the CESTAT to be decided on merits without regard to Mangli Impex Ltd., and after ensuring service of notice on the respondent.

Final Conclusion: The Court condoned the delay in filing the appeal and set aside the CESTAT's remand to the Original Adjudicating Authority premised on a High Court decision that had been stayed; the appeal is restored to the CESTAT for fresh disposal on merits without taking into account the stayed Mangli Impex Ltd. decision.

Mandamus to consider refund application - direction to pass administrative order within prescribed time frame - finality of appellate tribunal order and legal quietus - provisional release on compliance with stipulated terms - repetition of relief where matter is squarely covered by earlier order

Mandamus to consider refund application - direction to pass administrative order within prescribed time frame - Second respondent directed to consider and decide the refund application dated 05.10.2018 within four weeks. - HELD THAT: - The writ petitioner filed a refund application dated 05.10.2018 which, according to the petitioner, has not been processed by the second respondent. The petitioner sought a writ of mandamus to compel consideration and decision of that application. The Court, observing the narrow scope of the dispute and the innocuous nature of the prayer, accepted that there had been inaction and issued a direction mandating that the refund application be considered and an order passed thereon within four weeks of receipt of this order. The directive is a limited supervisory direction to ensure timely administrative action, without deciding the merits of the refund claim itself. [Paras 9, 10]

Refund application dated 05.10.2018 to be considered and decided by the second respondent within four weeks.

Finality of appellate tribunal order and legal quietus - The Court recorded that the CESTAT order dated 12.06.2017 has become final and has been given legal quietus. - HELD THAT: - The Court noted that the proceedings concerning clearance of the imported machinery culminated in an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 12.06.2017 and expressly recorded that there was no dispute before the Court that this order has attained finality. That factual-legal finding was relied upon in framing the limited relief, but the Court did not proceed to adjudicate the substantive entitlement to refund; it recognised the finality of the appellate order as part of the background justifying prompt administrative consideration of the pending refund application. [Paras 7, 8]

CESTAT order dated 12.06.2017 is final and has attained legal quietus.

Provisional release on compliance with stipulated terms - The Court recorded that the petitioner had been granted provisional release of the imported machinery in 2003 on specified terms and that those terms were complied with. - HELD THAT: - The Court recalled that provisional release of the machinery had been directed by this Court on 27.08.2003 subject to certain terms; it further recorded that there was no dispute that those terms were complied with and the machinery provisionally released. This background fact was noted as part of the factual matrix leading to the pendency of eventual proceedings and the subsequent appellate decision, but the Court did not otherwise re-open or re-examine the provisional release order. [Paras 6]

Provisional release ordered on 27.08.2003 was complied with and the machinery was provisionally released.

Repetition of relief where matter is squarely covered by earlier order - The writ petition was disposed of by passing a similar order to that made in W.P.No.18854 of 2019 (Label Kingdom case) dated 03.07.2019, the Court finding the instant matter squarely covered by that earlier order. - HELD THAT: - Counsel for the petitioner relied on earlier orders of this Court in related matters; the respondents accepted notice and made no disputation on this point. The Court held that the present case fell within the scope of the earlier decision dated 03.07.2019 and, accordingly, issued a similar, short-form order disposing of the writ petition. The disposition was therefore guided by consistency with precedent orders of this Court in factually analogous matters rather than by fresh extensive adjudication. [Paras 4, 5]

Matter held to be squarely covered by the Court's earlier order of 03.07.2019; similar order passed in the instant petition.

Final Conclusion: Writ petition disposed by directing the second respondent to consider and decide the refund application dated 05.10.2018 within four weeks; the decision was rendered on the short compass that the matter is covered by this Court's earlier order, CESTAT's order of 12.06.2017 is final, and the provisional release terms had been complied with. No costs.

Condonation of delay - service of order and proof of delivery - limitation under Section 128(1) and (1A) of the Customs Act, 1962 - exercise of appellate jurisdiction in excess

Condonation of delay - limitation under Section 128(1) and (1A) of the Customs Act, 1962 - Validity of condonation of 28 days' delay in filing the appeal before the Commissioner (Appeals). - HELD THAT: - The Commissioner (Appeals) recorded that the Order in Original dated 27.09.2016 was received by the respondent only on 25.01.2018 and, after considering the respondent's explanation, condoned the delay of 28 days. The Revenue's challenge that the appeal was barred by limitation and that the Commissioner (Appeals) failed to make enquiries under the statutory provision was examined. The Tribunal found on the record that the respondent proved receipt of the order on 25.01.2018, the Department had dispatched the order to the respondent's old address despite prior intimation of change of address in 2015 (a fact acknowledged by the dispatch register and the record), and the Department did not produce evidence of service. The Commissioner (Appeals) also had the respondent's application with reasons for condonation before him and the Department had not raised limitation objection below. In these circumstances the condonation was held to be a valid exercise of discretion and not vitiated by jurisdictional excess.

Condonation of 28 days' delay by the Commissioner (Appeals) upheld and the appeal not barred by limitation.

Service of order and proof of delivery - exercise of appellate jurisdiction in excess - Whether the Department proved lawful service of the Order in Original and whether lack of such proof vitiated the impugned order or the condonation decision. - HELD THAT: - The Tribunal considered the dispatch record and the respondent's evidence that the departmental notice of personal hearing had been sent to the new address while the Order in Original was dispatched to the old address. The Department failed to produce any proof of delivery to the respondent at the old address. Given absence of evidence of service and the respondent's contemporaneous intimations of change of address on record, the finding of the Commissioner (Appeals) that the order was received only on 25.01.2018 was sustained. Since proper service was not established, the Department's complaint that the appellate authority exceeded its jurisdiction by deciding a time barred appeal was rejected.

No proof of delivery established; departmental objection on service fails and does not invalidate the condonation or justify setting aside the impugned appellate order.

Final Conclusion: The appeal filed by the Revenue is dismissed; the Commissioner (Appeals)'s order condoning delay and allowing the respondent's appeal is upheld.

Clause 36 of the Listing Agreement - material event - prompt and immediate disclosure - price sensitive information - SEBI penalty under Section 23A and 23E of the SCRA - PIT Regulations - Regulation 13(6) and Regulation 12(2) - disclosure - effectiveness upon receipt by stock exchange - compliance officer liability

Clause 36 of the Listing Agreement - material event - SEBI penalty under Section 23A and 23E of the SCRA - Failure to disclose the income-tax assessment order and demand under Clause 36 constituted a material event and attracted penalties under Section 23A and 23E of the SCRA. - HELD THAT: - The Tribunal holds that the final assessment order and the resultant demand (which effectively exceeded the company's networth) constituted a "material event" with a material impact on the company's financials and therefore had to be reported "promptly" to the stock exchanges and made public "immediately" under Clause 36 read with the Guidance Note. The appellant's conscious decision not to intimate the exchanges and the belated disclosure made only after queries from the exchanges (more than three months after the assessment order) amounted to gross failure and non-disclosure under Clause 36. The AO's imposition of penalties under Section 23A for failure to furnish information and under Section 23E for breach of listing conditions was examined on the facts; the Tribunal found the quantum of penalties imposed to be within the statutory range, not arbitrary or unreasonable, and affirmed them. [Paras 17, 18, 27, 29, 30]

Appeal against the penalty for non-disclosure under Clause 36 is dismissed; penalties under Section 23A and 23E as imposed by the AO are upheld.

Prompt and immediate disclosure - interpretation of "immediately" - Meaning and temporal scope of the terms "promptly" and "immediately" in Clause 36 and the Guidance Note. - HELD THAT: - The Tribunal examined authorities and reference works on the meaning of "immediately" and "promptly" and concluded that while the words can, in broader contexts, permit construction as "within a reasonable time", in the context and purpose of Clause 36 (to avoid false markets and to enable timely appraisal by security holders) the obligation requires disclosure at the earliest without undue delay. Accordingly, even assuming some latitude for reasonable time, the facts here (more than three months' delay and no disclosure even after interim stay) could not be treated as reasonable; the obligation to disclose remained unfulfilled. [Paras 20, 21, 23, 26, 27]

The words "promptly" and "immediately" require disclosure at the earliest without undue delay; the delay in this case was inordinate and not excused.

PIT Regulations - Regulation 13(6) and Regulation 12(2) - disclosure - effectiveness upon receipt by stock exchange - price sensitive information - Whether the company and its officers violated Regulation 13(6) and the Code in Schedule II by failing to disclose price sensitive information and whether dispatch alone suffices for compliance. - HELD THAT: - Regulation 13(6) and the Code require listed companies to disclose certain information to all stock exchanges within the prescribed time. The Tribunal reiterated that "disclosure" is not complete upon dispatch; it is completed when the information is received by the intended recipient (the stock exchange). The AO's finding-that the exchanges confirmed receipt only on March 27, 2014 and the appellant failed to produce delivery receipts proving receipt within the two-working-day period-was sustained. The Tribunal therefore upheld the finding of violation of Regulation 13(6) and Clauses 2.1, 3.2 and 7.0(ii) of Schedule II read with Regulation 12(2), and found the penalty imposed on the company for these lapses to be justified. [Paras 36, 38, 39, 40]

Findings that the company violated Regulation 13(6) and the Schedule II disclosure obligations are affirmed and the penalty upon the company is upheld.

Compliance officer liability - authority for making disclosures - Whether the penalty imposed on the Compliance Officer for violation of Clause 36 was sustainable. - HELD THAT: - The Guidance Note contemplates that a listed entity shall determine the authority authorised to make disclosures, and the onus of ensuring duly authorised disclosures lies with the listed entity. The Tribunal found that the Compliance Officer acted under the directions of management and that the management (and directors) had taken a conscious decision not to disclose. In those circumstances, penalising the Compliance Officer for the same failure, in addition to penalising the management and directors, was unjustified. However, the Compliance Officer remained liable for obligations under Regulation 13(6) and Schedule II in respect of insider-trading related disclosure, and penalties in that respect were affirmed where appropriate. [Paras 41, 42]

Penalty imposed on the Compliance Officer under Clause 36 is quashed; the Compliance Officer's liability under Regulation 13(6)/Schedule II is affirmed to the limited extent previously upheld.

Final Conclusion: The appeal challenging the AO's order imposing penalties for non-disclosure under Clause 36 and under Sections 23A and 23E of the SCRA is dismissed; the appeal challenging penalties under PIT Regulations and related disclosure obligations is allowed in part - the penalties and findings against the company and directors are upheld, but the penalty imposed on the Compliance Officer for breach of Clause 36 is set aside.

Liquidation as a last resort and the primacy of revival and continuance of the corporate debtor - Power of the liquidator to seek compromise or arrangement under Section 230 of the Companies Act, 2013 - Sale of the corporate debtor as a going concern - Verification and admission/rejection of claims by the Liquidator under the Insolvency and Bankruptcy Code - Condonation of delay in preferring appeal

Condonation of delay in preferring appeal - Whether the delay of 11 days in preferring the appeal should be condoned. - HELD THAT: - The Appellate Tribunal, having heard counsel and being satisfied with the grounds, condoned the delay of 11 days in filing the appeal and disposed of the interlocutory application seeking condonation.

Delay of 11 days in filing the appeal is condoned.

Liquidation as a last resort and the primacy of revival and continuance of the corporate debtor - Power of the liquidator to seek compromise or arrangement under Section 230 of the Companies Act, 2013 - Sale of the corporate debtor as a going concern - Whether the adjudicating authority's order of liquidation dated 25 March 2019 should be interfered with and what directions should govern the liquidation process. - HELD THAT: - The Tribunal declined to interfere with the impugned liquidation order but directed that the liquidator must, before selling assets, take steps aimed at revival and continuance of the corporate debtor. In line with the Supreme Court authority and decisions cited, liquidation is to be a last resort; the liquidator may pursue compromise or arrangement under Section 230 of the Companies Act, 2013 and, if appropriate, sell the business as a going concern. The Tribunal emphasised that steps for revival must protect the corporate debtor and balance stakeholders, and that the Adjudicating Authority may exercise its powers under Section 230 to overrule irrelevant objections and, where necessary, extend timelines for the arrangement process consistent with the objects of the I&B Code. [Paras 8, 13, 19]

Order of liquidation affirmed; liquidator directed to first pursue revival measures including proceedings under Section 230, and only on failure of revival to proceed with sale/liquidation (preferably as a going concern).

Verification and admission/rejection of claims by the Liquidator under the Insolvency and Bankruptcy Code - Duties of the liquidator under the I&B Code during the liquidation process. - HELD THAT: - The Tribunal directed the liquidator to verify claims of all creditors, take custody and control of assets, carry on the business for beneficial liquidation, access information, consolidate claims and, after verification, admit or reject claims in accordance with Sections 33, 35, 38 to 40 of the I&B Code. The liquidator is to take steps under Section 230 before selling assets and, where required, seek appropriate orders from the Adjudicating Authority. [Paras 8]

Liquidator must perform duties of claim verification, control of assets and pursue Section 230 measures before asset sale, complying with the prescribed I&B Code provisions.

Promoter's settlement plea post invocation of resolution process - Whether the promoter's contention that they should have been given an opportunity to settle with creditors can be entertained at this stage. - HELD THAT: - The Tribunal observed that the promoter's submission that they could have settled with creditors cannot be permitted once the resolution process has been invoked and resolution plans called for, particularly having regard to the provisions for settlement under Section 12A and the object of the Code to effect a resolution process focused on revival. Consequently, the plea that promoters be allowed to settle was not accepted as a ground to interfere with liquidation.

Promoter's contention for permitting settlement post initiation of resolution process is not accepted and does not warrant interference with the liquidation order.

Final Conclusion: The appeal is disposed of: the delay in filing is condoned; the order of liquidation dated 25 March 2019 is not interfered with, subject to directions that the liquidator shall first pursue revival measures including proceedings under Section 230 of the Companies Act, 2013 and comply with the I&B Code's verification and liquidation procedures, and only on failure of revival proceed to sale/liquidation (preferably as a going concern).

Exclusion of services provided by an employee to employer from the definition of "service" - employer-employee relationship - reverse charge liability on remuneration paid to director - characterisation of remuneration and perquisites as salary - relevance of Form 16 and statutory filings to income characterisation

Exclusion of services provided by an employee to employer from the definition of "service" - employer-employee relationship - characterisation of remuneration and perquisites as salary - relevance of Form 16 and statutory filings to income characterisation - reverse charge liability on remuneration paid to director - Whether the remuneration and perquisites paid to the Managing Director, Shri D.S. Sahney, constitute a "service" liable to service tax under the Reverse Charge Mechanism or are excluded as a provision of service by an employee to the employer under Section 65(44)(b) of the Finance Act, 1994. - HELD THAT: - The Tribunal accepted the appellants' case that Shri D.S. Sahney was appointed and paid as Managing Director pursuant to the Memorandum and Articles of Association and that the board resolution (dated 04.10.2012) specified salary and perquisites payable. Statutory filings (Form 31 and Form 25C) before the Registrar of Companies record his appointment and the salary/perquisites. The Tribunal held that perquisites shown in Form 16 and the supporting worksheet do not transform amounts payable as salary into fees for consultancy; no case was made out by the department that payments (other than salary) were for consultancy rather than for routine managerial services performed by the Managing Director. Applying the exclusion in Section 65(44)(b), the Tribunal concluded that services rendered by the Managing Director in the course of employment are not "service" for levy of service tax. Reliance was placed on the authorities cited by the appellant and the Tribunal's view in Allied Blenders and Distilleries Pvt. Ltd. to support that the impugned demand under the notification invoked is not maintainable where an employer-employee relationship exists and remuneration is salary/perquisites for managerial duties. [Paras 4, 5]

Payments to the Managing Director were held to be excluded from "service" under Section 65(44)(b) and not liable to service tax under the Reverse Charge Mechanism; the impugned order was set aside.

Final Conclusion: The impugned Order-in-Appeal confirming service tax on remuneration paid to the Managing Director was quashed; the appeal is allowed and the demand set aside with consequential relief as per law.

Compulsion under threat of arrest - reversal of Cenvat Credit - pre-adjudication recovery - strong arm tactics by revenue officers - subversion of rule of law - Article 226 of the Constitution

Compulsion under threat of arrest - reversal of Cenvat Credit - pre-adjudication recovery - strong arm tactics by revenue officers - Petition under Article 226 seeking relief against alleged coercive recovery of Cenvat credit prior to issuance/adjudication of show cause notice was not finally adjudicated; matter adjourned for final hearing. - HELD THAT: - The petitioners alleged that they were compelled, under threat of arrest, to reverse Cenvat credit and pay an amount prior to any show cause notice being adjudicated, and relied on precedents to contend that such pre adjudication recovery by revenue officers and use of strong arm tactics subverts the rule of law. The respondents filed an affidavit denying any threat of arrest and submitted that a show cause notice has been issued. The Court recorded that it was not impressed with the respondents' submissions but, at the respondents' request for time to take further instructions, granted limited time and did not decide the merits of the claim. No adjudication on the legality of the reversal or the alleged coercion was undertaken in the order; the matter was listed for final hearing on the specified date.

Limited time granted to respondents; petition not finally decided and listed for final hearing on 30th July 2019.

Final Conclusion: The Court declined to adjudicate the petition on merits at this stage, granted the respondents' request for time, and directed that the matter be taken up for final hearing on 30th July 2019.

Pre-deposit condition - conditional order - post-facto compliance cannot cure non-compliance - maintainability of appeal where condition precedent not complied - no substantial question of law

Pre-deposit condition - conditional order - post-facto compliance cannot cure non-compliance - maintainability of appeal where condition precedent not complied - Effect of non-compliance with the pre-deposit condition at the time of CESTAT's order and whether subsequent full compliance cures the defect - HELD THAT: - The Tribunal had passed a conditional order requiring pre-deposit. On 20.02.2017 the CESTAT dismissed the appeal on the ground that the pre-deposit condition was not complied with as of that date. The Court held that compliance after the impugned order cannot retrospectively validate the appeal; what matters is compliance on the date the Tribunal disposed of the appeal. Because the pre-deposit condition was not fulfilled when the CESTAT dismissed the appeal, the dismissal was unassailable on that ground. Consequently, no arguable substantial question of law arises from the dismissal based on non-compliance with the condition precedent. [Paras 6, 7, 8]

Dismissal of the appeal by the Tribunal for non-compliance with the pre-deposit condition upheld; subsequent compliance does not cure the defect and no substantial question of law arises.

Final Conclusion: The High Court dismissed the appeal, holding that the CESTAT's dismissal for non-compliance with the pre-deposit condition was valid and that belated compliance after the impugned order could not cure the defect; consequently no substantial question of law arose and the appeal was dismissed.

Clandestine removal - statement recorded under Section 14 of the Central Excise Act, 1944 - onus to prove clandestine removal - duty demand upheld where assessee accepts shortages and offers no explanation

Clandestine removal - onus to prove clandestine removal - Whether the CESTAT correctly applied the principle of clandestine removal and shifted the onus to the Revenue - HELD THAT: - The Court held that the Tribunal erred in treating the case as one of clandestine removal and in applying the principle that the onus shifts to the Revenue to establish clandestine removal. The facts showed that the Department conducted physical stock verifications on two occasions and recorded major shortages, and responsible officers of the company (including the General Manager (Finance) and a Director) admitted the shortages in statements recorded by the authorities. The Tribunal failed to take these admissions and the factual matrix into account and wrongly imported the clandestine-removal doctrine where the assessee had not pleaded that clandestine removal was the specific allegation. Consequently the Tribunal's reliance on precedents concerning clandestine removal was misplaced in the facts of this case. [Paras 9, 11, 12, 14, 15]

Tribunal's application of the clandestine removal principle and resultant shifting of onus was incorrect and not applicable on the facts

Statement recorded under Section 14 of the Central Excise Act, 1944 - duty demand upheld where assessee accepts shortages and offers no explanation - Whether the demand of excise duty, interest and penalty could be sustained where the assessee accepted the shortages in statutory statements and made partial payments and undertook to pay the balance - HELD THAT: - The Court found that statements recorded under Section 14 by the company's authorised representatives, including the Director, unequivocally accepted the shortages and acknowledged removals without following excise procedures and without payment of duty. The assessee also paid a substantial part of the assessed duty and gave undertakings to pay the balance, while failing to provide any satisfactory explanation for the large variation between book and physical stock. In such circumstances the assessing authority's computation of duty and imposition of interest and penalty were in conformity with law. The Tribunal's failure to consider the admissions recorded under Section 14 and the partial payments rendered its conclusion unsustainable. [Paras 9, 10, 11, 13, 15]

Demand, interest and penalty as confirmed by the Commissioner were sustainable on the facts; Tribunal's order setting them aside was quashed

Final Conclusion: The appeal is allowed; the CESTAT order dated 05.03.2018 is quashed because the Tribunal wrongly applied the clandestine-removal onus-shifting principle and ignored statutory admissions recorded under Section 14 and the assessee's partial payments and undertakings, and the demand, interest and penalty as confirmed by the Commissioner are held sustainable.

Rectifiable mistake - interest on delayed payment - penalty for incorrect payment - recognition of duty payment despite wrong registration code - departmental discretion to adjust deposits

Rectifiable mistake - recognition of duty payment despite wrong registration code - interest on delayed payment - penalty for incorrect payment - departmental discretion to adjust deposits - Whether interest and penalty could be sustained where the assessee had deposited the duty but, through mistake, credited it to an old registration number instead of the current one. - HELD THAT: - The Tribunal found as fact that the duty was duly deposited by the appellant though against the old registration number because the earlier registration had not been deleted from the system. The error was treated as a rectifiable mistake capable of being corrected by departmental adjustment rather than an instance of non-payment or delayed payment attracting interest or penalty. The Tribunal noted and relied upon precedents of the Gujarat High Court which held that mere mention of a wrong code does not render a payment invalid and that levy of interest and penalty in such circumstances is not sustainable. Applying that reasoning, and having regard to the conceded fact of payment to the Revenue, confirmation of interest and imposition of penalty were held not justifiable. [Paras 3]

Interest quantified and penalty imposed were set aside and the appeal allowed.

Final Conclusion: The appeal was allowed: since the duty had been deposited albeit under the old registration number and the error was a rectifiable mistake, confirmation of interest and imposition of penalty were set aside.

Curative petition - Maintainability of curative petition - Parameters in Rupa Ashok Hurra - Dismissal of curative petition

Curative petition - Maintainability of curative petition - Parameters in Rupa Ashok Hurra - Curative petitions dismissed for failure to satisfy the test laid down in Rupa Ashok Hurra. - HELD THAT: - The Court examined the curative petitions against the standards and parameters articulated in Rupa Ashok Hurra Vs. Ashok Hurra & Anr., 2002 (4) SCC 388, and concluded that the petitions did not disclose any grounds warranting the exceptional remedy of a curative petition. Having found that no case was made out within those parameters, the Court declined to entertain the petitions and dismissed them.

Curative petitions dismissed for want of merit under the parameters of Rupa Ashok Hurra.

Final Conclusion: The Supreme Court considered the curative petitions and, applying the criteria in Rupa Ashok Hurra, found no basis to interfere; the curative petitions are dismissed.

Penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - wrongful availment and reversal of CENVAT credit - bona fide belief and absence of mala fide, fraud, collusion or willful mis-statement or suppression of fact - reversal of credit with interest as mitigation against penalty

Penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - wrongful availment and reversal of CENVAT credit - bona fide belief and absence of mala fide, fraud, collusion or willful mis-statement or suppression of fact - Whether imposition of equal penalty under Rule 15(2) read with Section 11AC was warranted where the appellant reversed the wrongly availed CENVAT credit with interest and there was no mala fide intention. - HELD THAT: - The Tribunal found on the record that the appellant, upon detection of the wrongful availment of CENVAT credit in respect of civil construction services, reversed the credit and paid interest. The appellant asserted a bona fide belief in taking the credit and there was no material to establish fraud, collusion, willful mis-statement or suppression of facts. In these circumstances the Tribunal applied the principle that imposition of penalty under the cited provisions is not warranted where the credit has been restored with interest and mala fide or deliberate concealment is not established. Relying on the facts recorded, the Tribunal concluded that penalty could not be sustained and allowed the appeal to set aside the penalty. [Paras 6]

Penalty imposed under Rule 15(2) read with Section 11AC set aside as appellant reversed the credit with interest and no mala fide was established.

Final Conclusion: The appeal is allowed and the equal penalty imposed by the lower authorities is set aside because the appellant reversed the wrongful CENVAT credit with interest and there was no finding of mala fide, fraud, collusion or willful suppression.

Principles of natural justice - opportunity of hearing - reassessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 - adjournment and procedural fairness - quashing of assessment order for lack of fair hearing - remand for fresh consideration

Principles of natural justice - opportunity of hearing - reassessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 - procedural fairness - Validity of Ext.P5 assessment order in light of alleged denial of effective hearing and non-compliance with Section 25(1) of the Act. - HELD THAT: - The notice called for production of books relating to the financial year 2016-17 and alleged misclassification and purchase suppressions. The petitioner sought time for cross-verification and for obtaining records from suppliers, requesting two months from 24.12.2018. Ext.P5, however, records reliance on a hearing dated 26.11.2018 despite contemporaneous adjournment requests and a hearing date of 24.12.2018 being reflected in the record. The Court found that the assessment order proceeded without affording a practical and effective opportunity to produce the evidentiary material relied upon by the petitioner, thereby failing the requirements of procedural fairness and the mandate of Section 25(1). For these reasons the impugned order cannot stand. [Paras 5, 6]

Ext.P5 assessment order set aside as violative of the principles of natural justice and Section 25(1) of the Act.

Remand for fresh consideration - direction to afford opportunity and decide assessment afresh - Procedure for disposal of the assessment after setting aside the impugned order. - HELD THAT: - Having set aside Ext.P5 for want of a fair hearing, the Court directed a limited remand: the petitioner, armed with this judgment and its reply/annexures to the show-cause notice, is to appear before the respondent on 20.08.2019, and the respondent is to consider the material and pass final orders either on that date or on a subsequent date intimated to the petitioner. The remand is for fresh consideration and decision in accordance with law after affording an effective opportunity to the petitioner. [Paras 6]

Matter remanded to the respondent to afford opportunity to the petitioner and to pass final assessment orders on or after 20.08.2019.

Final Conclusion: The assessment order dated 31.12.2018 (Ext.P5) is quashed for breach of natural justice and non-compliance with Section 25(1); the matter is remitted to the respondent for fresh consideration and final disposal after affording the petitioner an opportunity to be heard, with the petitioner directed to appear on 20.08.2019 (or such later date as fixed).

Restoration of assessment order - jurisdiction to reassess after appellate remand - principles of natural justice - finality of appellate tribunal decision - limitation for reassessment

Restoration of assessment order - jurisdiction to reassess after appellate remand - finality of appellate tribunal decision - Validity of Ext.P13 assessment in view of the Appellate Tribunal's remand order (Ext.P7) which stated that the original assessment order would stand restored if the assessee failed to produce records. - HELD THAT: - The Tribunal in Ext.P7 set aside the assessing authority's order for violation of principles of natural justice and remitted the matter for fresh disposal, expressly providing that if the assessee failed to produce records within the time fixed, "the original assessment order will stand restored." The court gives full effect to that declaration: by operation of the Tribunal's order Ext.P6 is restored and becomes binding between the parties. Once Ext.P6 was restored by the final order of the Tribunal, the second respondent could not ignore that restoration and independently re-open or re-assess the same period by issuing a fresh order in Ext.P13. The court therefore holds that Ext.P13 is illegal and beyond the jurisdiction of the second respondent because it contravenes the binding effect of the Tribunal's decision and the scheme of finality in the appellate hierarchy under the Act. [Paras 7, 8, 10]

Ext.P13 is illegal and beyond the jurisdiction of the second respondent as it disregards the Tribunal's restoration of Ext.P6 and the finality of the Tribunal's decision.

Limitation for reassessment - jurisdiction to reassess after appellate remand - Whether Ext.R2(a) could be treated as an independent fresh notice of reassessment and whether any such initiation at that stage was within the period of limitation. - HELD THAT: - The court notes that the respondents did not at any time during the appeals contend that they intended to amend or replace the reassessment notices (Exts.P2 and P4) or seek restoration of the file on other grounds. If Ext.R2(a) were to be treated as an independent initiation of reassessment, such initiation would be beyond the period of limitation under the Act. The respondents themselves did not advance a case that Ext.R2(a) was a lawful, independent fresh start to reassessment; instead their position effectively depended on proceeding under the earlier notices. Consequently, Ext.R2(a) and the consequent Ext.P13 cannot be sustained as a time barred or procedurally unauthorized fresh reassessment. [Paras 8, 9]

Ext.R2(a), if viewed as an independent reassessment notice, would be beyond the period of limitation and cannot validate Ext.P13; respondents did not contend a lawful independent initiation.

Final Conclusion: The assessment order in Ext.P13 is set aside as illegal and beyond the jurisdiction of the second respondent because the Appellate Tribunal's order restored Ext.P6 (making that order binding and final) and the respondents have not established a lawful, timely independent reassessment; the Tribunal's decision is final for assessment year 2008-09.

Mandatory and directory distinction - rule-making power to regulate export of intoxicants - production of Export Verification Certificates (EVCs) as proof of export - construction of the word 'shall' in regulatory provisions - invocation of bank guarantee for non-submission of EVCs - constitutionality under Article 265

Production of Export Verification Certificates (EVCs) as proof of export - mandatory and directory distinction - Production of EVCs is necessary to avail reduced duty on exported liquor, but the prescribed time-limit for furnishing EVCs is directory and not mandatory. - HELD THAT: - The court held that EVCs serve as proof that the manufactured liquor reached the destination State and are therefore necessary to substantiate entitlement to reduced duty on exports. However, the sixty/ninety day time-limit for production of EVCs depends on the functioning of authorities in other States and is beyond the control of the exporter. Reliance was placed on precedents holding that time-limits for production of verification certificates in export contexts are directory when strict enforcement would lead to unjust results and render the provision unworkable. Accordingly, belatedly submitted EVCs accompanied by sufficient cause or other adequate material evidence that the liquor reached the destination must be considered and need not disentitle the exporter to the reduced rate of duty. [Paras 29]

EVCs are required as proof of export but the sixty/ninety day time-limit for furnishing them is directory; belated EVCs with sufficient explanation must be considered.

Construction of the word 'shall' in regulatory provisions - rule-making power to regulate export of intoxicants - invocation of bank guarantee for non-submission of EVCs - constitutionality under Article 265 - Rule 20(2) of the Karnataka Excise (Possession, Transport, Import and Export of Intoxicants) Rules, 1967 is intra vires the Act and Constitution, but the mandatory phrasing 'shall' in the time provision must be read as permissive to make the rule workable; invocation of bank guarantee and demand for duty for belated EVCs are unjustified in the circumstances. - HELD THAT: - The court found the State possessed legislative power under Entries 8 and 66 of List II and Section 71(2)(d) to frame regulations governing export of intoxicants, including requirements for verification certificates. While the rule-making power is not excessive or arbitrary, interpreting the word 'shall' literally to render the time-limit strictly imperative would produce disproportionate and unjust results and could render the provision violative of Article 265. Applying established principles on interpreting 'shall', the court read the temporal obligation as directory (effectively treating 'shall' as 'may' for the time prescription) so as to preserve the rule's constitutionality and purpose. Consequently, demands premised on non-submission of EVCs within the prescribed period and the invocation of bank guarantees in the recorded facts were quashed. [Paras 31, 32]

Rule 20(2) is intra vires; temporal 'shall' is to be read permissively so the sixty/ninety day limit is directory; demand and invocation of bank guarantee are quashed.

Final Conclusion: The court upheld the validity of Rule 20(2) but held that while submission of EVCs is necessary to claim export treatment, the sixty/ninety day time-limit is directory; on the facts impugned demands and invocation of bank guarantee were quashed and the respondents were directed to process pending export permits subject to other conditions.