TaxTMI Updates e-Newsletter
Aug 20,2024

Eligibility and conditions for taking input tax credit - Burden of proof for claiming input tax credit - Requirement of proving physical movement and genuineness of transaction - Input tax credit wrongly availed under Section 74 - Prohibition on grant of input tax credit without fulfilment of section 16 conditions

Eligibility and conditions for taking input tax credit - Burden of proof for claiming input tax credit - Requirement of proving physical movement and genuineness of transaction - Entitlement of the petitioner to avail input tax credit on the basis of tax invoices, e-way bills and bank payments in absence of evidence of physical movement and other corroborative documents. - HELD THAT: - The Court applied Section 16 of the U.P. GST Act to hold that entitlement to input tax credit is subject to statutory conditions and restrictions, and that mere production of tax invoices, e-way bills and bank payment details is not sufficient to discharge the purchaser's burden. Reliance was placed on the Apex Court's decision in Ecom Gill Coffee Trading Pvt. Ltd., which places the onus on the purchasing dealer to prove beyond doubt the genuineness of the transaction and actual physical movement of goods by furnishing additional particulars such as seller's particulars, vehicle details, payment of freight, acknowledgements of delivery and related proof. In the present case the petitioner failed to produce evidence of freight payment, delivery acknowledgements, toll receipts or proof of filing inwards returns (GSTR-2A), and therefore did not establish the material facts necessary under Section 16(2) to claim ITC. On that basis the court found that the claimed input tax credit could be disallowed. [Paras 9, 11, 12, 13]

The petitioner was not entitled to the input tax credit claimed because he failed to discharge the statutory burden of proving the genuineness of transactions and actual physical movement of goods.

Input tax credit wrongly availed under Section 74 - Prohibition on grant of input tax credit without fulfilment of section 16 conditions - Validity of initiation and sustenance of proceedings under Section 74 of the U.P. GST Act for alleged wrongful availing of input tax credit. - HELD THAT: - The Court examined Section 74 and noted that it empowers initiation of adjudication where input tax credit has been wrongly availed by reason of fraud, wilful misstatement or suppression of facts, subject to procedural safeguards (notice and opportunity). The court held that where the purchaser fails to establish entitlement to ITC by satisfying the conditions under Section 16, initiation of proceedings under Section 74 is competent. Having found that the petitioner did not furnish the requisite corroborative evidence to establish the genuineness of purchases, the Court upheld the impugned adjudication and penalty imposed under Section 74 as not requiring interference. [Paras 10, 11, 19]

Proceedings under Section 74 were rightly initiated and the impugned orders sustaining recovery and penalty were upheld.

Final Conclusion: The writ petition was dismissed: the Court held that the petitioner failed to discharge the statutory burden to prove genuineness and physical movement required for claiming ITC under Section 16, and that proceedings under Section 74 to recover alleged wrongly availed ITC were validly initiated and sustained.

Rules of natural justice - ex parte order - opportunity of personal hearing - communication of adjourned date - quash and set aside

Rules of natural justice - ex parte order - communication of adjourned date - opportunity of personal hearing - Validity of an assessment order passed ex parte when the authority did not pass the order on the fixed hearing date and failed to communicate any subsequently fixed date to the petitioner. - HELD THAT: - The Court found that the impugned order was passed ex parte and not on the date fixed for hearing, and that no notice of any subsequent date was communicated to the petitioner. Relying on earlier coordinate-bench authority, the Court held that under the rules of natural justice the assessing authority was obliged either to decide the matter on the date fixed or to fix another date and communicate it to the petitioner. By neither passing the order on the fixed date nor informing the petitioner of a new hearing date, the authority effectively forced the ex parte nature of the order by its own conduct. Consequently the order could not stand and required quashing with a direction for a fresh personal hearing and a reasoned decision in accordance with law. [Paras 3, 4, 5]

Impugned order dated March 1, 2024 quashed and set aside; authority directed to grant personal hearing to the petitioner and thereafter pass a reasoned order in accordance with law.

Final Conclusion: Writ petition allowed; impugned assessment order quashed and remanded for fresh consideration after granting the petitioner an opportunity of personal hearing and issuing appropriate communication of the hearing date.

Opportunity of hearing - statutory obligation of Section 75(4) of Uttar Pradesh Goods and Service Tax Act, 2017 - quashing and remand for fresh hearing - reasoned order

Opportunity of hearing - statutory obligation of Section 75(4) of Uttar Pradesh Goods and Service Tax Act, 2017 - Whether the impugned order is vitiated for want of a proper opportunity of hearing in breach of the statutory requirement - HELD THAT: - The Court found that no proper opportunity of hearing was granted to the petitioner because the opportunity was accorded on the very date of the show cause notice, which did not meet the requirements of fair hearing. The judgment relied on the earlier decision in M/s Shree Sai Palace Vs. State of U.P. and Ors. and held that the statutory obligation under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017 was not fulfilled. Consequently, the impugned order was held to be legally unsustainable for failure to observe the audi alteram partem principle embedded in the statutory procedure. [Paras 3, 4]

Impugned order quashed for want of proper opportunity of hearing and statutory non-compliance

Quashing and remand for fresh hearing - reasoned order - Relief required upon finding of procedural infirmity - HELD THAT: - Having quashed the impugned order, the Court directed the authority to grant another opportunity of hearing to the petitioner and thereafter to pass a reasoned order in accordance with law. The direction was remedial and prospective: the matter is remitted to the competent authority for fresh consideration after affording the statutory and fair hearing and for issuance of a reasoned decision consistent with legal requirements. [Paras 5]

Matter remitted; authority directed to grant fresh hearing and pass a reasoned order

Final Conclusion: Impugned order dated July 3, 2024 quashed for failure to afford a proper hearing in breach of Section 75(4) of the UP GST Act; matter remitted to the authority to grant fresh opportunity of hearing and thereafter pass a reasoned order in accordance with law; writ petition disposed of.

Regular bail - Alleged wrongful claim of Input Tax Credit - Maintainability of complaint under Section 132 of the CGST Act - Use of forged GST registration certificate for opening bank account - Triability by Magistrate - Bail conditions including surrender of passport and reporting obligations

Regular bail - Bail conditions including surrender of passport and reporting obligations - Grant of regular bail to the petitioner subject to conditions - HELD THAT: - Challan had been presented and the petitioner was in custody since his arrest on 17.02.2024. The Court observed that the allegations were documentary in nature, that culpability would be determined at trial, and that completion of trial would take long; accordingly no useful purpose would be served by keeping the petitioner behind bars for a prolonged period. Without commenting on merits, the petition was allowed and the petitioner directed to be released on regular bail on furnishing bail bonds/surety bonds as specified. The Court attached conditions including surrender of passport, registration of mobile number for SMS from CIS, prior intimation before changing residence, and requirement to appear on every date of hearing, and left the Trial Court liberty to impose further conditions or cancel bail in case of default. [Paras 11, 12, 13, 14]

Petitioner released on regular bail on furnishing specified bail/surety bonds and subject to enumerated conditions; Trial Court may impose further conditions or cancel bail for default.

Alleged wrongful claim of Input Tax Credit - Maintainability of complaint under Section 132 of the CGST Act - Triability by Magistrate - Maintainability of complaint under Section 132 of the CGST Act and characterisation of allegations as triable by a Magistrate - HELD THAT: - The Court noted that on the first allegation the Deputy Commissioner had passed an order under Section 74 of the CGST Act for recovery of tax, interest and penalty, and that a challan had been presented. The Court recorded that a complaint under Section 132 of the CGST Act is maintainable in respect of the allegation. With respect to the second allegation concerning submission of a forged GST certificate to the bank, the Court observed that no evidence had been collected to show cheating arising from the bank account and that the case was essentially based on documentary evidence; therefore culpability would be decided during trial and the matter is triable by a Magistrate. [Paras 7, 8, 9, 10]

Complaint under Section 132 CGST Act is maintainable in respect of the first allegation; the allegations are documentary and triable by a Magistrate, with culpability to be determined at trial.

Final Conclusion: Bail petition allowed and petitioner released on regular bail subject to specified bonds and conditions; the complaint founded on alleged wrongful ITC claim is maintainable under Section 132 CGST Act and the issues are documentary in nature and triable by the Magistrate, with merits to be decided at trial.

Cancellation of GST registration - Show Cause Notice - Requirement of a reasoned order - Revocation of cancellation and restoration of registration - Right of revenue to initiate fresh proceedings in accordance with law

Show Cause Notice - Requirement of a reasoned order - Cancellation of GST registration - Validity of the Show Cause Notice and the cancellation order impugned for want of reasons - HELD THAT: - The Court found that the SCN merely recorded initiation of cancellation proceedings without stating any reasons for proposing cancellation. The impugned cancellation order likewise did not set out any reasons and merely referred to the SCN. For administrative orders affecting statutory registration, absence of any stated reason renders both the notice and the cancellation order unreasoned and therefore liable to be set aside. The Court accepted the petitioner's explanation about the address and noted that the authorities had not recorded determinative findings justifying retrospective cancellation from 01.07.2017.

The SCN and the impugned cancellation order are set aside for being unreasoned.

Revocation of cancellation and restoration of registration - Cancellation of GST registration - Right of revenue to initiate fresh proceedings in accordance with law - Whether the petitioner's GST registration should be restored and whether the revenue may take further action - HELD THAT: - Having found the SCN and cancellation order unreasoned, the Court directed revocation of the impugned cancellation and ordered restoration of the petitioner's GST registration forthwith. The Court recorded the respondents' acceptance (post-appellate inspection) that the petitioner exists at the stated address and that departmental instructions permitted revocation. The Court expressly clarified that this restoration does not preclude the authorities from initiating any future action, including retrospective cancellation, provided such action is taken in accordance with law and with reasons.

The cancellation is revoked and the petitioner's GST registration is restored; authorities remain free to initiate fresh proceedings lawfully.

Final Conclusion: The writ petition is allowed: the Show Cause Notice and cancellation order were quashed for want of reasons, the cancellation is revoked and the petitioner's GST registration is restored forthwith; the concerned authorities remain entitled to initiate any fresh, reasoned proceedings in accordance with law.

Cancellation of GST registration - Retrospective cancellation - Prospective effect - Show Cause Notice - Reasoned order - Opportunity of hearing

Cancellation of GST registration - Retrospective cancellation - Prospective effect - Reasoned order - Show Cause Notice - Opportunity of hearing - Impugned order cancelling GST registration with retrospective effect was modified to operate prospectively from the date of the Show Cause Notice. - HELD THAT: - The Show Cause Notice referenced filing of returns under Section 39 and the details in Form GSTR-1 but did not record any specific allegation of non-compliance or any discrepancy in the returns; it also did not propose retrospective cancellation. The impugned order cancelling registration with retrospective effect from 17.07.2021 failed to record any reasons for that retrospective effect and merely stated reference to the SCN and non-appearance at the fixed hearing, while indicating no tax or other dues were determined. The petitioner had furnished explanations (including that the proprietor was travelling and had requested re-verification) which the impugned order does not reflect as considered or rejected with reasons. In these circumstances, the Court declined to sustain retrospective cancellation from 17.07.2021 and directed that cancellation be operative prospectively from 21.12.2021 (the date the GST was suspended/SCN issued). The Court expressly left open the statutory authority's power to initiate any action in accordance with law, including reconsideration of retrospective cancellation if the proper officer, upon lawful process, considers it necessary. [Paras 3, 5, 7, 11, 12]

Impugned cancellation modified to be effective from 21.12.2021 instead of 17.07.2021; authorities not precluded from lawful action including retrospective cancellation if justified.

Final Conclusion: The petition is disposed by modifying the impugned order so that cancellation of GST registration operates from 21.12.2021 (date of the SCN), not from 17.07.2021; the competent authorities remain free to act in accordance with law.

Cancellation of GST registration - retrospective cancellation - revocation of cancellation - KYC and address for future correspondence - taxpayer liability unaffected by cancellation

Cancellation of GST registration - retrospective cancellation - Petitioner's application for cancellation of GST registration to be allowed with effect from 01.10.2022 and the retrospective cancellation challenged by the petitioner addressed. - HELD THAT: - The Court found that the petitioner has stopped carrying on business and therefore the application for cancellation ought to be allowed. The grievance that the registration was cancelled retrospectively (from 29.11.2019) was examined and the Court directed that the proper officer should reconsider the petitioner's application for cancellation with effect from 01.10.2022. The Court observed that documents earlier called for by the officer related to assessing liability and that allowing cancellation from the date sought by the petitioner is appropriate subject to verification of future correspondence address and KYC documents. [Paras 16, 17]

Direct reconsideration and allowance of the cancellation application so as to effect cancellation from 01.10.2022, subject to verification of specified documents.

KYC and address for future correspondence - revocation of cancellation - Procedure to be followed by the proper officer on reconsideration of cancellation and revocation application. - HELD THAT: - The Court mandated that the petitioner shall, within two weeks, furnish documents evidencing the future correspondence address and KYC documents. If the proper officer is satisfied with those documents, the officer shall proceed to allow the petitioner's cancellation application. The direction operates as a remand for limited verification and compliance rather than a decision on merits of past liability. The Court noted that the petitioner had not responded to earlier notices and that the revocation application rejection requires reconsideration in light of the prescribed compliance. [Paras 18]

Petitioner to submit KYC and address documents within two weeks; proper officer to allow cancellation on being satisfied; remand for limited verification and compliance.

Taxpayer liability unaffected by cancellation - Effect of allowing cancellation on pre-existing tax liabilities and enforcement proceedings. - HELD THAT: - The Court clarified that allowing cancellation of registration does not absolve the petitioner of any liability to pay taxes or from being accountable for statutory violations. The concerned authority remains entitled to initiate proceedings for assessment, recovery, or statutory violations despite the cancellation of registration. [Paras 15, 19]

Cancellation, if allowed, will not absolve the petitioner of liabilities and authorities remain free to initiate or continue assessment and recovery proceedings.

Final Conclusion: The petition is disposed of by directing the proper officer to reconsider the petitioner's cancellation application so as to effect cancellation from 01.10.2022 upon the petitioner furnishing KYC and address documents within two weeks; such cancellation will not affect the authority's power to assess, recover or prosecute any tax liabilities or statutory violations.

Cancellation of GST registration - Show Cause Notice - Retrospective cancellation - Prospective cancellation - Right to be heard - Liability not extinguished by cancellation - Suspension of GST registration - Disclosure of complaint and allegations

Show Cause Notice - Disclosure of complaint and allegations - Right to be heard - Validity of the Show Cause Notice and the impugned cancellation order insofar as they failed to disclose reasons or provide the petitioner an opportunity to meet allegations contained in an undisclosed complaint. - HELD THAT: - The Court found that the Show Cause Notice merely referred to a complaint but did not furnish the complaint or any particulars of the allegations to the petitioner, and the subsequent cancellation order likewise did not record reasons for cancellation. Such omission deprived the petitioner of a meaningful opportunity to respond. The Court observed that cancellation of registration does not absolve the taxpayer of liabilities, but procedural fairness requires that the grounds of the proposal be disclosed so that the assessee can address them. For these reasons the SCN and the impugned cancellation order were set aside. [Paras 4, 5, 6, 7]

SCN and impugned cancellation order set aside for failure to disclose reasons and for denying an opportunity to meet allegations.

Retrospective cancellation - Prospective cancellation - Liability not extinguished by cancellation - Suspension of GST registration - Relief as to temporal operation of cancellation - whether cancellation should be prospective or retrospective. - HELD THAT: - Having set aside the impugned cancellation to the extent it was retrospective from 29.11.2018, the Court directed that the petitioner's GST registration be cancelled prospectively from the date of the impugned cancellation order (i.e., made operative prospectively). The Court expressly clarified that such prospective cancellation does not absolve the petitioner from payment of any statutory liabilities under the CGST, Delhi GST or IGST Acts, nor does it preclude initiation of action if warranted in accordance with law. The suspension effected from the date of the SCN was recorded in the factual background, and the order adjudicates only the temporal effect of cancellation. [Paras 9, 10]

Cancellation to operate prospectively from the date of the impugned order; retrospective cancellation set aside; liabilities and enforcement not affected.

Final Conclusion: The petition is disposed by quashing the SCN and the impugned retrospective cancellation for failure to disclose reasons and denying an opportunity to respond, and by directing that the GST registration stand cancelled prospectively from the date of the impugned order while preserving the authority's right to enforce statutory liabilities or initiate proceedings in accordance with law.

Unreasoned order - requirement to consider taxpayer's reply - remand for fresh consideration - opportunity of personal hearing - retrospective cancellation and restoration of registration

Unreasoned order - requirement to consider taxpayer's reply - remand for fresh consideration - opportunity of personal hearing - Impugned orders passed under Section 73 confirming demand were set aside and the matter remanded for fresh consideration because the orders did not deal with the explanations filed by the taxpayer and were unreasoned. - HELD THAT: - The Court found that the impugned orders reproduce a tabular statement from the show cause notices and confirm demand without addressing the detailed replies filed by the petitioner. The orders record only that the reply was examined but conclude that the taxpayer had not properly replied, without referring to or dealing with the explanations submitted. Such non-speaking orders, particularly when passed close to the expiry of limitation, fail the requirement of reasoned decision-making. In view of these deficiencies the Court set aside the impugned orders and remanded the matter to the Proper Officer for fresh consideration. On remand the Proper Officer is directed to examine the reply furnished by the petitioner and to afford the petitioner an opportunity for a personal hearing before passing any fresh order. The Court noted that restoration of the supplier's registration by a separate order may be a relevant factor for reconsideration but did not decide the underlying merits of the demand. [Paras 7, 8, 9, 10, 13]

Impugned orders set aside; matter remanded to the Proper Officer to consider the petitioner's reply afresh and to afford a personal hearing.

Final Conclusion: The writ petition is disposed of by setting aside the impugned orders and remanding the matter to the Proper Officer for fresh consideration after examining the petitioner's reply and granting a personal hearing; pending application disposed of.

Cancellation of GST registration - violation of principles of natural justice - reliance on directions of another officer without disclosure - non-existence / fictitious person allegation - restoration of GST registration - exercise of writ jurisdiction where appellate authority not constituted

Violation of principles of natural justice - reliance on directions of another officer without disclosure - Validity of the cancellation order insofar as it was passed pursuant to directions of another authority which were neither mentioned in the show cause notice nor furnished to the petitioner - HELD THAT: - The Court held that the cancellation order was passed pursuant to a direction issued by another officer which was not set out in the impugned show cause notice and a copy of that letter was not supplied to the petitioner. Passing the cancellation order on the basis of such undisclosed directions deprived the petitioner of an opportunity to meet the material relied upon and thus violated principles of natural justice. The Proper Officer was required to independently satisfy himself of the reasons for cancellation and could not mechanically act on undisclosed directions. [Paras 10, 11]

Impugned show cause notice and cancellation order set aside insofar as they were founded on undisclosed directions; cancellation quashed on natural justice grounds.

Non-existence / fictitious person allegation - cancellation of GST registration - restoration of GST registration - Whether cancellation of GST registration was justified on the ground that the assessee was non-existent given the petitioner's undisputed claim of ownership of the principal place of business and explanation of temporary cessation of business due to ill health - HELD THAT: - The Court recorded that the petitioner had consistently explained that business activity ceased temporarily due to illness and had filed NIL returns; he also furnished property tax receipts and asserted ownership of the declared principal place of business. These facts were not disputed and had earlier sufficed for revocation of a prior cancellation. Temporary suspension of business on account of ill health does not warrant cancellation of GST registration for being a fictitious entity. The Proper Officer failed to independently assess and rebut the petitioner's explanations before cancelling registration. [Paras 15, 16, 17]

Cancellation on the ground of alleged non-existence/fictitiousness was not sustainable; registration to be restored.

Exercise of writ jurisdiction where appellate authority not constituted - Whether the High Court should entertain the writ petition despite the availability of an appeal under the CGST Act when the Goods and Services Tax Appellate Tribunal is not constituted - HELD THAT: - The Court noted that although an appeal lay under Section 112 of the CGST Act, the statutory appellate forum (the Appellate Board) has not been constituted, rendering the alternative remedy ineffective. In such circumstances the High Court was entitled to exercise its writ jurisdiction and entertain the petition. Having found substantive infirmities in the cancellation process and in the grounds relied upon, the Court considered it appropriate to set aside the impugned orders and direct restoration. [Paras 18]

Writ petition entertained and allowed as alternative remedy; impugned orders set aside and registration restored.

Final Conclusion: The impugned show cause notice, cancellation order and appellate order were set aside; the respondents are directed to forthwith restore the petitioner's GST registration, subject to their right to initiate fresh proceedings in accordance with law after affording the petitioner an opportunity to be heard.

Cancellation of GST registration - limitation under the GST appellate provision - revival of GST registration on compliance with payment and filing conditions - non-utilisation of Input Tax Credit pending departmental scrutiny - restriction to prevent passing of Input Tax Credit / bill trading - reliance on prior High Court precedents for grant of equitable relief

Cancellation of GST registration - limitation under the GST appellate provision - Validity of appellate authority's dismissal of the belated appeal against cancellation on the ground of limitation - HELD THAT: - The High Court recorded that the petitioner filed an appeal against the cancellation order beyond the statutory period prescribed under the relevant GST appellate provision. The appellate authority dismissed the appeal in limine on limitation grounds. The Court found no error in that conclusion, having regard to the statutory limitation applicable to such appeals, and upheld the appellate authority's order rejecting the belated appeal. [Paras 2]

Appellate authority's dismissal of the belated appeal on the ground of limitation is upheld.

Revival of GST registration on compliance with payment and filing conditions - non-utilisation of Input Tax Credit pending departmental scrutiny - restriction to prevent passing of Input Tax Credit / bill trading - reliance on prior High Court precedents for grant of equitable relief - Whether discretionary relief in the form of revival of registration should be granted and on what conditions - HELD THAT: - Although the appeal was time-barred, the Court exercised its writ jurisdiction and allowed the petition on merits by following the consistent precedent of this Court in Tvl.Suguna Cutpiece Centre and similar orders. The Court directed that revival be conditional: filing of returns for the period prior to cancellation and payment of tax, interest, fines and fees for defaults; such payments cannot be made out of any unutilised Input Tax Credit; any Input Tax Credit already claimed shall not be utilised until scrutinised and approved by the competent officer; only approved ITC may be utilised thereafter; the petitioner must also file returns and pay GST for the period subsequent to cancellation with payment in cash; the respondents may impose restrictions to prevent undue passing of ITC or bill trading; and upon compliance the registration shall stand revived. The Court noted that these directions have been consistently followed and accepted by the department. [Paras 3, 4, 5, 6, 7]

Writ petition allowed and registration revived subject to the specified conditions and directions modeled on the cited precedent.

Final Conclusion: Writ petition allowed; appellate dismissal on limitation upheld but petitioner granted revival of GST registration on compliance with the Court's conditions (filing returns, payment of tax/interest/penalty, restrictions on use of Input Tax Credit pending scrutiny) in accordance with the High Court's earlier precedents; no costs.

Restoration of GST registration - direction subject to deposit of tax, penalty and interest - submission of returns as precondition for restoration - bar of limitation in appellate proceedings - exercise of writ jurisdiction under Article 226 - maintainability of writ petition in presence of alternative remedy

Restoration of GST registration - submission of returns as precondition for restoration - direction subject to deposit of tax, penalty and interest - Petitioners entitled to restoration of cancelled GST registration on compliance with specified conditions - HELD THAT: - The Court, noting that facts in the present petitions are similar to earlier decisions, disposed both petitions by directing the petitioners to approach the Competent Authority for restoration of their GST registration within seven days. Restoration is to be effected immediately by the Competent Authority subject to completion of requisite formalities. The Court conditioned restoration on the petitioners filing the returns and depositing the taxes and the penalty along with interest in accordance with the GST Act, 2017, within seven days. The orders explicitly provide that failure to comply within the stipulated period will render the direction inoperative. The Court emphasised that these directions are grounded in analogy to prior orders and the peculiar facts of the cases, and refrained from adjudicating the broader legal question regarding the maintainability of writ petitions under Article 226 where alternative remedies exist. [Paras 4, 5, 10, 11]

Petitions disposed by directing restoration of GST registration on the petitioners approaching the Competent Authority within seven days and complying with filing of returns and deposit of tax, penalty and interest; order to cease if compliance is not effected.

Final Conclusion: Both writ petitions were disposed of by directing immediate restoration of the petitioners' GST registration on their approaching the Competent Authority within seven days and on filing returns and depositing tax, penalty and interest within the same period; the Court did not decide the question of maintainability of writs in presence of alternate remedy.

Input Tax Credit wrongly refunded - Jurisdiction of proper officer under Section 73 of the Central Goods and Services Tax Act, 2017 - Show cause notice - Maintainability of writ petition challenging jurisdiction - Prohibition on communicating/executing order passed under Section 73(9) without leave of Court

Maintainability of writ petition challenging jurisdiction - Show cause notice - Writ petition challenging the show cause notice admitted for hearing; interim directions issued. - HELD THAT: - The High Court, noting that an identical challenge in WPA 5780 of 2024 had been admitted, accepted the petitioner's challenge to the competence of the proper officer to determine recovery of the claimed Input Tax Credit wrongly refunded under the impugned show cause notice. The Court concluded that the petition is not premature or non-maintainable merely because the proceedings are at the show cause stage and therefore admitted the writ for adjudication. Procedural directions were issued for exchange of affidavits and liberty to mention after their filing.

Writ petition admitted for hearing; directions given for filing affidavit-in-opposition and rejoinder; petition to be heard on merits.

Jurisdiction of proper officer under Section 73 of the Central Goods and Services Tax Act, 2017 - Input Tax Credit wrongly refunded - Question whether Section 73 empowers the proper officer to determine and recover ITC allegedly wrongly refunded was not finally adjudicated and reserved for further hearing. - HELD THAT: - Although the petitioner contended that Section 73 permits determination/recovery only of tax and not of Input Tax Credit wrongly refunded, the Court did not pronounce a final view on this legal controversy. Instead, having admitted the writ on this jurisdictional point, the Court directed that the matter be heard on merits following exchange of affidavits. The Court thereby left the substantive question of statutory interpretation and its application to be decided at the hearing.

Substantive question on competence to recover the alleged wrongly refunded ITC left for adjudication on merits at the hearing; not decided presently.

Show cause notice - Prohibition on communicating/executing order passed under Section 73(9) without leave of Court - Interim procedural directions in relation to the pending show cause notice were issued and the execution/communication of any order under Section 73(9) restrained without leave of the Court. - HELD THAT: - The Court directed the petitioner to appear before the proper officer and extended the time to respond to the show cause notice by two weeks. The proper officer was directed to decide the show cause after affording opportunity of hearing and after receipt of the pleadings. Further, the Court ordered that any order passed by the proper officer under Section 73(9) shall not be given effect to or communicated to the petitioner without the leave of the High Court, reserving the respondents' right to seek further relief thereafter.

Petitioner directed to respond within extended time; proper officer to decide after hearing; order under Section 73(9) shall not be acted upon or communicated without the Court's leave.

Final Conclusion: The writ petition challenging the show cause notice (period 2019-20 to 2022-23) is admitted for hearing on the jurisdictional question whether Section 73 permits recovery of the alleged wrongly refunded ITC; affidavits to be filed and the proper officer directed to decide the show cause after hearing, with any order under Section 73(9) restrained from being given effect to or communicated without the High Court's leave.

Attachment of bank accounts - personal liability of directors under the Finance Act, 1994 - penalty paid - representation for release of attachment - reasonable opportunity to be heard - administrative consideration of representation

Representation for release of attachment - administrative consideration of representation - reasonable opportunity to be heard - Direction to the respondent to consider and dispose of the petitioner's representation seeking release of attachment on two bank accounts - HELD THAT: - The writ petition sought an order directing the respondent to raise attachments on the petitioner's two bank accounts. The petitioner had earlier paid the penalty imposed on him and contended that the Finance Act, 1994 does not impose personal liability on directors of a private limited company, relying on that contention to urge release of the attachments. The respondent's counsel accepted notice and, noting that a representation dated 20-9-2023 had been submitted, undertook to consider and dispose of that representation on merits. The High Court did not adjudicate the substantive question of personal liability under the Finance Act or decide whether the attachments should be vacated on merits; instead the Court directed the respondent to consider the pending representation, to afford the petitioner a reasonable opportunity of hearing, and to dispose of it by applying the provisions of the Finance Act. [Paras 5]

Respondent directed to consider and dispose of the representation dated 20-9-2023 after giving a reasonable opportunity to the petitioner, and to do so within one month from receipt of a copy of the order.

Final Conclusion: Writ petition disposed of by directing the respondent to consider and dispose of the petitioner's representation dated 20-9-2023 in accordance with the Finance Act after affording a reasonable opportunity, to be completed within one month; no adjudication on the merits of personal liability or on the propriety of the attachments.

Settlement application as abated on account of it not being true and full disclosure of unaccounted income - report submitted by the Income Tax Department i.e. Volumetric Report relied upon - As decided by HC [2017 (5) TMI 427 - MADHYA PRADESH HIGH COURT] Order passed u/s 245D(4) by the Settlement Commission is perverse and devoid of merits, both in law and on facts and hence deserves to be set aside and is accordingly set aside. The Settlement Commission has erred in upholding the survey report dated 24/07/2012 merely because Total Station Method and 3D scanning technique was used without considering the fact that the person preparing the said report was incompetent and did not possess the necessary qualification to prepare the said report and gross inaccuracies were writ large on the face of the report, like Manganese Ore being 83% and waste being 27% which is impossible. Moreover, the gross production for six years determined at 16 lac MT was more than the estimated reserve determined as epr the mining plan which again is impossible.

The Settlement Commission has also erred in rejecting the report dated 17/06/2012 prepared by the State Government at the directions of this Court - HELD THAT:- We are not inclined to interfere with the impugned judgment(s) passed by the High Court. The special leave petitions stand dismissed.

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

Maintainability of appeal on Low tax effect - policy of the Union of India - Clause 4 of the Circular dated 11th July, 2018 - Headcount method of cost allocation - apportionment of common expenses between business segments - consistency in application of allocation method - comparability of an associated or independent enterprise - reliance on company website and internet material for selecting comparables - remand for fresh consideration of comparables

HELD THAT:- Tax effect comes to Rs.81,27,390/- (Rupees Eighty One Lakh Twenty Seven Thousand Three Hundred and Ninety Only) which is below the limit of 2 crores fixed under the policy.

In view of Clause 4 of the Circular dated 11th July, 2018, the case will be covered by the policy of the Union of India. We dispose of the petition on the ground of low tax effect.

Stay of demand - direction as called upon the writ petitioner to make a pre-deposit of 20% - as decided by HC [2024 (5) TMI 734 - DELHI HIGH COURT] respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit. The aforesaid stand as taken is thoroughly misconceived and wholly untenable in law

HELD THAT:- We dispose of this appeal by directing that pending disposal of the appeal filed by the appellant herein before the ITAT there shall be stay of further recovery of the outstanding dues.

The aforesaid order is being made having regard to the admitted fact that 30% of the demand has already been recovered by the respondent.

ITAT shall consider the appeal of the appellant in accordance with law on its own merits and without being prejudiced or influenced by any of the observations made by the High Court in the impugned order which has been modified by us as above.

The judgment of the High is modified in the aforesaid terms. Appeal is disposed of in the aforesaid terms.

Review petition -Most Favoured Nation clause (MFN) - notification under Section 90 as condition for domestic enforceability of treaties/protocols - interpretation of the word "is" in treaty text (present signification) - treaty incorporation/dualist principle - treaties not self executing absent domestic assimilation - subsequent practice and state practice as an authentic means of treaty interpretation (VCLT Article 31(3)(b)) - role of foreign executive decrees/administrative practice in treaty application

HELD THAT:- We have carefully perused the review petitions as also the grounds in support thereof. In our opinion, no case for review of the order [2023 (10) TMI 981 - SUPREME COURT] is made out.

The review petitions are, accordingly, dismissed.

Additions in completed/unabated assessments in absence of incriminating material found during search - abatement of pending assessments on initiation of search/requisition - jurisdiction under section 153A/153C consequent to search or requisition - reopening of completed/unabated assessments under sections 147/148 subject to statutory conditions

Additions in completed/unabated assessments in absence of incriminating material found during search - jurisdiction under section 153A/153C consequent to search or requisition - No additions can be made in respect of completed/unabated assessments where no incriminating material is found during the course of search or requisition. - HELD THAT: - The High Court, following its earlier decision in Commissioner of Income Tax v. Continental Warehousing Corporation and the subsequent authoritative pronouncement of the Supreme Court in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (paragraph 14 of that decision reproduced in this judgment), holds that where a search under section 132 or requisition under section 132A yields no incriminating material, the Assessing Officer cannot make additions in respect of completed/unabated assessments by invoking the powers under section 153A/153C. The Tribunal correctly applied this ratio in setting aside additions which were not founded upon any incriminating material seized in search proceedings. For persons assessed under section 153C (i.e. other persons), the time reference for abatement is governed by the proviso which interprets the date as the date of receiving seized/requisitioned material by the AO having jurisdiction over such other person; accordingly, unabated original assessments remain protected from additions absent incriminating material. [Paras 4, 6, 7]

The Tribunal's conclusion that no additions are permissible in respect of unabated/completed assessments in the absence of incriminating material is upheld and accepted.

Reopening of completed/unabated assessments under sections 147/148 subject to statutory conditions - Completed/unabated assessments may be reopened under sections 147/148 if the statutory conditions for reopening are satisfied; those powers are saved. - HELD THAT: - While prohibiting additions to completed/unabated assessments on the sole basis of non-search material, the Supreme Court's view-adopted by this Court-expressly preserves the Assessing Officer's power to reopen assessments under sections 147/148 where the statutory conditions for such reopening are met. The High Court clarifies that this aspect remains open for exercise in accordance with law and that all contentions relating to reopening under sections 147/148 are not decided adversely but are left to be examined as per the requirements of those sections. [Paras 6, 7]

The Assessing Officer's power to reopen completed/unabated assessments under sections 147/148 is preserved, subject to fulfillment of the statutory conditions for reopening.

Final Conclusion: In view of and pursuant to the Supreme Court's authoritative pronouncement, the appeals are dismissed; additions sustained by the revenue in respect of unabated/completed assessments without any incriminating material found in search are not permissible, while the statutory right to reopen under sections 147/148 remains available subject to applicable conditions.

Sanction under Section 151 for issuance of notice under Section 148 - Requirement of satisfaction by the prescribed authority - Application of mind by the prescribed authority (non-mechanical approval) - Rubber-stamp or mechanical approvals v. meaningful reasons - Quashment of notice under Section 148 where sanction is invalid

Sanction under Section 151 for issuance of notice under Section 148 - Application of mind by the prescribed authority (non-mechanical approval) - Rubber-stamp or mechanical approvals v. meaningful reasons - Validity of the approval recorded by the Principal Commissioner under Section 151 and consequence for the notice issued under Section 148 for AY 2015-16. - HELD THAT: - Section 151 requires that the prescribed authority be "satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case" for issuance of a notice under Section 148; such satisfaction is a sine qua non and must reflect an independent application of mind. The PCIT's approval was a common, omnibus endorsement in respect of 111 cases and did not refer to any material or indicate what had weighed in the decision. While elaborate reasons are not mandated, the approval must disclose that the authority applied its mind; mere rubber stamping or recording of a perfunctory endorsement (analogous to affixing "Yes") is insufficient. Precedents relied upon by the Court establish that approval must reveal a rational nexus between the material placed before the authority and the conclusion reached, and that mechanical endorsements fail the statutory safeguard. Applying these principles, the Court found that the PCIT's concurrence was not satisfactorily recorded and therefore the sanction under Section 151 was invalid; consequentially, the notice issued under Section 148 and the proceedings arising therefrom could not be sustained. [Paras 15, 16, 17, 18, 21]

The approval granted by the PCIT was invalid for want of meaningful application of mind; the notice under Section 148 for AY 2015-16 and proceedings pursuant thereto are quashed.

Final Conclusion: The Court set aside the approval granted by the Principal Commissioner as not reflecting requisite satisfaction and quashed the notice issued under Section 148 for AY 2015-16 together with the reassessment proceedings initiated thereunder.

Principles of natural justice - faceless assessment - Standard Operating Procedure for Assessment Unit - response time to Show Cause Notice - remand for fresh assessment

Standard Operating Procedure for Assessment Unit - response time to Show Cause Notice - principles of natural justice - Failure to give the seven days response time as prescribed by the SOP amounted to breach of the SOP and violated principles of natural justice, causing prejudice to the petitioner. - HELD THAT: - The SOP issued under the powers conferred by Section 144B(6)(xi) prescribes a response time of seven days from issuance of the Show Cause Notice to ensure adherence to the principles of natural justice (paragraph N.1.3 providing response time of seven days). In the present case the Show Cause Notice was issued on 22 March 2024 but the Assessing Officer initially allowed less than the seven days prescribed and thereafter granted only limited short extensions, culminating in completion of assessment without affording the seven days response period. The Court found that sufficient time was available to the Assessing Officer to comply with the SOP, and that the truncated time given was not in accordance with the SOP and resulted in denial of a fair and reasonable opportunity to the petitioner. This arbitrary exercise of jurisdiction in curtailing the response time amounted to breach of the SOP and violation of the principles of natural justice, causing prejudice to the petitioner. [Paras 5, 8]

The assessment proceedings were vitiated by failure to comply with the SOP-prescribed response time and by breach of principles of natural justice; prejudice was caused to the petitioner.

Remand for fresh assessment - faceless assessment - Disposition of proceedings and directions for fresh assessment after quashing the impugned order. - HELD THAT: - In view of the breach of the SOP and principles of natural justice, the impugned Assessment Order dated 27 March, 2024 (and consequential computation sheet and notice of demand) was quashed and set aside. The Court remanded the matter for a fresh assessment under Section 144 read with Section 144B of the Act, while prescribing procedural timelines: the portal to be opened within two weeks; the petitioner to file its detailed response within seven days thereafter; and the Respondents to pass a fresh assessment in accordance with law within four weeks from the date of uploading the petitioner's reply. The Court expressly kept all contentions of the parties on the assessment open for consideration in the fresh proceedings. [Paras 9]

Impugned Assessment Order, computation sheet and notice of demand quashed; proceedings remanded with specific timelines for filing response and passing fresh assessment; substantive contentions left open.

Final Conclusion: The Court allowed the petition, quashed the impugned Assessment Order (and consequential documents) for failure to comply with the SOP-prescribed seven days response period and breach of principles of natural justice, and remanded the matter for a fresh faceless assessment with specified timelines for reply and disposal; all substantive contentions were left open for fresh adjudication.

Exemption from income tax on awards under the Land Acquisition Act, 2013 (Section 96) - Exemption from capital gains for compulsory acquisition of agricultural land - Administrative clarification by Central Board of Direct Taxes (Circular No. 36 of 2016) on tax treatment of compensation under Land Acquisition Act, 2013

Exemption from income tax on awards under the Land Acquisition Act, 2013 (Section 96) - Exemption from capital gains for compulsory acquisition of agricultural land - Administrative clarification by Central Board of Direct Taxes (Circular No. 36 of 2016) on tax treatment of compensation under Land Acquisition Act, 2013 - Whether compensation received under an award passed under the Land Acquisition Act, 2013 is exigible to income tax under the Income Tax Act, 1961. - HELD THAT: - The Court held that compensation received under an award made under the Land Acquisition Act, 2013 is not exigible to income tax. Section 96 of the Land Acquisition Act, 2013 exempts awards or agreements under that Act from income tax, and Section 10(37) of the Income Tax Act, 1961 further excludes income arising from compulsory acquisition of agricultural land from capital gains taxation. The position is reinforced by Circular No. 36 of 2016 issued by the Central Board of Direct Taxes, which clarifies that compensation for compulsory acquisition of agricultural or non-agricultural land under the 2013 Act is exempt from income tax. The Court observed that no assessment order or demand notice had been placed on record by the Income Tax Authorities against the petitioner; accordingly, while clarifying the legal position, the petition was disposed of as infructuous. [Paras 3, 4, 5, 6, 8]

Compensation received under an award made pursuant to the Land Acquisition Act, 2013 is exempt from income tax; petition disposed of as infructuous.

Final Conclusion: The High Court clarified that compensation awarded under the Land Acquisition Act, 2013 (subject to the carve out in Section 46) is exempt from income tax-supported by Section 10(37) of the Income Tax Act, 1961 and Circular No. 36 of 2016-and, in the absence of any assessment order or demand, disposed of the petition as infructuous.

Failure to collect tax at source (TCS) - reasonable cause for default - assessee in default - penalty under Section 271CA and 271C

Failure to collect tax at source (TCS) - reasonable cause for default - assessee in default - penalty under Section 271CA and 271C - Whether penalty under Section 271CA/271C can be sustained where TCS shortfall was rectified after detection and the assessee is a local authority claiming the breach to be technical - HELD THAT: - The Tribunal accepted the assessee's unchallenged factual position that upon detection of the discrepancy the assessee promptly collected the outstanding TCS and deposited it to the Government account, producing the challan. The assessee, a Nagar Palika Parishad operating as a non profit local authority and collecting amounts on behalf of the public, demonstrated that the breach arose from a technical misunderstanding rather than a willful omission and that no deliberate default persisted after detection. Having regard to these facts, the Tribunal found there existed a reasonable cause for the default and that the assessee could not be treated as an assessee in default for the purpose of imposing penalty. On this basis the imposition of penalty under Section 271CA and Section 271C was found to be unsustainable and was set aside.

Penalty under Section 271CA/271C deleted and the appeals allowed.

Final Conclusion: The Tribunal held that where the assessee promptly remedied the TCS shortfall upon detection and the breach was technical in nature in the circumstances of a non profit local authority, there was reasonable cause and no assessee in default; accordingly the penalties under Section 271CA and 271C for A.Y. 2017 18 and 2018 19 were deleted and the appeals were allowed.

Exemption of awards to amateur sportsmen under Section 10(17A) - binding effect of CBDT Circular No.447 / CBDT Circular No.2 of 2014 - distinction between professional receipts and awards/OTB received in capacity of a sportsman - rectification under Section 154 for a mistake apparent from record

Exemption of awards to amateur sportsmen under Section 10(17A) - binding effect of CBDT Circular No.447 / CBDT Circular No.2 of 2014 - distinction between professional receipts and awards/OTB received in capacity of a sportsman - Award of Rs. 30 lacs received from BCCI is exempt from tax - HELD THAT: - The Tribunal held that the assessee is not a professional cricketer and the award was received in the capacity of a sportsman as recognition of past contribution. Relying on the CBDT circulars and consistent precedents cited, a liberal construction of the circulars applies to awards to amateur sportsmen and such receipts are not taxable income. The Tribunal found the facts of the present case to be squarely covered by earlier decisions where awards/OTB received by non professional sportsmen were held to be exempt, and accordingly treated the award as exempt under the law and the binding circulars. [Paras 8]

Award is exempt and the addition is not sustainable

Rectification under Section 154 for a mistake apparent from record - effect of prior inclusion of receipt in return on claim of exemption - Prior inclusion of the award as taxable in the ITR does not estop the assessee from claiming the exemption and the case involves a bonafide mistake warranting relief - HELD THAT: - The Tribunal observed that showing an income as taxable in the return does not create an estoppel against claiming an exemption that is available under law. Where the claim is supported by applicable CBDT circulars and the inclusion in the return is a bonafide mistake, the authorities cannot refuse rectification or relief merely because the assessee earlier treated the receipt as taxable. Applying this principle, the Tribunal allowed the assessee's claim despite earlier inclusion in the ITR. [Paras 8]

Earlier inclusion in the ITR does not preclude granting exemption; relief allowed

Final Conclusion: The appeal is allowed: the award received from BCCI for F.Y. 2012-13 (A.Y. 2013-14) is held to be exempt in the hands of the assessee in view of the CBDT circulars and relevant precedents, and the prior inclusion of the amount in the return does not bar relief; the order of the CIT(A) is set aside.

Violation of natural justice - service of notice - opportunity of hearing - ex parte appellate order - duty of appellate authority to dispose of appeal on merits - remand for fresh consideration - speaking order

Violation of natural justice - service of notice - opportunity of hearing - ex parte appellate order - remand for fresh consideration - speaking order - Validity of the ex parte order of the CIT(A) where notices were issued to an incorrect email and whether the matter should be remanded for fresh adjudication - HELD THAT: - The Tribunal found that multiple notices were issued to an incorrect email address different from that furnished in Form 35, and that the assessee therefore did not receive effective service and was prevented from submitting evidence before the CIT(A). The assessee filed an adjournment application after correct service and explained that the employee handling the matter had left employment. Relying on the principle that an appellant must be afforded a reasonable opportunity and that the appellate authority is to decide appeals on merits, the Tribunal held that denial of opportunity amounted to a gross violation of natural justice. The Tribunal declined to express any view on the merits of the assessment. Instead, it directed that the matter be remanded to the file of the CIT(A) for disposal by a speaking order after giving the assessee a reasonable opportunity of hearing. [Paras 3, 4]

The ex parte appellate order is set aside for lack of service and denial of hearing; the matter is remanded to the CIT(A) to pass a speaking order after affording the assessee a reasonable opportunity of hearing.

Final Conclusion: Appeal allowed for statistical purposes; impugned ex parte order set aside and matter remitted to the CIT(A) for fresh adjudication by a speaking order after providing the assessee a reasonable opportunity to be heard; no adjudication on the merits by the Tribunal.

Deduction under section 80P(2)(d) in respect of interest on investments with other cooperative societies - interest income on deposits with cooperative banks treated as investment income qualifying for exemption - distinction between operational income and investment income for cooperative societies

Deduction under section 80P(2)(d) in respect of interest on investments with other cooperative societies - interest income on deposits with cooperative banks treated as investment income qualifying for exemption - Allowability of deduction under section 80P(2)(d) in respect of interest income earned by the cooperative society on deposits with cooperative banks - HELD THAT: - The Tribunal held that section 80P(2)(d) exempts income derived by a cooperative society from investments held with other cooperative societies, and therefore the determinative test is whether the interest was derived from investments with cooperative societies. The Assessing Officer treated interest received from various cooperative banks as non-operational 'other income' not qualifying for deduction under the provision. The Tribunal, relying on the line of decisions of this Bench and on the reasoning of the Hon'ble Karnataka High Court in CIT vs. Totagars Cooperative Sale Society , observed that the ratio of the Supreme Court decision cited by the Revenue does not apply to interest on investments that fall squarely under section 80P(2)(d). Applying this principle, the Tribunal concluded that interest earned by the appellant on deposits made out of surplus funds with cooperative banks qualifies for deduction under section 80P(2)(d), and the denial by the AO and confirmation by the CIT(A)/NFAC were set aside. [Paras 7, 8, 9]

The interest income earned on deposits with cooperative banks is deductible under section 80P(2)(d); the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2017-18, holding that interest earned on deposits with cooperative banks constitutes investment income within section 80P(2)(d) and is deductible from the society's total income; the assessments and appellate confirmations to the contrary were set aside.

Condonation of delay - Sufficient cause - Substantial justice - Deduction under section 80P(2)(a)(i) - cooperative societies - Allowability of interest income on fixed deposits - expenditure allowance under section 57 - Application of binding Supreme Court precedents - Remand for fresh consideration in light of higher court decisions

Condonation of delay - Sufficient cause - Substantial justice - Delay of 112 days in filing appeals before the Commissioner (Appeals) is condoned. - HELD THAT: - The Tribunal examined the assessee's explanation reproduced in the impugned order and found no mala fide intention for not preferring the appeals within limitation. The assessee had relied on advice of an erstwhile authorised representative to pay the demand and only upon later advice from a different tax consultant filed the appeals, which the Tribunal accepted as a reasonable cause. Relying on the principle of sufficient cause and the liberal approach endorsed by the Supreme Court in Collector Land Acquisition v. Mst. Katiji (reported in (1987) 167 ITR 471), the Tribunal held that condoning delay serves substantial justice where the delay is not attributable to the appellant and refusing condonation would result in defeating meritorious claims. [Paras 3]

Delay of 112 days in filing the appeals before the Ld.CIT(A) is condoned.

Deduction under section 80P(2)(a)(i) - cooperative societies - Allowability of interest income on fixed deposits - expenditure allowance under section 57 - Application of binding Supreme Court precedents - Remand for fresh consideration in light of higher court decisions - Claim for deduction under section 80P(2)(a)(i) and related treatment of interest on fixed deposits remitted to the Assessing Officer for fresh consideration in view of subsequent Supreme Court decisions. - HELD THAT: - The Tribunal observed that the authorities below did not consider recent Supreme Court decisions in Mavilayi Service Co-operative Bank Ltd. v. CIT and Kerala State Co-operative Agricultural and Rural Development Bank Ltd. v. AO, which are material to the assessee's claim. Given that the Tribunal's earlier remand occurred before those decisions were rendered, and that the assessing officer again dismissed the claim relying on a different Supreme Court decision, the Tribunal found it appropriate to remit the matter for verification and fresh adjudication. The Assessing Officer is directed to apply the ratios of the cited Supreme Court decisions in re-examining the claim for deduction under section 80P(2)(a)(i), and to consider the question of treatment of interest on fixed deposits (and whether related expenditure is allowable under section 57) in accordance with law and relevant Tribunal decisions. [Paras 5]

Issues relating to the deduction under section 80P(2)(a)(i) and the allowability of interest/expenditure on fixed deposits are remitted to the Assessing Officer for fresh consideration in accordance with the cited Supreme Court decisions and applicable Tribunal precedents.

Final Conclusion: Delay in filing the appeals is condoned; on merits the claim under section 80P(2)(a)(i) and related issues concerning interest on fixed deposits are not finally decided but remitted to the Assessing Officer for fresh consideration in light of the Supreme Court decisions referred to, and the appeals are allowed for statistical purposes.

Reopening of assessment under section 147 - Recorded reasons for reopening - Unexplained cash credit and addition under section 68 - Reliance on investigative inputs without independent verification - Non speaking/cryptic appellate order

Reopening of assessment under section 147 - Recorded reasons for reopening - Reliance on investigative inputs without independent verification - Validity of the reopening of assessment under section 147 based on the recorded reasons. - HELD THAT: - The Tribunal found that the assessing officer's recorded reason for reopening was erroneous and perverse because it was founded on information from the Investigation Department without any independent verification by the AO. The AO did not produce or furnish to the assessee the broker verification or other material relied upon, and disposed the assessee's objections without conducting any inquiry; there was no trace of the alleged transactions in the assessee's bank statements and the certificate produced by the assessee indicated the shares were in the name of the HUF, not the individual assessee. For these reasons the recorded reason for reopening was held to be baseless and the AO therefore lacked jurisdiction to sustain the reopening under section 147.

Recorded reason for reopening quashed; reopening under section 147 held invalid.

Unexplained cash credit and addition under section 68 - Reliance on investigative inputs without independent verification - Non speaking/cryptic appellate order - Sustenance of the addition treating the sale consideration as unexplained cash credit under section 68. - HELD THAT: - The addition of the sale consideration as unexplained cash credit under section 68 rested on the same defective recorded reasons and on the conclusion that the penny stock transactions were accommodation entries. The Tribunal noted absence of evidence that the assessee had undertaken the transactions: no reflection in bank or demat accounts, and documentary material filed by the assessee (including a certificate indicating the shares were issued in the HUF's name) was not properly considered by the AO or the CIT(A), whose order was described as cryptic. Given the invalidity of the reopening and the lack of independent verification or supporting material tying the transactions to the assessee, the addition could not be sustained and was deleted.

Addition under section 68 deleted; assessment adjustments set aside.

Final Conclusion: The assessee's appeal is allowed: the recorded reason for reopening is quashed, the addition treated as unexplained cash credit is deleted, and the assessment order is set aside for Assessment Year 2012-13.

Unexplained expenditure under Section 69C - Bogus purchases and accommodation entries - Re-opening of assessment on basis of material and not mere belief - Application of gross profit rate to determine taxable income

Re-opening of assessment on basis of material and not mere belief - Validity of reassessment proceedings under section 147 in view of investigation findings. - HELD THAT: - The Tribunal examined the investigation material arising from search and seizure operations and the statements of the entry-provider (Shri Gautam Jain) and relevant factual findings of the Investigation Wing. The recorded admissions and the corroborating search findings (no stock at premises, books maintained at an undisclosed back office, admissions that the concerns were paper companies issuing bogus bills and providing accommodation entries) were held to constitute substantive material justifying the reopening of assessment. The Tribunal therefore found that the formation of belief for issuance of notice under section 148/147 was based on substantive material and not on mere belief. [Paras 6]

Reopening of the assessment was valid as it was founded on substantive investigation material.

Unexplained expenditure under Section 69C - Bogus purchases and accommodation entries - Application of gross profit rate to determine taxable income - Whether the entire alleged purchases from M/s. Krishna Diam should be added to the assessee's income as unexplained expenditure under Section 69C or be restricted by application of an industry gross profit rate. - HELD THAT: - Having accepted the bogus nature of the entry-provider concerns and that the purchases were non-genuine, the Tribunal nonetheless considered precedents and the factual matrix of the assessee's case, including the assessee's own reliance on a comparable assessment and submissions regarding industry practice. The Tribunal observed that where sales are accepted, it is not invariably necessary to add the entire quantum of purchases to income; instead the correct approach may be to apply an appropriate gross profit rate to the alleged bogus purchases to compute taxable income. Following coordinate decisions and the assessee's plea, the Tribunal directed that the Assessing Officer should apply a gross profit rate of 3% on the alleged bogus purchases and compute the income accordingly. The Tribunal thereby reduced the addition and remitted the computation to the AO for giving effect to the direction. [Paras 5]

Addition under Section 69C cannot be sustained in full; AO is directed to apply G.P. @ 3% on the alleged bogus purchases and compute the assessee's income accordingly (matter remitted for computation).

Final Conclusion: The reassessment was held valid on the basis of substantive investigation material; however the addition on account of alleged bogus purchases was restricted - the Tribunal partly allowed the appeal and directed the Assessing Officer to apply a gross profit rate of 3% on the alleged purchases and to compute the taxable income accordingly.

Classification of goods under Customs Tariff - Advance Ruling under Section 28H of the Customs Act, 1962 - Reasoned order and duty to address submissions - Reliance on external undisclosed information - Distinguishing precedent - Consideration of prior adjudication/orders - Application of Explanatory Notes to the Harmonized System of Nomenclature - Remand for de novo consideration - Personal hearing and opportunity to file written submissions

Advance Ruling under Section 28H of the Customs Act, 1962 - Classification of goods under Customs Tariff - Validity of the advance ruling classifying the imported products under heading 29.36 instead of 23.09 and whether the impugned order must be quashed. - HELD THAT: - The Court examined the impugned advance ruling and concluded that it could not stand. The order under challenge pronounces a ruling on the basis of information said to be "gathered from other reliable sources" without disclosing what those sources or informations were, nor giving the appellant an opportunity to respond to them; such non-disclosure vitiates the decision-making process (see reasoning at para 6). The Court further found that respondent no. 6's conclusion that the product differed from that in Tetrogon Chemie required explanation; the impugned order did not elaborate how the products were different despite the Tribunal and Apex Court descriptions suggesting similarity (para 6.7). The impugned order also failed to deal with other materials placed before it, including reliance on Explanatory Notes to the HSN and an earlier adjudication accepting classification under 23.09 (paras 3.4 and 10), and did not furnish reasons addressing the appellant's submissions (para 11). In these circumstances the Court quashed the impugned advance ruling and remanded the matter for fresh consideration (paras 5, 13). [Paras 5, 6, 10, 11, 13]

Impugned advance ruling set aside and matter remanded for de novo consideration.

Reliance on external undisclosed information - Reasoned order and duty to address submissions - Whether reliance on information from undisclosed sources without communicating it to the appellant was permissible and whether the adjudicator had an obligation to deal with and record reasons for rejecting the appellant's submissions. - HELD THAT: - The Court held that respondent no. 6's statement that the ruling was based on "information gathered from other reliable sources" required disclosure of the nature and source of such information and an opportunity to the appellant to respond; absence of disclosure and lack of opportunity undermines fairness and transparency in the ruling process (para 6). Further, it is not sufficient for the adjudicator merely to state that he considered all materials and submissions; he must confront and record reasons for disagreeing with the appellant's contentions so that the decision is reasoned and reviewable. The impugned order failed in this duty (para 11). [Paras 6, 11]

Reliance on undisclosed external information without giving the appellant an opportunity to respond and failure to record reasons for rejecting submissions vitiated the ruling; directions for a reasoned reconsideration were ordered.

Distinguishing precedent - Consideration of prior adjudication/orders - Whether respondent no. 6 properly distinguished or considered relevant judicial and administrative precedents relied upon by parties, including Tetrogon Chemie, Sonam International, and an adjudication in Kantilal Manilal & Co. Pvt. Ltd. - HELD THAT: - The Court observed that respondent no. 6 asserted the product here was different from that in Tetrogon Chemie but did not explain how they differed, despite descriptions in prior tribunal and Supreme Court decisions that suggested similarity (para 6.7). The impugned order relied on the Allahabad High Court's decision in Sonam International (para 6.8) but the appellant was not informed of that authority during hearing and was not given an opportunity to distinguish it. An adjudication order by respondent no. 1 in Kantilal Manilal & Co. Pvt. Ltd., where identical product was held to fall under 2309, was not considered (para 10). The Court concluded that these precedential and administrative authorities should have been explicitly considered and addressed in a reasoned order. [Paras 6, 10]

Failure to adequately distinguish or consider the cited precedents and prior adjudication contributed to the quashing and remand for fresh consideration.

Application of Explanatory Notes to the Harmonized System of Nomenclature - Reasoned order and duty to address submissions - Whether the Explanatory Notes to the HSN were properly considered and discussed in the impugned order. - HELD THAT: - Although the Explanatory Notes to HSN were referred to in the impugned order, the Court found they were not discussed or applied in a proper perspective that would justify the classification adopted (para 12). The absence of substantive engagement with the Explanatory Notes formed part of the inadequacy of the reasoning in the impugned order, reinforcing the need for a fresh, reasoned decision that addresses those notes in relation to the product description and classifications urged by the appellant. [Paras 12]

Impugned order failed to properly consider or apply the Explanatory Notes; matter remanded for reasoned consideration including those Notes.

Personal hearing and opportunity to file written submissions - Remand for de novo consideration - Directions to be followed on remand regarding personal hearing, notice period, and filing of written submissions after hearing. - HELD THAT: - In granting remand the Court issued specific procedural directions to ensure a fair reconsideration. Respondent no. 6 is to give the appellant a personal hearing with notice communicated at least five working days in advance (para 14). After the personal hearing, the appellant may file written submissions recording what transpired within three working days of the hearing, and those submissions must be dealt with in the final order (para 15). The Court also fixed a timeline: a reasoned order dealing with all submissions to be passed on or before 15th October 2024 (para 14). These directions were imposed to cure the procedural and reason-giving deficiencies identified in the impugned order. [Paras 14, 15]

Respondent no. 6 directed to grant personal hearing with minimum notice, to permit post-hearing written submissions within three working days, and to pass a reasoned order by 15th October 2024.

Final Conclusion: Impugned advance ruling dated 8th July 2022 is quashed for want of adequate disclosure, failure to address and record reasons on the appellant's submissions and relevant precedents and materials; matter is remanded for de novo consideration with directions to accord a personal hearing (five working days' notice), permit post-hearing written submissions within three working days, and pass a reasoned order dealing with all submissions on or before 15th October 2024.

Competence of issuing authority - limitation under Section 28 of the Customs Act, 1962 - mixed question of law and fact - statutory appellate remedy - exclusion of time spent in writ proceedings for computation of limitation

Competence of issuing authority - statutory appellate remedy - Challenge to competence of authority who issued show cause notice was not sustained. - HELD THAT: - The appellant did not have a case that the adjudicating order (Ext.P10) was passed by an incompetent authority. The contention that the show cause notice (Ext.P4) was issued by an incompetent authority was not raised before the adjudicating authority. The learned Single Judge correctly rejected this ground in the writ proceedings and relegated the appellant to the statutory appellate remedy to ventilate such contentions before the appellate forum.

Ground based on alleged incompetence of the issuing authority was dismissed and the appellant was relegated to pursue the statutory appeal.

Limitation under Section 28 of the Customs Act, 1962 - mixed question of law and fact - exclusion of time spent in writ proceedings for computation of limitation - Question of limitation could not be finally adjudicated in the writ petition and must be considered afresh by the appellate authority; appellate authority must not be bound by the Single Judge's finding and must exclude time spent prosecuting the writ when computing limitation. - HELD THAT: - The court held that whether Ext.P10 was barred by limitation under Section 28 involves a mixed question of law and fact unsuitable for final determination in writ proceedings and is therefore to be raised and considered in the statutory appeal. Although the learned Single Judge had entered a finding on limitation, the High Court directed that the appellate authority should consider the appeal on merits untrammelled by that finding. Further, the period during which the appellant prosecuted the writ petition is to be excluded while computing limitation for the appeal.

Limitation issue remitted to the appellate authority for fresh consideration on merits, with a direction to exclude the time occupied by the writ proceedings in computing limitation.

Final Conclusion: Writ appeal disposed by upholding the relegation to statutory appeal on competence grounds; limitation challenge remanded to the appellate authority for fresh consideration on merits, with exclusion of time spent in the writ proceedings from computation of limitation.

Penalty under Regulation 12(8) of HCCAR, 2009 - Penalty under Section 117 of the Customs Act, 1962 - Violation of Section 45 read with Sections 7 and 8 - operation outside the notified customs area - Non-fulfilment of conditions under Regulation 5 of HCCAR, 2009 - Renewal of custodianship and audit-based adjudication under HCCAR

Penalty under Regulation 12(8) of HCCAR, 2009 - Non-fulfilment of conditions under Regulation 5 of HCCAR, 2009 - Sustainability and quantum of penalty imposed under Regulation 12(8) of HCCAR, 2009 for non-fulfilment of conditions of custodianship. - HELD THAT: - The Tribunal found that the audit report disclosed discrepancies and non-adherence corresponding to the conditions prescribed in Regulation 5(1)(i)(c)(f)(g)(n) and clause (iii) of Regulation 5 of HCCAR, 2009. Those deficiencies amounted to failure to fulfil the conditions of approval as a Customs Cargo Service Provider (CCSP) and therefore attracted liability under Regulation 12(8). While the imposition of penalty under Regulation 12(8) is held to be tenable, the Tribunal considered the quantum excessive in relation to the nature of the lapses and reduced the penalty accordingly. [Paras 12, 13, 14]

Penalty under Regulation 12(8) is sustainable but reduced to Rs. 10,000.

Penalty under Section 117 of the Customs Act, 1962 - Violation of Section 45 read with Sections 7 and 8 - operation outside the notified customs area - Whether penalty under Section 117 of the Customs Act, 1962 was sustainable for operating from area beyond the notified customs limits and the appropriate reduction in quantum. - HELD THAT: - The Tribunal accepted the finding that the custodian operated from an area which was not part of the notified customs limits under Section 8 and that such operations without approval amounted to contravention of the statutory restrictions on custody and removal under Section 45 read with Sections 7 and 8. In consequence, imposition of penalty under Section 117 was held to be tenable. However, having regard to the nature of the violations and proportionality, the Tribunal reduced the monetary penalty imposed by the Commissioner. [Paras 11, 13, 14]

Penalty under Section 117 is sustainable but reduced to Rs. 25,000.

Final Conclusion: Appeal disposed by upholding both penalties as legally tenable but reducing the quantum: Regulation 12(8) penalty reduced to Rs. 10,000 and Section 117 penalty reduced to Rs. 25,000.

Predominant function test - Classification by principal function - Interpretative Rules and Section Note 3 to Section XVI - Applicability of MRP based assessment under Notification No.49/2008-CE(NT) - Board Circular No.27/2013-Customs and MRP assessment linkage - Customs Tariff Heading 8518 22 00

Predominant function test - Classification by principal function - Applicability of MRP based assessment under Notification No.49/2008-CE(NT) - Board Circular No.27/2013-Customs and MRP assessment linkage - Customs Tariff Heading 8518 22 00 - Whether MRP based assessment under Notification No.49/2008-CE(NT) is applicable to imported multimedia speakers with USB playback and FM radio where the goods are classifiable under CTH 8518 22 00. - HELD THAT: - The Tribunal applied the principle that classification of multifunctional goods is governed by the principal or predominant function they perform, guided by the Interpretative Rules and Section Note 3 to Section XVI. Relying on its earlier reasoning in Logic India Trading Co. the Tribunal observed that the imported items are speakers whose main role is sound amplification and that invoices, dealer affidavits and brochures show the goods are traded and sold primarily as "Multimedia Speaker." The Tribunal further relied on the ratio of the Hon'ble Supreme Court in Xerox India Ltd. that multifunctional machines remain classifiable under the heading corresponding to their predominant function. Since the classification of the impugned goods as falling under CTH 8518 22 00 was affirmed, the goods do not fall within the scope of headings for which Notification No.49/2008-CE(NT) (MRP based assessment) applies, notwithstanding the presence of USB playback or FM radio. Consequently, the Board Circular invoking MRP assessment could not be applied to goods classified under heading 8518 22 00. [Paras 6]

Tribunal held that MRP based assessment under Notification No.49/2008-CE(NT) is not applicable to the imported multimedia speakers classified under CTH 8518 22 00; Revenue's appeals dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeals, holding that multimedia speakers whose predominant function is sound amplification are classifiable under CTH 8518 22 00 and therefore not liable to MRP based assessment under Notification No.49/2008-CE(NT).

Manipulative, fraudulent and unfair trade practice - dealing while in possession of material or non-public information / insider trading - sharing of non-public recommendations (front running / recommendation based trading) - enabling assistance by intermediaries through provision of trading credentials and NEAT terminals - profit disgorgement and interim impounding of unlawful gains - restraining directions under Sections 11, 11(4) and 11B of the SEBI Act - violation of SEBI (Research Analyst) Regulations - dealings by associates

Connection amongst entities and coordination between guest experts and profit makers - Findings on factual connections and communications among the Noticees - HELD THAT: - On the basis of CDRs, WhatsApp/Telegram chats, geolocation data, bank records, seized device content and statements recorded on oath, the record demonstrates frequent communications, meetings and shared identifiers (including use of mobile numbers, forwarded screenshots and common corporate roles) establishing that the Guest Experts, Profit Makers and certain intermediaries were connected and communicated with each other during the Relevant Period. These factual connections underpin subsequent findings of information sharing and coordinated trading. [Paras 15, 16, 17, 18, 19]

Prima facie established connections and recurrent communications among the Noticees during the investigation period.

Sharing of non-public recommendations (front running / recommendation based trading) - Advance sharing of recommendations by Guest Experts with Profit Makers and subsequent trades based on such advance information - HELD THAT: - Investigative evidence (video timestamps of broadcasts, recovered chat screenshots, trade logs showing buy leg before and sell leg at/after broadcast, and admissions in statements) shows Guest Experts shared impending recommendations and timings in advance with Profit Makers (directly or via intermediaries). Profit Makers placed positions prior to telecast and squared them off immediately after broadcast, realizing gains. Select instances (e.g., BALRAMPUR CHINI, ADANI ENT, GNFC, INDIAMART, PNB, HINDCOPPER) illustrate the pattern where first leg precedes recommendation time and second leg coincides with or follows public airing. [Paras 25, 28, 36, 44, 53]

Prima facie established that Guest Experts provided advance non-public information and Profit Makers traded on that information.

Price and volume impact of broadcast recommendations - Broadcast recommendations produced significant, immediate price and volume effects facilitating profit opportunities - HELD THAT: - Market analysis around multiple recommendations shows marked increases in price volatility and trading volume during and immediately after the broadcast compared with the preceding 15 minute period, with no contemporaneous price sensitive corporate announcements to explain the shifts. This pattern confirms that the recommendations had predictable market impact which Profit Makers exploited based on advance information. [Paras 84, 90, 97, 102, 109]

Prima facie established that recommendations materially affected price and volume, creating exploitable opportunities for those with advance knowledge.

Enabling assistance by intermediaries through provision of trading credentials and NEAT terminals - Role of Enablers in facilitating execution of trades in Profit Makers' accounts - HELD THAT: - Evidence including sharing of NEAT terminal user ids/passwords, remote desktop configuration by a broker employee, client codes/password sharing, bank fund transfers and communications demonstrates that Noticees characterized as Enablers provided access, credentials and operational support enabling Noticee No.1 to execute trades in the accounts of Profit Makers (Noticees Nos.3-5). These acts materially facilitated the recommendation based trading. [Paras 17, 116, 117]

Prima facie established that Enablers aided and abetted the execution of trades by providing access and operational support.

Quantification of unlawful gains and joint and several liability - Computation of unlawful gains attributable to recommendation based trades and imposition of joint and several liability - HELD THAT: - Applying the selection criteria for recommendation based trades and the prescribed profit formula, the inquiry computed aggregate profit earned by Profit Makers from identified recommendation based instances as INR 7,41,29,648. Based on the evidentiary matrix (trades, communications, admitted profit sharing), the WTM held the Profit Makers, Guest Experts and identified Enablers jointly and severally liable for impounding that amount, with a tabular allocation identifying which entities are jointly and severally liable for specified portions. [Paras 131, 142, 143, 173, 174]

Prima facie wrongful gains of INR 7,41,29,648 have been quantified and Noticees are held jointly and severally liable to the extent recorded.

Manipulative, fraudulent and unfair trade practice - contravention of SEBI Act and PFUTP Regulations - Prima facie violations of Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations by Noticees - HELD THAT: - On the preponderance of the documentary and testimonial evidence, the conduct - advance sharing of non public recommendations, coordinated trading to exploit broadcast impact, profit sharing with Guest Experts and use of intermediated accounts - constitutes employment of manipulative/deceptive devices, schemes to defraud and dealing while in possession/communication of material non public information. Citing statutory prohibitions and judicial authority, the WTM concluded that the facts prima facie satisfy multiple limbs of Section 12A and Regulations 3 and 4 of PFUTP. [Paras 150, 153, 160, 162, 163]

Prima facie violation of Section 12A (multiple limbs) of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations by the respective Noticees.

Violation of SEBI (Research Analyst) Regulations - dealings by associates - Prima facie breach of Regulation 16(2) of the SEBI (Research Analyst) Regulations by a registered Research Analyst - HELD THAT: - Noticee No.15 (a registered Research Analyst) shared her forthcoming recommendations with her spouse prior to broadcast; the spouse traded in the recommended securities within the restricted period. Given the regulatory prohibition on research analysts (and their associates) trading in securities they recommend within the prescribed window, and the inclusion of spouse in the associate definition, the WTM found a prima facie contravention of Regulation 16(2) read with the intermediaries definition. [Paras 164]

Prima facie violation of Regulation 16(2) of the SEBI (Research Analyst) Regulations by Noticee No.15.

Interim restraining directions and impounding under Sections 11, 11(4) and 11B - Necessity and issuance of ex parte interim directions including restraint from dealing, preservation obligations and impounding of assessed unlawful gains - HELD THAT: - Considering the prima facie findings, the imminent risk of dissipation of proceeds and the imperative to protect investor confidence and market integrity, the WTM invoked powers under Sections 11, 11(4), 11B(1) and Section 19 to issue ex parte interim directions. The order restrains specified Noticees from trading, requires preservation of records, directs creation of an interest bearing escrow with lien for the impounded amount (INR 7,41,29,648) and imposes ancillary bank/demat/RTAs/depository obligations until further order. [Paras 165, 168, 171, 175, 176]

Interim ex parte directions issued as recorded, including restraint from trading and impounding of INR 7,41,29,648 in escrow with lien.

Final Conclusion: On the material collected and admissions recorded, the WTM reached prima facie findings that Guest Experts shared advance non public recommendations with certain Profit Makers, who, with assistance from Enablers, traded ahead of broadcast and realised unlawful gains; these acts prima facie contravene Section 12A of the SEBI Act, Regulations 3 and 4 of the PFUTP Regulations and, in the case of a registered research analyst, Regulation 16(2) of the RA Regulations. Accordingly, urgent interim ex parte directions were issued restraining specified Noticees from dealing in securities, directing preservation of records, and impounding INR 7,41,29,648 jointly and severally from the named Noticees into an interest bearing escrow account, pending further proceedings.

Res judicata - duty of resolution professional under Section 30(2) to examine resolution plans - ineligibility under Section 29A and its impact on eligibility of resolution applicants - non-disclosure and conflict of interest in CIRP - disciplinary jurisdiction of Insolvency and Bankruptcy Board of India

Res judicata - disciplinary jurisdiction of Insolvency and Bankruptcy Board of India - Whether the Second Show Cause Notice and the Disciplinary Committee's adjudication were barred by res judicata or amounted to impermissible review of the earlier decision under the First SCN. - HELD THAT: - The Court held that the Second SCN was founded on new information not considered in the proceedings under the First SCN - namely, cancellation of the Corporate Debtor's MSME registration and the Petitioner's filing of an Avoidance Application against the prospective co-resolution applicant. These facts altered the legal and factual matrix regarding the eligibility of the proposed joint resolution applicant and accordingly required de novo consideration by IBBI. Given IBBI's function to investigate the conduct of registered insolvency professionals, the subsequent adjudication on these distinct issues did not amount to impermissible re-hearing of the same cause of action and was not barred by res judicata. [Paras 11]

Second SCN not barred by res judicata; Disciplinary Committee rightly proceeded to examine new information.

Duty of resolution professional under Section 30(2) to examine resolution plans - ineligibility under Section 29A and its impact on eligibility of resolution applicants - non-disclosure and conflict of interest in CIRP - Whether the Petitioner failed to discharge the statutory duty under Section 30(2) by allowing inclusion of a suspended director as a joint resolution applicant on the basis of an incorrect MSME status and by not disclosing his own Avoidance Application. - HELD THAT: - The Court found that the Corporate Debtor's earlier MSME certificate stood cancelled and, applying the Ministry of MSME OM of 8 March 2017 to the date of commencement of CIRP, the Corporate Debtor did not qualify as an MSME. As Section 30(2) requires the resolution professional to examine that a resolution plan does not contravene any law, the Petitioner was under an obligation to ascertain the veracity of the MSME claim and the consequent applicability of Section 29A ineligibilities. The Court concluded that the Petitioner could not rely on an assertion from the suspended director who had a conflict of interest, and that failure to inform the CoC of the pending Avoidance Application constituted lack of due diligence. In view of these shortcomings, the Disciplinary Committee's finding of contravention of the Code and Regulations was sustainable. [Paras 12, 13]

Petitioner failed to discharge statutory duties under Section 30(2) and breached obligations by not verifying MSME status and by non-disclosure of the Avoidance Application; findings of contravention upheld.

Disciplinary jurisdiction of Insolvency and Bankruptcy Board of India - non-disclosure and conflict of interest in CIRP - Whether the Disciplinary Committee's determination that the Petitioner contravened the Code and Regulations warrants interference by this Court. - HELD THAT: - After considering the material placed before IBBI, including evidence that the MSME registration was cancelled and that an Avoidance Application naming the proposed co-applicant was on file, the Court found that IBBI's determination was reached after due consideration of relevant material. The Court emphasised the centrality of the resolution professional's role and the necessity of exercising due diligence to preserve fairness in the CIRP. Given the sustained findings of contravention and the absence of compelling grounds to disturb the Disciplinary Committee's conclusion, judicial interference was unwarranted. [Paras 14, 15]

No interference with IBBI's determination; petition dismissed.

Final Conclusion: The High Court dismissed the petition, upholding IBBI's adjudication on the Second SCN that the petitioner contravened the Code and Regulations by failing to verify MSME status, allowing an ineligible suspended director to be a joint resolution applicant, and not disclosing an Avoidance Application; the Second SCN was not barred by res judicata and IBBI acted within its disciplinary jurisdiction.

Invocation of corporate guarantee - continuing security - novation of contract - maintainability of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - liability of corporate guarantor

Invocation of corporate guarantee - maintainability of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Invocation of the guarantees dated 22.08.2015 and 18.11.2016 by notice dated 06.03.2023 rendered the Section 7 application maintainable and the Adjudicating Authority was correct in admitting the petition. - HELD THAT: - The Tribunal examined the notice of invocation dated 06.03.2023 and the Part IV particulars of the Section 7 application which showed disbursements and default as on 06.03.2023. The sanction letters and facility breakup in Annexure E demonstrate that the Cash Credit, Term Loan, FITL and Adhoc Cash Credit defaults relied upon were linked to facilities covered by the guarantees dated 22.08.2015 and 18.11.2016. The sanction letters of 26.12.2019 (Adhoc limit) and 09.09.2020 (FITL) expressly provided that existing securities would continue and would also cover the FITL and Adhoc facility. On this factual and documentary foundation the Tribunal held that the invocation of the earlier guarantees on 06.03.2023 was rightly made and, consequently, the Section 7 petition was not barred and was properly admitted by the Adjudicating Authority. [Paras 11, 12, 20]

Invocation of the guarantees dated 22.08.2015 and 18.11.2016 on 06.03.2023 was valid and the Section 7 application was maintainable; the admission by the Adjudicating Authority was upheld.

Novation of contract - continuing security - liability of corporate guarantor - Subsequent sanction letters and the corporate guarantee dated 06.11.2020 did not operate as a novation to extinguish earlier guarantees; earlier securities continued to bind the corporate guarantor. - HELD THAT: - The appellant's contention that later sanction letters (26.12.2019 and 09.09.2020) and the corporate guarantee of 06.11.2020 novated and thereby extinguished the obligations under the earlier guarantees was considered and rejected. The Tribunal noted that the 26.12.2019 ad hoc sanction expressly stated 'security - as applicable for existing FBWC limits' and the 09.09.2020 FITL sanction expressly provided that 'all existing securities in the captioned facilities will continue' and would also cover the FITL. Annexure E showed that disbursements relevant to the invoked guarantees pre dated or were covered by the earlier guarantees. The 06.11.2020 guarantee related to a separate term loan facility and, by its terms and by the consortium agreement, did not extinguish or supersede the pre existing securities. On these findings there was no novation under Section 62 of the Contract Act or otherwise, and the corporate guarantor remained liable under the earlier guarantees. [Paras 16, 19, 21, 22]

The plea of novation was negatived; the earlier guarantees continued to operate and the corporate guarantor remained liable.

Final Conclusion: The Tribunal found no error in the Adjudicating Authority's admission of the Section 7 petition: invocation of the 2015 and 2016 guarantees was valid, subsequent sanctions and the 06.11.2020 guarantee did not novate or extinguish earlier securities, and the appeal was dismissed.

Maintainability of appeal - appealability of interlocutory administrative communication - appeals to the Customs, Excise and Service Tax Appellate Tribunal limited by statutory mandate - Section 35B(1)(b) restriction on CESTAT's jurisdiction

Maintainability of appeal - appealability of interlocutory administrative communication - Section 35B(1)(b) restriction on CESTAT's jurisdiction - Whether the appeal filed against the 'Acknowledgment Cum Deficiency Memo' dated 18.03.2024 is maintainable before the Tribunal - HELD THAT: - The Tribunal first examined whether the communication dated 18.03.2024 (referred to by the appellant as Order-in-Appeal No. Nil) amounted to an order passed by the Commissioner (Appeals) under the statutory provisions enabling appeal to the Tribunal. The letter is an "Acknowledgment Cum Deficiency Memo" issued by the Superintendent-Registry and was neither passed by nor issued under the authority or direction of the Commissioner (Appeals). Reliance on precedents where orders of Commissioners or adjudicating authorities were held appealable does not assist the appellant because those decisions concerned orders actually passed by competent authorities and did not displace the express limits on the Tribunal's jurisdiction under the statutory scheme. The Tribunal, being a creature of statute, can only entertain appeals expressly provided for by the governing statute; the impugned communication does not fall within the categories contemplated by Section 35B(1)(b) (or the comparable appeal provisions) and therefore is not an appealable order before the CESTAT. The Bench accordingly declined to enter into merits on admissibility of refund/transfer of credit until maintainability is established. [Paras 8, 10, 12, 15, 16]

The appeal against the Acknowledgment Cum Deficiency Memo dated 18.03.2024 is not maintainable before the Tribunal.

Final Conclusion: The appeal is dismissed as non-maintainable because the impugned communication is an acknowledgment/deficiency memo not constituting an appealable order by the Commissioner (Appeals) within the statutory jurisdiction of the Tribunal.

Revenue neutrality and prohibition of double levy where service tax has been paid by the recipient - bonafide belief of classification by assessee and recipient as a defence to demand - invocation of extended period of limitation in cases of bona fide classification and payment by recipient - inapplicability of authority on main contractor-sub contractor liability to revenue neutral situations

Revenue neutrality and prohibition of double levy where service tax has been paid by the recipient - Whether a demand of service tax could be confirmed against the service provider when the service recipient has paid service tax on the transaction, rendering the position revenue neutral. - HELD THAT: - The Tribunal found it undisputed that both the appellant and the service recipient believed the services to be manpower supply and that the Chartered Accountant certificate establishes payment of service tax by the recipient throughout. Applying precedent which holds that where the entire service tax has been paid by one party the situation is revenue neutral and no double levy can be sustained, the Tribunal concluded that even if the service were recharacterised, the demand could not be confirmed. The Tribunal relied on the cited decisions applying the principle that revenue neutrality precludes a fresh demand against the provider in such circumstances. [Paras 6]

Demand cannot be confirmed against the appellant because the service tax was paid by the recipient and the situation is revenue neutral.

Bonafide belief of classification by assessee and recipient as a defence to demand - invocation of extended period of limitation in cases of bona fide classification and payment by recipient - Whether the extended period of limitation could be invoked where the appellant and the recipient bonafidely treated the service as manpower supply and the recipient paid service tax accordingly. - HELD THAT: - The Tribunal recorded that it was not in dispute that the appellant and BSNL bona fide believed the services to be manpower supply and that service tax was paid by BSNL. Given the bona fide classification by both parties and continuous payment by the recipient, the Tribunal held that invocation of the extended period of limitation was not justified, and therefore the extended period could not sustain the demand. [Paras 3, 8]

Extended period of limitation could not be invoked; invocation was unjustified in the facts of the case.

Inapplicability of authority on main contractor-sub contractor liability to revenue neutral situations - Whether the Apex Court decision in Om Sai Fabricators (main contractor-sub contractor liability) is applicable to the present facts where the recipient paid service tax and the position is revenue neutral. - HELD THAT: - The Tribunal examined the reliance on Om Sai Fabricators and observed that that case dealt with liability of sub contractors vis a vis main contractors and involved different factual matrix. The Tribunal found that the cited apex authority did not address a revenue neutral situation where the recipient had paid service tax, and therefore it was not applicable to the instant case. [Paras 7]

Om Sai Fabricators is not applicable to the facts of this case.

Final Conclusion: Appeal allowed; demand and penalties set aside because service tax was paid by the recipient, the parties bona fide classified the services as manpower supply, invocation of the extended period of limitation was unjustified, and the authority relied upon by revenue was inapplicable.

Entitlement to Cenvat Credit - utilisation of Cenvat Credit to discharge service tax liability - extended period of limitation for recovery - reopening/assessment in extended period - remand for fresh consideration of evidence and case law

Entitlement to Cenvat Credit - utilisation of Cenvat Credit to discharge service tax liability - remand for fresh consideration of evidence and case law - Whether the appellant was entitled to the Cenvat Credit claimed and whether that credit, having been availed and utilised, should be applied against the service tax demand. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had decided the question of non-entitlement to credit in a cryptic manner by merely reiterating the Original Adjudicating Authority's grounds without independently examining the appellant's factual evidence and authorities relied upon. The appellant produced books, ledgers and contends that credits were recorded in the relevant period and were subsequently availed and utilised when the liability became apparent. Given that the factual matrix and the legal authorities (including those invoked by the appellant) were not effectively addressed, the Tribunal considered it necessary in the interest of justice to remit the matter. On remand the Commissioner (Appeals) is directed to evaluate all documentary evidence, examine the invoices and tax payment details, apply the relevant legal principles and case law relied upon by the appellant, hear the parties and determine whether the claimed credit was legitimately available and was properly availed and utilised; if entitlement (in whole or in part) is established, that benefit is to be applied towards the departmental demand.

Remanded to the Commissioner (Appeals) for fresh adjudication on the appellant's entitlement to Cenvat Credit and its application to the demand after full consideration of evidence and authorities.

Extended period of limitation for recovery - reopening/assessment in extended period - remand for fresh consideration of evidence and case law - Whether the show cause notice and demand were time-barred by reason of limitation or whether invocation of the extended period was justified. - HELD THAT: - The Tribunal observed that the appellant raised limitation-defence and produced materials (for example screenshots and alleged correspondence) to show attempts to file ST-3 returns during the relevant period. The record before the Tribunal did not permit a definitive finding on limitation because the Commissioner (Appeals) had not re-examined these specific evidentiary aspects. Consequently the Tribunal left the limitation issue open and directed the Commissioner (Appeals) on remand to examine the evidences submitted by the appellant, including attempts to file returns and related communications, and to decide whether the extended period was rightly invoked in light of the material on record and applicable law.

Remanded to the Commissioner (Appeals) to reassess the question of limitation/extended period in the light of the appellant's evidences and submissions.

Final Conclusion: The appeal is disposed of by remand: both the appellant's claimed entitlement to Cenvat Credit (and its utilisation against the demand) and the question of limitation/extended period are left open and directed to be reconsidered afresh by the Commissioner (Appeals) on the basis of all documentary evidence and legal authorities, after hearing the parties.

Renting of immovable property service - exclusion of land used for parking purposes from taxable immovable property - use in the course or furtherance of business or commerce - parking services not taxable under renting of immovable property

Renting of immovable property service - parking services not taxable under renting of immovable property - use in the course or furtherance of business or commerce - exclusion of land used for parking purposes from taxable immovable property - Whether car parking fees collected by the appellant are taxable as 'renting of immovable property service' for the period 01.06.2007 to 31.03.2011 - HELD THAT: - The Tribunal examined the definition of 'renting of immovable property' and the related definition of taxable service and noted that Explanation 1 and the exclusion clauses treat 'land used for ... parking purposes' as outside the scope of immovable property for the entry under Section 65(105)(zzzz). The Tribunal accepted the reasoning in earlier decisions relied upon by the appellant, including Mahesh Sunny Enterprises P. Ltd. , and similar findings in Brookefields Estates Pvt. Ltd. , that parking services are excluded from chargeability under the renting of immovable property entry. The Tribunal distinguished the situations where parking fees are collected from shop owners or their employees as part of rent (which may fall within renting of immovable property because the use is in furtherance of business), and noted that in the present case no parking charges were recovered from tenants or their employees; parking was provided to visitors on a non-exclusive, first-come-first-serve basis against hourly charges. Applying the statutory exclusions and the cited precedents, the Tribunal held that the appellant's car parking fees could not be taxed under the 'renting of immovable property service' head. [Paras 9, 10, 11, 12]

Car parking fees collected by the appellant are not taxable under the category 'renting of immovable property service' for the period in dispute; resulting demand and penalty set aside.

Final Conclusion: Appeal allowed; impugned order set aside - demand of service tax raised on car parking charges and penalty thereon quashed, with consequential reliefs, for the period 01.06.2007 to 31.03.2011.

Classification of activity as 'manufacture' or 'assembly' - recovery of duty on alleged clearances without payment - reliance on purchase invoices as proof of duty discharge - onus on Revenue to prove manufacturing/assembly - penalty under Section 11AC of the Central Excise Act, 1944

Classification of activity as 'manufacture' or 'assembly' - recovery of duty on alleged clearances without payment - reliance on purchase invoices as proof of duty discharge - Whether duty was leviable on 39 SMPS cleared by the appellant during December 2004 to February 2005 on the ground that they were manufactured/assembled by the appellant and cleared without payment of duty. - HELD THAT: - The Tribunal found that during the period in question the appellant was engaged in trading and not registered as a manufacturer. The appellant produced purchase invoices showing SMPS procured from M/s. United Telecoms Ltd. (UTL) on which duty had been discharged. The Revenue produced no evidence to establish that the supply of additional addendums with the SMPS resulted in the emergence of a new manufactured product or that assembly undertaken by the appellant amounted to manufacture attracting excise duty. No investigation or recorded statements were shown to substantiate a finding of manufacture or assembly by the appellant. In the absence of such proof, the mere presence of additional parts supplied with traded SMPS was insufficient to convert the transactions into dutiable manufacture and clearances without payment of duty could not be sustained.

The demand for duty on the 39 SMPS was not sustained; the impugned order confirming the demand was set aside and the appeal allowed.

Penalty under Section 11AC of the Central Excise Act, 1944 - onus on Revenue to prove manufacturing/assembly - Whether the penalty imposed on the appellant under Section 11AC was sustainable in the circumstances. - HELD THAT: - The Tribunal noted that there was no finding of suppression or misdeclaration by the appellant and that the Revenue failed to prove that the appellant had manufactured or assembled the goods so as to attract duty. Given that the foundational demand for duty was not established and that no evidence of deliberate concealment was shown, the imposition of penalty under Section 11AC could not be sustained. The Tribunal therefore allowed consequential relief to the appellant.

The penalty imposed under Section 11AC was not sustained and is set aside consequentially.

Final Conclusion: The appeal is allowed: the demand for duty and the penalty confirmed by the lower authority in respect of 39 SMPS cleared during December 2004 to February 2005 have been set aside for want of admissible evidence proving manufacture or non-payment of duty; consequential relief granted as per law.

Eligibility for refund of unutilised CENVAT credit on exported goods - mining amounts to manufacture for excise purposes - definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 - precedential effect of Tribunal orders in reassessing prior adjudicatory reliance

Eligibility for refund of unutilised CENVAT credit on exported goods - mining amounts to manufacture for excise purposes - definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 - The appellant is entitled to refund of unutilised CENVAT credit in respect of input services used in the exported iron ore during January 2008 to March 2009. - HELD THAT: - The Tribunal examined whether the original and appellate authorities correctly denied refund by holding that the appellant's processes did not amount to manufacture and therefore input service credit was not admissible. It noted that the Orders-in-Original and Commissioner(A)'s findings had proceeded on the basis of an earlier Appellate Order (OIA No.138/2008) which this Tribunal subsequently set aside in Final Order No.20489-20500/2017 (and related Final Order No.22400-22406/2007), holding that mining activity amounts to manufacture and that the impugned input services fall within the wide scope of "input service" as contemplated by Rule 2(l). Having regard to those determinations, the basis for rejecting the refund claims no longer survives. The Tribunal therefore set aside the impugned orders and allowed the refund claims with consequential reliefs as per law. [Paras 5, 7, 8]

Impugned orders set aside; refund of unutilised CENVAT credit allowed for the period January 2008 to March 2009 with consequential relief as per law.

Final Conclusion: The appeals are allowed: the appellant is eligible for refund of unutilised CENVAT credit on input services used in exported iron ore for January 2008 to March 2009, and the impugned orders are set aside with consequential relief.

Valuation of excisable goods - transaction value - valuation under Section 4(1)(a) - physician samples - cost construction / pro rata valuation - transaction between assessee and distributor

Valuation of excisable goods - physician samples - valuation under Section 4(1)(a) - transaction value - cost construction / pro rata valuation - Whether physician samples cleared to distributors for free distribution to doctors are to be valued under Section 4(1)(a) on the transaction value between the assessee and distributor or by cost/construction method applicable where goods are not sold. - HELD THAT: - The Tribunal held that the determinative transaction is between the assessee and the distributor to whom price was charged. The subsequent act of distributors giving samples free to physicians is extraneous to valuation under Section 4 and cannot negate that a sale occurred between the assessee and distributor. Where price was the sole consideration and parties were not related in a manner invalidating transaction value, valuation must be on the transaction value under Section 4(1)(a) and not by a cost/construction or pro rata method applicable to goods not sold. The Tribunal further relied on the appellant's own earlier decisions affirmed by the Hon'ble Supreme Court, which held that Section 4(1)(a) applies where price was charged to distributors even if ultimate distribution to physicians was free; thus Central Excise Rules for valuation in non-sale cases do not apply. [Paras 4, 5]

The impugned demands based on valuation other than transaction value are not sustainable; appeals allowed and impugned orders set aside.

Final Conclusion: The Tribunal, following its earlier orders and the Supreme Court's affirmation in the appellant's own case, concluded that physician samples sold to distributors are to be valued on the transaction value under Section 4(1)(a); the impugned demands are set aside and the appeals are allowed.

Definition of Goods Transport Agency as requiring issuance of consignment note - consignment note as a non-derogable ingredient for classification as GTA - taxability under the reverse charge mechanism for GTA services - distinction between invoice/monthly bill and consignment note - limitation/extended period and time-bar in revenue-neutral audit cases

Definition of Goods Transport Agency as requiring issuance of consignment note - consignment note as a non-derogable ingredient for classification as GTA - taxability under the reverse charge mechanism for GTA services - distinction between invoice/monthly bill and consignment note - Whether payments for transportation of goods can be taxed as Goods Transport Agency (GTA) services under reverse charge where no consignment note was issued by the transporter - HELD THAT: - The Tribunal found as a fact that transportation of building material was effected but transporters did not issue consignment notes and, in some instances, the transporter billed for supply of goods. Applying the statutory definition of GTA and consistent precedents of this Tribunal and co-ordinate benches, the Court held that issuance of a consignment note is an essential, non-derogable ingredient to constitute a "goods transport agency" and to attract service tax under the GTA category. Invoices or monitoring slips prepared by the service recipient cannot substitute for a consignment note because a consignment note carries legal and contractual consequences (such as the carrier's responsibility for delivery) which an invoice does not. Numerous decisions were followed and applied to the facts, and on that basis the demand framed under GTA (reverse charge) was held unsustainable. The Tribunal therefore set aside the impugned demand insofar as it rested on classification as GTA service. [Paras 4, 5, 17]

Demand under GTA service (reverse charge) set aside as no consignment notes were issued; issue answered in favour of the appellant

Limitation/extended period and time-bar in revenue-neutral audit cases - Whether the demand could be sustained invoking the extended period of limitation - HELD THAT: - The Tribunal observed that the matter was revenue-neutral, multiple audits had been conducted, and the Department had full knowledge of the issue. In these circumstances the invocation of the extended period was not sustainable. The Tribunal accepted the limitation plea raised by the appellant and concluded that the demand could not be maintained on the ground of time-bar. [Paras 18]

Demand also unsustainable on limitation grounds; appellant succeeds on time-bar plea

Final Conclusion: Applying settled Tribunal precedents and statutory definition, the impugned demand under the GTA (reverse charge) was set aside because no consignment notes were issued and, additionally, the demand was held time barred; the appeal is allowed.

Exemption of sugar cess on export under Notification No. 42/2001-CE (NT) - sugar cess as duty of excise - applicability of Central Excise Act procedural provisions to sugar cess - exemption of cess on exported sugar under Circular No. 10/93-CX.8 dated 1-9-1993 - precedential value of Tribunal decisions

Exemption of sugar cess on export under Notification No. 42/2001-CE (NT) - sugar cess as duty of excise - applicability of Central Excise Act procedural provisions to sugar cess - exemption of cess on exported sugar under Circular No. 10/93-CX.8 dated 1-9-1993 - Entitlement of the appellant to exemption from payment of sugar cess on export of sugar under Notification No. 42/2001-CE (NT). - HELD THAT: - The Tribunal held that sugar cess is levied as a duty of excise under the Sugar Cess Act, 1982 and sub section (4) of Section 3 brings into play the provisions of the Central Excise Act and rules, including those relating to refunds and exemptions. Applying that legal characterisation, exemptions applicable to excise duty under Notification No. 42/2001-CE (NT) operate mutatis mutandis in respect of sugar cess. The Tribunal followed its earlier decisions in the appellant's own case and other precedents which treated analogous cesses as duties of excise and recognised exemption for export. The Circular No. 10/93-CX.8 (dated 1-9-1993) exempting cess on sugar exported out of India was also noted. In view of these reasons and the binding precedential orders relied upon, the demand of sugar cess raised in the impugned orders was held unsustainable. [Paras 4, 5]

Impugned orders setting demand of sugar cess on export set aside; appeals allowed.

Final Conclusion: Following earlier Tribunal decisions and the statutory deeming of sugar cess as a duty of excise (with Central Excise Act procedural provisions applying), the Tribunal held that sugar cess is not payable on export of sugar under Notification No. 42/2001-CE (NT) and allowed the appeals.

Maintainability of appeal - failure to adjudicate certain noticees - scope of challenge in appeal - adjudication of show-cause notice

Maintainability of appeal - failure to adjudicate certain noticees - scope of challenge in appeal - Whether the Revenue's appeal challenging the adjudicating authority's omission to decide the show-cause notice qua several other noticees (not the appellant) is maintainable and meritorious. - HELD THAT: - The Tribunal observed that the Revenue's appeal is directed against the order insofar as it concerns M/s SMS Smelters and that the adjudicating authority did not grant relief to M/s SMS Smelters. The grievance raised by the Revenue-that the adjudicating authority failed to decide the show-cause notice against Noticee Nos.7/7A/7B, 8/8A/8B, 9/9A, 10, 11, 12, 13, 14 and 15-relates to parties which are not the subject of the appeal filed by the Revenue. The Tribunal held that the complaint about non-adjudication of those other noticees falls outside the scope of the present appeal and, on that basis, found no merit in the Revenue's challenge. [Paras 4, 5]

Appeal dismissed for lack of merit.

Final Conclusion: The appeal filed by the Revenue was dismissed because the challenge to the adjudicating authority's omission to decide the show-cause notice in respect of other noticees-who are not parties to the Revenue's appeal-was outside the scope of the present appeal and therefore devoid of merit.

Pre-deposit - direction to Appellate Authority to decide appeal on merits - attachment of bank accounts - interim stay - power under Section 62(6) of the Act

Pre-deposit - interim stay - Annexures P-13 to P-16 taken on record and the interim stay founded on the pre-deposit was recognised. - HELD THAT: - The application under Order 151 CPC for placing Annexures P-13 to P-16 on record was allowed and the documents were taken on record subject to exceptions. The Court noted its earlier interim order which had stayed attachment orders because the petitioner had made the requisite pre-deposit for certain Assessment Years and paid the complete amounts for others; this factual position formed the basis for maintaining the interim consequences while directing further adjudication on merits.

Documents Annexures P-13 to P-16 are taken on record; the interim stay stands in light of the pre-deposit and payments already made.

Direction to Appellate Authority to decide appeal on merits - Appellate Authority directed to decide the appeal on merits and expeditiously. - HELD THAT: - Having noted that pre-deposit(s) had been made for the Assessment Years in issue and that the petitioner had paid the complete amounts for other Assessment Years, the Court exercised its supervisory power to order that the appeal be decided on merits. The Court observed that earlier suggestions for officials to meet had not yielded resolution and therefore it was appropriate to require the Appellate Authority to proceed to decide the appeal itself. The Court specified an aspirational timeline for disposal to ensure expedition. [Paras 4, 6]

Appellate Authority to proceed and decide the appeal on merits, preferably within four months from the date of the order.

Attachment of bank accounts - Attachment or blocking of the petitioner's bank accounts is not permissible while the appeal is to be decided on merits given the pre-deposit status. - HELD THAT: - The Court held that since the appeal is to be considered on merits and the petitioner had already made the pre-deposit and payments for the specified Assessment Years, there was no justification for attachment or blocking of the petitioner's bank accounts. The respondents' plea to block accounts was found not to be in accordance with law in the circumstances recorded by the Court. [Paras 5]

No attachment or blocking of the petitioner's bank accounts; respondents' plea to that effect rejected.

Power under Section 62(6) of the Act - pre-deposit - Respondents may not, in the facts of this case, invoke the power under Section 62(6) of the Act to require full deposit of the demand. - HELD THAT: - After hearing submissions, the Court rejected the respondents' contention that the Appellate Authority should be permitted to exercise its power under Section 62(6) to call for deposit of the entire demand. The Court reasoned that the petitioner had already made the requisite pre-deposit for Assessment Years 2010-11 and 2011-12 and had paid the complete amounts for Assessment Years 2013-14, 2014-15 and 2015-16, rendering the exercise of that power inapplicable in the present circumstances. Consequently the Appellate Authority was directed to decide the appeal on merits without requiring full deposit under Section 62(6). [Paras 7]

Power under Section 62(6) shall not be exercised to require full deposit in view of the pre-deposit and payments already made; Appellate Authority to decide appeal on merits.

Final Conclusion: The petition is disposed of by directing the Appellate Authority to decide the appeal on merits (preferably within four months); Annexures P-13 to P-16 are taken on record; attachment or blocking of the petitioner's bank accounts is disallowed in the circumstances; and the respondents cannot invoke Section 62(6) to require full deposit given the pre-deposits and payments already made.

Turnover escaping assessment - condition precedent for reassessment - existence of prior assessment as jurisdictional requirement - self-assessment deemed completed - limitation on assessment under the five-year bar - requirement of filing periodical returns within prescribed time - jurisdiction to initiate reassessment

Existence of prior assessment as jurisdictional requirement - condition precedent for reassessment - jurisdiction to initiate reassessment - Whether reassessment under the provision for turnover escaping assessment could be validly initiated and completed when no assessment under the specified assessment provisions had been earlier made and self-assessment could not be deemed completed. - HELD THAT: - The Court held that the power to reassess for turnover escaping assessment can be invoked only after there exists an assessment under the specified assessment provisions. The statutory scheme requires three preconditions for reassessment: (i) there must have been an assessment under the relevant assessment provisions for the year or part thereof; (ii) the authority must have reason to believe turnover has escaped assessment or has been under assessed or wrongly allowed deductions/credits; and (iii) opportunity and enquiries must follow before assessing to the best of judgment. In the present case the assessing authority had not completed an assessment under the assessment provisions in question and the petitioner had not filed returns within the prescribed time so as to render any self assessment complete. Consequently no antecedent assessment existed in law and the assessing authority therefore lacked jurisdiction to exercise reassessment powers. The impugned reassessment was accordingly held to be illegal and without jurisdiction. [Paras 20, 21, 22, 25, 26]

Reassessment was invalid because the requisite antecedent assessment did not exist and the authority therefore had no jurisdiction to reassess.

Self-assessment deemed completed - requirement of filing periodical returns within prescribed time - limitation on assessment under the five-year bar - Whether the assessing authority could treat the assessment as self assessed and thereby escape the limitation under the statute when periodical returns were not filed within the prescribed time. - HELD THAT: - Section governing self assessment provides that where returns (including annual/audited returns where required) are filed in prescribed manner and within prescribed time and tax paid, assessment is deemed completed. Rule requires monthly returns to be filed within twenty one days of the succeeding month. The petitioner did not file the monthly returns within the prescribed time and thus could not be said to have a deemed self assessment. Section providing a five year bar prevents assessment after the expiry of five years from the end of the year to which the assessment relates. As no assessment had been completed within that period, the time for completing assessment expired (the Court identified the bar as having been reached) and the assessing authority could not rely on a deemed self assessment that was not in law made to avoid the limitation. The assessing authority's reliance on filing of audited balance sheet and Form 23 to treat self assessment as complete was held to be fallacious in the absence of timely returns. [Paras 12, 13, 17, 19, 24]

Deemed self assessment did not arise since periodical returns were not filed within the prescribed time; assessment was barred by the statutory five year limitation and could not be validly completed thereafter.

Final Conclusion: The reassessment order dated 05.03.2022 and the notice of demand are quashed and the writ petition is allowed: reassessment under the turnover escaping provision was invalid as no antecedent assessment existed and the assessment was otherwise barred by limitation.

Court monitored investigation - Special Investigating Team (SIT) - quid pro quo - recourse to statutory remedies - reopening of tax assessments - jurisdiction under Article 32 - prosecutorial and statutory functions

Court monitored investigation - Special Investigating Team (SIT) - quid pro quo - jurisdiction under Article 32 - Whether a court monitored investigation by an SIT should be constituted to probe alleged quid pro quo revealed by electoral bond data - HELD THAT: - The petitions seeking constitution of an SIT rest on assumptions that proximity between purchase/encashment of electoral bonds and subsequent contracts or policy changes gives rise to prima facie quid pro quo and that investigative agencies may be compromised. The Court observed that these contentions are speculative at the present stage and would require detailed factual enquiries. Intervention under Article 32 for allegations of criminality is premature and inappropriate unless normal legal remedies have been invoked and found inadequate. The existence at the relevant time of statutory authorization for electoral bonds further reinforces that the Court should not embark upon a roving inquiry. Given the availability of investigative and prosecutorial processes under existing criminal law, and the availability of remedies (including challenge to refusal to investigate or closure reports), extraordinary relief in the form of a court monitored SIT is declined. [Paras 11, 12, 13, 14, 16]

The Court declined to constitutionally mandate a court monitored SIT; petitions for such investigation dismissed as premature and inappropriate.

Recourse to statutory remedies - reopening of tax assessments - prosecutorial and statutory functions - Whether directions should be issued to income tax or other statutory authorities to reopen assessments, make recoveries, or otherwise exercise statutory powers on the basis of the electoral bond disclosures - HELD THAT: - Reliefs seeking recovery of amounts from political parties as proceeds of crime or directions to reopen income tax assessments impinge upon functions statutorily conferred upon competent authorities. For example, reopening an assessment requires the Assessing Officer to form a subjective opinion based on tangible material that income has escaped assessment. Such statutory functions are to be exercised on a case by case basis by the designated authorities under their governing statutes and cannot be supplanted by exercise of extraordinary jurisdiction under Article 32 in the present proceedings. Accordingly, the Court will not itself direct reopening of assessments or recoveries that fall within the statutory domain of other authorities. [Paras 18, 19]

Claims for reopening assessments and statutory recoveries declined; such matters lie within the statutory competence of the relevant authorities and are not to be directed by this Court in these petitions.

Final Conclusion: The petitions invoking Article 32 seeking constitution of an SIT, court monitored investigation, and directions for reopening assessments or recoveries based on electoral bond disclosures are dismissed; petitioners must pursue available remedies under the ordinary statutory and criminal processes.