TaxTMI Updates e-Newsletter
Aug 27,2024

Liberty to operate bank account pending adjudication - lapse of attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - duty of revenue officers to furnish timely instructions to advocates - direction for departmental enquiry and disciplinary action for failure to communicate orders

Liberty to operate bank account pending adjudication - lapse of attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Petitioner was permitted to operate and use funds in the bank account notwithstanding respondents' actions regarding attachment. - HELD THAT: - The Court noted that the impugned letter dated 9th July 2024 did not state that the bank account was frozen and that the petitioner had made a representation on 13th July 2024. Having regard to the position that an earlier order attaching the account had lapsed (as recorded in the disposal of writ petition No. 5476 of 2024 on 8th July 2024 by reference to the lapse under Section 83), and in the absence of a clear communicated attachment justifying continued restraint, the petitioner was placed at liberty to operate the bank account and use the money to his credit as an interim measure. The Court accordingly ordered immediate operational liberty while preserving the entitlement of the respondents to file a reply and pursue the matter further. [Paras 1]

Petitioner allowed to operate the bank account and use the funds to his credit; respondents to file reply and follow the timetable directed by the Court.

Duty of revenue officers to furnish timely instructions to advocates - direction for departmental enquiry and disciplinary action for failure to communicate orders - Court directed a departmental enquiry and mandated filing of an explanatory affidavit by the Principal Commissioner for failure to communicate an attachment order and for lapses in instructions to revenue's advocates. - HELD THAT: - The Court observed that respondents had not informed the petitioner or their counsel about an alleged order dated 8th May 2024 attaching the petitioner's bank account, and that this omission - and the consequent lack of timely instructions from departmental officers to the advocates - put the revenue's counsel in an embarrassing position. Recording concern at this state of affairs, the Court directed the Principal Secretary, Ministry of Revenue, to institute an enquiry against the officer concerned and, if lapses were found, to take disciplinary action and advise officers to give timely instructions. Further, the Principal Commissioner, Gurugram was directed to file an affidavit in reply, bringing all facts on record and explaining the noted lapses by 30th August 2024, with rejoinder timelines specified; the Court warned that failure to file the affidavit would be taken as absence of objection to the relief sought. [Paras 9, 10, 13]

Principal Secretary directed to order enquiry and consider disciplinary action; Principal Commissioner to file explanatory affidavit by the specified date, failing which the Court will proceed on the basis that respondents have no objection to the petitioner's relief.

Final Conclusion: Interim relief granted permitting the petitioner to operate the bank account; respondents ordered to file a detailed affidavit and departmental enquiry directed into failures to communicate the alleged attachment order, with possible disciplinary consequences and specified timetables for pleadings.

Ultra vires notification issued under Section 168A of the CGST Act, 2017 - applicability of force majeure to extension of limitation - requirement of GST Council recommendation/ratification for extending limitation - interim protection against coercive action - adoption of Central notifications by State GST law (pari materia operation)

Interim protection against coercive action - Interim relief restraining coercive action in respect of the impugned assessment order dated 18.04.2024 - HELD THAT: - The High Court, after hearing parties, concluded that the petitioner is entitled to interim protection pending further proceedings. Having noted prima facie concerns about the validity of Notification No.56/2023, the Court directed that no coercive action shall be taken on the basis of the impugned assessment order dated 18.04.2024 until the next date of hearing. This interim protection was granted to preserve the petitioner's position while respondents file affidavits and furnish materials on the issues raised. [Paras 13, 15]

No coercive action to be taken on the basis of the impugned assessment order dated 18.04.2024 until the next listed date.

Ultra vires notification issued under Section 168A of the CGST Act, 2017 - requirement of GST Council recommendation/ratification for extending limitation - applicability of force majeure to extension of limitation - Validity of Notification No.56/2023 dated 28.12.2023 extending time for passing orders under Section 73(9) - prima facie view and requirement for fresh consideration - HELD THAT: - The Court observed prima facie that Notification No.56/2023 does not appear to be in consonance with the requirements of Section 168A of the CGST Act, 2017. The petitioner's challenge rests on the contention that the Central Government could not validly issue the extension without a recommendation of the GST Council and that the reasons relied upon (including lack of manpower as reflected in the 49th GST Council minutes) do not amount to a force majeure. The respondents acknowledged absence of formal GST Council recommendation and relied upon a recommendation of the GST Implementation Committee and the prospect of subsequent ratification. The Court did not finally adjudicate the validity on merits but directed respondents to place on record their stand and the materials supporting the invocation of force majeure and the basis for issuing the impugned notification, thereby remitting these matters for fresh consideration in the proceedings. [Paras 6, 7, 10, 13, 14]

Prima facie view that Notification No.56/2023 may be not in consonance with Section 168A; respondents directed to file affidavits and materials for fresh consideration; issue remanded for further adjudication.

Adoption of Central notifications by State GST law (pari materia operation) - Applicability of Notification No.56/2023 to proceedings under the Assam GST Act, 2017 - HELD THAT: - The petition raised that the Assam GST authorities cannot rely on the Central notification to extend limitation because Section 11(4) of the Assam GST Act, 2017 permits adoption of certain Central notifications but does not contemplate adoption of a notification granting an extension under Section 168A. The Court noted conflicting contentions - respondents stating Assam follows Central notifications and petitioner disputing lawful adoption - and required the State/Assam GST authorities to place on record their stand and supporting materials. The Court did not decide the question on merits and left it for determination after receipt of affidavits and materials. [Paras 8, 11, 12, 13, 14]

Question left open for fresh consideration; respondents directed to file affidavits and materials addressing applicability under the Assam GST Act.

Final Conclusion: The Court granted interim protection restraining coercive action in respect of the impugned assessment dated 18.04.2024 and recorded a prima facie view that Notification No.56/2023 may not conform to Section 168A of the CGST Act; respondents were directed to file affidavits and place on record materials concerning the GST Council recommendation/ratification, the asserted applicability of force majeure, and the adoption of the Central notification under the Assam GST Act for fresh consideration on the next listed date.

Violation of principles of natural justice / right to personal hearing - restoration of proceedings / revival of application for revocation - remand for fresh consideration after affording personal hearing - consideration of mitigating circumstances in granting relief - appeal barred by limitation

Violation of principles of natural justice / right to personal hearing - The petitioner was not afforded a personal hearing at the threshold because the Show Cause Notice did not specify the date and time for appearance. - HELD THAT: - The Court found that the impugned Show Cause Notice dated 06.09.2022 failed to specify the date and time for the petitioner to appear for personal hearing. In consequence, the petitioner was not afforded an opportunity to be heard at the initial stage of the cancellation proceedings. Although the petitioner later had chances in proceedings relating to the revocation application, the absence of a specified hearing date/time in the threshold SCN constituted denial of the right to be heard, warranting remedial intervention. [Paras 11, 13]

The absence of a specified date and time in the initial Show Cause Notice amounted to denial of a personal hearing; this deficiency justified further relief to enable the petitioner to be heard.

Restoration of proceedings / revival of application for revocation - remand for fresh consideration after affording personal hearing - consideration of mitigating circumstances in granting relief - The petitioner's application for revocation was restored and remitted to the proper officer for fresh consideration after affording an opportunity of hearing; mitigating circumstances were taken into account in granting this relief. - HELD THAT: - Having noted the procedural deficiency and the petitioner's explanation regarding mitigating circumstances, the Court exercised its discretionary supervisory power to restore the petitioner's application for revocation. The petitioner was granted one further opportunity to respond to the Show Cause Notice dated 03.03.2023 and to furnish documents regarding its existence within one week. The proper officer was directed to consider the materials and take an appropriate decision after affording the petitioner an opportunity to be heard. The order of the appellate authority rejecting the time barred appeal was not allowed to preclude the restored revocation proceedings; instead, the matter was remitted for fresh consideration. [Paras 14, 15, 16]

The revocation application is restored; the petitioner given one week to respond to the 03.03.2023 SCN and produce evidence of existence, and the proper officer shall decide after affording a personal hearing.

Final Conclusion: The petition is disposed of by restoring the petitioner's application for revocation and remitting the matter to the proper officer for fresh consideration after affording the petitioner a personal hearing and an opportunity to file documents within one week; pending matters are disposed.

Limitation for filing appeal under Section 107 of the CGST Act - effect of communication/service of order on limitation - entertainment of appeal by Appellate Authority despite expiry of statutory limitation

Limitation for filing appeal under Section 107 of the CGST Act - effect of communication/service of order on limitation - Whether the limitation period for preferring an appeal runs from the date of passing of the order or from the date of its communication when the order was not served on the assessee - HELD THAT: - The Court noted that the impugned order was passed on 30.12.2023 but was placed on the portal and not communicated to the petitioner, who came to know of it only in April 2024. While observing that the statutory provision on limitation expressly counts time from the date of passing of the order, the Court accepted the petitioner's contention that the petitioner was prevented from filing an appeal within the prescribed period because the order had not been communicated to it. Thus, although the provision states limitation from the date of passing, the facts showed non-communication which prevented the petitioner from exercising its right to appeal within time, and the Court treated that circumstance as material to relieve the petitioner of the practical bar to filing an appeal. [Paras 6, 7, 8]

The Court accepted that the petitioner was prevented from filing an appeal in time because the order was not communicated to it, notwithstanding that the statutory limitation is expressed to run from the date of passing.

Entertainment of appeal by Appellate Authority despite expiry of statutory limitation - Whether the writ petition should be entertained or the matter remitted for adjudication by the Appellate Authority and what direction should be given - HELD THAT: - Although declining to quash the impugned order by writ, the Court observed that there exists a statutory remedy of appeal and that factual aspects relevant to any extension or waiver of limitation ought to be considered by the Appellate Authority. The Court directed that if the petitioner prefers an appeal within 15 days from the date of the order, the Appellate Authority shall examine and decide the appeal on merits without being inhibited by limitation, and preferably conclude the decision within three months. The direction thus entrusts the Appellate Authority with fresh consideration of the appeal on merits, effectively remitting the dispute for adjudication. [Paras 9, 10]

Writ petition not entertained; Appellate Authority directed to admit and decide any appeal filed within 15 days on merits sans limitation, preferably within three months.

Final Conclusion: Writ petition dismissed; petitioner permitted to prefer an appeal within 15 days and the Appellate Authority directed to decide the appeal on merits notwithstanding limitation, preferably within three months.

Natural justice - opportunity of personal hearing - confirmation of tax proposal for non-response to show cause notice - assessment based on mismatch between GSTR-3B and auto-populated GSTR-2A - remand subject to deposit

Natural justice - opportunity of personal hearing - confirmation of tax proposal for non-response to show cause notice - assessment based on mismatch between GSTR-3B and auto-populated GSTR-2A - Validity of the impugned order dated 18.12.2023 in view of absence of petitioner's reply and failure to consider objections before confirming the tax proposal arising from mismatch between GSTR-3B and GSTR-2A. - HELD THAT: - The court found that the tax proposal was instituted on the basis of a mismatch between the petitioner's GSTR-3B returns and the auto-populated GSTR-2A and that the proposal was confirmed because the petitioner did not reply to the show cause notice and personal hearing notices. Consequently, the impugned order confirmed the tax proposal without considering the petitioner's objections, thereby engaging principles of natural justice. Having regard to these circumstances, the court set aside the impugned order and directed that the matter be reconsidered on merits, while putting the petitioner on terms to enable effective contestation of the demand. The court noted communications and reminders preceding the order but observed that the petitioner's request for adjournment (by communication dated 22.11.2023) was not reflected in the respondent's instructions. [Paras 4, 5]

Impugned order dated 18.12.2023 set aside; matter remanded for fresh consideration on merits with directions to afford the petitioner an opportunity, including a personal hearing, before passing a fresh assessment order.

Remand subject to deposit - opportunity of personal hearing - Terms on which the matter is remanded and procedural directions for fresh adjudication. - HELD THAT: - The court conditioned the remand on the petitioner remitting 10% of the disputed tax demand within two weeks from receipt of the copy of the order and filing a reply to the show cause notice within the same period. Upon receipt of the petitioner's reply and satisfaction that the 10% deposit has been made, the respondent is directed to provide a reasonable opportunity to the petitioner including a personal hearing, and thereafter to issue a fresh assessment order within three months from receipt of the reply. The court disposed of the writ petition on these terms and closed the connected miscellaneous petitions. [Paras 5]

Remand granted subject to petitioner remitting 10% of the disputed demand within two weeks and filing a reply; respondent to afford hearing and pass fresh assessment within three months.

Final Conclusion: Writ petition allowed by setting aside the impugned order dated 18.12.2023; matter remanded for fresh consideration subject to deposit of 10% of the disputed demand within two weeks and filing of a reply, with respondent directed to grant a hearing and pass a fresh assessment order within three months; no costs.

Limitation bar to revision - principles of natural justice - revisional jurisdiction under Section 54 of the TNGST Act, 2006

Limitation bar to revision - principles of natural justice - Impugned orders rejecting the revision petitions as barred by limitation were illegal and liable to be set aside. - HELD THAT: - The Court observed that it had earlier granted liberty to the petitioner to file revision petitions under Section 54 of the TNGST Act, 2006 within 30 days, and the petitioner had filed the revision petitions within that period. Despite this, the Revisional Authority rejected the revision petitions on the ground of limitation without hearing the petitioner. Such rejection, when the petitions were filed in time in terms of the liberty granted and without affording an opportunity of hearing, violated the principles of natural justice and was therefore contrary to law. The impugned orders were held to be per se illegal and unsustainable for these reasons. [Paras 6, 7]

Impugned orders dated 12.04.2023 rejecting the revision petitions on limitation grounds set aside.

Revisional jurisdiction under Section 54 of the TNGST Act, 2006 - principles of natural justice - Revision petitions remitted for fresh enquiry and decision on merits after affording opportunity of hearing. - HELD THAT: - The Court directed that the respondents shall fix a date for enquiry in the revision petitions and, after affording the petitioner an opportunity and conducting enquiry, pass orders on merits and in accordance with law. The Court prescribed a time-bound direction requiring the Revisional Authority to decide the matters within eight weeks from receipt of a copy of the order. [Paras 8]

Revision petitions remanded for enquiry and fresh decision on merits; respondents to decide within eight weeks.

Final Conclusion: Writ petitions allowed; impugned orders dated 12.04.2023 set aside and the revision petitions for AY 2010-11 and 2011-12 remanded for enquiry and fresh decision on merits within eight weeks; no costs.

Reasonable opportunity of hearing - personal hearing - reverse charge mechanism - burden to produce documents to establish reverse charge - Section 9(3) of applicable GST enactments read with Notification No.13/2017 - Central Tax (Rate) dated 28.06.2017 - show cause notice procedure - remand for fresh consideration - conditional remand on deposit

Reasonable opportunity of hearing - personal hearing - show cause notice procedure - Impugned order set aside for failure to afford a reasonable opportunity to contest the tax demand on merits. - HELD THAT: - The Court found that the petitioner had replied to the Form GST ASMT 10 and asserted that his supplies attract tax under the reverse charge mechanism, but the respondent did not call for documentary proof referred to in the impugned order. The petitioner had enclosed certain documents with the reply and asserted availability of further transport documents, while the respondent maintained that it was incumbent on the petitioner to establish applicability of the reverse charge by producing relevant documents. In these circumstances the Court concluded that the petitioner was not afforded a fair and reasonable opportunity to establish his case and therefore the impugned order could not stand. [Paras 4]

Impugned order dated 18.12.2023 is set aside for lack of a reasonable opportunity to contest the demand.

Remand for fresh consideration - conditional remand on deposit - burden to produce documents to establish reverse charge - personal hearing - Matter remanded to the respondent for fresh adjudication subject to specified terms and timelines. - HELD THAT: - The Court directed a conditional remand, putting the petitioner on terms to regularise the procedural lapse. The petitioner was ordered to remit a portion of the disputed demand and was permitted a limited period to file a reply to the show cause notice along with additional documents to establish applicability of the reverse charge mechanism. Upon verification of the deposit, the respondent is to afford the petitioner a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order within a fixed timeframe. These directions balance the petitioner's right to be heard with the respondent's entitlement to require documentary proof for invocation of the statutory provision and notification relied upon. [Paras 5]

Petitioner to remit 10% of the disputed tax demand and file additional documents within two weeks; on receipt and verification respondent to grant personal hearing and pass a fresh order within three months.

Final Conclusion: Writ petition allowed by setting aside the impugned order; matter remitted to respondent for fresh adjudication on the stated conditional terms (deposit and filing of documents) with directions to grant a personal hearing and decide within three months; no costs.

Variation of contract terms after performance - substitution of contractual clause - retrospective withdrawal of administrative instruction - enforcement of contractual term that price is inclusive of GST - arbitrariness in administrative action

Variation of contract terms after performance - enforcement of contractual term that price is inclusive of GST - retrospective withdrawal of administrative instruction - Validity of the communication dated 06.09.2021 withdrawing the earlier substituted Clause-9 and varying the terms of the letter of acceptance after completion of the work - HELD THAT: - The Court found that the parties had a letter of acceptance and agreement under which the finalized rate was expressly stated to be inclusive of GST, and that an earlier administrative communication dated 18.05.2018 had clearly substituted Clause-9 to provide that GST would be borne by IDCO. After the petitioner completed the work in March, 2021, the Opposite Parties issued the communication dated 06.09.2021 withdrawing the substituted Clause-9 and directing implementation of a different position. The Court held that having performed the contract in reliance on the existing terms, the Petitioners could not be subjected to a unilateral variation of the contractual term by the Opposite Parties after completion of work. The impugned communication was therefore arbitrary and could not be sustained; consequently it was quashed and all actions taken pursuant to it were declared illegal. The Court directed the Opposite Parties to proceed in accordance with the quashing of that communication. [Paras 8]

Communication dated 06.09.2021 withdrawing the substituted Clause-9 is quashed; actions taken thereunder are illegal and set aside.

Final Conclusion: The writ petition is allowed; the Opposite Parties cannot unilaterally vary the contractual term after performance, the communication dated 06.09.2021 is set aside and consequences flowing therefrom shall follow.

Prior approval under Section 153D - application of mind - mechanical approval / rubber stamping - satisfaction of the prescribed authority - legislative intent of Section 153D - assessment or reassessment in search cases - no substantial question of law

Prior approval under Section 153D - application of mind - mechanical approval / rubber stamping - satisfaction of the prescribed authority - Validity of the approvals accorded by the Additional Commissioner under Section 153D of the Income Tax Act - HELD THAT: - The Court upheld the Tribunal's finding that the competent authority accorded approval to 246 proposed assessments by a single, formulaic letter which contained no reference to seized material, assessment records or any consideration of the materials upon which the Assessing Officer had proceeded. The Court applied the legislative intent behind Section 153D - that superior authorities must apply their minds to the material forming the basis of assessments/reassessments in search cases - and treated a mechanically recorded approval as inadequate. Relying on the reasoning in earlier decisions cited by the Court, the approval must disclose discernible satisfaction and a rational nexus between the materials considered and the conclusion reached; mere endorsement or a rubber-stamped "Yes" (or equivalent formulaic language) does not amount to valid approval. Applying these principles to the facts recorded by the Tribunal, the impugned approvals were found to be vitiated by non-application of mind and thus could not sustain the assessments. [Paras 5]

The Tribunal's conclusion that the approvals were mechanically recorded and invalid is upheld; the appeals fail and are dismissed.

Assessment or reassessment in search cases - legislative intent of Section 153D - Whether to adjudicate the effect of Section 144A and the Search and Seizure Manual, 2007 in these proceedings - HELD THAT: - The Court observed that the present facts do not require examination of the consequences or interplay of Section 144A of the Act or the provisions of the Search and Seizure Manual, 2007. Having regard to the issues decided, the Court expressly left those questions open for consideration in appropriate proceedings, rather than deciding them in the present batch of appeals. [Paras 6, 7]

The question relating to the effect and impact of Section 144A and the Search and Seizure Manual, 2007 is kept open for determination in appropriate proceedings.

Final Conclusion: The High Court dismissed the appeals, affirming the Tribunal's finding that the approvals under Section 153D were accorded mechanically without application of mind and were therefore invalid; no substantial question of law arises from these appeals. Questions concerning Section 144A and the Search and Seizure Manual, 2007 are left open for future proceedings.

Penalty under section 271D - Contravention of section 269SS - Meaning of "specified sum" in the Explanation to section 269SS - Distinction between advance and final sale consideration - Levy of penalty where payment made at time of registration

Meaning of "specified sum" in the Explanation to section 269SS - Distinction between advance and final sale consideration - Penalty under section 271D - Acceptance of cash as final sale consideration at the time of registration does not constitute contravention of section 269SS and hence penalty under section 271D is not leviable. - HELD THAT: - The Tribunal followed the coordinate Benches holding that the Explanation to section 269SS, which defines "specified sum" as any sum receivable whether as advance or otherwise in relation to transfer of immovable property, was intended to target advances and not the final payment made at the time of registration. Having regard to the legislative intent and the reasoning in earlier Tribunal decisions including Katasani Tirupati Reddy and Income Tax Officer vs. Shri R. Dhinagharan (HUF) , the cash receipt as final payment before the Sub-Registrar does not fall within the mischief of section 269SS. Applying that principle to the facts on record, where the assessee received the entire consideration as final payment at registration, there is no contravention of section 269SS; consequently, the precondition for invoking penalty under section 271D is absent. The Tribunal therefore directed deletion of the penalty levied by the Assessing Officer, following the cited coordinate decisions and applying that interpretation to the present appeal. [Paras 8, 9]

Penalty imposed under section 271D deleted; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y.2017-18 and directed deletion of the penalty imposed under section 271D, holding that cash received as final sale consideration at the time of registration did not amount to a contravention of section 269SS.

Characterisation of network fees as business income - fees for technical services and royalty - scope under tax treaty and domestic law - "make available" requirement for fees for technical services - revenue authority's reliance on Explanation 2 to Section 9(1)(vii) - precedent value of coordinate-bench Tribunal decisions

Characterisation of network fees as business income - fees for technical services and royalty - scope under tax treaty and domestic law - "make available" requirement for fees for technical services - Network fees received by the assessee from Damco India are not taxable as royalty or fees for technical services under the Income-tax Act or the India-Netherlands DTAA. - HELD THAT: - The Tribunal examined the Network Agreement and its remuneration mechanism showing that the network fee equals CM1 minus company costs and mark up and that Damco India is insulated from downside risk while the assessee bears commercial risk; the payment is a sharing of surplus rather than a consideration for use of intellectual property or for rendering technical/consultancy services. Article 12 (royalty/FTS) was interpreted in light of its text, observing that the definition of FTS requires rendering of technical or consultancy services and, for sub clause (b), the making available of technical knowledge, experience or know how. The Revenue produced no material to demonstrate that any technical know how was "made available" to Damco India. The Tribunal further noted reliance on Explanation 2 to Section 9(1)(vii) was insufficient in the facts where the contractual structure evidences remuneration as business consideration and not payment for technical services or royalty. The Bench followed coordinate bench decisions in the assessee's own cases which held similar network receipts not to be FTS/royalty and recorded that no change in facts or law justified deviation. [Paras 9, 10]

Impugned addition on account of network fees deleted; receipts held not exigible to tax as royalty or FTS under the Act or the India-Netherlands DTAA.

Procedural objection on limitation - condonation/limitation under Section 144C read with Section 153 - Assessee's challenge that the assessment order was time barred under Section 144C r.w.s. 153 was not pressed. - HELD THAT: - The assessee expressly conceded before the Tribunal that it would not press the limitation ground. The Tribunal accordingly treated that ground as not pressed and did not adjudicate the substance of the limitation challenge. [Paras 12]

Limitation ground dismissed as not pressed.

Final Conclusion: Following coordinate bench precedents and on examination of the Network Agreement, the Tribunal held that the network fee receipts are not royalty or fees for technical services and directed deletion of the impugned additions; the limitation ground was not pressed by the assessee and is dismissed as not pressed. Appeals are partly allowed.

Validity of order under section 92CA(3) - Transfer Pricing Officer - authorization by the Board - Joint Commissioner and Additional Commissioner - equivalence in designation and functions - associated enterprise - arm's length price - comparative uncontrolled price (CUP) method - Rule 8D/section 14A disallowance - book profits under section 115JB - remand for quantification/verification

Validity of order under section 92CA(3) - Transfer Pricing Officer - authorization by the Board - Joint Commissioner and Additional Commissioner - equivalence in designation and functions - Validity of the order passed by an Additional Commissioner in capacity of Transfer Pricing Officer - HELD THAT: - The Tribunal examined whether an officer in the rank of Additional Commissioner could validly act as a Transfer Pricing Officer (TPO) under the Explanation to section 92CA. Having considered statutory definitions, explanatory notes and notifications, the Bench held that the definition of 'Joint Commissioner' expressly includes an 'Additional Commissioner' and that the insertion of the definition of Additional Commissioner was clarificatory. Board notifications creating TPO vacancies and subsequent posting/transfer orders filling those vacancies were distinguished from the Board's authorization; the notification No.231/2007 created the authorized TPO vacancies and the Department's posting assigned an officer to that vacancy. In these circumstances an Additional Commissioner posted to an authorized TPO vacancy is competent to pass orders under section 92CA(3). The assessee's contention that no specific authorization in the name of the officer was produced was addressed by reference to the Board notification crystallizing vacancies and to transfer/posting orders assigning the officer to that vacancy. The Tribunal found no infirmity in the impugned TPO order and dismissed the additional jurisdictional ground. [Paras 3, 4, 8, 9, 11]

Additional ground No.16 challenging jurisdiction of the Additional Commissioner as TPO is dismissed

Remand for quantification/verification - Allowability of pro rata amount for leasehold lands (ground No.1) - quantum to be examined by AO - HELD THAT: - The Tribunal noted that similar claims had been accepted in earlier assessment years and that the issue had been the subject of earlier appellate directions. In principle the claim for deduction in respect of pro rata leasehold amount was accepted, but the Tribunal restored the matter to the Assessing Officer for limited examination of the quantum of the claim. [Paras 14]

Ground No.1 allowed in principle and restored to the AO for determination of quantum

Remand for quantification/verification - Write back of provision for doubtful debts (ground No.2) - restoration to AO - HELD THAT: - Having considered the assessee's disclosure, earlier proceedings and submissions including year wise break ups and certificates, and taking note of related appellate proceedings, the Tribunal found it appropriate to remit the matter to the Assessing Officer for re examination. The AO is to consider the detailed claims, grant opportunity of hearing and decide afresh. [Paras 17]

Ground No.2 allowed for statistical purposes and restored to the AO for de novo consideration

Income taxed in excess - Taxability of excess interest on income tax refund offered in earlier intimation (ground No.3) - HELD THAT: - The assessee had offered interest u/s 244A as per an earlier intimation but subsequently the Assessing Officer reduced the amount by orders under section 154. The Tribunal held that where the assessee has offered to tax an amount and the Department later withdraws part of that income, the excess cannot be charged and the AO was directed to grant relief on the excess amount offered to tax. [Paras 21]

Ground No.3 allowed; AO directed to grant relief on the excess interest offered to tax

Rule 8D/section 14A disallowance - comparative application for investments yielding exempt income - Disallowance under section 14A read with Rule 8D (ground No.4) - deletion of interest proportion and restriction of Rule 8D(2)(iii) basis - HELD THAT: - On facts the Tribunal accepted that the assessee had sufficient own interest free funds to cover investments and applied the established principle that where own funds suffice, investments are presumed financed from such funds; accordingly disallowance under Rule 8D(2)(ii) was deleted. As to Rule 8D(2)(iii), the Tribunal rejected the assessee's plea to adopt the historical 1% approach but accepted the alternate submission (supported by the Special Bench) that disallowance under Rule 8D(2)(iii) should be computed considering only investments yielding exempt dividend income. AO was directed to recompute accordingly. [Paras 24]

Ground No.4 partly allowed: deletion of 8D(2)(ii) disallowance and 8D(2)(iii) to be computed on investments yielding exempt income

Book profits under section 115JB - non inclusion of section 14A disallowance in book profits - Whether disallowance under section 14A r.w. Rule 8D is to be added back while computing book profits under section 115JB (ground No.5) - HELD THAT: - Following the Special Bench and supporting High Court authority, the Tribunal held that disallowance under section 14A r.w. Rule 8D should not be added to the book profits for the purpose of computing tax under section 115JB. [Paras 26]

Ground No.5 allowed: section 14A/Rule 8D disallowance shall not be added to book profits u/s 115JB

Deductibility of issue expenses for convertible bonds - Allowability of expenditure on issue of FCCNs (ground No.6) - HELD THAT: - Relying on the coordinate bench decisions in the assessee's own case and on the Rajasthan High Court authority, the Tribunal treated FCCNs as effectively in the nature of loan for the relevant facts and allowed the expenditure relating to their issue as deductible. [Paras 30]

Ground No.6 allowed: expenditure on issue of FCCNs held allowable

Deduction under section 80G - Claim for deduction under section 80G where income is negative (ground No.7) - HELD THAT: - The Tribunal observed that the assessee had negative income for the year, making the section 80G deduction inoperative for the assessment year; accordingly the ground was dismissed as infructuous. [Paras 31]

Ground No.7 dismissed as infructuous

Arm's length price - comparative uncontrolled price (CUP) method - cherry picking of comparables - Adjustment under section 92CA(3) in respect of export of vehicles - deletion of TPO adjustments (ground No.8) - HELD THAT: - The Tribunal held that the TPO had impermissibly cherry picked individual transactions and failed to compare average prices at the model/product level across all AE and non AE transactions. Where the assessee's aggregate data showed average prices to AEs were not lower than to non AEs, the TPO's selective comparisons were unsustainable. No alternative method was applied by the TPO to determine ALP for the contested models, so the adjustments were deleted. [Paras 34]

Ground No.8 allowed: transfer pricing adjustments in respect of selected vehicle exports deleted

Associated enterprise - section 92A(2)(c) - Whether Hispano Carrocera S.A. is an associated enterprise (ground No.10) - HELD THAT: - The Tribunal found that the assessee had advanced loans to Hispano which exceeded 51% of Hispano's book value of total assets and that the assessee itself had disclosed Hispano as an AE in Form 3CEB (annexure). On these facts the statutory threshold was satisfied and the Bench held Hispano to be an associated enterprise. [Paras 37]

Ground No.10 dismissed; Hispano held to be an associated enterprise

Arm's length interest rate - comparative uncontrolled price (CUP) method - remand for verification of internal CUP - Adjustment in respect of interest on loans to AEs (ground No.9) - restoration to AO for de novo adjudication - HELD THAT: - The TPO had applied a high notional lending rate by reference to domestic borrowing rates plus ad hoc risk premia; the DRP limited adjustment in earlier years but the Tribunal observed that availability of internal CUPs and the assessee's evidences required careful examination. Following earlier coordinate bench directions, the Tribunal restored the issue to the Assessing Officer/TPO for de novo adjudication after considering the assessee's submissions and internal comparables. [Paras 42]

Ground No.9 allowed for statistical purposes and remitted to the AO/TPO for fresh consideration

Comparability of valuation - arm's length price - property transactions - Adjustment in respect of purchase of property from Hispano (ground No.11) - deletion of TPO adjustment - HELD THAT: - The assessee produced an independent valuation report detailing land and constructed projections and documentary evidence of payments net of encumbrances; the valuer had noted deduction for encumbrances and the assessee produced government construction cost data. The Tribunal held there was no adequate basis for the TPO to adopt the insured value (which related to building not land) and that the TPO could not make an ad hoc adjustment without applying a prescribed method. In absence of contrary material, the independent valuation was accepted and the adjustment deleted. [Paras 46]

Ground No.11 allowed; the transfer pricing adjustment in respect of the property purchase deleted

Consequential relief - Notional interest on alleged excess consideration for property purchase (ground No.12) - HELD THAT: - Ground No.12 was consequential to ground No.11. As ground No.11 was allowed and the adjustment deleted, the notional interest contention became infructuous. [Paras 47]

Ground No.12 dismissed as infructuous

Notional rent/lease valuation - arm's length rent - Adjustment for notional rent on property leased to Hispano adopting 10% of property value (ground No.13) - HELD THAT: - The Tribunal examined the lease agreement and found an express monthly rent clause at an agreed rate (calculated at 4% annually) excluding VAT. Accordingly, the TPO's estimate of 10% of property value as notional rent was contrary to the contractual documentation and unsustainable. [Paras 48]

Ground No.13 allowed; notional rent adjustment deleted and contractual rent to govern

TDS credit examination - Short TDS credit (ground No.14) - remand to AO - HELD THAT: - The Tribunal directed the Assessing Officer to examine the TDS position for the year and allow credit of any short amount in accordance with law, giving the assessee opportunity as required. [Paras 49]

Ground No.14 allowed for statistical purposes and remitted to the AO for verification of TDS credit

Interest under section 234D - Levy of interest under section 234D (ground No.15) - HELD THAT: - The Tribunal observed that levy of interest under section 234D is mandatory and consequential upon the facts and the impugned assessment; no merit was found in the assessee's challenge. [Paras 50]

Ground No.15 dismissed

Limitation and applicability of section 144C procedure - Whether assessment order was time barred because section 144C procedure was inapplicable for AY 2008 09 (additional ground No.19) - HELD THAT: - The Tribunal admitted the legal ground but, after reviewing coordinate decisions and the comparative weight of High Court benches, followed the line of authorities holding that the section 144C draft/finalisation procedure could be applied as effected by subsequent notifications and binding coordinate bench precedents. In that view the Tribunal found no merit in the limitation challenge and dismissed the additional ground. [Paras 54]

Additional ground No.19 dismissed

Final Conclusion: The appeal is partly allowed: the Tribunal dismissed the jurisdictional challenge to the TPO's order; allowed or partly allowed various substantive grounds (leasehold pro rata deduction - quantum remitted, write back of provisions remitted, excess interest offered to tax allowed, Rule 8D adjustments partly deleted/restricted, book profit treatment under section 115JB directed, FCCN issue expenses allowed, several transfer pricing adjustments deleted or remitted for fresh consideration, TDS credit remitted); other grounds were dismissed as indicated above.

Direction of appellate tribunal to give effect to its judgment - treatment of Tax Deducted at Source as tax paid under Section 199 - duty of Assessing Officer to refund consequent to appellate order under Section 240 - interest on refund under Section 244A(1)(a) - non-relevance of claim made in original return where Tribunal grants relief

Direction of appellate tribunal to give effect to its judgment - non-relevance of claim made in original return where Tribunal grants relief - Assessing Officer was obliged to give TDS credit as reflected in Form 26AS pursuant to the Tribunal's direction and could not restrict credit to the amount claimed in the original return. - HELD THAT: - The Tribunal had adjudicated the substantive issue in favour of the petitioner and expressly directed the AO to verify and grant the TDS credit as reflected in Form 26AS. The AO, while giving effect to the appellate direction, limited credit to the quantum disclosed in the original return and treated the question as dependent upon a claim under Section 239. The High Court held that this approach was impermissible: where a refund or credit becomes due by virtue of an appellate order, the AO must give effect to that direction and cannot confine relief to what was originally claimed in the return. The Court rejected the respondents' reliance on the necessity of a fresh claim or revision of the return and on the cited precedents, observing that the Tribunal's plenary powers under Section 254 permit admission of and relief on claims not reflected in the return where the Tribunal so directs. The AO's refusal to recognise the TDS reflected in Form 26AS was therefore unsustainable and required quashing of the impugned order and grant of credit in accordance with the Tribunal's direction. [Paras 8, 10, 12, 13, 15]

Quashed the AO's order restricting TDS credit; directed respondents to acknowledge TDS credit as per Form 26AS and recompute refund accordingly.

Treatment of Tax Deducted at Source as tax paid under Section 199 - interest on refund under Section 244A(1)(a) - The TDS deposited is to be treated as tax paid and interest on the refund is payable from the first day of April of the relevant assessment year under Section 244A(1)(a). - HELD THAT: - The Court noted that taxes deducted and deposited under TDS provisions are to be treated as tax paid under Section 199, and therefore any refund flowing from the Tribunal's direction attracts interest under Section 244A(1)(a) from the beginning of the relevant assessment year until the date of refund. The respondents' contention that interest would only run from the date of the Tribunal's order was rejected as contrary to the statutory scheme. The Court accordingly directed that interest be borne in mind while framing consequential refund orders. [Paras 11, 16]

Directed respondents to pay interest on the refund in accordance with Section 244A(1)(a), computed from the start of the relevant assessment year.

Final Conclusion: Writ petition allowed; impugned order dated 08 April 2024 quashed. Respondents directed to acknowledge TDS credit as reflected in Form 26AS for AY 2014-15, recompute and refund the resultant amount, and pay interest as prescribed under Section 244A(1)(a).

Sanction for issuance of reassessment notice - Independent application of mind - Rubber-stamping of approval - Reasons as link between material and conclusion - Validity of approval under Section 151

Sanction for issuance of reassessment notice - Independent application of mind - Rubber-stamping of approval - Reasons as link between material and conclusion - The approval accorded by the Principal Chief Commissioner of Income Tax under Section 151 for reopening assessment was mechanically recorded and therefore invalid; consequently the order under Section 148A(d) and notice under Section 148 issued thereunder were quashed. - HELD THAT: - Section 151 requires the prescribed authority to 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. The competent authority's concurrence is not a mere formality and must reflect an independent application of mind based on the material placed before it. The approval in the present case consisted only of the word "Approved" (or equivalent endorsement) without any indication of reasons or reference to material which weighed in the decision. Such rubber-stamping does not disclose the manner in which the mind of the authority was applied and therefore fails the statutory requirement. Authority and precedents relied upon in the judgment (including M.L. Capoor, Chhugamal Rajpal and subsequent decisions of this Court) establish that a bare endorsement or a stamped "Yes/Approved" is inadequate; reasons, even if brief, must show the link between the material considered and the conclusion of satisfaction. Applying this principle to the record, the PCCIT's concurrence could not be treated as valid satisfaction under Section 151 and is vitiated by mechanical approval. [Paras 12, 13, 15, 18, 19]

Approval granted by the PCCIT under Section 151 is invalid for being mechanical; the order under Section 148A(d) and the consequential notice under Section 148 are set aside and quashed.

Final Conclusion: The writ petition is allowed: the sanction for re-opening recorded by the PCCIT is declared invalid for want of meaningful reasons; the order under Section 148A(d) and the notice under Section 148 for AY 2016-17 are quashed and the petition is disposed accordingly.

Power of rectification under Section 154 - effect of quashing - order deemed never to have existed - CBDT Instruction No.1/2022 - threshold for reopening based on escaped income - competence to initiate fresh reassessment after quashing

CBDT Instruction No.1/2022 - threshold for reopening based on escaped income - Validity of the reassessment action in light of CBDT Instruction No.1/2022 and the conceded amount of escaped income being below the prescribed threshold - HELD THAT: - The Court recorded that in earlier proceedings W.P.(C) 13733/2022 was allowed on the basis that the respondents conceded the income alleged to have escaped assessment was less than Rs.50,00,000/-, and that reopening for AY 2013-14 was therefore in violation of CBDT Instruction No.1/2022 which precludes issuance of notices where the condition in Section 149(1)(b) (income alleged to have escaped assessment being Rs.50,00,000/- or more) is not fulfilled. The earlier order quashing the impugned proceedings under Section 148A(d) was founded on that conclusion and the court treated those reassessment notices as unsustainable for that reason. [Paras 3, 4, 5]

The reassessment action had been quashed in earlier proceedings because the reopening contravened CBDT Instruction No.1/2022 given the conceded escaped income was below the threshold.

Power of rectification under Section 154 - effect of quashing - order deemed never to have existed - competence to initiate fresh reassessment after quashing - Whether the Assessing Officer could invoke Section 154 to rectify or revive reassessment orders that had been quashed - HELD THAT: - The Court held that Section 154 can be exercised only where an order capable of rectification exists in law. Once the original reassessment orders under Section 148 had been quashed, they were to be treated as having never existed; consequently there was no subsisting order which could be rectified under Section 154. The review dismissal merely preserved liberty for the revenue to take steps in accordance with law, which could only mean initiating fresh proceedings and framing a new order rather than invoking rectification of a quashed order. Applying settled precedents on the legal effect of quashing, the Court concluded that the AO's reliance on Section 154 was misplaced. [Paras 6, 7, 8, 9]

Section 154 could not be invoked to revive or rectify reassessment orders that had been quashed; the rectification notices issued on that basis are unsustainable.

Final Conclusion: Writ petition allowed; the impugned order dated 22.11.2022 for AY 2013-2014 is quashed. This does not preclude the respondents from initiating any other proceedings permissible in law (including fresh reassessment proceedings in accordance with law).

Penalty under Section 271(1)(c) - Disallowance of interest under Section 57(iii) - Failure to substantiate claims - Penalty not attracted for every quantum addition - Condonation of delay in filing appeal - Substantial justice over technical delay

Penalty under Section 271(1)(c) - Disallowance of interest under Section 57(iii) - Failure to substantiate claims - Penalty not attracted for every quantum addition - Deletion of penalty levied under section 271(1)(c) arising from disallowance of interest under section 57(iii). - HELD THAT: - The Tribunal found that the penalty of Rs. 75 lakhs was imposed on account of a quantum disallowance of interest where the assessee had claimed interest expenditure against interest income but failed to substantiate the claim despite filing details. The Tribunal accepted the assessee's contention, and observed that a mere quantum disallowance or failure to substantiate a claim does not automatically attract penal consequences under section 271(1)(c). Reliance was placed on the principle reiterated in the cited precedent that penalty cannot be mechanically levied for every addition or disallowance. In view of that settled principle and the absence of other aggravating factors recorded by the authorities, the impugned penalty was deleted. [Paras 3]

Impugned penalty under section 271(1)(c) deleted.

Condonation of delay in filing appeal - Substantial justice over technical delay - Condonation of two days' delay in presenting the appeal. - HELD THAT: - The Tribunal considered the assessee's condonation petition and applied the principle that technical delays should yield to substantial justice. Citing the established approach in Collector Land Acquisition v. Katiji, the Tribunal accepted the explanation for delay and condoned the two-day delay, thereby admitting the appeal for adjudication. [Paras 4]

Delay of two days condoned and appeal admitted for adjudication.

Final Conclusion: Penalty imposed under section 271(1)(c) for the disallowance of interest under section 57(iii) quashed; two-day delay in filing condoned and the appeal allowed.

Rectification of return - limitation not to bar consideration - self-assessment tax erroneously deposited - no tax can be collected without the authority of law - bonafide mistake - remand for verification and computation by Assessing Officer

Rectification of return - limitation not to bar consideration - remand for verification and computation by Assessing Officer - Rectification petition filed by the assessee for refund of erroneously deposited self-assessment tax is to be considered by the Assessing Officer without being dismissed on limitation grounds, and the return must be processed afresh. - HELD THAT: - The Tribunal found that the assessee, a semi-literate taxpayer, had filed an original and a revised return for A.Y. 2016-17 and that substantial amounts of self-assessment tax were subsequently deposited by the auditor in error in the assessee's PAN for reasons unrelated to the returns filed. The assessee had not received a speaking order and was misled by the auditor, and only later discovered that refunds had not been claimed. Noting the principle that no tax can be collected without authority of law and recognising the bonafides of the assessee, the Tribunal directed that the Assessing Officer must consider the rectification petition and verify the returns and payments. The Tribunal explicitly instructed that the petition under section 154 shall not be rejected on the ground of limitation and that the AO shall process the return in accordance with law, with the assessee supplying relevant evidence in support of its claim. The effect is a remand for fresh consideration and computation by the Assessing Officer rather than a final adjudication on the entitlement to refund.

Assessee's rectification petition to be considered by the Assessing Officer; petition shall not be dismissed on limitation grounds and the AO shall verify, compute income and process the return in accordance with law.

Final Conclusion: The appeal is partly allowed: the Tribunal directs the Assessing Officer to consider the rectification application on merits (without raising limitation as a bar), verify the returns and payments, compute income in accordance with law and process the return so that any refund due to the assessee may be determined.

Transfer pricing adjustment - associated enterprises - arm's length price - Chapter X of the Income Tax Act - rectification under section 154 of the Act - tolerance range under proviso to Section 92C(2) - principles of natural justice

Transfer pricing adjustment - associated enterprises - Chapter X of the Income Tax Act - arm's length price - tolerance range under proviso to Section 92C(2) - Whether the TPO/AO could compute transfer pricing adjustment for the assessee's SDS segment by including non-AE (unrelated party) revenues and costs. - HELD THAT: - The Tribunal held that Chapter X permits additions on account of transfer pricing adjustments only in respect of international transactions with associated enterprises and not in respect of transactions with unrelated parties. The TPO had computed margins and the ALP for the SDS segment by aggregating both AE and non-AE revenue and costs, contrary to the direction in the earlier remand to verify computations limited to AE transactions. On the assessee's computation restricting to AE transactions, the margin falls within the statutory tolerance range under the proviso to Section 92C(2) and the resultant adjustment is materially lower. The Tribunal found the TPO's approach to be contrary to the basic principles of transfer pricing and the statutory scheme, and therefore directed reassessment of the TP computation confined to AE transactions only. [Paras 12, 14, 18]

TP adjustment computed by including non-AE revenue and costs is impermissible; AO/TPO must consider only transactions with associated enterprises and recompute the TP adjustment accordingly.

Transfer pricing adjustment - rectification under section 154 of the Act - principles of natural justice - Whether the TPO complied with the directions of the ITAT and the DRP to verify and, if necessary, rectify the margin computations and to pass a speaking order after providing opportunity to the assessee. - HELD THAT: - The Tribunal noted that its earlier remand had specifically required verification of the CIT(A)'s recomputation by the TPO/AO and directed that the assessee be given an opportunity of hearing. The DRP also directed verification of margin computations and passage of a speaking order. The TPO failed to verify the computations as directed, made manifest errors (including considering non-AE transactions) and did not pass a speaking order addressing the identified computational errors. The assessee's rectification application under section 154 was successful in respect of the ITeS segment, but the TPO did not rectify the SDS segment error. For these reasons the Tribunal directed the AO/TPO to follow the earlier directions, examine documents, rectify computations limited to AE transactions and afford the assessee hearing in accordance with natural justice. [Paras 14, 16, 17, 18]

TPO/AO failed to comply with ITAT/DRP directions; matter remitted to AO/TPO to verify computations, pass a speaking order and give the assessee opportunity of hearing, and to rectify the SDS segment computation accordingly.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, holding that transfer pricing adjustments under Chapter X must be confined to transactions with associated enterprises; the TPO/AO erred by including non-AE revenue and costs and by not following ITAT/DRP directions, and is directed to re-compute and rectify the SDS segment adjustment confined to AE transactions after affording the assessee an opportunity of hearing.

Provision for doubtful debts - book profit under section 115JB - clause (i) of Explanation 1 to section 115JB - actual write off - revision under section 263 - erroneous insofar as prejudicial to the interests of revenue

Provision for doubtful debts - book profit under section 115JB - clause (i) of Explanation 1 to section 115JB - actual write off - revision under section 263 - Whether the Principal Commissioner of Income Tax was justified in invoking section 263 and directing reassessment because the assessing officer did not add back the provision for doubtful debts to book profit under section 115JB. - HELD THAT: - The Tribunal examined the assessee's accounts and noted that the amount recorded as provision for doubtful debts was simultaneously reduced from loans and advances / trade receivables in the balance sheet, resulting in the asset being shown net of that provision. On the factual matrix, the Tribunal applied the principle in HCL Comnet Systems (supra) that where a provision is obliterated by reducing the corresponding asset in the balance sheet it amounts to an actual write off and is not caught by clause (i) of Explanation 1 to section 115JB. The Tribunal also relied on Supreme Court and High Court authorities (Vijaya Bank; Kirloskar Systems Ltd.) holding that a debit to P&L accompanied by simultaneous reduction from the asset side constitutes write off and not merely a provision requiring add-back. Since the assessing officer had before him the accounts showing the netting-off and the view taken by the AO that no add-back was required is sustainable in law on the admitted accounting treatment, the order under section 263 treating the assessment as erroneous and prejudicial to revenue was not justified. Consequently the directions to reopen/complete assessment afresh were held to be bad in law. [Paras 4]

Tribunal quashed the directions issued under section 263 and held that the provision represented an actual write off and was not required to be added back to book profit under section 115JB.

Final Conclusion: The appeal is allowed; the order passed under section 263 directing recomputation of book profit by adding back the provision for doubtful debts is set aside as being bad in law.

Fee for Technical Services - Fees for Included Services - make available test - human intervention requirement for technical/managerial services - aggregation/online platform access versus provision of technical services - burden of proof on Revenue to establish transfer of technical knowledge/know how

Fee for Technical Services - Fees for Included Services - make available test - human intervention requirement for technical/managerial services - aggregation/online platform access versus provision of technical services - burden of proof on Revenue to establish transfer of technical knowledge/know how - Receipts received by the non-resident assessee from Indian customers do not constitute Fees for Technical Services/Fees for Included Services under section 9(1)(vii) of the Act and Article 12(4) of the India-USA DTAA for the assessment years under appeal. - HELD THAT: - The Tribunal found on the record that the assessee operated an online learning platform which provided access to course content created by third party universities and companies, and acted as a facilitator/aggregator providing platform access to Indian customers. Tests, examinations and certificates were conducted and issued by the universities/companies, not by the assessee. The Assessing Officer himself had recorded that the assessee was an aggregation service provider and not a content creator, yet later concluded the receipts were FIS without producing material to demonstrate that the assessee transferred technical knowledge, know how or skill to service recipients or that there was human intervention amounting to provision of technical/managerial services. The Tribunal emphasised that even if services had a technical character, Article 12(4)'s taxability requires satisfaction of the make available test, and the onus lies on the Revenue to prove transfer of technical knowledge enabling independent use by the recipient. The Tribunal relied on precedents dealing with online access/subscription services (e.g., Elsevier/Relx line of decisions) which held that access to copyrighted material or databases via an automated platform does not, absent human intervention or transfer of know how, amount to FTS/FIS. The Tribunal also observed that the Assessing Officer failed to implement the DRP's direction to examine the agreement with GITAM on the basis of assessment records and impermissibly treated the DRP directions as lacking application of mind, contrary to section 144C(13). Applying these principles to the facts, the Tribunal concluded the Revenue did not discharge its burden to classify the receipts as FIS/FTS under the treaty. [Paras 11, 12, 13, 14, 16]

Appeals allowed; receipts held not to qualify as Fees for Included Services/Fees for Technical Services under Article 12(4) of the India-USA DTAA for the assessment years.

Final Conclusion: The Tribunal allowed the appeals and held that the amounts received by the non resident assessee for providing access to its online learning platform are not taxable as Fees for Technical Services/Fees for Included Services under section 9(1)(vii) and Article 12(4) of the India-USA DTAA for assessment years 2020 21 and 2021 22.

Deduction under section 54F - absence of declared capital gain - direction to Assessing Officer to consider omitted claim - change of head of income after filing return - application of Goetze principle to omitted claims

Deduction under section 54F - absence of declared capital gain - direction to Assessing Officer to consider omitted claim - application of Goetze principle to omitted claims - change of head of income after filing return - Whether the Commissioner (Appeals) was justified in refusing to entertain a new plea for deduction under section 54/54F when no capital gain was declared in the return of income. - HELD THAT: - The return of income filed by the assessee did not disclose any capital gain; the income was declared under the head "business or profession" and no claim under section 54F was made. The Tribunal accepted the assessee's contention that the omission arose from a mistake by the previous authorised representative but held that the Goetze principle (permitting consideration of an omitted claim) is applicable where capital gains have been declared in the return but the specific claim for exemption/deduction was omitted. In the absence of any declared capital gain, there is no basis to direct the Assessing Officer to consider a claim under section 54/54F. The Revenue's point that the assessee seeks effectively to change the head of income after filing the return was noted and, coupled with the fact that the CPC intimations showed no tax liability outstanding, reinforced that the CIT(A)'s refusal to admit the new plea was justified. Consequently, the grounds seeking remittance for consideration of section 54/54F failed. [Paras 2, 7]

The plea for permitting a fresh claim under section 54/54F was rejected and the Commissioner (Appeals)'s order in that respect was upheld.

Final Conclusion: The appeal is dismissed; the request to remit the matter to the Assessing Officer for consideration of a deduction under section 54/54F was refused because no capital gain was declared in the return, and the CIT(A)'s order is sustained.

Definition of short-term capital asset under Section 2(42A) - long-term capital asset - holding period test - exemption under section 54F of the Act - unexplained cash deposit - addition under section 69 - judicial precedence and CBDT Circular relevance to holding period

Definition of short-term capital asset under Section 2(42A) - long-term capital asset - holding period test - judicial precedence and CBDT Circular relevance to holding period - Sale of shares held for about 31 months is to be treated as transfer of a long-term capital asset for AY 2013-14. - HELD THAT: - The Tribunal found the undisputed holding period to be approximately 31 months and held that the amendment curtailing the holding period to 12 months for certain securities took effect from AY 2015-16 and is therefore not applicable to AY 2013-14. Relying on the interpretative approach in the decisions considered (including the reasoning of the Hon'ble Madras High Court and the ITAT decision discussed therein) and on the CBDT explanatory note, the Tribunal accepted that the proviso in Section 2(42A) distinguishes 'shares held in a company' from 'any other security listed in a recognised stock exchange', and that for the relevant period the statutory scheme treated company shares differently so as to allow the benefit of long-term status after the shorter period claimed by the assessee. For these reasons the Tribunal set aside the findings of the lower authorities and directed that the gains be treated as long-term capital gains.

Gains on sale of the impugned shares shall be treated as long-term capital gains.

Exemption under section 54F of the Act - Claim for exemption under section 54F was not finally adjudicated and is to be reconsidered in light of the classification of the capital gains as long-term. - HELD THAT: - Because the Tribunal has held that the capital gains arising from the sale of shares are long-term, it directed the Assessing Officer to re-examine the assessee's claim for exemption under section 54F afresh and decide the matter according to law after affording the assessee a reasonable opportunity of hearing. The Tribunal did not decide entitlement to the exemption on merits but remanded the issue for fresh consideration by the AO.

Claim under section 54F is remanded to the AO for fresh adjudication in accordance with law.

Unexplained cash deposit - addition under section 69 - Addition of the cash deposits as unexplained investment under section 69 is deleted. - HELD THAT: - The Tribunal accepted the assessee's explanation that the modest cash deposits were from petty loans to friends and relatives and considered the assessee's overall financial position - returned income exceeding Rs. 50 lakhs and significant sale consideration - as corroborative of the explanation. On the totality of facts and the assessee's status, the Tribunal found that the AO's adverse treatment of the small aggregate deposits was not warranted and directed deletion of the addition.

The addition of the impugned cash deposits under section 69 is deleted.

Final Conclusion: Appeal allowed: classification of the impugned share transfers as long-term capital gains upheld; claim for exemption under section 54F remanded to the AO for fresh decision after hearing; addition under section 69 deleted; appeal otherwise disposed in favour of the assessee.

Condonation of delay in filing appeal - rectification under section 154 - appeal against intimation under section 143(1) - restoration of the case to the appellate authority for disposal on merits

Condonation of delay in filing appeal - rectification under section 154 - appeal against intimation under section 143(1) - restoration of the case to the appellate authority for disposal on merits - Whether the delay in filing the appeal against the intimation under section 143(1) ought to be condoned in view of a pending rectification petition filed under section 154, and whether the matter should be restored to the appellate authority for adjudication on merits. - HELD THAT: - The Tribunal noted that the assessee had filed a rectification petition under section 154 in respect of the order passed under section 143(1) and, acting under a bona fide belief that the rectification had to be decided before filing an appeal, delayed filing the appeal. The rectification petition remained undisposed. Having regard to these facts and the affidavit asserting pendency of the section 154 petition, the Tribunal concluded that the circumstances justified condonation of delay. The Tribunal set aside the CIT(A)'s order dismissing the appeal for delay and directed that the assessee be afforded an opportunity before the CIT(A). The CIT(A) was directed either to decide the appeal on merits or to dispose of the pending section 154 application within a short period, thereby restoring the proceeding for adjudication on merits. [Paras 2, 3]

Order of the CIT(A) dismissing the appeal for delay is set aside; condonation of delay is warranted and the case is restored to the file of the CIT(A) for disposal of the rectification petition or for decision on merits.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(A)'s order dismissing the appeal for delay, condoned the delay in filing the appeal in view of the pending section 154 rectification petition, and restored the matter to the CIT(A) to decide the rectification or the appeal on merits within a short period.

Burden of proof - transaction value - valuation under the Customs Valuation (Determination of Value of Imported Goods) Rules - re-assessment under section 17 - reopening of assessment under section 28 - assessment ceases on clearance for home consumption - discretionary confiscation under Section 111

Burden of proof - transaction value - valuation under the Customs Valuation (Determination of Value of Imported Goods) Rules - Capacity and declared transaction value of the imported suction pumps - HELD THAT: - The Department contested the appellant's declaration that the pumps were 75 GPD and claimed they were 100 GPD. The burden of proof lay on the Department to establish falsity of the declaration. The only evidence produced was a Chartered Engineer's certificate which stated the pumps "seem to be suitable for 100 GPD capacity" and did not record any definitive test, formula or conclusive determination of GPD. Labels attached to the pumps did not express capacity in GPD. In absence of any conclusive evidence to the contrary, the adjudicating authority was not justified in rejecting the transaction value declared in the Bill of Entry. Consequently, the declared capacity and the transaction value should have been accepted. [Paras 14, 15]

The declaration that the pumps were 75 GPD is accepted and the transaction value declared in the Bill of Entry must be accepted.

Re-assessment under section 17 - reopening of assessment under section 28 - assessment ceases on clearance for home consumption - Whether the differential duty demand was a demand under section 28 (reopening) or merely a reassessment under section 17 - HELD THAT: - Self-assessment by the importer and any subsequent reassessment by the proper officer both fall within the statutory definition of assessment. Section 28 (reopening and recovery) is triggered from the relevant date which is the date of clearance for home consumption; until clearance, the assessment remains open and may be corrected by reassessment under section 17. In the present case the Additional Commissioner proceeded with reassessment while the proper officer's process was still open, so the demand confirmed is a reassessment under section 17 and not a demand under section 28. Sections linked to section 28, including provisions invoked to sustain penalties linked to reopening, therefore do not apply. [Paras 23]

The demand confirmed is a reassessment under section 17 and not a reopening under section 28; provisions and penalties tied to section 28 are inapplicable.

Discretionary confiscation under Section 111 - Validity of confiscation under Section 111 and redemption fine - HELD THAT: - Section 111 makes certain goods liable to confiscation but does not mandate confiscation in every case; the adjudicating authority must exercise discretion. Here the only proved violation was importation of excess quantity of one item, on which duty was paid by the appellant. No sufficient ground existed to exercise the drastic remedy of confiscation. In these circumstances, confiscation and the redemption fine imposed were not justified. [Paras 24, 25]

The confiscation and the redemption fine are set aside.

Final Conclusion: Appeal partly allowed: confirmation of duty on excess quantity of non-textured fabric upheld (appellant has paid the duty); the rejection of the transaction value of the suction pumps is set aside, the demand characterized as a reassessment under section 17 (not a section 28 reopening) and associated section 28-linked penalties do not apply; confiscation and redemption fine are quashed.

Professional misconduct - Fraud risk and evergreening of loans - Related party transactions - SA 600 - reliance on component auditors - Failure to report fraud under section 143(12) - Section 185 compliance and CARO reporting - SQC 1 and SA 230 - audit documentation controls - Firm liability for audit quality and supervision - Monetary penalty and debarment

Professional misconduct - Fraud risk and evergreening of loans - Related party transactions - SA 600 - reliance on component auditors - Whether the Firm, the Engagement Partner and the EQCR committed professional misconduct by failing to detect, investigate and report diversion of funds to a promoter-controlled entity (MACEL), understatement of receivables and evergreening of loans in the Consolidated Financial Statements. - HELD THAT: - NFRA found that the principal auditors identified the group's exposure to MACEL as a significant audit area but did not perform sufficient additional procedures or exercise professional skepticism required by the Standards. The principal auditor's reliance on the work of component auditors under SA 600 was misplaced given (a) the materiality of component balances to the CFS, (b) apparent red flags (unusual advances, disproportionate advances for purchases, circular fund movements visible in bank statements), and (c) the statutory right of access to subsidiary records under section 143(1). The audit file shows recoverability testing based on the promoter's net worth certificate without appropriate evaluation of the expert, absence of item wise recoverability analysis, discrepancies in related party amounts across work papers, and bank evidence of structured circulation of funds (evergreening) which the auditors failed to identify or report. These failures amounted to gross negligence and a breach of duties under SA 200, SA 240, SA 315, SA 330 and SA 550 and constituted professional misconduct. [Paras 31, 34, 37, 48, 50]

Proved that the Firm, the Engagement Partner and the EQCR committed professional misconduct by failing to detect, investigate and report the diversion, understatement and evergreening in the Consolidated Financial Statements.

Failure to report fraud under section 143(12) - Professional misconduct - Whether the auditors failed to report to the Central Government an offence of fraud in terms of section 143(12) of the Act. - HELD THAT: - NFRA concluded that despite evidence indicating diversion of funds to promoter controlled entities and other indicia of fraud, the auditors represented in their report that no material fraud had been noticed. The factual findings (bank statements showing circular transactions, abnormal related party transactions, improper recoverability analyses) established that the auditors were aware of circumstances warranting reporting under section 143(12) but did not report to the Central Government. This omission forms part of the proven professional misconduct under the Companies Act and the Standards. [Paras 50]

Proved that the auditors failed to report the suspected offence of fraud to the Central Government in breach of section 143(12).

Section 185 compliance - CARO - Related party transactions - Whether the Firm, the EP and the EQCR failed to comply with CARO and applicable auditing requirements in auditing the standalone financial statements, specifically for verification of compliance with section 185 (loans/guarantees/end use) of the Act. - HELD THAT: - NFRA found that CDEL had advanced substantial loans and given guarantees to subsidiaries whose proceeds were not shown to be used for principal business activities. The auditors did not verify whether special resolutions (where required) were passed, nor did they adequately test the end use of funds or substantiate management representations. Work papers lacked transaction wise verification and the EQCR's review did not cure these deficiencies. These lapses violated CARO reporting obligations and the auditors' duties under SA 315, SA 330 and related Standards. [Paras 61, 63, 65, 67, 69]

Proved that the Firm, the Engagement Partner and the EQCR failed to report and verify compliance with section 185 of the Act and thus violated CARO and relevant auditing Standards.

SQC 1 and SA 230 - audit documentation controls - Audit documentation - Whether the Firm and the Engagement Partner violated SQC 1 and SA 230 by permitting creation and modification of audit work papers after signing the auditor's report without proper records of who modified them and when. - HELD THAT: - The e audit application used by the Firm allowed creation and modification of AWPs post sign off and post audit report without mandating that the modifier record identity and date, and without preventing post sign off insertion or replacement of evidence. NFRA's review identified multiple AWPs created or modified after the auditor's report date and AWPs lacking modifier sign offs. The Firm's contention that iterative electronic workflows justify such changes was rejected because SA 230 and SQC 1 require documentation of the nature, timing and authorship of audit procedures and controls to prevent unauthorized changes. The absence of mandatory re signing and traceability undermined the integrity and reliability of the audit documentation. [Paras 71, 73, 76, 78, 79]

Proved that the Firm and the Engagement Partner violated SQC 1 and SA 230 by permitting inadequate controls over audit documentation creation and modification.

Firm liability for audit quality - Monetary penalty and debarment - Whether the Firm is accountable for the audit failures and what sanctions should be imposed on the Firm, the Engagement Partner and the EQCR. - HELD THAT: - NFRA held that the legal responsibility for the audit rests with the appointed audit firm and that firm level systems, supervision and quality control are integral to compliance with the Act and Standards. Given systemic documentation weaknesses and the demonstrated failures of supervision, the Firm was held jointly and severally responsible with the EP and EQCR for the professional misconduct. Applying the statutory sanctioning powers in section 132(4)(c) and principles of proportionality and deterrence, NFRA imposed monetary penalties and debarments: a monetary penalty on the firm and individual penalties and periods of debarment on the EP and the EQCR, with the order effective after 30 days. [Paras 87, 100, 104, 105, 106]

Firm held responsible for failures of audit quality; monetary penalties and debarments imposed on the Firm, the Engagement Partner and the EQCR as ordered.

Final Conclusion: NFRA concluded that M/s BSR & Associates LLP, CA Aravind Maiya (EP) and CA Amit Somani (EQCR) committed professional misconduct by failing to exercise due diligence and professional skepticism, by inadequately relying on component auditors, by not reporting suspected fraud, by failing to verify compliance with section 185 and CARO requirements, and by maintaining deficient audit documentation systems; monetary penalties and periods of debarment were therefore imposed as set out in the Order.

Pre-existing dispute - initiation of corporate insolvency resolution process (CIRP) under Section 9 - operational debt - Mobilox three-fold test for admission under Section 9 - dispute over GST/ genuineness of invoices - inadmissibility of merits-based adjudication at admission stage

Pre-existing dispute - Mobilox three-fold test for admission under Section 9 - Existence of a pre-existing dispute between the Corporate Debtor and the Operational Creditor sufficient to bar admission under Section 9. - HELD THAT: - The Tribunal examined whether a genuine dispute, existing prior to the demand notice, was established such that the Section 9 application should be rejected. Applying the Mobilox test, the Tribunal noted the Operational Creditor had filed documentary evidence of an operational debt exceeding the statutory threshold and that the Corporate Debtor's assertions on dispute were primarily anchored in investigations by GST authorities and subsequent litigation between the Corporate Debtor and the GST department. The Tribunal found the Appellant/Corporate Debtor failed to show a dispute that truly existed between the parties prior to the demand notice; the GST-related proceedings did not, on the material on record, demonstrate a pre-existing bilateral dispute as contemplated by Mobilox and its progeny. Consequently the Tribunal held that the three-fold test for admission under Section 9 was satisfied and the Section 9 application was rightly admitted. [Paras 38, 42, 43, 44, 48]

No pre-existing dispute between the parties was proved; the Adjudicating Authority correctly admitted the Section 9 application.

Dispute over GST/ genuineness of invoices - pre-existing dispute - Whether the GST investigations, raids and attendant High Court proceedings constituted a pre-existing dispute between the Corporate Debtor and the Operational Creditor. - HELD THAT: - The Tribunal analysed the GST-related material relied upon by the Corporate Debtor, including searches, summons and the pending writ before the High Court, and observed that those proceedings were between the Corporate Debtor and the Directorate General of GST Intelligence and did not include the Operational Creditor as a party. The Operational Creditor's GST returns were on record and no legal action had been taken against it by GST authorities. The Tribunal therefore held that the GST investigations and the High Court writ did not convert into a bilateral dispute over the operational debt that would bar admission of the Section 9 petition. [Paras 37, 38, 40, 45, 48]

GST investigations and related proceedings did not amount to a pre-existing dispute between the parties.

Operational debt - inadmissibility of merits-based adjudication at admission stage - Whether the Adjudicating Authority erred by delving into the merits/quantum of the claim or by admitting CIRP despite the Corporate Debtor's claim of solvency. - HELD THAT: - The Tribunal recognised the settled principle that the Adjudicating Authority should not undertake detailed merits adjudication at the admission stage but must ensure the Mobilox tests are met. On review of the record, the Tribunal found documentary particulars in Form 5 and accompanying material establishing a principal sum due which exceeded the applicable threshold. The Tribunal further held that assertions of the Corporate Debtor's solvency or pleas that the dispute should be pursued in civil or arbitral fora did not render the Section 9 petition untenable where the debt and default were otherwise established. Hence, the Adjudicating Authority did not err in admitting the petition and initiating CIRP. [Paras 42, 46, 48, 49, 50]

Adjudicating Authority did not err in admitting the Section 9 petition; solvency and plea for civil/arbitral remedy are not a bar where operational debt and default are established.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's admission of the Section 9 petition and the initiation of CIRP against the Corporate Debtor, finding no substantiated pre-existing dispute between the parties that would bar the proceedings.

Principles of natural justice - time-bound statutory scheme of the Insolvency and Bankruptcy Code - unconditional and irrevocable guarantee - put option agreement - assignment to an asset reconstruction company - deeming fiction under Section 5(2) of the SARFAESI Act - role of Resolution Professional under Section 99 of IBC - Form C and Rule 7(2) compliance under the Personal Guarantor Rules

Principles of natural justice - time-bound statutory scheme of the Insolvency and Bankruptcy Code - Denial of natural justice by the Adjudicating Authority in admitting the Section 95 petitions - HELD THAT: - The Adjudicating Authority recorded that the appellant's counsel appeared online but suffered audio-visual problems and was directed to file short written submissions the same day and the matter was reserved. Given the statutory timeline (Section 100 IBC) and that the RP's report had been on record for over two years, the Tribunal found that the Adjudicating Authority acted to expedite disposal within the IBC time-sensitive framework. The appellants did not seek recall of the reservation order before the Adjudicating Authority and did file additional affidavits which the Tribunal considered. In these circumstances the Tribunal concluded there was no prejudicial denial of hearing warranting remand. [Paras 15, 16, 17, 18]

No violation of principles of natural justice; no remand on this ground.

Unconditional and irrevocable guarantee - put option agreement - Whether the invocation of the Deed of Guarantee was circumscribed by the Put Option Agreement - HELD THAT: - The Deed of Guarantee is an independent contract containing express clauses making the guarantee irrevocable and enforceable on demand without reference to the borrower, and expressly preserving the lender's right to call on the guarantor notwithstanding other securities (clauses 2, 5, 8, 12, 14, 31, 32). The Put Option Agreement was a separate transaction creating an obligation on the put option party to purchase pledged securities on a put event, but its terms are not incorporated into the Deed of Guarantee and do not operate as a contractual condition precedent to invocation of the guarantee. Therefore non-exercise of put option rights by the lender does not absolve the guarantor where the guarantee is otherwise invoked in accordance with its terms. [Paras 28, 29, 30, 31]

Put Option Agreement does not circumscribe or displace the lender's right to invoke the unconditional and irrevocable Deed of Guarantee.

Assignment to an asset reconstruction company - deeming fiction under Section 5(2) of the SARFAESI Act - Form C and Rule 7(2) compliance under the Personal Guarantor Rules - role of Resolution Professional under Section 99 of IBC - Whether the personal guarantor could validly object to the Assignment Agreement and whether the assignee (an ARCs) was entitled to initiate Section 95 proceedings - HELD THAT: - The Term Loan Agreement conferred on the bank the right to assign (clause 14) and the Assignment Agreement transferred the lender's rights, including rights under financing documents, security interests and guarantees, to an asset reconstruction company. Section 5(1)(b) and the deeming provision in Section 5(2) of the SARFAESI Act render the assignee a deemed lender with vested rights. Clause 32 of the Deed of Guarantee also expressly permitted assignment by the bank. The RP conducted an inquiry, considered documents (including NeSL records) and issued notices under Section 99; the RP's report listed examined records and recorded absence of evidence from the guarantor of repayment or discharge. Form C was found to be in order. The Tribunal therefore held that the assignee stepped into the lender's shoes and the guarantor lacked locus to challenge the assignment on the grounds advanced. [Paras 33, 34, 35, 38, 40]

The Assignment to the Asset Reconstruction Company was valid; the assignee was entitled to initiate Section 95 proceedings and the guarantor could not successfully object to the assignment.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's admission of the Section 95 petitions: there was no denial of natural justice warranting remand; the Put Option Agreement did not prevent invocation of the unconditional Deed of Guarantee; and the assignment to the asset reconstruction company validly vested lender's rights in the assignee. Appeals dismissed with no costs.

Offence of money laundering - Proceeds of crime - Scheduled offence - Requirement of a scheduled offence as a condition precedent to prosecution under PMLA - Section 120-B as a scheduled offence only if the alleged conspiracy is to commit a scheduled offence - Enforcement Directorate's jurisdiction to register ECIR and launch prosecution - Respect for conclusions of another investigating agency unless varied by a competent court

Requirement of a scheduled offence as a condition precedent to prosecution under PMLA - Proceeds of crime - Offence of money laundering - Existence of a scheduled offence is a sine qua non for registration of ECIR and prosecution under Section 3/4 of PMLA; without a scheduled offence there are no proceeds of crime and no offence of money laundering. - HELD THAT: - The Court held that 'proceeds of crime' under the PMLA means property derived or obtained as a result of criminal activity relating to a scheduled offence, and an offence under Section 3 PMLA can only be committed after a scheduled offence is committed. Absent registration or a pending inquiry/trial in respect of a scheduled offence, authorities under the PMLA cannot assume that recovered property is proceeds of crime. Reliance was placed on the Supreme Court's interpretation that only property derived from criminal activity relating to a scheduled offence qualifies as proceeds of crime, and that action under the PMLA cannot proceed on mere assumption that a scheduled offence has been committed. Applying these principles to the charge-sheet presented by the CBI, which set out offences (120-B, 406 and 409 RPC) that are not scheduled offences, the material did not disclose commission of a scheduled offence and therefore did not make out the offence of money laundering under Section 3 PMLA. [Paras 10, 11, 12, 13]

Registration of ECIR and prosecution under Sections 3/4 PMLA cannot be sustained in the absence of a scheduled offence being registered or pending; the complaint and prosecution based on the existing charge-sheet do not disclose money laundering.

Enforcement Directorate's jurisdiction to register ECIR and launch prosecution - Respect for conclusions of another investigating agency unless varied by a competent court - Section 120-B as a scheduled offence only if the alleged conspiracy is to commit a scheduled offence - The Enforcement Directorate cannot independently recharacterise or supplant the findings of the investigating agency (CBI) by treating non-scheduled offences as scheduled offences for the purpose of initiating PMLA prosecution; it must await adjudication or fresh framing of scheduled charges by the competent criminal court. - HELD THAT: - The Court rejected the contention that the Enforcement Directorate is entitled to examine the CBI charge-sheet and reach an independent conclusion that scheduled offences are made out. The ED is not superior to the CBI and cannot sit in review over the investigation and conclusions of that agency; permitting ED to preempt the competent criminal court's exercise at charge/framing stage would lead to inconsistent and contradictory proceedings. If the ED believes that the material before the CJM discloses scheduled offences, it may invite the CJM to consider framing such charges; only if the competent court frames scheduled offences would the ED be entitled to register a fresh ECIR and prosecute for money laundering. The Court also applied the Supreme Court's principle that Section 120-B becomes a scheduled offence only if the alleged conspiracy is to commit an offence specifically included in the schedule, and observed that the CBI's conspiracy allegations (to commit 406/409 RPC) do not render 120-B a scheduled offence. [Paras 14, 15, 18, 19]

Enforcement Directorate cannot assume jurisdiction to register and prosecute under PMLA by independently treating the CBI's material as disclosing scheduled offences; it must await the competent court's framing of scheduled offences, after which the ED may register fresh proceedings.

Final Conclusion: The petition is allowed: the complaint, the PMLA prosecution and the charges framed by the Designated Special Court (order dated 18.03.2020) are quashed. It is left open to the Enforcement Directorate to register a fresh ECIR and prosecute under Section 3 PMLA if and when the competent criminal court frames charges in respect of offences that are specifically included in the schedule of the PMLA.

Extraordinary jurisdiction under Article 226 - availability of alternative remedy - exercise of writ jurisdiction in tax recovery matters - rule of exhaustion of alternative remedies - grounds for entertaining writ despite alternative remedy - violation of principles of natural justice - condonation of delay by appellate authority

Extraordinary jurisdiction under Article 226 - availability of alternative remedy - exercise of writ jurisdiction in tax recovery matters - rule of exhaustion of alternative remedies - grounds for entertaining writ despite alternative remedy - violation of principles of natural justice - Whether the High Court should entertain the writ petition challenging confirmation of service tax demand when an alternative statutory remedy of appeal is available - HELD THAT: - The Court applied the principle that the High Court will ordinarily not entertain a petition under Article 226 where an effective alternative remedy exists, particularly with greater rigour in matters of recovery of taxes and other public dues. The Court relied on the Supreme Court's observations that writ jurisdiction is to be exercised with self-imposed restraint in such matters and noted the exceptions permitting writ relief only where (i) fundamental rights enforcement, (ii) breach of natural justice, (iii) proceedings wholly without jurisdiction, or (iv) vires of an enactment are involved. The petitioner's plea of incapacity due to health for non-filing of a show cause reply was not supported by documents demonstrating incapacity at the relevant time and did not establish violation of natural justice or any other exception. Consequently, the Court found no ground to invoke Article 226 in the face of the efficacious statutory appellate remedy and dismissed the writ petition on that basis. [Paras 5, 6, 7]

Writ petition dismissed for want of jurisdiction to entertain it in presence of an alternative efficacious remedy; no exception to permit writ jurisdiction established.

Availability of alternative remedy - condonation of delay by appellate authority - Whether the petitioner should be afforded time and protection to resort to the statutory appellate remedy and whether the appellate authority should be precluded from rejecting the appeal on limitation grounds - HELD THAT: - Having dismissed the writ petition on the ground that an alternative remedy exists, the Court nevertheless granted relief in the interests of justice by permitting the petitioner a further limited period to invoke the statutory appeal. The Court directed that if the petitioner files the appeal within thirty days from the date of the order, the Commissioner (Appeals) shall decide the appeal on merits without going into the question of limitation. This direction is procedural and equitable, intended to enable the petitioner to avail the statutory remedy previously available under Section 107 of the CGST Act, 2017, and does not constitute determination of the merits of the tax demand. [Paras 8, 9]

Petitioner granted 30 days to file appeal; Commissioner (Appeals) directed to decide the appeal on merits without addressing limitation.

Final Conclusion: Writ petition dismissed as an alternative efficacious appellate remedy exists; petitioner granted 30 days to file the statutory appeal and the Commissioner (Appeals) is directed to decide the appeal on merits without going into limitation.

Adjustment of deposits against declared liability - personal hearing for verification of payment attribution - recognition and appropriation of deposits made before adjudication - issuance of Form-4 under Sabka Vishwas (Legacy Dispute Resolution) Scheme - quashing of show cause notice and extension for issuance of fresh notice

Personal hearing for verification of payment attribution - adjustment of deposits against declared liability - recognition and appropriation of deposits made before adjudication - Petitioner's payment of Rs.40,99,597/- for Financial Year 2015-2016 to be verified by respondents by way of personal hearing and, if proved, to be adjusted for purposes of the SVLDR Scheme declaration. - HELD THAT: - The respondents admitted receipt of the payment but contended absence of ST-3 returns to establish that the deposit pertained to service tax liability for FY 2015-2016. In light of Circular No. 1074/07/2019-CX (12.12.2019) which permits deduction/adjustment of deposits made after issuance of show cause notice but before adjudication when issuing the statement of amount payable by a declarant, the court directed that respondent no.3/4 give the petitioner a personal hearing (with at least five working days' notice) to produce evidence that the payment relates to FY 2015-2016. If the Committee is satisfied the payment pertains to that year, it shall issue the necessary Form-4 under the SVLDR Scheme. The matter of attribution for FY 2015-2016 is therefore remitted to the Committee for fresh verification and decision on adjustment of the deposit. [Paras 2, 3, 4, 7]

Remand for personal hearing and verification; if petitioner proves the payment relates to FY 2015-2016, respondents shall adjust the deposit and issue Form-4 under the SVLDR Scheme.

Issuance of Form-4 under Sabka Vishwas (Legacy Dispute Resolution) Scheme - adjustment of deposits against declared liability - Petitioner entitled to issuance of Form-4 for Financial Years 2016-2017 and 2017-2018. - HELD THAT: - Respondent no.3 had admitted in the impugned order that the petitioner discharged its liability for FY 2016-2017 and 2017-2018 pursuant to the declaration under the SVLDR Scheme. Independent of the outcome of the FY 2015-2016 verification, the court held that the petitioner was entitled to Form-4 for those years and directed respondent no.3 to issue Form-4 for FY 2016-2017 and FY 2017-2018 within one week of the order being uploaded. [Paras 5, 6]

Directed issuance of Form-4 for FY 2016-2017 and FY 2017-2018 within one week.

Quashing of show cause notice and extension for issuance of fresh notice - The show cause cum demand notice dated 30th December 2020 is quashed; time to issue a fresh show cause notice for FY 2015-2016, if required, extended by 30 days after disposal of the petitioner's declaration for that year. - HELD THAT: - Given the directions for verification and the admission regarding payments, the court quashed and set aside the impugned show cause cum demand notice dated 30.12.2020. The court further permitted the respondents to issue a fresh show cause notice for FY 2015-2016, if necessary, within 30 days after the Committee disposes of the petitioner's declaration for that year, thereby preserving respondents' ability to act lawfully post-verification while protecting the petitioner's procedural rights during the verification process. [Paras 8, 9]

Show cause notice dated 30.12.2020 quashed; if required, fresh notice may be issued within 30 days after disposal of petitioner's FY 2015-2016 declaration.

Final Conclusion: Petition disposed: respondents to hold a personal hearing to verify the attribution of the admitted payment to FY 2015-2016 and adjust it if proved; Form-4 shall be issued for FY 2016-2017 and FY 2017-2018 within one week; the show cause notice dated 30.12.2020 is quashed, with liberty to issue a fresh notice for FY 2015-2016 within 30 days after disposal of the petitioner's declaration for that year.

Interest under section 11BB - Refund under Rule 5 of the Cenvat Credit Rules - Cenvat credit as refundable duty/credit under section 11B proviso clause (c) - Mandatory obligation to pay interest where refund not sanctioned within three months - Computation of interest from three months after filing of first refund application

Interest under section 11BB - Refund under Rule 5 of the Cenvat Credit Rules - Cenvat credit as refundable duty/credit under section 11B proviso clause (c) - Mandatory obligation to pay interest where refund not sanctioned within three months - Computation of interest from three months after filing of first refund application - Payment of interest under section 11BB is payable on delayed refunds sanctioned under Rule 5 of the Cenvat Credit Rules for the claimed periods - HELD THAT: - The Tribunal applied the settled principle that refunds under Rule 5 of the Cenvat Credit Rules fall within sub section (2) of section 11B (proviso clause (c)) and therefore attract section 11BB when not refunded within three months. The mandatory tenor of section 11BB ('there shall be paid to the applicant interest ...') requires payment of interest where refund is not sanctioned within three months of receipt of the application. Reliance on the decisions of constitutional courts (including the Gujarat High Court judgment in Reliance Industries Ltd., approved by the Supreme Court) supports that refund of accumulated cenvat credit is a refund of duty/credit and is governed by section 11BB. The Tribunal rejected the contrary view taken in Gionee (Tribunal Delhi) as not binding in face of higher judicial precedent and consistent tribunal decisions. The interest period is to be computed from three months after the date of filing of the first refund application for the respective appeals. [Paras 5, 7]

Appellant entitled to interest under section 11BB on refunds sanctioned under Rule 5, payable from three months after filing of the first refund application for the respective periods

Final Conclusion: Appeals allowed; orders of the Commissioner (Appeals) are modified to grant interest under section 11BB on the refunded amounts for the specified refund periods, interest to be computed from three months after filing of the first refund application and the Department directed to pay the amounts within two months of receipt of this order.

Business Auxiliary Service - Taxability of margin on ocean freight - principal-to-principal versus principal-to-agent - Reimbursable expenses not includible in taxable value - GTA Service - recipient liability and consignment note requirement - Valuation for service tax - consideration must be transaction specific - No penalty without suppression with intent to evade tax

Business Auxiliary Service - Valuation for service tax - consideration must be transaction specific - Commission/brokerage received from shipping lines is not exigible to service tax under business auxiliary service - HELD THAT: - The Tribunal found that the amounts characterized as commission/brokerage arose from booking of cargo/ selling of space and not from rendering a taxable service to the shipping lines. There was no principal-agent agreement or commission-agent relationship with the shipping lines; incentives were performance-based and not transaction-specific consideration for a taxable service. The Tribunal applied the principle that only transaction-specific consideration for the taxable service falls within valuation for service tax and followed the Larger Bench decision in Kafila Hospitality & Travels Pvt. Ltd., holding such receipts not liable to service tax as business auxiliary service. [Paras 5]

Demand of service tax on commission/brokerage of Rs.10,11,406/- set aside.

Taxability of margin on ocean freight - principal-to-principal versus principal-to-agent - Valuation for service tax - consideration must be transaction specific - Profit/margin earned on ocean freight (difference between ocean freight collected and paid) is not liable to service tax as business support/clearing & forwarding service where transactions are on principal-to-principal basis - HELD THAT: - The Tribunal accepted the appellant's case that the margins arose from bulk purchase and resale of ocean freight space on principal-to-principal basis, constituting trading in ocean freight rather than the provision of a clearing/forwarding or business support service. There was no finding in the adjudication to substantiate that such margins represented Information and Tracking or other taxable services. The Tribunal relied on its earlier decision in Tierra Logistics and other consistent Tribunal precedents to hold that such profit is not exigible to service tax. [Paras 5]

Demand of service tax on profit earned on ocean freight of Rs.1,37,14,491/- set aside.

Reimbursable expenses not includible in taxable value - Clearing and Handling Agent (CHA) services - valuation - Amounts recovered as reimbursable expenses in relation to cargo handling services are not includible in taxable value for service tax - HELD THAT: - On examination, the Tribunal found that amounts such as AD code registration charges, custom clearance charges, port charges, EDI registration charges and AWB fees were reimbursements of actual expenses and not consideration for the taxable CHA service. Applying precedents (including Karam Freight Movers and Suraj Forwarders), the Tribunal held that reimbursements made on actual basis are not to be included in the taxable value for service tax. [Paras 5]

Demand of service tax relating to cargo handling services of Rs.46,39,520/- set aside.

GTA Service - recipient liability and consignment note requirement - Appellant liable to pay service tax as recipient under GTA service only for one specific invoice; remaining transportation-related demands as recipient are not sustainable for lack of consignment note - HELD THAT: - The Tribunal reviewed invoices produced by the appellant and observed that, except for one invoice (M/s. Rishab Trans Management dated 05.01.2017), the documents were for 'hire charges' and did not evidence transportation by the truck owners (no consignment note). For the specific invoice which expressly stated service tax to be payable by the party, the Tribunal held the appellant liable to pay service tax under GTA on the freight shown in that invoice together with interest. For the balance of the demand computed merely from trial balance heads without verification of underlying consignment notes, the Tribunal held the appellant not liable, noting that customers had paid under reverse charge where applicable and no consignment note existed from the local truck owners. [Paras 5]

Out of the transportation charge demand, appellant liable to pay service tax with interest only on the freight shown in the specific invoice (Rs.4,20,000/- as per invoice dated 05.01.2017); remaining portion set aside; no penalty imposed.

No penalty without suppression with intent to evade tax - Demand of service tax on director sitting fees upheld but penalty not imposable where no suppression with intent to evade tax is established - HELD THAT: - The appellant accepted the director sitting fees demand and had paid the principal amount though interest remained unpaid. The Tribunal upheld the service tax demand and directed payment of interest. However, on factual finding that there was no suppression with intent to evade tax, the Tribunal held that no penalty should be imposed in respect of this demand. [Paras 5]

Service tax on director sitting fees upheld; interest payable; no penalty imposable.

Final Conclusion: The appeal is partly allowed: demands confirmed in the impugned order on commission/brokerage, profit on ocean freight, and cargo handling reimbursements are set aside; the appellant is liable for service tax with interest on one specified GTA invoice, and the demand on director sitting fees is upheld with interest but without penalty; the appeal is disposed of on these terms.

Extended period - best judgment assessment - invocation of extended period based on 26AS statements - reverse charge mechanism - onus on revenue to adduce evidence

Extended period - invocation of extended period based on 26AS statements - best judgment assessment - onus on revenue to adduce evidence - reverse charge mechanism - Whether extended period of limitation was correctly invoked and the demand sustainable where assessment was founded on 26AS data and best judgment without adequate investigation or evidence as to taxability - HELD THAT: - Revenue issued the Show Cause Notice on the basis of data received from the Income Tax Department (26AS) and proceeded to compute duty by the best judgment method after alleging non-cooperation by the appellant. The Tribunal finds that the Department did not undertake reasonable verification-such as confirming the correct address or conducting an adequate investigation-before issuing and finally confirming a large demand. The Show Cause Notice did not demonstrate any positive act of suppression or deliberate evasion by the appellant that would justify invocation of the extended period. Further, the appellant was a provider of GTA services falling under a regime where service recipients are ordinarily liable under the reverse charge mechanism; Revenue failed to produce evidence showing that the recipients were not those covered by RCM and that taxability therefore rested on the appellants. In these circumstances, and having regard to consistent tribunal precedents, extended period could not be invoked where the case rests on 26AS data without the necessary evidentiary foundation; accordingly the appeal succeeds on limitation. The Tribunal expressly refrains from adjudicating the merits of tax liability, rates or computation since the matter is disposed of on limitation grounds. [Paras 9, 10, 11]

Extended period cannot be invoked; appeal allowed on limitation and the demand set aside on that ground; merits not adjudicated.

Final Conclusion: The appeal is allowed solely on the ground that extended period of limitation was not invocable given assessment based on 26AS and best judgment without adequate investigation or evidence; the Tribunal does not decide merits of tax liability.

Security deposit not consideration for taxable service - Interest on security deposits not includible in taxable value - Statutory security deposit under the PNGRB Act, 2006 not leviable to Service Tax - Reconnection charges constitute consideration for taxable service - Penalty under Section 78 of the Finance Act, 1994 not imposable without suppression of facts

Security deposit not consideration for taxable service - Interest on security deposits not includible in taxable value - Demand of Service Tax on three months advance received against transmission charges (security deposit) set aside. - HELD THAT: - The Tribunal held that the three months advance collected from tea estates and other consumers is an interest-bearing refundable security deposit retained till expiry or adjusted against outstanding dues under the contract. Relying on its earlier decision in the appellant's own case, the Tribunal found no nexus between the deposit and any consideration for provision of taxable service; interest earned (or notional) on such deposits cannot be included in the value of a taxable service. The Revenue failed to establish that the security deposit formed part of consideration for the service; accordingly the demand confirmed by the lower authorities on this count was held unsustainable and set aside. [Paras 7]

Demand of Rs.14,67,083/- on advances against transmission charges is set aside.

Statutory security deposit under the PNGRB Act, 2006 not leviable to Service Tax - Security deposit not consideration for taxable service - Demand of Service Tax on amounts collected as cost of gas meter and installation (statutory refundable security deposit) set aside. - HELD THAT: - The Tribunal observed that the amount collected towards cost of gas meter and installation is a statutory deposit required under Section 14 of the PNGRB Act, 2006 and is refundable on surrender of the connection. Being a statutory, refundable deposit with no nexus to consideration for provision of taxable service, it cannot form part of the taxable value. The Tribunal followed its earlier concurrent finding in the appellant's own case and held the demand to be unsustainable. [Paras 7]

Demand of Rs.9,60,289/- on meter and installation/security deposit is set aside.

Reconnection charges constitute consideration for taxable service - Penalty under Section 78 of the Finance Act, 1994 not imposable without suppression of facts - Demand of Service Tax on reconnection charges upheld; interest payable but penalty set aside for lack of suppression with intent to evade tax. - HELD THAT: - The Tribunal accepted that reconnection charges arise from disconnection and resumption of supply and represent consideration for a service (initial connection/re-connection). Relying on its earlier order in the appellant's own case, the Tribunal upheld confirmation of Service Tax and interest on the reconnection charges. However, on facts of the present appeal there was no finding of suppression with intent to evade tax; consequently the penalties imposed under Section 78 were set aside. [Paras 7, 8]

Demand of Rs.1,483/- on reconnection charges upheld with interest; all penalties set aside.

Final Conclusion: The appeal is disposed by setting aside the Service Tax demands confirmed on advance transmission charges and on meter/installation statutory deposits, upholding the demand (with interest) on reconnection charges, and cancelling all penalties imposed.

Exclusion of roads, transport terminals and similar public works from - works contract service involving transfer of goods deemed excluded where subject-matter is road construction - extended period of limitation invocable where duty short paid by reason of fraud, collusion, willful mis-statement or suppression of facts or violation of Act/Rules with intent to evade - section 73(3) subject to section 73(4) - voluntary payment proviso inapplicable where intent to evade is established - best judgment assessment where records/returns not available - appropriation of amounts paid and recomputation of demand, interest and penalty - penalty under section 78 to be computed on confirmed demand; section 77 penalty for failure to register/return upheld

Exclusion of roads, transport terminals and similar public works from - Whether amounts received for construction/restoration of DDA roads, construction of boundary walls for DDA land/park and construction of Metro station car parking are taxable as services - HELD THAT: - The Tribunal found that the specified activities are public/non-commercial in nature and thus fall within the exclusion for services provided in respect of roads, transport terminals and similar public works from the definition of "commercial or industrial construction". Consequently, service tax demand insofar as it related to (i) construction/restoration of roads for DDA, (ii) construction of boundary walls for DDA land/park and (iii) construction of Metro Station and car parking for DDA was not sustainable and was set aside. [Paras 13, 17]

Demand of service tax in respect of the three specified categories is set aside.

Appropriation of amounts paid and recomputation of demand, interest and penalty - Treatment of amounts already paid by the appellant and recomputation of the remaining confirmed demand, interest and penalty - HELD THAT: - The Tribunal observed that the appellant had paid service tax on certain services (construction of additional facilities, swimming pool, and subcontract work for BIL) which were not appropriated by the Commissioner when confirming demand. It directed that amounts already paid be appropriated against the recomputed demand. Interest payable under the statute is to be computed appropriately and any interest already paid shall be adjusted. Penalty under section 78 must be recomputed in accordance with the revised demand. [Paras 14, 18, 19]

Amounts paid to be appropriated; interest and penalty to be recomputed and adjusted against amounts already paid.

Best judgment assessment where records/returns not available - Validity of invoking and confirming demand based on such assessment - HELD THAT: - Investigation revealed absence of registration, non-filing of returns and lack of disclosure of taxable services by the appellant; detailed particulars had to be ascertained from documents obtained during inquiry. In view of non-availability of proper records and returns, the authorities resorted to best judgment assessment under the statutory provision and the Tribunal found that resort to best judgment assessment was permissible in the circumstances to determine and confirm the demand. [Paras 7, 16]

Best judgment assessment was legitimate and the demand confirmed on that basis is sustainable to the extent upheld.

Extended period of limitation invocable where duty short paid by reason of fraud, collusion, willful mis-statement or suppression of facts or violation of Act/Rules with intent to evade - section 73(3) subject to section 73(4) - voluntary payment proviso inapplicable where intent to evade is established - Whether the extended period of limitation could be invoked or whether the appellant was entitled to protection under the proviso for voluntary payment (section 73(3)) - HELD THAT: - The Tribunal held that section 73(3) is subject to section 73(4); where non-payment or short payment arises by reason of fraud, collusion, wilful mis-statement, suppression of facts or violation of Act/Rules with intent to evade, the extended period under section 73 is invocable. The facts - no registration, non-filing of returns, nondisclosure of taxable activities and discovery only upon audit of a recipient - permitted an inference of intent to evade. The appellant's claim of reliance on consultant's advice did not negate intent, as such a defence would render the exemption meaningless. Accordingly, extended period was rightly invoked and the demand for the period covered by the investigation was maintainable. [Paras 15, 16]

Extended period of limitation invoked lawfully; section 73(3) protection is inapplicable as case falls under section 73(4).

Penalty under section 78 to be computed on confirmed demand; section 77 penalty for failure to register/return upheld - Whether penalties imposed under the statute were sustainable and how they should be treated after recomputation - HELD THAT: - The Tribunal upheld the imposition of penalty under section 77. Regarding penalty under section 78, the Tribunal held that it is to be recomputed in accordance with the re-calculated service tax demand; since the extended period was properly invoked due to concealment/non-compliance, imposition of penalty was justified subject to recomputation on the reduced demand after appropriation of amounts paid. [Paras 10, 19, 20]

Penalty under section 77 upheld; penalty under section 78 sustained but to be recomputed on the revised demand.

Remand for recomputation and denovo order by original authority - Whether the matter should be remitted to the original authority for computation in accordance with the Tribunal's directions - HELD THAT: - Given the Tribunal's findings-disallowance of demand for specified public works, direction to appropriate amounts paid, and recomputation of interest and penalty-the matter requires fresh computation and consequential adjustments by the original authority. The Tribunal accordingly remitted the matter for passing a de novo order implementing these directions. [Paras 20, 21]

Matter remanded to the original authority for de novo computation and fresh order in accordance with the Tribunal's directions.

Final Conclusion: The appeal is partly allowed: service tax demand is set aside for construction/restoration of DDA roads, boundary walls for DDA land/park, and Metro station car parking, while the remainder of the demand is upheld; amounts already paid are to be appropriated, interest and penalties are to be recomputed accordingly, and the matter is remitted to the original authority for de novo computation and order.

Cenvat credit admissibility - proviso to Rule 9(2) of the Cenvat Credit Rules - invoice particulars under Rule 4A of the Service Tax Rules - burden of proof under Rule 9(5) of the Cenvat Credit Rules - procedural lapses cannot defeat substantive right - competence of adjudicating authority where show cause is issued by Audit Commissionerate

Competence of adjudicating authority where show cause is issued by Audit Commissionerate - Adjudicating authority's jurisdiction where show cause notice was issued by the Audit Commissionerate. - HELD THAT: - The Tribunal considered the departmental circular governing functions of Audit Commissionerates and reproduced Para 5.3 which provides that audit ends with issuance of show cause notice and further adjudication is to be undertaken by the Executive Commissioner or subordinate officers within adjudication limits. On that basis the challenge to jurisdiction on ground that the show cause notice was issued by an Assistant Commissioner, CGST Audit, but adjudicated by a Deputy Commissioner, CGST Division, was rejected. The adjudicating authority was held to have competent jurisdiction to decide the matter despite being different from the officer who issued the show cause notice. [Paras 5]

Jurisdictional challenge dismissed; adjudicating authority had competent jurisdiction to decide the show cause notice.

Cenvat credit admissibility - proviso to Rule 9(2) of the Cenvat Credit Rules - invoice particulars under Rule 4A of the Service Tax Rules - burden of proof under Rule 9(5) of the Cenvat Credit Rules - procedural lapses cannot defeat substantive right - Whether Cenvat credit could be denied where invoices bore addresses of other units of the same assessee, and whether departmental denial was sustainable in absence of evidence that those other units received or accounted for the services. - HELD THAT: - The Tribunal examined Rule 3 (substantive entitlement to credit), Rule 9 (documents and accounts) and Rule 4A (invoice particulars) and observed that while Rule 9(2) requires prescribed particulars in invoices, the proviso thereto permits allowance of credit where the deputy/assistant commissioner is satisfied that goods/services have been received and accounted for. The authorities below denied credit on the ground that invoices showed other unit addresses and on perceived irregularities in sample invoices, and placed reliance on burden principles in Rule 9(5). The Tribunal found that Revenue produced no evidence that the units named in the invoices had in fact received the services or accounted for them; the invoices were recorded in NEI Jaipur's books and the appellant produced a CA certificate and accounting evidence which were not rebutted. Applying the proviso to Rule 9(2) and settled principles that procedural defects cannot defeat a vested substantive right, the Tribunal held that the deficiency of address was a procedural lapse and not a ground to deny the substantive Cenvat credit where receipt and accounting in the appellant's books was established and Revenue failed to discharge its burden of proof. [Paras 5]

Denial of Cenvat credit was unsustainable; in absence of evidence from Revenue that other units received or accounted for the services, and given accounting entries and CA certificate, credit must be allowed under the proviso to Rule 9(2). Appeal allowed on merits.

Final Conclusion: The adjudication was held to be within jurisdiction and, on merits, the Tribunal set aside the orders denying Cenvat credit; the deficiency of recipient address in invoices was treated as a procedural lapse which did not overcome the appellant's entitlement to credit in view of accounting records and unrebuffed CA certificate, and the appeal was allowed with consequential relief.

Clean Slate principle - moratorium under Section 14 of the IBC - extinguishment of statutory dues on approval of resolution/acquisition plan - overriding effect of Section 238 of the IBC - sale of corporate debtor as a going concern under Regulation 32(e) & 32A of the Liquidation Regulations, 2016 - operational creditor - prohibition on institution of proceedings after commencement of liquidation under Section 33(5) of the IBC

Moratorium under Section 14 of the IBC - overriding effect of Section 238 of the IBC - prohibition on institution of proceedings after commencement of liquidation under Section 33(5) of the IBC - Validity of the red entry/charge created on the corporate debtor's properties during the moratorium and after the liquidation order. - HELD THAT: - The Court held that the moratorium imposed by the NCLT on admission of the Section 7 petition prohibited any action or proceedings against the corporate debtor or enforcement of security interests during the CIRP. In light of Section 238, the Code has overriding effect over inconsistent provisions of other laws. Further, after the corporate debtor was ordered to be liquidated, Section 33(5) bars legal proceedings by or against the corporate debtor. Therefore the red entry/charge created on 07.01.2020, during the period of moratorium and after commencement of liquidation, was ex facie void and impermissible under the Code. [Paras 51, 52, 53, 54]

The red entry/charge made during the moratorium and after commencement of liquidation is void in law.

Sale of corporate debtor as a going concern under Regulation 32(e) & 32A of the Liquidation Regulations, 2016 - operational creditor - extinguishment of statutory dues on approval of resolution/acquisition plan - Clean Slate principle - Whether the approval of the acquisition plan and sale of the corporate debtor as a going concern extinguished the respondents' statutory claims and charges. - HELD THAT: - The Court applied the principle that once an acquisition/resolution plan is approved by the Adjudicating Authority, it becomes binding on the corporate debtor and its creditors so as to permit the resolution applicant to take over on a 'clean slate'. The sale of the corporate debtor as a going concern in terms of Regulation 32(e)/32A and the NCLT's approval (confirmed by NCLAT and the Supreme Court) extinguished claims not included in the approved plan. The respondents' claim had been admitted as an operational creditor in the liquidation process, the sale proceeds were deposited and the certificate of sale issued; consequently the respondents' statutory claims stood dealt with and extinguished in terms of the distribution mechanism under Section 53 of the IBC and the approved acquisition plan. [Paras 24, 25, 56, 59, 60]

The approval of the acquisition plan and sale as a going concern extinguished the respondents' statutory claims and charges not incorporated in the approved plan.

Extinguishment of statutory dues on approval of resolution/acquisition plan - Clean Slate principle - Whether the respondents are estopped from continuing the red entries after failing to challenge the NCLT approval of the acquisition plan. - HELD THAT: - The Court found that respondents, as stakeholders entitled to participate in the liquidation process and distribution under Section 53, did not object to the acquisition plan nor challenge the NCLT order approving it. The acquisition plan was subsequently upheld by appellate forums including the NCLAT and the Supreme Court, rendering the plan binding in rem. Having acquiesced throughout the process and having not challenged the order, the respondents cannot continue to act as if rights subsist over the properties; they are estopped from maintaining the red entries. [Paras 27, 28, 29, 57, 58]

Respondents are estopped from maintaining or enforcing red entries/charges after acquiescence to and non-challenge of the approved acquisition plan.

Overriding effect of Section 238 of the IBC - extinguishment of statutory dues on approval of resolution/acquisition plan - Remedial relief to be granted to give effect to the extinguishment of claims. - HELD THAT: - Given the voidness of the charge created during moratorium/liquidation and the extinguishment of claims by operation of the approved acquisition plan upheld by higher forums, the Court directed removal of the respondents' charge/red entries from the revenue records to effectuate the 'clean slate' and to enable the corporate debtor under new management to proceed with revival measures (including mortgaging assets for sanctioned financing). The relief was granted without costs. [Paras 56, 61, 62]

Respondent No.4 directed to remove the charge/red entries from the revenue record forthwith.

Final Conclusion: Writ petition allowed. The red entry/charge created during the moratorium and after commencement of liquidation is void; the approved acquisition plan and sale as a going concern extinguished the respondents' statutory claims not incorporated in the plan and respondents are estopped from enforcing any charge; respondent No.4 is directed to remove the charge/red entries from the revenue record forthwith.