TaxTMI Updates e-Newsletter
Aug 28,2023

Regular bail - economic offences - triple test for bail - triable by Magistrate - completion of investigation and stage of trial - risk of absconding, tampering with evidence or influencing witnesses

Regular bail - triable by Magistrate - risk of absconding, tampering with evidence or influencing witnesses - completion of investigation and stage of trial - economic offences - triple test for bail - Grant of regular bail to the petitioner in FIR No. 401 dated 12.10.2018. - HELD THAT: - The Court applied the principle that in economic offences (subject to statutory restrictions) once investigation is complete, the final report is filed and the triple test is satisfied, denial of bail should be the exception. The matter is triable by a Magistrate; the petitioner has been in custody since 21.07.2022; 22 of 33 prosecution witnesses have been examined and the trial is unlikely to conclude soon. The State did not demonstrate a real risk that the petitioner would abscond, tamper with evidence or influence witnesses if enlarged on bail. On these facts, and without adjudicating merits, continued incarceration was held unnecessary and bail was directed to be granted subject to specified conditions. [Paras 6, 7, 8, 9, 10]

Petitioner Puneet Sonkar released on regular bail to the satisfaction of the Magistrate, subject to monthly attendance at the police station, written confirmation of non-involvement in other crimes, and deposit of an FDR with the Trial Court recoverable for unexplained absence from trial.

Final Conclusion: The petition seeking regular bail is allowed; the petitioner is to be released on bail on specified conditions and subject to compliance with the Court's directions.

Interim stay - classification of goods for GST - authority of the GST Council to issue clarifications on classification - stay subject to deposit and bank guarantee - adjudication proceedings to continue but not given effect without leave of court

Interim stay - classification of goods for GST - stay subject to deposit and bank guarantee - adjudication proceedings to continue but not given effect without leave of court - Interim effect of Circular dated 6.10.2021 and the impugned show cause notices stayed subject to specified deposits and guarantees - HELD THAT: - The High Court, while not adjudicating the merits of the petitioner's challenge to the GST Council's classification and consequential Circular, granted an interim stay on the operation and effect of the Circular dated 6.10.2021 and the two impugned show cause notices. The stay is conditional: the petitioner must deposit Rs. 10 crores with the respondents within three weeks to be kept in a separate account and furnish a bank guarantee for the balance amount within the same period. The Court clarified that adjudication proceedings may continue but no adjudicatory order shall be given effect to without the leave of the Court. This interim arrangement preserves the status quo subject to the financial security furnished by the petitioner and does not constitute a final determination on the legality of the classification or Circular. [Paras 7]

Effect and operation of the Circular dated 6.10.2021 and the impugned show cause notices stayed on the terms that the petitioner deposits Rs. 10 crores and furnishes a bank guarantee for the balance within three weeks; adjudication may proceed but cannot be given effect without the Court's leave.

Procedural timetable for pleadings - Time granted to respondents to file counter affidavit and to petitioner to file rejoinder; listing fixed - HELD THAT: - The Court allowed the respondents four weeks to file a counter affidavit and granted the petitioner two weeks thereafter to file a rejoinder. The matter was directed to be listed after the expiry of six weeks. These directions structure the interlocutory timetable for further adjudication of the petition and preservation of parties' rights pending final disposal. [Paras 5, 6]

Respondents granted four weeks to file counter affidavit, petitioner granted two weeks for rejoinder, and matter listed after six weeks.

Final Conclusion: Interim relief granted: operation of the impugned Circular and show cause notices stayed on the petitioner furnishing a cash deposit of Rs. 10 crores and a bank guarantee for the balance within three weeks; adjudication may continue but no order shall be given effect without leave of the Court; procedural timetable for filing of pleadings and listing is fixed.

Export of Services - receipt in foreign convertible exchange - deemed receipt in foreign currency via authorized dealer / VOSTRO account - application of service tax precedents to IGST regime - remand for fresh adjudication

Export of Services - receipt in foreign convertible exchange - deemed receipt in foreign currency via authorized dealer / VOSTRO account - application of service tax precedents to IGST regime - Whether the matter should be remanded for fresh consideration by the adjudicating authority to examine if payment received in INR through an overseas exchange house (via its VOSTRO account with an authorised dealer) satisfies the condition of receipt in foreign convertible exchange for export of services and whether service tax era precedents apply to the IGST regime. - HELD THAT: - The Court found that the first respondent rejected the refund claim solely on the ground that the appellant did not receive remittance in foreign convertible exchange, applying the definition of "Export of Service" under Section 2(6) of the IGST Act, 2017, but failed to analyse or take note of prior decisions (including those under the erstwhile service tax regime) relied upon by the appellant. The appellant's contention that remittances routed through an overseas exchange house and converted to INR by an authorised dealer (via a VOSTRO account) may be treated as receipt in foreign currency under the RBI/FEMA regulations and thus satisfy the export condition was not properly considered. Given that pari materia provisions and earlier judicial pronouncements exist, the Court held that a holistic adjudication was required: the first respondent must examine the factual matrix, consider the applicability of service tax precedents and relevant FEMA/RBI regulations, afford personal hearing, and then decide the refund claim on merits in accordance with law. The Court expressly did not go into merits itself but directed that the authorities re adjudicate after taking note of the observations and authorities cited by the appellant. [Paras 3, 4, 5]

Orders of the first and second respondents set aside; matter remanded to the first respondent for fresh adjudication after personal hearing and consideration of the cited precedents and regulatory provisions, to be decided on merits in accordance with law.

Final Conclusion: The impugned orders rejecting the refund and dismissing the appeal are set aside and the matter is remitted to the adjudicating authority for fresh consideration, with a direction to afford personal hearing and decide the claim on merits in accordance with law (preferably within three months of conclusion of the hearing).

Computation of the six month period under Section 112(3) of the Central Goods and Services Tax Act, 2017 - effect of the CGST (Ninth Removal of Difficulties) Order, 2019 on limitation - withdrawal of writ petition to enable departmental remedy before the Appellate Tribunal once constituted

Computation of the six month period under Section 112(3) of the Central Goods and Services Tax Act, 2017 - effect of the CGST (Ninth Removal of Difficulties) Order, 2019 on limitation - The six month period under Section 112(3) of the CGST Act, 2017 is to be reckoned as the later of the date of communication of the order or the date on which the President or the State President of the Appellate Tribunal, after its constitution under Section 109, enters office, as provided by the CGST (Ninth Removal of Difficulties) Order, 2019. - HELD THAT: - The Court records the provision placed before it by the Deputy Solicitor General and the CGST (Ninth Removal of Difficulties) Order, 2019 which stipulates that the six month period under Section 112(3) shall be considered to commence from the later of two specified dates: (i) the date of communication of the order; or (ii) the date on which the President or State President of the Appellate Tribunal enters office after constitution under Section 109. Having accepted the departmental position and the operative effect of the Removal of Difficulties Order on the computation of the limitation period, the Court proceeded to dispose of the writ petition to permit the department to pursue the remedy before the Appellate Tribunal when constituted. [Paras 1, 2]

The Court accepted the effect of the Ninth Removal of Difficulties Order on computation of the six month period under Section 112(3) and disposed of the writ petition to enable the department to approach the Appellate Tribunal once constituted.

Withdrawal of writ petition to enable departmental remedy before the Appellate Tribunal once constituted - Permissibility of withdrawing the writ petition to allow the department to seek recourse before the Appellate Tribunal upon its constitution. - HELD THAT: - The Deputy Solicitor General sought withdrawal of the writ petition so that the department could approach the Appellate Tribunal as and when it is constituted in conformity with the statutory scheme and the Removal of Difficulties Order. The Court granted the request and disposed of Writ Petition (C) No. 48 of 2022 accordingly, enabling the departmental remedy to be pursued before the appropriate appellate forum. [Paras 2]

Writ Petition (C) No. 48 of 2022 disposed of on the basis of withdrawal to enable departmental proceedings before the Appellate Tribunal once constituted.

Final Conclusion: The Court accepted the departmental position regarding the effect of the CGST (Ninth Removal of Difficulties) Order, 2019 on computation of the six month period under Section 112(3) and, at the department's request, allowed withdrawal of the writ petition, disposing Writ Petition (C) No. 48 of 2022 to enable the department to approach the Appellate Tribunal when constituted.

Appellate Tribunal not constituted - extension of limitation by Removal of Difficulties Order and Circular - supervisory jurisdiction under Article 227 - stay of implementation of appellate authority order until tribunal constituted

Appellate Tribunal not constituted - extension of limitation by Removal of Difficulties Order and Circular - supervisory jurisdiction under Article 227 - stay of implementation of appellate authority order until tribunal constituted - Whether the High Court may exercise its supervisory jurisdiction under Article 227 to restrain enforcement of an order passed by the Appellate Authority where the Appellate Tribunal under Section 109 of the Act has not been constituted and no efficacious remedy is available to the petitioner. - HELD THAT: - The Court found that Section 109 of the Himachal Pradesh Goods and Services Tax Act, 2017 envisages constitution of an Appellate Tribunal to entertain appeals under Section 112; in the State the Tribunal is yet to be constituted, thereby preventing the petitioner from availing the statutory appellate remedy. The Ministry of Finance's Removal of Difficulties Order dated 03.12.2019 and the Board's circular (as noted in the judgment) extend the period for filing appeals to the Tribunal by treating the three month (and six month) limitation as commencing from the date on which the President/State President of the Tribunal enters office. Having regard to the statutory scheme and the administrative measures to avoid prejudice, the Court held that where the statutory appellate forum is unavailable and the taxpayer would otherwise be rendered remediless, the High Court may exercise Article 227 supervisory jurisdiction to prevent implementation of an executive or quasi judicial order until the Appellate Tribunal is constituted and the extended period for filing the appeal (as per the Removal of Difficulties Order/circular) commences. Applying these principles to the facts, the Court concluded that the petitioner had no efficacious alternate remedy and that restraint on giving effect to the impugned appellate authority order was justified until the Tribunal is constituted and the petitioner files an appeal within the period prescribed by the aforesaid administrative direction. [Paras 5, 9, 11]

Petition allowed: respondent No.1 restrained from acting in furtherance of the appellate authority order dated 19.5.2023 until the Appellate Tribunal under Section 109 is constituted and the petitioner files an appeal within the period prescribed by the Removal of Difficulties Order/circular.

Final Conclusion: The petition was allowed and respondent No.1 was directed not to give effect to the appellate authority order dated 19.5.2023 until the Appellate Tribunal is constituted under Section 109 and the petitioner files the appeal within the extended period as indicated in the Ministry of Finance order and related circular.

Scrutiny of returns - jurisdiction of a Range Officer to issue a fresh notice after audit closure - Section 61 of the CGST Act, 2017 - proceedings under Section 65 of the CGST Act, 2017 - stay of impugned notice pending disposal of writ petition - parallel investigation by DGGI

Scrutiny of returns - jurisdiction of a Range Officer to issue a fresh notice after audit closure - Section 61 of the CGST Act, 2017 - proceedings under Section 65 of the CGST Act, 2017 - Whether the Superintendent, CGST & Central Excise, Range 1, had jurisdiction to proceed pursuant to the notice dated 17.04.2023 in respect of matters already scrutinised and settled by the Audit Department by order dated 25.03.2022. - HELD THAT: - The court noted that the Audit Department had earlier issued a notice, received documents, conducted audit scrutiny and approved/settled the matter by order dated 25.03.2022 arising from action under the scrutiny provisions and Section 65. The appellants contended that identical documents called for by the impugned notice had already been furnished and considered in that audit. Given that the effect of such prior audit and approval raises a jurisdictional question about the competence of the Superintendent to issue a fresh notice for the same period and same subject-matter, the court treated the issue as requiring adjudication on the merits in the writ petition. In the exercise of its jurisdiction to preserve the status quo pending resolution of that question, the court stayed further proceedings under the impugned notice until the writ petition is finally disposed of. [Paras 6, 8, 9]

The notice dated 17.04.2023 issued by the Superintendent shall remain stayed until the disposal of WPA 10506 of 2023.

Stay of impugned notice pending disposal of writ petition - parallel investigation by DGGI - Procedural directions for adjudication of the writ petition and treatment of submissions regarding parallel proceedings by DGGI. - HELD THAT: - The court directed the respondent to file an affidavit in opposition in the writ petition and recorded that the applicability of the contention (reliance on authority permitting parallel investigation) would be considered when the writ petition is taken up for hearing. The order is interlocutory and preserves the appellants' position by staying the impugned notice, while leaving the substantive questions-including the scope for parallel action by DGGI-to be determined on merits at the hearing. [Paras 9, 10]

Respondent to file affidavit in opposition; writ petition to be heard and disposed of on merits and in accordance with law, with the stay on the impugned notice continuing until such disposal.

Final Conclusion: The intra court appeal is allowed in part: the notice dated 17.04.2023 issued by the Superintendent is stayed until WPA 10506 of 2023 is finally disposed of; the respondent is directed to file an affidavit in opposition and the writ petition will be decided on merits, including consideration of any contention about parallel investigations.

Misrepresentation of exhaustion of statutory remedies - maintainability of writ petition where alternative statutory appeal exists - refusal to adjudicate merits for non-disclosure / incorrect averments - attachment of bank account to secure tax demand

Misrepresentation of exhaustion of statutory remedies - maintainability of writ petition where alternative statutory appeal exists - Petition dismissed on account of the petitioner furnishing incorrect information that statutory remedies had been exhausted, when the remedy of appeal under the GST statute had not been availed and the period for filing that appeal had expired. - HELD THAT: - The Court noted that paragraph 3 of the petition affirmatively stated that all statutory remedies had been availed. It was undisputed that the statutory appeal under the GST Act had not been filed and, in fact, the period for filing that appeal had expired. The High Court treated the incorrect declaration regarding exhaustion of remedies as material and declined to proceed to examine the merits of the challenge to the demand and attachment. In these circumstances the petition was held to be not maintainable and was dismissed on that ground. [Paras 4, 5]

Petition dismissed for furnishing incorrect information about exhaustion of statutory remedies; maintainability negatived on that basis.

Refusal to adjudicate merits for non-disclosure / incorrect averments - attachment of bank account to secure tax demand - Court declined to examine substantive grounds alleging denial of reasonable opportunity and other contentions, and did not adjudicate upon the validity of the demand or the attachment, because of the petitioner's incorrect averments regarding available remedies. - HELD THAT: - Although several substantive grounds were raised challenging the order raising tax demand under the GST provisions and the subsequent attachment of the petitioner's bank account, the High Court expressly declined to consider those contentions. The reason given was the petitioner's misstatement that statutory remedies had been exhausted; having found that the appeal remedy remained available but was not pursued (and was now time-barred), the Court refused to entertain the writ petition on that basis rather than on the merits of the claim. [Paras 2, 5]

Substantive challenges to the demand and attachment were not adjudicated; petition dismissed without consideration of merits due to petitioner's incorrect averments.

Final Conclusion: Writ petition dismissed for non-maintainability on account of the petitioner's incorrect declaration that statutory remedies were exhausted; the High Court declined to consider the substantive challenges to the demand and attachment.

Filing of appeal electronically or otherwise - notification enabling manual filing by the Commissioner - Rule 108 of A.P. GST Rules - substantial justice over technicalities - provisional acknowledgment on filing - technical glitch in online portal

Filing of appeal electronically or otherwise - technical glitch in online portal - substantial justice over technicalities - Whether the petitioner could be denied admission of the appeal for having filed it manually when electronic filing failed due to a portal error and no notification permitting manual filing was produced. - HELD THAT: - The Court examined the petitioner's evidence showing attempts to upload the appeal and the portal's error message, and held that an appellant who genuinely could not complete electronic filing because of a technical glitch cannot be penalised by rejection of the appeal. While Rule 108 contemplates filing either electronically or 'otherwise' as may be notified by the Commissioner, absence of a notification did not justify depriving the petitioner of the statutory right to file an appeal when electronic filing was rendered impossible. The Court preferred the ends of substantial justice over a mere technicality and relied on the principle applied in the Division Bench decision referred to in the judgment to set aside the rejection. [Paras 5, 6]

The rejection of the appeal on the sole ground that it was not filed electronically despite evidence of a portal error was set aside and the petitioner's manual filing was accepted for the purposes of admitting the appeal.

Filing of appeal electronically or otherwise - provisional acknowledgment on filing - Whether the appellate authority should admit and decide the appeal on merits after accepting the petitioner's manual submission. - HELD THAT: - Having found that the petitioner's inability to file electronically was due to a portal glitch and that rejection on that ground was unsustainable, the Court directed the appellate authority to admit the appeal if otherwise in order. The matter was remitted to the appellate authority for adjudication on merits in accordance with law, leaving open consideration of the appeal's substantive merits and any consequent proceedings, consistent with Rule 108's requirement for filing in FORM GST APL 01 and issuance of provisional acknowledgment upon filing. [Paras 7]

The appellate authority was directed to admit the appeal and proceed to dispose of it on merits in accordance with law.

Final Conclusion: Writ petition allowed; the appeal rejection dated 29.11.2022 is set aside and the appellate authority is directed to admit the appeal if otherwise in order and decide it on merits; no costs.

Refund of IGST on zero-rated supplies - limitation under Section 54(1) of the CGST Act - completion of refund application in the form and manner prescribed - documentary evidences required under Rule 89(2) of the CGST Rules - treatment of deficiency memo and requirement to file a fresh application under Rule 90(3) - acknowledgement and date of filing for limitation under Rule 90(1)-(2) - verification by issuance of notice in Form GST RFD-08 under Rule 90(5) - Circular No.125/44/2019-GST (procedure on deficiency memos)

Completion of refund application in the form and manner prescribed - documentary evidences required under Rule 89(2) of the CGST Rules - limitation under Section 54(1) of the CGST Act - Validity of the petitioner's refund application for IGST filed on 31.10.2019 for the month of October 2017 and whether limitation under Section 54(1) was attracted - HELD THAT: - The Court found that an application for refund, if accompanied by the documentary evidence specified in Rule 89(2), is filed in the "form and manner" prescribed and the period of limitation under Section 54(1) stops running from the date of such filing. The Court held that the petitioner had submitted the statements and FIRCs called for by Clause (c) of Rule 89(2) and therefore the application of 31.10.2019 could not be treated as non est. Deficiencies subsequently raised by the proper officer related to discrepancies and requests for further verification but did not render the original application incomplete in terms of Rule 89(2). Consequently the application was within the two year period prescribed by Section 54(1) and could not be rejected as barred by limitation. [Paras 20, 23, 24, 25, 26]

The petitioner's refund application filed on 31.10.2019 was validly filed within the period prescribed by Section 54(1) and could not be rejected on the ground of limitation.

Treatment of deficiency memo and requirement to file a fresh application under Rule 90(3) - Circular No.125/44/2019-GST (procedure on deficiency memos) - acknowledgement and date of filing for limitation under Rule 90(1)-(2) - Whether deficiency memos issuing requests for further documents/clarifications convert a compliant application into a nullity requiring a fresh filing for limitation purposes - HELD THAT: - The Court interpreted Rule 90(3) and the impugned Circular in context with Rule 89(2) and Section 54. It concluded that only where an application is incomplete in terms of Rule 89(2) may it be treated as deficient so as to necessitate a fresh filing. Merely issuing deficiency memos seeking clarifications or further verification does not convert an application that is complete under Rule 89(2) into a fresh application for the purpose of computing the two year limitation. The Court observed that the proper officer may seek further verification by issuing appropriate notices (including Form GST RFD-08) but that does not affect the date from which limitation is to be computed where the requisite documentary evidences under Rule 89(2) are already furnished. [Paras 19, 20, 21, 22, 23]

Deficiency memos seeking further information do not, by themselves, render an application incomplete under Rule 89(2) or restart the limitation period; the date of filing of a complete application governs limitation.

Restoration of refund claim for adjudication on merits - Relief to be granted where a refund application has been rejected as barred by limitation despite being filed with required documents - HELD THAT: - Having held that the petitioner's 31.10.2019 application was filed within the statutory period and was accompanied by the documents required under Rule 89(2), the Court set aside the impugned order rejecting the refund on limitation grounds. The matter was remitted to the proper officer for fresh consideration on merits of the refund claim, without expressing any view on the substantive entitlement beyond the limitation issue. [Paras 29]

The impugned order rejecting the refund claim on limitation grounds is set aside and the refund application is restored for fresh consideration on merits by the proper officer.

Challenge to vires of Rule 90(3) and Circular No.125/44/2019-GST - Whether the Court would adjudicate the constitutional challenge to Rule 90(3) and the impugned Circular - HELD THAT: - The Court observed that the present controversy was covered by its earlier decision in Bharat Sanchar Nigam Limited v. Union of India & Ors. and that the learned counsel for the petitioner did not press the broader vires challenge. Consequently the Court did not examine the constitutional validity of Rule 90(3) or paragraph 12 of the Circular and decided the case on the basis that the petitioner's filing complied with Rule 89(2) and limitation stopped on such filing. [Paras 26, 27, 28]

The constitutional challenge to Rule 90(3) and paragraph 12 of the Circular was not adjudicated; the matter was decided on limitation and compliance with Rule 89(2).

Final Conclusion: The petition is allowed: the order rejecting the petitioner's IGST refund claim as barred by limitation is set aside; the Court held that a refund application accompanied by the documentary evidences specified in Rule 89(2) is filed in the prescribed form and manner and stops the running of the two year period under Section 54(1); the refund application is restored and remitted to the proper officer for fresh consideration on merits.

Quashing of demand cum show-cause notice - invocation of extended limitation under proviso to Section 73(1) of the Finance Act, 1994 - recovery of refund of unutilised input tax credit - refund of unutilised ITC on zero-rated supplies without payment of IGST - consistency principle in grant of refunds - applicability of precedent

Quashing of demand cum show-cause notice - recovery of refund of unutilised input tax credit - invocation of extended limitation under proviso to Section 73(1) of the Finance Act, 1994 - Validity of Demand cum Show Cause Notice dated 30.03.2021 seeking recovery of refund and demand of service tax - HELD THAT: - The Court examined the impugned notice issued under Sections 73 of the Finance Act, 1994 read with Section 174 of the CGST Act which sought to invoke the extended period of limitation to recover a previously granted refund and to demand service tax. The petitioner relied on the earlier decision in Genpact India (P.) Ltd. (CWP-6048-2021) where this Court held that the petitioner was not an intermediary and allowed refund of unutilised ITC used in making zero-rated supplies without payment of IGST, applying the principle of consistency in grant of refunds. The respondents had implemented that earlier judgment, sanctioned a refund for the period April 2019 to June 2019, and had decided not to file a Special Leave Petition in the Supreme Court. In view of the respondents' conscious decision not to challenge the earlier detailed judgment and the direct applicability of its ratio to the present case, the Court concluded that the impugned notice could not stand. [Paras 7, 8]

Writ petition allowed; the notice dated 30.03.2021 is set aside.

Final Conclusion: The petition succeeds: relying on the ratio of the earlier Genpact India (P.) Ltd. judgment and the respondents' decision not to challenge it, the High Court quashed the Demand cum Show Cause Notice dated 30.03.2021 and set it aside.

Bail under Section 439 Cr.P.C. - bail pending trial - custody not required for further investigation - release on furnishing bail bonds/surety - allegation of fabricated prosecution/false implication

Bail under Section 439 Cr.P.C. - custody not required for further investigation - allegation of fabricated prosecution/false implication - release on furnishing bail bonds/surety - Grant of bail to the petitioner pending trial - HELD THAT: - The petition under Section 439 Cr.P.C. was considered on the prosecution's case that the petitioner was part of a group alleged to have obtained GST refunds through issuance of fake bills, and on the defence contention that the case was concocted and the petitioner was not involved. It was recorded that the petitioner has been in custody since 10.12.2022 and is not required for any further investigation. Weighing these facts and without expressing any opinion on the merits of the prosecution case, the Court concluded that bail pending trial should be granted. The relief was directed to be subject to usual safeguards by requiring bail bonds/surety to the satisfaction of the trial Court/Duty Magistrate. [Paras 4]

Petition allowed; petitioner released on bail pending trial on furnishing bail bonds/surety to the satisfaction of the trial Court/Duty Magistrate.

Final Conclusion: Bail granted under Section 439 Cr.P.C. as petitioner was in custody since 10.12.2022 and not required for further investigation; release ordered on furnishing bail bonds/surety to the satisfaction of the trial Court/Duty Magistrate, without expressing any view on merits.

Order of attachment - attachment of immovable property - ceases to have effect under Section 83(3) of the Tamil Nadu Goods and Services Tax Act, 2017 - lifting of attachment - follow earlier decision

Attachment of immovable property - ceases to have effect under Section 83(3) of the Tamil Nadu Goods and Services Tax Act, 2017 - lifting of attachment - Whether the attachment of the petitioner's immovable property made on 28.01.2021 has to be lifted in view of Section 83 of the Tamil Nadu GST Act and the Court's earlier decision in M.Arul Kumaran. - HELD THAT: - The Court noted its earlier decision in W.P.No.32973 of 2022 in M.Arul Kumaran, wherein it was held that an order of attachment under the CGST Act ceases to have effect under Section 83(3). Applying that legal position, the Court observed prima facie that the attachment effected on 28.01.2021 against the petitioner's immovable property must be lifted in light of Section 83 of the Tamil Nadu Goods and Services Tax Act, 2017. The respondents were directed to take steps in accordance with the law laid down in M.Arul Kumaran and to carry out the exercise within a specified time frame. [Paras 4, 6, 7, 8]

The respondents are directed to lift the attachment and take suitable steps in accordance with the Court's earlier decision in M.Arul Kumaran within 30 days; the writ petition is allowed.

Final Conclusion: Writ petition allowed; attachment of the petitioner's immovable property to be lifted and respondents to act in accordance with this Court's earlier decision within 30 days.

Jurisdiction of Advance Ruling Authority - place of supply determining jurisdiction - interstate supply - advance ruling not admissible for hypothetical questions - binding effect of advance ruling - advance ruling void ab initio for fraud or suppression

Jurisdiction of Advance Ruling Authority - place of supply determining jurisdiction - interstate supply - Whether the Tamilnadu Authority for Advance Ruling can adjudicate the applicability of Notification No.12/2017 to the applicant's sub contract services performed for a project located in Maharashtra - HELD THAT: - The Authority examined the contractual documents and invoices and found that the services were supplied from Tamil Nadu to a recipient in Maharashtra, indicating an interstate supply and that the situs of the transaction is not within Tamil Nadu. The Advance Ruling Authority under the TNGST/CGST framework is empowered to pronounce rulings within the State; where the situs of the transaction is outside the State, the Tamilnadu Authority cannot acquire jurisdiction to decide the question. In view of the situs being in another State and the Authority's territorial limits, the question seeking applicability of the exemption was not admitted for adjudication (see para 6). [Paras 6]

Question on applicability of Notification No.12/2017 to the applicant's sub contract for the Maharashtra project is not admitted for want of jurisdiction.

Advance ruling not admissible for hypothetical questions - Whether a prospective, blanket ruling can be given on applicability of exemption to all future sub contracts, covering both intrastate (SGST/CGST) and interstate (IGST) supplies - HELD THAT: - The Authority noted that each future contract would require assessment on its own facts and terms. An advance ruling cannot be rendered on hypothetical or prospective contingencies that lack a concrete contract or factual matrix. Consequently, the request for a general ruling applicable to all future sub contracts was held inadmissible as hypothetical (see para 7). [Paras 7]

Request for a blanket advance ruling covering all future sub contracts (intrastate and interstate) is not admitted as hypothetical.

Final Conclusion: The Authority declined to admit the application: the question on exemption in respect of the Maharashtra project was not admitted for lack of territorial jurisdiction of the Tamilnadu Advance Ruling Authority, and the request for a general ruling on all future sub contracts was rejected as hypothetical; procedural avenues of appeal to the State Appellate Authority remain available.

Composite supply of works contract - Classification of recipient as Governmental Authority, Government Entity or Local Authority - Effect of amendment to Notification No. 11/2017-C.T.(Rate) by Notification No. 15/2021 and Notification No. 22/2021 - Rate of tax applicable on works contract supplied to a Governmental Authority after 01.01.2022 - Binding nature of an Advance Ruling

Classification of recipient as Governmental Authority, Government Entity or Local Authority - Special Purpose Vehicle (SPV) - Legal status of M/s Tirunelveli Smart City Limited for purposes of Notification No. 11/2017-C.T.(Rate). - HELD THAT: - The Authority examined the Memorandum of Association, shareholding pattern (50:50 by State/ULB), the Smart Cities Mission guidelines and the role of an SPV as the implementing vehicle at city level. The Smart City SPV is constituted to plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate Smart City projects and is an entity in which State/UT and ULB are promoters with combined majority control. Tirunelveli Smart City Limited's objects and constitution align with the Smart Cities Mission and the explanation to Para 4(ix) of Notification No.11/2017 (inserted by Notification No.31/2017) which defines a Governmental Authority as an authority established by government to carry out functions entrusted under article 243W. The Authority further noted that the company is not invested with powers to control or manage a municipal or local fund as required for characterisation as a Local Authority under section 2(69)(c) of the CGST Act. Applying these factors, Tirunelveli Smart City Limited is within the meaning of Governmental Authority for purposes of the Notification and cannot be equated to a local body. [Paras 3, 8]

Tirunelveli Smart City Limited is a Governmental Authority and not a Local Authority.

Composite supply of works contract - Effect of amendment to Notification No.11/2017 by Notification No.15/2021 and Notification No.22/2021 - Classification of tax rate under Notification No.11/2017-C.T.(Rate) - Applicable GST rate on works contract services supplied by the applicant to Tirunelveli Smart City Limited with effect from 01.01.2022. - HELD THAT: - Prior to 01.01.2022, works contract services supplied to a Governmental Authority were covered by serial number 3(vi) of Notification No.11/2017 and attracted concessional treatment as specified therein. Notification No.15/2021 (effective 01.01.2022) amended serial 3(vi) by deleting the words 'a Governmental Authority or a Government Entity', and Notification No.22/2021 gave effect to that amendment with effect from 01.01.2022. Consequently, the description and entry that provided concessional classification for services to a Governmental Authority was altered. Having found Tirunelveli Smart City Limited to be a Governmental Authority, the Authority applied the post-amendment matrix and concluded that, with effect from 01.01.2022, the applicant's services fall under serial number 3(xii) of Notification No.11/2017 (as amended) and therefore attract CGST 9% and SGST 9% from that date. [Paras 8, 9]

With effect from 01.01.2022, the applicant's works contract services to Tirunelveli Smart City Limited are covered under serial number 3(xii) of Notification No.11/2017 and attract CGST @ 9% and SGST @ 9%.

Scope of advance ruling under Section 95 - Requirement of particulars for advance ruling - Advance ruling application in respect of works contract services to Tamil Nadu Urban Habitat Development Board. - HELD THAT: - The Authority noted that the applicant did not furnish details and nature of services being provided or proposed to be provided to Tamil Nadu Urban Habitat Development Board as required under section 95(a) and the application was withdrawn by the applicant. The Authority therefore refrained from answering the question concerning that recipient. [Paras 2, 6, 9]

No ruling on services to Tamil Nadu Urban Habitat Development Board; the question is not answered for want of requisite particulars.

Final Conclusion: The Authority rules that Tirunelveli Smart City Limited is a Governmental Authority and that, consequent to amendments effective 01.01.2022, the applicant's works contract services to that entity are taxable under serial number 3(xii) of Notification No.11/2017 and attract CGST @ 9% and SGST @ 9%; no advance ruling is given in respect of Tamil Nadu Urban Habitat Development Board for lack of requisite details.

Input tax credit eligibility on leasing/renting/hiring of motor vehicles - Blocking of ITC for motor vehicles with seating capacity of not more than thirteen persons - Proviso to Section 17(5)(b) - ITC available where supply is obligatory for an employer under any law - Effective date of state notification determining applicability of proviso

Input tax credit eligibility on leasing/renting/hiring of motor vehicles - Blocking of ITC for motor vehicles with seating capacity of not more than thirteen persons - Proviso to Section 17(5)(b) - ITC available where supply is obligatory for an employer under any law - Entitlement to avail ITC on GST paid for leasing/renting/hiring of motor vehicles used to provide transport facilities to women employees working beyond 8.00 PM - HELD THAT: - The amended Section 17(5) disallows ITC on leasing/renting/hiring of motor vehicles used for transportation of persons where approved seating capacity is not more than thirteen persons (including driver). The vehicles actually hired by the applicant have seating capacity of less than thirteen persons and therefore, prima facie, fall within the blocked category. However, the proviso to Section 17(5)(b) makes ITC available where the inward supply is obligatory for an employer to provide to its employees under any law for the time being in force. The Tamil Nadu Notification dated 28.05.2019 under the Shops and Establishments Act mandates transport arrangements for women employees working in shifts and requires provision of adequate protection for women working between 8.00 PM and 6.00 AM. On the facts, the applicant has entered into leasing agreements and produced invoices showing vehicles with seating capacity below thirteen, and the obligation under the State law to provide transport to women employees working beyond 8.00 PM is established. Applying the proviso, the Authority held that ITC is not blocked for the applicant in respect of the renting/leasing/hiring services insofar as they are provided to fulfil that statutory obligation to women employees, subject to the conditions of Section 16 for availing ITC. [Paras 6]

The applicant is entitled to ITC on GST paid for leasing/renting/hiring of motor vehicles used to provide transport to women employees working between 8.00 PM and 6.00 AM, insofar as such transport is obligatory under the Tamil Nadu law.

Effective date of state notification determining applicability of proviso - Proviso to Section 17(5)(b) - ITC available where supply is obligatory for an employer under any law - The date from which ITC can be availed under the proviso where the obligation to provide transport arises under a State notification - HELD THAT: - Section 17(5) as amended with effect from 01.02.2019 blocks ITC on certain supplies including renting of motor vehicles with seating capacity not exceeding thirteen. The proviso permitting ITC where the supply is obligatory under any law becomes operative for the applicant only from the date on which the State law/notification made the provision obligatory. The Tamil Nadu Notification making transport arrangements obligatory for women employees working in shifts is dated 28.05.2019; consequently, the condition in the proviso is satisfied only from that notification date. The Authority therefore confined the availability of ITC under the proviso to supplies received on or after 28.05.2019, subject to compliance with Section 16. [Paras 6]

ITC in respect of the renting/leasing/hiring of motor vehicles to provide transport to women employees is available from 28.05.2019, being the date of the State notification imposing the statutory obligation, subject to the conditions of Section 16.

Final Conclusion: The Authority ruled that the applicant may avail ITC on GST paid for leasing/renting/hiring of motor vehicles used to provide transport to women employees arriving or leaving between 8.00 PM and 6.00 AM, and that such ITC is admissible from 28.05.2019 (the date of the Tamil Nadu Notification) subject to the provisions of Section 16 of the CGST/TNGST Act, 2017.

Beneficial ownership of shares under the Portuguese Civil Code (Comunha o dos Bens) - effect of communion of matrimonial assets on voting power and shareholding for tax purposes - deeming fiction of Section 2(22)(e) - deemed dividend on loan/advance for benefit of a shareholder - person who has a substantial interest / Section 2(32) - voting-power threshold for deemed dividend - Section 5A apportionment of income between spouses governed by Portuguese Civil Code - requirement of declaration of beneficial interest under Section 187C of the Companies Act - jurisdiction under Section 153A/153C - incriminating material discovered during search - distinction between registered shareholder/member and extraneous beneficial claims for company law rights - assessment under Section 153A/153C limited to material unearthed in search (incriminating material)

Beneficial ownership of shares under the Portuguese Civil Code (Comunha o dos Bens) - requirement of declaration of beneficial interest under Section 187C of the Companies Act - distinction between registered shareholder/member and extraneous beneficial claims for company law rights - Whether a spouse governed by the Portuguese Civil Code becomes, by operation of that Code, a beneficial owner of shares (and acquires voting rights) in a company where the shares are registered only in the other spouse's name, thereby affecting applicability of Section 2(22)(e) and Section 2(32) of the Income Tax Act. - HELD THAT: - The Court examined the Portuguese Civil Code provisions on communion of assets and the Companies Act scheme for membership, registers and voting rights. It held that the Companies Act prescribes who is a member/shareholder and who has voting rights - namely the person whose name appears in the register of members (or register of beneficial owners where applicable) and who complies with statutory declarations. Section 187C requires prescribed declarations to be made and recorded for a third party to be recognised by the company as beneficial owner. The Income Tax provisions (Sections 2(22)(e) and 2(32)) must be read with the company law meaning of 'shareholder' and 'beneficial owner'. Consequently, absent the statutory declaration/recordal under the Companies Act, a spouse who is not registered cannot be treated, for company-rights or for triggering the deeming provision, as the beneficial owner of the shares merely by operation of the Portuguese Civil Code. The Court therefore held that the wife in these appeals was not the registered/recognised beneficial owner and had no voting rights in the companies; the husband remained the holder of the registered shares for purposes of Section 2(22)(e) and Section 2(32). The Court rejected the submission that Section 187C is inapplicable to persons governed by the Portuguese Civil Code and answered Substantial Questions (A)-(C) against the appellants. [Paras 76, 77, 78, 79, 80]

Spouse (wife) not to be treated as beneficial owner with company-law rights merely by Portuguese Civil Code; Section 187C applies and the registered shareholder (husband) is the relevant person for applying Section 2(22)(e) and Section 2(32).

Jurisdiction under Section 153A/153C - incriminating material discovered during search - assessment under Section 153A/153C limited to material unearthed in search (incriminating material) - Whether proceedings under Section 153C (and the assessments made thereunder) were invalid because no new incriminating material was found during the search. - HELD THAT: - The Court reviewed the facts of the earlier rounds of appeal. It recorded that the CIT(A) had found, on the earlier round, that intragroup transactions and shareholding details were collated for the first time during the search and constituted incriminating material; that factual finding was raised before the ITAT and the appellants withdrew/abandoned that ground in the first round. Because that jurisdictional challenge was expressly given up and not pressed before the ITAT, the factual finding about the incriminating material became final in the earlier proceedings. The High Court therefore held that Substantial Question (D) does not arise for adjudication in these appeals (the remand to CIT(A) was limited to issues on deemed dividend) and that the appellants cannot re-agitate the given-up jurisdictional challenge in this forum. [Paras 83, 84, 85, 86, 97]

Jurisdictional challenge under Section 153C was given up in earlier proceedings and does not fall for fresh adjudication; issue (D) does not arise.

Deeming fiction of Section 2(22)(e) - deemed dividend on loan/advance for benefit of a shareholder - person who has a substantial interest / Section 2(32) - voting-power threshold for deemed dividend - commercial inter company transactions versus loans or advances - Whether the inter company payments/advances made among group companies in which the appellants were shareholders were loans/advances attracting the deeming provision of Section 2(22)(e), or bona fide business/trade transactions not falling within that provision (Substantial Questions (E) and (F)). - HELD THAT: - The Court treated these contentions largely as questions of fact. It reviewed the Tribunal's and lower authorities' factual findings on each impugned transaction (advances between KIPL and KCPL; KCPL and KCRPL; KIPL and KCRPL; AVCTPL and KCPL). Where contemporaneous records supported that a payment represented bona fide commercial consideration (for example management fees proportionate to sales), those parts were accepted; where no adequate explanation or contemporaneous documentary support existed, the authorities treated the amounts as advances/loans for the assessee's benefit and applied Section 2(22)(e). The Court noted the CBDT Circular No.19/2017 principles had been considered and, on the whole, found no perversity in the fact finding of the authorities. The High Court concluded that these were factual determinations and not substantial questions of law warranting interference, answering Substantial Questions (E) and (F) against the appellants. [Paras 100, 101, 102, 103, 104]

Inter company payments assessed as loans/advances attracting Section 2(22)(e) where not supported as bona fide business transactions; factual findings of lower authorities upheld and Substantial Questions (E) and (F) answered against appellants.

Final Conclusion: The High Court dismissed the appeals and upheld the ITAT order. It held (i) a spouse governed by the Portuguese Civil Code cannot, without statutory declaration/recordal under company law, be treated as the company's beneficial owner for purposes of Sections 2(22)(e) and 2(32); (ii) the appellants cannot re open the jurisdictional challenge under Section 153C which was given up earlier; and (iii) the factual findings of the authorities that certain inter company payments were not bona fide business transactions but advances/loans attracting the deeming fiction were supported by the record and do not call for interference.

Compensation under the Motor Vehicles Act is a capital receipt and not income - interest awarded on compensation under the Motor Vehicles Act is not exigible to tax unless it constitutes income - Section 145-B operates as a mode of accounting and does not itself charge non-income to tax - deduction of tax at source under Section 194-A applies only where the payment is in the nature of income - exception to TDS under Section 194-A(3)(ix) and threshold in Section 194-A(3)(ix-a) - refund of illegally deducted TDS on non-taxable interest

Compensation under the Motor Vehicles Act is a capital receipt and not income - interest awarded on compensation under the Motor Vehicles Act is not exigible to tax unless it constitutes income - Section 145-B operates as a mode of accounting and does not itself charge non-income to tax - deduction of tax at source under Section 194-A applies only where the payment is in the nature of income - exception to TDS under Section 194-A(3)(ix) and threshold in Section 194-A(3)(ix-a) - refund of illegally deducted TDS on non-taxable interest - Whether tax was rightly deducted at source from the interest awarded on compensation under the Motor Vehicles Act and whether such deducted tax must be refunded. - HELD THAT: - The Court held that compensation awarded under the Motor Vehicles Act is by way of restitution for loss and is a capital receipt; accordingly, interest awarded on such compensation from the date of claim petition until the award (and on enhanced compensation until the High Court judgment) is not, per se, income. Section 145-B is a provision dealing with timing/mode of accounting and does not convert a non-income receipt into taxable income; thus Section 145-B cannot be read as a charging provision that renders non-income exigible to tax. Deduction of tax at source under Section 194-A is authorized only where the payment is in the nature of interest that is income of the recipient. The statutory exceptions in Section 194-A(3)(ix) and the threshold in Section 194-A(3)(ix-a) indicate that TDS liability arises only insofar as the interest component is treated as income and exceeds the specified limit. Applying these principles and preceding High Court and coordinate-bench authorities, the Court concluded that the interest portion awarded in the petitioner's MACT award and High Court enhancement, being not income, was not liable to TDS and the tax so deducted was illegally charged and must be refunded. The Court qualified that only that part of interest which is properly treated as income and exceeds the statutory threshold would be exigible to tax under the Act. [Paras 8, 9]

Tax deducted at source from the interest component of the compensation awarded to the petitioner was not exigible and the respondents are directed to refund the amount so deducted within one month.

Final Conclusion: Writ petition allowed; respondents directed to refund the tax deducted at source from the interest awarded on motor-accident compensation to the petitioner within one month; no order as to costs.

Issuance of notice to non-existent amalgamating company - amalgamation and corporate death - intimation of amalgamation to income tax authorities - reopening assessment under Section 148 - successor liability and assessment on transferee company - curability of mistake under Section 292B - precedent distinction: Principal Commissioner of Income-tax v. Mahagun Realtors - ratio in Marshall Sons & Co. regarding appointed date of amalgamation

Issuance of notice to non-existent amalgamating company - intimation of amalgamation to income tax authorities - reopening assessment under Section 148 - amalgamation and corporate death - precedent distinction: Principal Commissioner of Income-tax v. Mahagun Realtors - Validity of notices issued under Section 148 of the Income Tax Act in the name of Satyasarthi Estate Organisers Pvt. Ltd. after its amalgamation into Anokhi Realty Pvt. Ltd. - HELD THAT: - The Court examined whether notices dated between 29.03.2021 and 31.03.2021 under Section 148 issued to Satyasarthi Estate Organisers Pvt. Ltd. could be treated as valid when that company had ceased to exist w.e.f. the appointed date of amalgamation (01.04.2019) and the Revenue had been informed of the scheme. The Court compared the facts with precedents where assessment notices issued in the name of an amalgamating/transferee entity were held void when the amalgamating company had ceased to exist and the department had knowledge of the merger (Maruti Suzuki and a line of Gujarat High Court decisions). It distinguished the Supreme Court decision in Mahagun Realtors on the factual matrix there - namely, absence of intimation and conduct of the amalgamating company (filing returns, participating in proceedings and suppressing amalgamation) - which supported upholding assessments in that case. Here, the scheme was sanctioned with effect from 01.04.2019, the transferee's records and audit note recorded the merger, and the jurisdictional officer had been notified. Given these facts and the line of authority (including Marshall Sons regarding effect of the appointed date), the notices addressed to the extinct transferor entity were inconsistent with the legal principle that an amalgamating entity ceases to exist and were therefore without jurisdiction.

The notices issued under Section 148 for the Assessment Years 2014-15 to 2017-18 in the name of Satyasarthi Estate Organisers Pvt. Ltd. are quashed and set aside.

Final Conclusion: Writ petition allowed; reassessment notices issued in the name of the dissolved/merged transferor company for AY 2014-15 to AY 2017-18 quashed and set aside, without prejudice to the Revenue initiating appropriate proceedings in accordance with law.

Relevance of seized documents to assessment year for proceedings under section 153C - Requirement of incriminating material specific to the assessment year - Application of the ratio in Kabul Chawla - Affirmation by the Supreme Court in Principal Commissioner of Income Tax v. Abhisar Buildwell - Condonation of delay - No substantial question of law

Condonation of delay - Application for condonation of delay in filing the appeal was allowed. - HELD THAT: - The Court considered the application seeking condonation of 14 days' delay in filing the appeal and, having regard to the period of delay, exercised its discretion to allow the prayer for condonation. [Paras 1, 3]

Application for condonation of delay allowed.

Relevance of seized documents to assessment year for proceedings under section 153C - Requirement of incriminating material specific to the assessment year - Application of the ratio in Kabul Chawla - No substantial question of law - Additions made by assessing officer for the assessment years under consideration could not be sustained because incriminating material seized during search did not pertain to those years. - HELD THAT: - The Tribunal found that the documents seized during search related to Assessment Years 2010-11 and 2011-12 and did not pertain to Assessment Years 2007-08 to 2009-10. Applying the principle that initiation of proceedings and any additions under proceedings arising from search must be related to material relevant to the assessment year sought to be reopened, the Tribunal concluded that the additions for the years under consideration were not based on incriminating material found during the search. The High Court observed that this conclusion is governed by the coordinate bench decision in Kabul Chawla and noted the Supreme Court's affirmation in Principal Commissioner of Income Tax v. Abhisar Buildwell. In view of the absence of incriminating material specific to the assessment years in question, the Court found no reason to interfere with the Tribunal's factual and legal conclusion and held that no substantial question of law arises. [Paras 12, 13, 14, 15, 16]

Appeal dismissed/closed; Tribunal's finding that additions could not be sustained is upheld and no substantial question of law arises.

Final Conclusion: Delay in filing the appeal condoned; on merits the Tribunal's finding that no incriminating material seized related to the assessment years under challenge was upheld in view of Kabul Chawla and its affirmation, the appeal is closed and no substantial question of law arises.

Validity of assessment order where service was effected to address/e-mail particulars furnished in the return - service on a company by reference to address and e-mail on Ministry of Corporate Affairs website - effect of inadvertent error in revised return on service and assessment proceedings - remand for passing a speaking order - electronic communication under Section 282 and Rule 127 of the Income tax Rules, 1962

Validity of assessment order where service was effected to address/e-mail particulars furnished in the return - service on a company by reference to address and e-mail on Ministry of Corporate Affairs website - effect of inadvertent error in revised return on service and assessment proceedings - electronic communication under Section 282 and Rule 127 of the Income tax Rules, 1962 - Whether the assessment order dated 08.09.2021 for AY 2018-2019 could be sustained where notices and order were sent to the old address/e mail furnished in the revised return though the Department had correct address/e mail information - HELD THAT: - The court found that the petitioner had committed a mistake in the revised return by furnishing the old postal address and old e mail id, so communications pursuant to that return were sent to those particulars. At the same time, other wings of the Income Tax Department were aware of the petitioner's new address and e mail and had used the correct particulars while issuing the refund order for the subsequent year. Rule 127(2)(a)(iii) and (iv) and Rule 127(2)(b)(iii) require that, in the case of a company, service may be effected by reference to the address and e mail available on the Ministry of Corporate Affairs website; and Section 282 as amended contemplates electronic modes of communication. Considering the competing facts - inadvertent but material error by the petitioner in the revised return and knowledge on the part of the Department of the correct particulars - the court treated the mistake as not so grave as to foreclose adjudication on merits. In the interests of justice the court quashed the impugned assessment order and remitted the matter to the respondents for a fresh, speaking order to be passed within a specified short time frame, permitting the petitioner to file a reply, thereby balancing procedural regularity with opportunity to be heard. [Paras 26, 28, 29, 30, 31]

Impugned Assessment Order dated 08.09.2021 quashed and matter remitted to the respondents to pass a speaking order within 45 days; the Impugned Assessment Order shall be treated as a corrigendum to the preceding show cause notice for the purpose of final disposal; petitioner permitted to file a reply within 15 days.

Lifting of lien over pre deposit - Whether the petitioner is entitled to immediate lifting of the respondents' lien over amounts deposited - HELD THAT: - The court noted the petitioner had made a pre deposit and that the respondents were holding a lien over certain amounts. Rather than directing immediate lifting of the lien, the court left the matter open: the petitioner was granted liberty to approach the respondents to seek lifting of the lien while the remand proceedings are conducted. This preserves administrative discretion while allowing the petitioner an opportunity to seek relief from the respondents promptly. [Paras 13, 15, 31]

Petitioner is at liberty to approach the respondents to seek lifting of the lien; no mandatory direction to lift the lien was issued.

Final Conclusion: Writ petition allowed: the assessment order for AY 2018-2019 dated 08.09.2021 is quashed and remitted for fresh consideration by the authorities within 45 days, the petitioner may file a reply within 15 days and may approach the respondents for lifting of the lien; no costs.

Reopening of assessment by issuance of notice under Section 148/148A - premature judicial interference in interim notices - availability of statutory remedies and exclusive machinery for assessment/reassessment - distinction between jurisdictional error and error within jurisdiction

Reopening of assessment by issuance of notice under Section 148/148A - premature judicial interference in interim notices - availability of statutory remedies and exclusive machinery for assessment/reassessment - distinction between jurisdictional error and error within jurisdiction - Writ Court should not intervene at the stage of issuance of notice under Section 148/148A when assessment/reassessment is yet to be concluded by the Assessing Officer - HELD THAT: - The Court applied the settled principle that the Income-tax Act provides a complete statutory machinery for assessment and reassessment and that interlocutory writ relief challenging issuance of notice under Section 148/148A is generally premature where no assessment order under Section 147 has been framed. Precedents were followed which decline to entertain challenges at the notice stage and leave factual and legal controversies to be resolved by the statutory process and appellate remedies; the Court observed that only in cases where the authority clearly acts without jurisdiction would writ intervention be warranted. The petitioner's challenge, based on alleged erroneous exercise of jurisdiction (as opposed to absence of jurisdiction), therefore falls within errors correctable under the statutory scheme and not by interlocutory constitutional writ at this stage. The Court declined to enter into merits so as not to prejudice the adjudicatory process and emphasized the distinction between jurisdictional error and an error within jurisdiction remediable under the Act.

Writ petition dismissed; no interference with the issuance of the notices at this interim stage

Final Conclusion: The High Court dismissed the petition challenging the notices under Section 148A(b), Section 148A(d) and Section 148, holding that judicial intervention is not appropriate at the preliminary notice stage when the statutory assessment/reassessment proceedings are pending and alternative statutory remedies are available; nothing was decided on the merits.

Allowability of provision for future/unbilled expenses - application of mercantile/matching principle in claiming provisions - assessment officer's duty to examine factual matrix and evidentiary documents - scope and effect of remand to assessing officer

Allowability of provision for future/unbilled expenses - application of mercantile/matching principle in claiming provisions - Whether the provisions made by the assessee for unbilled/future expenses for the project were allowable for AY 2011-12 and AY 2012-13 and whether the Tribunal was justified in setting aside the assessing officer's disallowance. - HELD THAT: - The Court examined the record and the findings of the ITAT and concluded that the assessing officer had before him the technical estimates, costs and computations relied upon by the assessee to arrive at the provisions for the respective years. The ITAT recorded that the AO had noted details of expenditure in his order and those details were extracted in the ITAT's order. There was no dispute that provisions were made on a pro rata basis relative to turnover and the total unbillable future expenses of the project, and the design component (part of the unbilled expenses) was accepted by the Revenue. On the material placed before the AO and the finding that the provision was not a contingent liability but based on ascertainable liability and matching of expenditure, the Court found no error in the Tribunal's conclusion to allow the provisions and to dismiss Revenue's appeals. [Paras 8, 9, 11]

Provisions for unbilled/future expenses as claimed by the assessee for AY 2011-12 and AY 2012-13 are allowable; ITAT was justified in dismissing the assessing officer's disallowance.

Assessment officer's duty to examine factual matrix and evidentiary documents - scope and effect of remand to assessing officer - Whether the matter should be remanded to the assessing officer for fresh examination of the component relating to reconstruction of roads and other civil works. - HELD THAT: - Revenue relied on a remand made in respect of a later year (AY 2013-14) to contend that the present years required remand for detailed factual examination. The Court observed that remand decisions are fact-specific and parity cannot be assumed. For AY 2013-14 the AO, after remand, accepted the provisions, and no disallowance was made for AY 2014-15. Given that the AO had before him the technical communications and estimates and had recorded details of expenditure, the Court found no reason to order a remand for AY 2011-12 and AY 2012-13. The factual material had been considered by the AO and noted by the ITAT, negating the need for further remand in these appeals. [Paras 5, 9, 10]

No remand required; the AO had examined the factual matrix and there was no error in the Tribunal declining to remit the matter for AY 2011-12 and AY 2012-13.

Final Conclusion: Revenue's appeals are dismissed; substantial questions of law are answered in favour of the assessee and against the Revenue, upholding the allowability of the provisions for unbilled/future expenses for AY 2011-2012 and AY 2012-13 and refusing remand.

Limitation for initiation and completion of proceedings under section 201(1) and 201(1A) of the Income-tax Act - Effect of retrospective and subsequent amendments to limitation period (Finance Act, 2009; Finance Act, 2014) on vested rights - Temporal bar to piecemeal or belated initiation of TDS liability proceedings - Application of the proviso to section 201(1) and section 201(3) to assessment of time-bar

Limitation for initiation and completion of proceedings under section 201(1) and 201(1A) of the Income-tax Act - Effect of retrospective and subsequent amendments to limitation period (Finance Act, 2009; Finance Act, 2014) on vested rights - Temporal bar to piecemeal or belated initiation of TDS liability proceedings - Validity of the order passed under section 201(1) and 201(1A) of the Act in respect of payments alleged in financial year 2005-06, having regard to limitation - HELD THAT: - The Tribunal examined the chronology and found that the alleged failure to deduct TDS related to the financial year 2005-06. An order under section 201(1) and 201(1A) was earlier passed on 06/07/2010 in respect of other alleged payments, and the impugned order was passed on 03/03/2014, beyond seven years from the end of financial year 2005-06. The Tribunal observed that public policy requires such proceedings to be completed within a reasonable and prescribed period and noted that section 201(3) (as introduced by Finance Act, 2009 w.e.f. 01/04/2010 and later amended by Finance Act, 2014) prescribes a time limit for passing orders under section 201(1). Relying on the principle that a right accrued to an assessee prior to a subsequent amendment cannot be taken away by retroactive application of a later substituted limitation period, the Tribunal held that the impugned order was clearly time barred. The Tribunal considered earlier judicial pronouncements referred to by the parties [Mahindra & Mahindra and Bheemarasetty Sunitha ] and, following their reasoning on limitation, concluded that the Revenue could not sustain the belated order passed beyond the statutory period; accordingly no illegality was found in the CIT(A)'s decision setting aside the order. [Paras 8, 9, 10, 11]

The order under section 201(1) and 201(1A) in respect of financial year 2005-06 is barred by limitation and is invalid.

Final Conclusion: The Revenue's appeal is dismissed; the impugned order under section 201(1) and 201(1A) in respect of the payments relating to financial year 2005-06 (Assessment Year 2006-07) is time barred and therefore unsustainable.

Conversion of capital asset into stock in trade - deemed consideration on conversion under section 45(2) - treatment of profit as business income versus capital gains - exemption under section 54F - adventure in the nature of trade

Conversion of capital asset into stock in trade - deemed consideration on conversion under section 45(2) - exemption under section 54F - Whether profits on sale of plots converted from agricultural land and introduced as stock in trade are to be assessed as capital gains by treating the Fair Market Value on the date of conversion as the deemed consideration and whether exemption under section 54F is available. - HELD THAT: - The Tribunal examined the factual matrix and the rival contentions. The Assessing Officer had treated the receipts as business income by applying the doctrine of "adventure in the nature of trade" after conversion and sale. The assessee pleaded that once a capital asset is converted into stock in trade, section 45(2) operates to treat the Fair Market Value on the date of conversion as the deemed consideration and that actual capital gains on subsequent sales must be computed with reference to that deemed consideration; the assessee also claimed exemption under section 54F after utilising amounts from the capital gains account for acquisition of a house. The CIT(A) accepted the assessee's contention and allowed the exemption. The Tribunal found no infirmity in the legal principle adopted by the assessee and CIT(A): Revenue did not dispute the legal proposition that capital gains can be computed by taking the Fair Market Value as on the date of conversion as the deemed sale consideration. The Tribunal therefore confirmed the legal conclusion that capital gains computation under section 45(2) (and consequent claim of exemption under section 54F) is permissible on the stated basis, subject to factual verification of the computations by the Assessing Officer. [Paras 5, 7, 9, 10, 11]

Tribunal upheld the legal principle that capital gains arising on sale of plots converted from a capital asset into stock in trade can be computed by taking the Fair Market Value on the date of conversion as the deemed consideration and that exemption under section 54F is available if conditions are satisfied.

Treatment of profit as business income versus capital gains - verification of computation - Whether the addition made by the Assessing Officer should be sustained where the assessee computed capital gains using Fair Market Value at conversion and indexed cost of acquisition, and what further action is required. - HELD THAT: - Although the Assessing Officer had characterized the receipts as business income, the Revenue advanced an alternative plea that capital gains be restricted to the Fair Market Value at conversion and any excess be treated as business income. The Tribunal observed from the assessee's chart and the record that the assessee had computed capital gains by taking the Fair Market Value on the date of conversion and applying indexed cost of acquisition for the year of sale. The Tribunal noted that Revenue raised no substantive objection to that principle and that the remaining controversy was factual-verification of the computations. Consequently, the Tribunal declined to decide the arithmetic or factual correctness itself and directed the Assessing Officer to verify whether the assessee had indeed computed capital gains by adopting the Fair Market Value on the date of conversion and deducting the indexed cost applicable to the year of sale. If such verification established that the computation was correct, the Tribunal directed deletion of the addition. [Paras 11, 12]

Tribunal dismissed the appeal insofar as the legal principle is concerned and remitted to the Assessing Officer for verification of the assessee's computations, directing deletion of the addition if verification confirms use of Fair Market Value at conversion and appropriate indexed cost deduction.

Final Conclusion: Revenue's appeal is dismissed on merits; the Tribunal confirmed the legal position that capital gains on assets converted into stock in trade may be computed by taking the Fair Market Value as on date of conversion and allowed exemption under section 54F subject to the Assessing Officer's verification of the assessee's computations, with a direction to delete the addition if verification is in the assessee's favour.

Condonation of delay - deeming a person to be an assessee in default under section 201(1)/201(1A) - time-bar / limitation under section 201(3) - validity of statements filed under section 200 / Form 26Q - effect of statutory amendment on expired limitation

Condonation of delay - Whether the delay in filing appeals before the CIT(A) was liable to be condoned - HELD THAT: - The Tribunal examined the reasons for delay in filing appeals before the CIT(A) and noted that the delays arose from genuine operational difficulties at branch level, changing consultants, and subsequent centralised action by the Zonal office to coordinate appeals. The delay was neither deliberate nor due to negligence but caused by bona fide inability to act promptly at individual branches. On this basis the Tribunal found a reasonable and sufficient cause to excuse the delay and condoned it. [Paras 5]

Delay in presenting the appeals before the CIT(A) is condoned.

Deeming a person to be an assessee in default under section 201(1)/201(1A) - time-bar / limitation under section 201(3) - validity of statements filed under section 200 / Form 26Q - effect of statutory amendment on expired limitation - Whether the orders treating the bank-branches as assessee in default under section 201(1)/201(1A) were time barred having regard to section 201(3) as it stood prior to the 2014 amendment - HELD THAT: - The Tribunal held that the impugned cases fell within the first limb of section 201(3) (i.e., statements under section 200/Form 26Q were filed), and therefore the two year limitation from the end of the relevant financial year applied. A mere mistake or omission in the filed quarterly statement does not amount to non filing so as to attract the longer four year limb. The quarterly returns in Form 26Q for the relevant quarters of FY 2009 10 and FY 2010 11 were filed within the prescribed period, so the two year period expired by 31 03 2013 and 31 03 2014 respectively. The orders under section 201(1)/(1A) were passed much later (in 2017-2018) and were therefore time barred. The Tribunal also rejected the Revenue's contention that the subsequent amendment by the Finance (No.2) Act, 2014 could revive the limitation already expired, observing that a later amendment cannot resurrect a limitation period that had already lapsed. [Paras 7, 8, 9, 10]

The orders deeming the bank branches to be in default under section 201(1)/201(1A) are time barred and are quashed; consequential proceedings based on those orders also stand annulled.

Final Conclusion: The Tribunal condoned the delay in filing appeals and allowed the appeals on merits by holding that the orders under section 201(1)/201(1A) in respect of FY 2009 10 and FY 2010 11 were time barred and are quashed; all appeals are allowed.

Recording of satisfaction note under section 153C/158BD - Jurisdiction under section 153C - Transmission of seized documents and requirement of satisfaction by AO of searched person - Applicability of CBDT Circular No.24/2015 to section 153C proceedings - Assessment vitiated for absence of satisfaction note - Characterisation of income as business income (vs long term capital gains)

Recording of satisfaction note under section 153C/158BD - Jurisdiction under section 153C - Applicability of CBDT Circular No.24/2015 to section 153C proceedings - Assessment vitiated for absence of satisfaction note - Validity of assessments framed under section 153C for AYs 2010-11 to 2012-13 in absence of a satisfaction note recorded by the Assessing Officer of the searched person - HELD THAT: - The Tribunal found as an undisputed fact that no satisfaction note was recorded in the file of the searched person (Shri Madanlal D. Chawla) and that the only satisfaction note on record was recorded in the file of the assessee. Relying on the CBDT Circular No.24/2015 and the Supreme Court precedents (as discussed in M/s Super Malls Pvt. Ltd. and Calcutta Knitwears), the Tribunal held that recording of satisfaction by the Assessing Officer of the searched person that seized documents belong to another person is a mandatory prerequisite to acquiring jurisdiction under section 153C. The requirement applies even where the Assessing Officer of the searched person and the other person is the same; the satisfaction must still be recorded by the AO qua the searched person before initiating 153C proceedings. The AO's recording of satisfaction only in the assessee's file did not satisfy this mandatory requirement and consequently the jurisdiction under section 153C was vitiated. The Tribunal therefore quashed the assessments for AYs 2010-11 to 2012-13 and allowed the corresponding grounds raised by the assessee, rendering other grounds academic. [Paras 4, 5, 7]

Assessments for AYs 2010-11 to 2012-13 framed under section 153C are quashed for want of satisfaction note recorded by the Assessing Officer of the searched person; appeals allowed.

Characterisation of income as business income (vs long term capital gains) - Adoption of comparable sale rate - Determination of tax treatment and sale rate for AY 2013-14 - adoption of sale rate from co-owner's Tribunal order and classification of income - HELD THAT: - On review of the Tribunal order in the co-owner's appeals, the Tribunal directed the Assessing Officer to adopt a sale rate of Rs. 400 per sq. ft. (as estimated in the co-owner's case) for computation of gains in the assessee's case. On the nature of income, the Tribunal found that the assessee had consistently developed and sold plots, incurred development expenses, sold vacant house sites and purchased jointly with a real estate dealer, indicating an intention to deal in real estate. For these reasons the Tribunal concurred with the tax authorities' characterisation of the receipts as business income rather than long term capital gains. The appeal was therefore partly allowed by directing adoption of the Rs. 400 per sq. ft. rate and upholding assessment as business income. [Paras 8, 9]

Appeal for AY 2013-14 partly allowed - sale rate directed to be adopted at Rs. 400 per sq. ft.; income correctly treated as business income.

Final Conclusion: The appeals for AYs 2010-11 to 2012-13 are allowed and the assessments framed under section 153C are quashed for lack of a satisfaction note by the Assessing Officer of the searched person; the appeal for AY 2013-14 is partly allowed by adopting the sale rate of Rs. 400 per sq. ft. and upholding the assessment as business income.

Admission of additional evidence under Rule 46A - capital asset definition under Section 2(14) - deduction under Section 54B - reopening of assessment under section 148 - TDS under Section 194IA and taxability of sale consideration

Admission of additional evidence under Rule 46A - Whether the first appellate authority erred in not admitting additional evidence filed by the assessee during appellate proceedings. - HELD THAT: - The Tribunal found that the additional evidence furnished by the assessee during appellate proceedings had material bearing on the computation of capital gains and on the alternate claim under Section 54B. The CIT(A)'s refusal to admit those documents without application under Rule 46A was held to be erroneous because the evidence could affect the substantive adjudication of tax liability. For these reasons the Tribunal concluded that the matter should be restored for fresh consideration where such evidence may be taken on record and assessed afresh. [Paras 3, 4]

Ld. CIT(A) erred in not admitting the additional evidence; matter restored to AO for fresh consideration.

Capital asset definition under Section 2(14) - reopening of assessment under section 148 - Whether the land sold by the assessee is a capital asset exigible to tax or agricultural land exempt from capital gains treatment. - HELD THAT: - The AO treated the land as a capital asset after determining, with reference to census data and aerial measurement, that the property lay within the statutory distance from the nearest municipality as relevant to the amended definition in Section 2(14), and computed capital gains accordingly. The Tribunal did not decide the substantive question on merits but noted that this factual and legal determination bears directly on computation of gains and, in view of the improperly excluded appellate evidence, remanded the issue to the AO for fresh adjudication with all issues kept open. [Paras 3, 4]

Remanded to AO for fresh examination of whether the land is a capital asset or agricultural land.

Deduction under Section 54B - TDS under Section 194IA and taxability of sale consideration - Whether the assessee is entitled to deduction under Section 54B in respect of reinvestment in agricultural land and the relevance of TDS under Section 194IA to taxability. - HELD THAT: - The AO denied the Section 54B deduction for want of documentary evidence and on the ground that the land alleged to be the reinvestment was purchased in the name of the assessee's son prior to the sale. The CIT(A) affirmed the AO's view and observed that TDS under Section 194IA had been deducted and claimed as credit, treating the sale consideration as taxable. The Tribunal held that these contentions and the alternate claim under Section 54B require fresh consideration in the light of evidence that should have been admitted on appeal, and therefore remitted the matter to the AO to decide these questions afresh. [Paras 3, 4]

Deduction claim under Section 54B and issue of taxability in view of TDS remitted to AO for fresh adjudication.

Final Conclusion: Appeal allowed for statistical purposes; assessment remanded to the file of the Assessing Officer for fresh framing of assessment for AY 2014-15 with all issues, including admissibility of additional evidence, classification of the land as capital or agricultural, and the Section 54B deduction, kept open.

Applicability of section 45(3) to transfer of capital asset as partner's capital contribution - Applicability of section 50C to transfers where consideration is received or accruing and stamp valuation is relevant - Special provision prevailing over general provision (Generalia Specialibus Non Derogant) - Admissibility of additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 - Principle of consistent treatment of co-owners in assessment

Applicability of section 45(3) to transfer of capital asset as partner's capital contribution - Applicability of section 50C to transfers where consideration is received or accruing and stamp valuation is relevant - Special provision prevailing over general provision (Generalia Specialibus Non Derogant) - Consideration for capital gain on transfer of land by assessee to partnership firm as capital contribution is to be determined under section 45(3) and not by invoking section 50C. - HELD THAT: - The Tribunal analysed the specific deeming fiction in section 45(3), which prescribes that the amount recorded in the books of the firm as the value of the capital asset shall be deemed to be the full value of consideration for purposes of section 48, and contrasted it with section 50C(1), which applies where consideration received or accruing on transfer of land or building is less than the stamp valuation. Applying the canon that a special provision prevails over a general provision (Generalia Specialibus Non Derogant), the Tribunal held that transfers by a partner to a firm by way of capital contribution are governed by the specific provision in section 45(3). The Tribunal distinguished the authorities relied upon by the Revenue which treated an otherwise sham arrangement as a sale (notably the facts of the cited Allahabad High Court decision), observing that those decisions turned on findings of a colourable device and were therefore not applicable to the present factual matrix. The Tribunal also noted supportive authority of a Special Bench decision and concluded that in the present case the consideration in the hands of the partner must be taken as per section 45(3). [Paras 11]

Finding of authorities below invoking section 50C was set aside and the matter was remitted to the AO to take the full value of consideration as prescribed under section 45(3).

Admissibility of additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 - Additional bank and corroborative evidence concerning loan and its utilisation was admitted under Rule 29 and the issue of allowance of interest as cost of improvement was remanded to the AO for de novo adjudication in light of the admitted evidence. - HELD THAT: - The Tribunal found the additional documentary evidence filed before it to be material and directly bearing on whether the loan from Shri Suresh Patel was utilised for acquisition of the land and hence whether interest could be allowed as part of cost of improvement. Exercising the power under Rule 29, the Tribunal admitted the evidence but recognised that the Revenue had not had an opportunity to verify it. In the interests of justice and fair play the Tribunal therefore set aside the issue and directed the AO to decide the claim afresh, taking into account the newly admitted documents and the law. [Paras 18]

Additional evidence admitted; allowance of interest remanded to AO for fresh adjudication.

Principle of consistent treatment of co-owners in assessment - Claim of cost of improvement by way of compensation paid to Om Shri Sanat Non-Trading Owners' Association was accepted and the disallowance by the authorities below was set aside; AO directed to allow the claim. - HELD THAT: - The Tribunal reviewed the documentary record including the declaration/indemnity bond, ledger entries of the partnership, and bank records which evidenced payment and waiver of rights by Om Shri Sanat. It found that the lower authorities had not pointed to any infirmity in the material furnished and had rejected the claim mainly because the cancellation deed did not record the payment and because the payee's tax filings were not produced. The Tribunal further noted that an identical claim by the co-owner was allowed by the Revenue in the co-owner's assessment; relying on the principle that similarly situated co-owners must receive consistent treatment, the Tribunal held that the assessee cannot be treated differently. On these grounds the Tribunal set aside the findings of the CIT(A) and directed the AO to allow the claim. [Paras 18]

Disallowance of the compensation component of cost of improvement set aside and AO directed to allow the claim.

Final Conclusion: The appeal is partly allowed: (a) the Tribunal held that the valuation for capital gains on the transfer of land as a partner's capital contribution must be determined under section 45(3) and not section 50C, and directed the AO to compute capital gains accordingly; (b) additional evidence on loan/interest was admitted and the question of allowing interest as cost of improvement was remanded to the AO for de novo consideration; and (c) the disallowance of the compensation paid to Om Shri Sanat Non-Trading Owners' Association was set aside and the AO was directed to allow that component of cost of improvement.

Deduction under Section 80IB(10) - Housing project as individual building/block - Completion within five years for eligible units - Beneficial construction of fiscal provision and non-technical approach

Deduction under Section 80IB(10) - Housing project as individual building/block - Completion within five years for eligible units - Allowability of deduction claimed under Section 80IB(10) in respect of specified completed blocks of a larger housing development - HELD THAT: - The Tribunal accepted the assessee's factual position that separate planning sanctions and separate Building Usage permissions were obtained from the local authority (Ahmedabad Municipal Corporation) for each block claimed. Applying the principle that each residential block with separate sanction can be treated as an independent "housing project" for the purposes of Section 80IB(10), the Tribunal held that eligible blocks completed within the statutory five-year period qualify for deduction even if other blocks in the larger development remained incomplete. The Tribunal relied on and followed precedents which construed "housing project" to include an individual building/block where it satisfies the conditions of Section 80IB(10), and emphasized that the provision being beneficial should not be defeated by a too-technical approach. On the material on record (commencement and completion/usage permissions for blocks C, D, L, M, N, O, P & Q within the prescribed period), the Tribunal concluded that the Assessing Officer and the CIT(A) erred in disallowing the deduction for the completed blocks and directed allowance of the claimed deduction. [Paras 11]

The addition disallowing deduction under Section 80IB(10) is set aside and the Assessing Officer is directed to allow the deduction in respect of the completed blocks claimed by the assessee.

Final Conclusion: The appeal is allowed: the Tribunal set aside the disallowance under Section 80IB(10) and directed the Assessing Officer to allow the claimed deduction for those blocks of the housing project which obtained separate planning and Building Usage permissions and were completed within five years.

Penalty under Section 271C for failure to deduct TDS - Reasonable cause defence under Section 273B - Relevance of payment by payee and certificate under the first proviso to Section 201(1) - Contumacious conduct test for levy of penalty - Relevance of interest under Section 201(1A)

Penalty under Section 271C for failure to deduct TDS - Reasonable cause defence under Section 273B - Relevance of payment by payee and certificate under the first proviso to Section 201(1) - Relevance of interest under Section 201(1A) - Contumacious conduct test for levy of penalty - Whether the penalty imposed under Section 271C for non-deduction of tax at source on purchase of immovable property is sustainable in view of the assessee's bona fide mistake, payment of interest, and the fact that the recipients declared and paid tax on the sale consideration. - HELD THAT: - The Tribunal found on the material on record that the assessee had made a bona fide mistake in not deducting tax under Section 194-IA at the time of purchase and had produced documentary evidence that the recipients had declared the sale consideration in their returns and paid the tax. The assessee had also paid interest under Section 201(1A). Applying settled principles as discussed in the authorities relied upon by the Tribunal (including Bank of Nova Scotia , decisions of coordinate Benches and the Supreme Court in Eli Lilly ), the Tribunal held that penalty under Section 271C is discretionary and should not be imposed where there is no contumacious conduct and there is a reasonable cause under Section 273B. The fact that the payees accounted for and paid tax, together with the assessee's payment of interest and the documentary certificate, demonstrated absence of prejudice to Revenue and constituted reasonable cause. On these grounds the Tribunal concluded that imposition of penalty was not justified and therefore deleted the penalty. [Paras 7, 11, 12]

Penalty under Section 271C deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2016-17, deleted the penalty imposed under Section 271C, and held that a bona fide mistake coupled with payment of interest and the payees having declared and paid tax constituted reasonable cause under Section 273B obviating penalty.

Principles of natural justice - right to be heard - opportunity to be heard before an adjudicatory tribunal - remand for fresh consideration - reconsideration in accordance with law

Principles of natural justice - right to be heard - Whether the Tribunal's final order could be sustained where the appellant was not represented or heard on the date of hearing. - HELD THAT: - The Court found on the material before it that the appellant was not present or represented before the Tribunal on the critical hearing date and therefore was not heard. The absence of representation meant the Tribunal decided the matter on merits without receiving the appellant's submissions. In these circumstances the Tribunal's decision offended the principles of natural justice and the appellant's right to be heard, making the impugned order unsustainable.

Impugned order set aside on the ground that the appellant was not heard; decision quashed for breach of natural justice.

Remand for fresh consideration - opportunity to be heard before an adjudicatory tribunal - reconsideration in accordance with law - Relief to be granted and procedure to be followed after setting aside the impugned order. - HELD THAT: - The Court directed that justice required giving the appellant an opportunity to appear before the Tribunal and make submissions so that the appeal may be considered with assistance from both parties. The matter was remanded to the Tribunal for fresh consideration in accordance with law, permitting both parties to file additional documents and make submissions. A specific date was fixed for appearance before the Tribunal and no separate notice was required.

Matter remanded to the Tribunal for rehearing and reconsideration in accordance with law, with liberty to both parties to file additional documents and make submissions; parties to appear on the date fixed by the Court.

Final Conclusion: The Civil Appeal is allowed: the Tribunal's final order is set aside for failure to hear the appellant and the matter is remitted to the Tribunal for fresh consideration in accordance with law, with liberty to both sides to file additional documents and make submissions; no costs.

Classification of goods under the Central Excise Act, 1944 - jurisdiction of the High Court under Section 130 of the Customs Act, 1962 - appeal to the Supreme Court under Section 130-E of the Customs Act, 1962 - precedential effect of Commissioner of Customs, Bangalore-I v. Motorola India Ltd.

Jurisdiction of the High Court under Section 130 of the Customs Act, 1962 - appeal to the Supreme Court under Section 130-E of the Customs Act, 1962 - precedential effect of Commissioner of Customs, Bangalore-I v. Motorola India Ltd. - Whether the High Court should entertain the appellant's challenge or the remedy lies by way of appeal to the Supreme Court under Section 130-E of the Customs Act, 1962. - HELD THAT: - The Court held that the High Court rightly declined to exercise jurisdiction under Section 130 of the Customs Act because the statutory route for challenging the Tribunal's decision in the present subject-matter is by filing an appeal to the Supreme Court under Section 130-E. The decision in Commissioner of Customs, Bangalore-I v. Motorola India Ltd. governs the question and establishes that the remedy before the High Court is not available in such cases. Applying that precedent, the Court permitted withdrawal of the civil appeal and granted liberty to the appellant to file an appeal under Section 130-E within a limited period.

The High Court's refusal to exercise jurisdiction was upheld; the appeal is permitted to be withdrawn and the appellant granted liberty to file an appeal under Section 130-E within three weeks.

Final Conclusion: The civil appeal is dismissed as withdrawn; appellant is granted liberty to pursue an appeal to the Supreme Court under Section 130-E of the Customs Act, 1962 within three weeks, in accordance with the precedent of Commissioner of Customs, Bangalore-I v. Motorola India Ltd.

Quashing of show cause notice for inordinate delay - Completion of adjudication within statutory time under Section 28(2A) of the Customs Act - Adjudication within a reasonable period - Principle of natural justice-service and opportunity of hearing - Inadequacy of vague administrative restructuring as justification for delay

Quashing of show cause notice for inordinate delay - Adjudication within a reasonable period - Completion of adjudication within statutory time under Section 28(2A) of the Customs Act - Inadequacy of vague administrative restructuring as justification for delay - Impugned show cause notice dated 7th May 1997 and Order in Original dated 7th June 2022 were quashed on account of inordinate delay in adjudication. - HELD THAT: - The Court found that the adjudication of the show cause notice was left pending for about 25 years, which cannot be characterised as a reasonable period. The explanation offered by the revenue-restructuring of departments-was held to be a vague and general justification lacking particulars as to timing, duration or its effect upon the adjudicating authority and therefore insufficient to excuse the prolonged inaction. The Court relied upon the statutory time-frame embodied in Section 28(2A) of the Customs Act (inserted by the Finance Act, 2001) to reject the submission that there was no limitation for adjudication, and observed that even absent the specific provision the proceedings must be completed within a reasonable time. Having regard to precedent where similar delay was held to warrant quashing, the show cause notice and the consequent O I O were quashed and set aside. [Paras 7, 9, 10, 11, 13]

Show cause notice dated 7th May 1997 and Order in Original dated 7th June 2022 quashed on account of inordinate delay and failure to adjudicate within a reasonable/statutory time.

Principle of natural justice-service and opportunity of hearing - Quashing of order for breach of natural justice - Impugned Order in Original also quashed for breach of the principles of natural justice due to failure to demonstrate service of hearing notices. - HELD THAT: - The petitioner asserted non service of notices for hearings said to have been granted in 2020 and 2022. The respondents' affidavit merely stated notices were issued by speed post without annexing proof of service. The Court held that in the absence of evidence of service and given the respondent's bald assertion, the order passed was contrary to the principles of natural justice. This defect, standing independently of the delay, warranted quashing of the O I O. [Paras 12, 13]

Impugned O I O quashed additionally for violation of natural justice for lack of proof of service of notices and opportunity to be heard.

Final Conclusion: The writ petition was allowed; the show cause notice dated 7th May 1997 and the Order in Original dated 7th June 2022 were quashed and set aside on grounds of inordinate delay in adjudication and breach of natural justice. No order as to costs.

Deemed exports - FOB value of exports - DTA Sale entitlement - Foreign Trade Policy paragraph 6.8(a) - application format for DTA Sale

Deemed exports - FOB value of exports - DTA Sale entitlement - Foreign Trade Policy paragraph 6.8(a) - application format for DTA Sale - Entitlement to include deemed exports when calculating FOB value of exports for DTA Sale entitlement under paragraph 6.8(a) of the Foreign Trade Policy for October-2005 to December-2007. - HELD THAT: - The High Court applied the ratio of the Supreme Court in Arvind Cotspin, which held that the application process for DTA Sale did not make an overt distinction between physical exports and deemed exports and that the term "FOB value of exports" in the application format treated deemed exports at par with physical exports. On that basis the Development Commissioner's order refusing benefit of deemed exports and holding the petitioner liable to pay differential duty was contrary to the legal position established by the Supreme Court. The Court therefore set aside the impugned order dated 09.12.2011 and directed that the petitioner be granted the benefit of deemed exports for computing FOB value of exports under paragraph 6.8(a) for the specified period, with consequential relief to be quantified and implemented within two months. [Paras 6, 7, 8]

Order dated 09.12.2011 set aside; petitioner entitled to benefit of deemed exports for calculating FOB value of exports under para 6.8(a) for October-2005 to December-2007 and respondents directed to grant the benefit and take consequential steps within two months.

Final Conclusion: Writ petition allowed; Development Commissioner's decision refusing deemed export benefit set aside and respondents directed to grant deemed export benefit for calculation of FOB value of exports under paragraph 6.8(a) of the Foreign Trade Policy for the period October-2005 to December-2007, with consequential steps to be taken within two months.

Admission of petitions where core issue is sub-judice before the Supreme Court - stay of impugned orders pending decision of a higher court - continuation of interim orders - liberty to respondents to apply for vacation of stay - waiver of service - challenge to statutory amendment and its effect on precedent

Admission of petitions where core issue is sub-judice before the Supreme Court - waiver of service - Petitions admitted and service on respondents waived. - HELD THAT: - The Court found that the principal legal question raised in these petitions is the same as that which is pending before the Supreme Court in proceedings arising out of the decision in Canon India Pvt. Ltd., and that identical or similar issues have been considered by coordinate benches in recent orders. In view of those proceedings and the pendency of related review/writ petitions in the Supreme Court, the High Court exercised its discretion to admit the petitions and directed that respondents waive service. The Court recorded that the parties should complete pleadings in the meantime and that all contentions remain open for final adjudication.

Petitions admitted; respondents waive service; parties directed to complete pleadings; contentions kept open.

Stay of impugned orders pending decision of a higher court - continuation of interim orders - liberty to respondents to apply for vacation of stay - challenge to statutory amendment and its effect on precedent - Ad-interim stay of the impugned orders granted, subject to liberty to respondents to apply for vacation. - HELD THAT: - Relying on earlier orders in which similar petitions were admitted and ad-interim reliefs continued because the determinative issue was sub-judice before the Supreme Court (including review and challenges to the Finance Act, 2022 amendment), the Court granted an identical interim remedy in these petitions. The stay of the impugned orders was directed to continue until final disposal of these petitions, subject to respondents being permitted to move to vacate the stay if they consider it inappropriate to continue or upon the Supreme Court's decision in the pending matters. The Court expressly left all substantive contentions open for final adjudication.

Impugned orders stayed on an ad-interim basis; respondents have liberty to apply for vacation of the stay; substantive issues reserved.

Final Conclusion: The High Court admitted the writ petitions, directed respondents to waive service, granted an ad interim stay of the impugned orders in view of the same core issue being sub judice before the Supreme Court (including challenges to the Finance Act, 2022 amendment), allowed respondents liberty to seek vacation of the stay, and kept all substantive contentions open while directing parties to complete pleadings.

Redemption fine under Section 125 of the Customs Act, 1962 - penalty for import of restricted goods without valid licence - confiscation under Section 111(d) of the Customs Act, 1962 - application of Tribunal precedent in valuation and quantum of fine - remand for disclosure of margin of profit and market survey for valuation

Redemption fine under Section 125 of the Customs Act, 1962 - penalty for import of restricted goods without valid licence - application of Tribunal precedent in valuation and quantum of fine - Whether the redemption fine and penalty imposed by the adjudicating authority require enhancement. - HELD THAT: - The Tribunal applied its earlier decision in Venus Traders (Tri.-Mumbai) which considered deficiencies in the original authority's disclosure of margin of profit, the validity of a belated market survey and the scope for remand. Having regard to those principles and the admitted failure to obtain the requisite import licence, the Tribunal held that the redemption fine and penalty imposed by the adjudicating authority are adequate to meet the ends of justice. The Revenue's plea for enhancement was therefore rejected and the quantum confirmed. [Paras 4, 6]

Redemption fine and penalty confirmed; appeal for enhancement dismissed.

Confiscation under Section 111(d) of the Customs Act, 1962 - penalty for import of restricted goods without valid licence - Validity of confiscation of the imported old and used worn clothing. - HELD THAT: - The Tribunal noted that want of the prescribed licence was not disputed and that confiscation under Section 111(d) for import without licence could not be faulted. The respondent did not challenge the confirmed duties and penalties by appeal, and there was no reason to interfere with the confiscation finding recorded by the adjudicating authority. [Paras 2, 7]

Confiscation upheld; no interference with the impugned order.

Final Conclusion: The Revenue's appeal is dismissed; the adjudicating authority's order including confiscation, redemption fine and penalty is upheld.

Undervaluation - self-assessment and finality of Bills of Entry - MRP comparison between consignments imported through different ports - requirement to challenge original assessment before demanding differential duty - Additional duty of Customs (CVD) on MRP basis

Undervaluation - MRP comparison between consignments imported through different ports - Additional duty of Customs (CVD) on MRP basis - Whether the department's demand for differential CVD based on higher MRP printed on consignments imported through other land ports establishes undervaluation of the appellant's imports. - HELD THAT: - The Tribunal found that different lots of cement from the same manufacturer were imported by different importers through different land ports, and that MRP on the same item may legitimately vary on account of factors including place of importation, landing cost and duty element. There was no evidence that consignments bearing a higher MRP were sold at the same price as the appellant's consignments or that multiple MRPs were printed on the same lot. Absent evidence of actual sale at higher prices or other indicia of suppression, the observed difference in printed MRPs could not be attributed to suppression of value by the appellant. On this factual and legal basis the demand for additional duty as attributable to undervaluation was held unsustainable. [Paras 9]

Demand for differential CVD based on comparison of MRPs across imports through different ports was not sustained; the undervaluation allegation failed.

Self-assessment and finality of Bills of Entry - requirement to challenge original assessment before demanding differential duty - Whether the department could demand differential duty without having challenged or modified the original self-assessment of the Bills of Entry. - HELD THAT: - The Tribunal applied the principle in ITC Ltd that a department cannot demand differential duty by issuing a demand notice without first challenging or modifying the original assessment or self-assessment through appropriate proceedings. The self-assessed Bills of Entry in this case were not challenged by the department; accordingly, the demand for differential duty issued without modifying the original assessment was held to be unsustainable under the cited precedent. [Paras 10, 11]

The demand is unsustainable because the department did not challenge or modify the original self-assessment of the Bills of Entry before demanding differential duty.

Final Conclusion: Both grounds of demand were rejected: the alleged undervaluation based on inter-port MRP differences was not proved, and the department could not lawfully demand differential CVD without first challenging or modifying the original self-assessments. The impugned order is set aside and the appeals are allowed.

Confiscation of vehicle under Customs law (Section 115) - penalty for concealment requiring mens-rea under Customs law (Section 114) - provisional release against security deposit and entitlement to refund - finality of an appellate order not challenged by Revenue - verification of succession claim by Adjudicating Authority

Finality of an appellate order not challenged by Revenue - provisional release against security deposit and entitlement to refund - Whether the security deposit given for provisional release of the consignment is refundable where the Commissioner (Appeals) has set aside confiscation and penalties and the Revenue has not appealed. - HELD THAT: - The Commissioner (Appeals) set aside the order of confiscation of the truck and the penalties imposed on the appellants. The Revenue did not prefer any appeal against that OIA, and therefore those conclusions remain unchallenged and final. Since the higher appellate order has reversed the confiscation and penalties, the security deposit furnished for provisional release cannot be retained by the Department. The Tribunal holds that the Department is not entitled to retain the security deposit and that the successor of the deceased appellant is eligible to claim refund of the deposit. [Paras 5, 6]

Security deposit paid for provisional release must be refunded in view of the final, unchallenged appellate order setting aside confiscation and penalties; the Department cannot retain the amount.

Verification of succession claim by Adjudicating Authority - Whether the claimant (son and alleged successor) is entitled to immediate refund or whether verification of succession is required. - HELD THAT: - Although the Tribunal finds the successor eligible to obtain refund of the security deposit, it directs that the Adjudicating Authority must carry out necessary verification of the claim that Mr. Dinesh Gupta is the relevant successor of the deceased appellant. The Tribunal thereby allows the appeal subject to completion of the prescribed verification by the Authority before releasing the refund. [Paras 7]

Refund to the alleged successor is ordered subject to verification by the Adjudicating Authority of the successor's claim.

Final Conclusion: Appeal disposed: security deposit paid for provisional release to be refunded as the Commissioner (Appeals) has set aside confiscation and penalties and the Revenue has not appealed; refund to the appellant's successor is permitted but release is subject to verification of succession by the Adjudicating Authority.

Interest on delayed refund under Section 27A of the Customs Act, 1962 - Notified rate of interest - Enhanced rate of interest - Computation of interest period until sanction of refund - No automatic entitlement to enhanced interest in absence of special circumstances

Interest on delayed refund under Section 27A of the Customs Act, 1962 - Notified rate of interest - Enhanced rate of interest - No automatic entitlement to enhanced interest in absence of special circumstances - Whether the appellant is entitled to interest on delayed refund at a rate higher than the notified rate of interest. - HELD THAT: - The Tribunal accepted that there was delay in granting the refund and that interest is payable under the statutory framework. Reliance on earlier decisions where enhanced interest was awarded was noted, but the Tribunal held that those authorities did not create a general entitlement to a rate higher than the notified rate. In the absence of special circumstances warranting departure from the statutory notified rate, the appellate authority was justified in granting interest only at the notified rate. The Tribunal found no such exceptional facts in the present case to justify enhanced interest and therefore declined to disturb the Commissioner (Appeals) order which awarded interest at the notified rate of 6%. [Paras 7, 8]

Appellant is not entitled to interest at a higher rate; interest is payable only at the notified rate of 6%.

Computation of interest period until sanction of refund - Interest on delayed refund under Section 27A of the Customs Act, 1962 - The period for computing interest on the delayed refund. - HELD THAT: - The Tribunal accepted the Department's computation that the statutory three month threshold runs from the date of the refund application, and that interest is therefore payable for the period from the expiry of three months after the refund claim to the date the refund was sanctioned. Applying those principles to the facts, the Tribunal recorded a delay of 253 days from 03.05.2016 (three months after the refund application) to 11.01.2017 (date of refund sanction) and sustained the Commissioner (Appeals) award of interest for that period. The Tribunal rejected the appellant's contention that interest should be computed up to the date when the interest amount at 6% was actually paid to them, finding no basis to extend the interest period to that later date. [Paras 2, 7]

Interest is to be computed for the 253 day delay from 03.05.2016 to 11.01.2017 (date of sanction of refund); computation extended to date of actual payment was not allowed.

Final Conclusion: The appeal is dismissed. The Commissioner (Appeals) order granting interest on the delayed refund at the notified rate of 6% for the delay from 03.05.2016 to 11.01.2017 is sustained; enhanced rate of interest and computation up to actual payment of interest were not warranted.

Confiscation for smuggled goods - onus of proof for lawful possession - circumstantial evidence and inference of foreign origin - provisional release subject to redemption fine and duty - maintenance of burden and shift of onus

Confiscation for smuggled goods - circumstantial evidence and inference of foreign origin - Whether the goods could be treated as smuggled and liable to confiscation. - HELD THAT: - The Tribunal upheld the finding that the consignment was liable to be treated as of foreign origin and confiscable. The conclusion rested on the factual matrix: the truck was intercepted at Chhapwa (between Raxaul and Motihari), the driver fled and produced no licit documents at interception, no transit or sale invoice for the alleged Motihari-Patna movement was produced before the Adjudicating Authority or the Tribunal, and the route taken was inconsistent with the Appellant's stated destination. These circumstances, together with the delay in claiming ownership and absence of documentary proof of payment, supported the inference that the consignment was not lawfully transported from within India. The Tribunal therefore found no error in the Adjudicating Authority treating the goods as smuggled and confiscating them. [Paras 7, 8]

The order of confiscation was affirmed.

Onus of proof for lawful possession - maintenance of burden and shift of onus - provisional release subject to redemption fine and duty - Whether the Appellant discharged the burden of proving lawful ownership and entitlement to set aside confiscation, redemption fine or penalty. - HELD THAT: - The Tribunal held that the Appellant failed to discharge the onus placed on him. Critical documentary evidence relied on by the Appellant (Invoice No. 55 dated 24/12/2012, evidence of payment, and any sale invoice for transport from Motihari to Patna) was not produced before the Adjudicating Authority nor before the Tribunal. The Appellant also delayed 25 days in claiming ownership and did not explain the mode of payment for a high-value purchase or reconcile the inconsistency in the alleged route. Given the absence of the claimed invoice and supporting proof, the initial burden was not met and thus shifted back to the Appellant; the Tribunal found no reason to fault the Adjudicating Authority's imposition of redemption fine and penalty. [Paras 7]

The Appellant failed to prove lawful possession and entitlement to relief; the redemption fine and penalty were sustained.

Final Conclusion: The Tribunal found no merit in the appeal: the Adjudicating Authority's findings that the goods were of foreign origin, confiscable, and that the Appellant failed to discharge the onus of lawful ownership were upheld; the appeal is dismissed.

Customs valuation - transaction value - identical goods - similar goods - contemporaneous comparables - recourse to Rule 10A and Rule 5 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - enhancement of value under section 28 of the Customs Act, 1962

Customs valuation - transaction value - identical goods - similar goods - contemporaneous comparables - recourse to Rule 10A and Rule 5 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - enhancement of value under section 28 of the Customs Act, 1962 - Validity of the adjudicating authority's enhancement of declared import value by adopting prices of other imports as 'identical' or 'similar' goods and consequent invocation of section 28 and ancillary penalties. - HELD THAT: - The Tribunal found that the adjudicating authority invoked rule 10A and then rule 5 of the Customs Valuation Rules to substitute the declared transaction value by reference to prices in other bills of entry. The statutory tests for adopting values of identical goods or similar goods require, inter alia, sameness of physical characteristics and production in the same country and by the same producer; these criteria are set out in the Rules. The impugned order did not furnish any justification demonstrating that the compared imports met the statutory qualifications of identical or similar goods, nor did it show that the prices used were contemporaneous or otherwise appropriate for comparison. Because the authority failed to apply the eligible alternatives in the Valuation Rules or to record findings establishing conformity with those tests, its exercise of valuation under the Rules could not sustain enhancement under section 28 of the Customs Act or the consequent imposition of redemption fines. Explanations offered by the appellant regarding the transaction value and post supply negotiations were not determinative where the comparator selection and conformity were not shown. For these reasons the Tribunal concluded that the valuation exercise was vitiated for want of requisite findings and contemporaneous comparables, and set aside the impugned order to allow the appeal. [Paras 5, 6]

Impugned order set aside for failure to justify adoption of compared imports as identical or similar goods and for reliance on non contemporaneous prices; appeal allowed.

Final Conclusion: The appeal is allowed and the adjudicating order enhancing the declared value and imposing consequential duties, interest and redemption fines is set aside for absence of requisite findings that the compared imports qualified as identical or similar goods and for use of non contemporaneous comparables.

Rejection of declared transaction value under Rule 12 of Customs Valuation Rules, 2007 - duty of the assessing officer to seek clarification and to record reasons when rejecting documentary evidence - NIBD/NIDB data as an indicator and not a substitute for assessable value - application of Section 14 read with Customs Valuation Rules, 2007 - waiver of show cause notice does not obviate requirement to give reasons for rejection of declared value

Rejection of declared transaction value under Rule 12 of Customs Valuation Rules, 2007 - duty of the assessing officer to seek clarification and to record reasons when rejecting documentary evidence - NIBD/NIDB data as an indicator and not a substitute for assessable value - Validity of rejection of declared transaction value where importer furnished invoices and supporting documents and assessing officer relied on higher contemporaneous value/NIDB data without giving reasons - HELD THAT: - The Tribunal examined Rule 12 which permits a proper officer to seek further information where the correctness of declared assessable value is doubted. Where the importer has furnished invoices, purchase orders and contractual documents, the assessing officer must either accept them or record valid reasons for discounting them before proceeding to reassessment. Contemporaneous import data (NIBD/NIDB) may be a guide or indicator, but cannot substitute for the assessable value determined under Section 14 read with the Customs Valuation Rules. In the present case, the record did not disclose any reasons by the original authority for rejecting the documentary evidence; hence there was a breach of the procedural and substantive mandates of Rule 12. The decision relied upon by the appellant (para 6 reproduced) was held squarely applicable and the rejection was held to be unsustainable.

Rejection of declared transaction value was unlawful for want of reasons and for treating NIDB data as a substitute for assessable value; the appeals were allowed on this ground.

Waiver of show cause notice does not obviate requirement to give reasons for rejection of declared value - duty of reasoned order under Rule 12 - Effect of the appellant's alleged waiver of show cause notice on the obligation of the authority to record reasons for rejecting declared value - HELD THAT: - The Tribunal noted communication from the Commissionerate that the file was old and records untraceable, and that the department contended the appellant had waived the SCN. Even if a waiver of SCN is recorded, the authority passing the original order remains obliged to give reasons for rejecting documentary evidence (invoices, packing list, certificate of origin, etc.). Absence of such reasons amounts to breach of Rule 12. Therefore waiver of SCN did not cure the failure to furnish a reasoned order on the rejection of declared value.

Waiver of the show cause notice did not absolve the authority from recording reasons for rejecting the documentary evidence; the failure to do so vitiated the assessment.

Final Conclusion: The appeals were allowed: the rejection of declared transaction value was held invalid for failure to comply with Rule 12 (lack of reasons and improper reliance on NIBD/NIDB data), and any waiver of SCN did not relieve the authority of the obligation to record reasons; the impugned assessments were set aside accordingly.

Admission of writ petition where identical issue is sub judice before the Supreme Court - ad-interim stay of impugned order - liberty to respondents to move for vacating interim relief - continuation of interim order pending determination of related proceedings in the Supreme Court - completion of pleadings during interim period - reliance on the decision in Canon India Pvt. Ltd. and related review/writ petitions

Admission of writ petition where identical issue is sub judice before the Supreme Court - reliance on the decision in Canon India Pvt. Ltd. and related review/writ petitions - Petitions were admitted because the principal issue raised is identically pending before the Supreme Court and earlier orders of co ordinate Benches had treated such matters as requiring final adjudication after the Supreme Court's outcome. - HELD THAT: - The Court noted that the core controversy in the present petitions is the same as that considered in prior matters and is presently sub judice before the Supreme Court in proceedings relating to Canon India Pvt. Ltd., including attendant review/writ challenges and subsequent legislative amendment. Having regard to earlier orders of this Court in similar matters and the pendency before the Supreme Court, the Court found it appropriate to admit the petitions for final adjudication rather than dismiss or decide them at this stage. The respondents were held to have waived service for the purpose of proceeding with the admitted petitions.

Petitions admitted; respondents waive service.

Ad-interim stay of impugned order - continuation of interim order pending determination of related proceedings in the Supreme Court - liberty to respondents to move for vacating interim relief - completion of pleadings during interim period - The impugned order was stayed ad interim, with provision for respondents to apply for vacation and direction to complete pleadings in the meantime. - HELD THAT: - As an interim measure, and following the approach adopted in co ordinate decisions where identical questions were pending before the Supreme Court, the Court stayed the operation of the impugned order. The stay was granted subject to the respondents' right to apply for its vacation if they considered continuation inappropriate or after the Supreme Court decides the pending review/writ petitions concerning Canon India Pvt. Ltd. The Court also directed that pleadings in the petitions be completed while the interim order remains in force, thereby preserving the parties' ability to pursue final adjudication promptly after the higher court's decision.

Impugned order stayed ad interim; respondents granted liberty to seek vacation of the stay; parties directed to complete pleadings.

Final Conclusion: The High Court admitted the petitions as the principal issue is sub judice before the Supreme Court, stayed the impugned order ad interim, granted respondents liberty to apply for vacation of the stay, and directed completion of pleadings while awaiting the Supreme Court's decision.

Corporate Insolvency Resolution Process - One Time Settlement (OTS) - Admission under Section 7 - Maximisation of asset value - Revival of proceedings - Committee of Creditors not constituted

One Time Settlement (OTS) - Corporate Insolvency Resolution Process - Admission under Section 7 - Maximisation of asset value - Whether the CIRP admitted under Section 7 should continue in light of the Bank's acceptance of a One Time Settlement - HELD THAT: - The Tribunal noted that Canara Bank accepted a One Time Settlement (OTS) proposal submitted by the corporate debtor and that both the appellant and the bank stated that, in view of the accepted OTS, the bank did not intend to pursue the CIRP further. The Tribunal observed that the result of the related Scheme of Arrangement was to be awaited for maximisation of asset value (para 6), but on the subsequent acceptance of the OTS it concluded that no purpose would be served in continuing the CIRP. Applying these facts, the Tribunal closed the CIRP and set aside the Adjudicating Authority's order admitting the Section 7 application, while preserving the bank's liberty to revive proceedings if circumstances change (para 7). [Paras 6, 7]

CIRP closed and the order admitting the Section 7 application dated 23.11.2022 set aside; liberty granted to the Bank to revive proceedings if circumstances arise.

Committee of Creditors not constituted - Revival of proceedings - Whether other applicants may take steps when the CoC has not been constituted pursuant to the interim order - HELD THAT: - The Tribunal recorded that the Committee of Creditors was not constituted in pursuance of the Tribunal's interim order. Consequently, parties who had sought intervention and claimed financial creditor status (SRS Private Investments Powai Ltd. and ICICI Bank) were held to be at liberty to take appropriate steps in accordance with law. This preserves their procedural rights despite closure of the CIRP (para 8). [Paras 8]

Applicants are at liberty to take appropriate steps in accordance with law because the CoC was not constituted.

Interim direction for payment of insolvency professional fees - Liability for payment of the Interim Resolution Professional's fees and expenses - HELD THAT: - The Tribunal directed that the IRP's fees and expenses shall be paid within two weeks by the Appellant, ensuring that the IRP is compensated notwithstanding the closure of the CIRP. This direction accompanies disposal of the appeal and closing of proceedings (para 8). [Paras 8]

IRP fees and expenses to be paid by the Appellant within two weeks.

Final Conclusion: The Tribunal, in view of the Bank's acceptance of a One Time Settlement and parties' statements, closed the CIRP and set aside the Adjudicating Authority's order admitting the Section 7 application dated 23.11.2022, while allowing the Bank liberty to revive proceedings if circumstances change, permitting intervening applicants to pursue appropriate remedies since the CoC was not constituted, and directing payment of IRP fees and expenses by the Appellant within two weeks.

Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - pre-existing dispute - default - interpretation of contract clauses regarding delivery, title and risk - remand for fresh consideration

Interpretation of contract clauses regarding delivery, title and risk - default - Whether on the admitted facts and on construction of clauses of the Sales Contract the Respondent failed to supply the goods and the Operational Creditor established existence of default. - HELD THAT: - The Tribunal examined Clauses 10, 11, 12, 16 and related provisions of the Sales Contract dated 22.02.2019 and found that the Seller was obligated to deliver the goods to the Buyer within three months (and in any case within six months) of receipt of the advance, and delivery was to be "By Trucks or as mutually agreed". Clause 16 makes clear that title and risk pass upon loading at the Buyer's site in Orissa. The Appellant paid the full advance in two tranches but no delivery was made within the contractual periods; the Respondent's later contention that the Buyer had to place trucks is not supported by the written contract and appears to be an afterthought. Given that no material was supplied and the advance remained with the Respondent, the Tribunal concluded there was no credible justification for the Respondent's assertion of a balance payment claim or of a negotiated final price; these contentions did not negate the Respondent's failure to perform its delivery obligations. The Tribunal therefore held that the Appellant had discharged its primary burden of establishing non-supply against the Respondent under the contract and that a prima facie default stood established. [Paras 28, 29, 30, 31, 32]

The Tribunal found that the Respondent failed to supply the contracted material within the agreed period and that the Appellant had established a prima facie default against the Respondent.

Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - pre-existing dispute - remand for fresh consideration - Whether the Adjudicating Authority erred in rejecting the Section 9 application on the ground of alleged pre-existing dispute without adequate reasoning and appropriate application of mind, and what relief should follow. - HELD THAT: - The Tribunal reviewed the Impugned Order (noting Paragraph 16) which rejected the Section 9 petition stating that records did not show default and referring to the respondent's letter as reflecting failure by the Operational Creditor. The Tribunal found that the Adjudicating Authority did not specify what documents were missing or explain how the respondent's contentions displaced the admitted facts (contract and advance payment). The lack of cogent reasoning or identification of specific evidentiary deficiencies amounted to non-application of mind. Given the Tribunal's own finding that prima facie default existed, the correct course was to set aside the Impugned Order and remit the matter to the Adjudicating Authority for fresh consideration and decision in accordance with law, permitting the parties to lead and contest evidence on the issues including any bona fide pre-existing disputes. [Paras 33, 34]

The Impugned Order was set aside and the matter remanded to the Adjudicating Authority for fresh consideration and decision in accordance with law.

Final Conclusion: The Appeal is allowed; the Impugned Order dated 03.01.2023 is set aside and the matter is remanded to the Adjudicating Authority for fresh consideration and appropriate order in accordance with law. Parties were directed to appear before the Adjudicating Authority on 31st August, 2023.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - de-registration of aircraft under Rule 30(7) of the Aircraft Rules, 1937 - possession and recovery of leased aircraft during corporate insolvency resolution process - jurisdiction of the Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code - interim preservation and maintenance of high-value aircraft

Interim preservation and maintenance of high-value aircraft - possession and recovery of leased aircraft during corporate insolvency resolution process - Whether the High Court should stay and interfere with the learned Single Judge's interim directions permitting lessors access for inspection and maintenance and restraining removal of parts pending final adjudication. - HELD THAT: - The Division Bench declined to decide the complex substantive questions at this interlocutory stage and refrained from interfering with the learned Single Judge's prima facie interim directions, noting that those directions were directed to prevent cannibalisation and preserve the value and integrity of the aircrafts until final disposal of the writ petitions. The Court recorded that DGCA's processing of GoAir's resumption plan required a minimum period (more than fifteen days) and that finality on the competing contentions would appropriately be achieved by the learned Single Judge at the scheduled hearing. Balancing inconvenience, the Bench modified the interim order to allow the Resolution Professional to carry out all maintenance tasks of the thirty aircrafts (with due permissions under extant law) while preserving the Lessors' right to conduct periodic monthly inspections in accordance with law. The Court emphasised that it expressed no opinion on merits and directed expeditious disposal by the Single Judge. [Paras 13, 14, 16]

The appeals were not entertained on merits; the interim directions were left in place subject to modification permitting the Resolution Professional to perform maintenance and allowing Lessors periodic inspections, and the learned Single Judge was directed to decide the writ petitions expeditiously.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - jurisdiction of the Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code - de-registration of aircraft under Rule 30(7) of the Aircraft Rules, 1937 - Whether questions concerning validity of lease termination, applicability of the moratorium to the aircrafts, and entitlement to possession/de-registration should be adjudicated by this Court at the interlocutory stage or determined by the appropriate fora. - HELD THAT: - The Bench observed that NCLAT in earlier proceedings had refrained from adjudicating the substantive issues of termination, applicability of the moratorium and possession/de-registration and had left the parties free to approach the Adjudicating Authority under the Code. Given those proceedings and the pendency of the writ petitions before the learned Single Judge, the Division Bench declined to entertain final adjudication of those contentions and left the parties free to press their respective claims before the Single Judge or the NCLT as appropriate. The Court expressly stated that it had not expressed any opinion on those contentions and that issues concerning termination, moratorium applicability and re-possession/de-registration remain to be considered and decided by the competent forum in accordance with law. [Paras 6, 11, 17]

The substantive disputes regarding lease termination, applicability of the moratorium to the aircrafts and entitlement to possession/de-registration were not decided and were left to be adjudicated by the learned Single Judge and/or the NCLT in accordance with law.

De-registration of aircraft under Rule 30(7) of the Aircraft Rules, 1937 - regulatory processing of resumption of flight operations by DGCA - Whether DGCA may process and decide GoAir's resumption application and the consequences for timing of judicial intervention. - HELD THAT: - On the basis of DGCA's stated timeline and procedure for auditing and approving GoAir's resumption plan and subsequent route/schedule permissions, the Court permitted DGCA to process and decide the resumption application without prejudice to the parties' rights. The Division Bench treated the regulatory timeline as a material factor militating against immediate determination of the appeals and as a reason for relegating the substantive disputes to the learned Single Judge for final determination. [Paras 12, 18]

DGCA was permitted to process and decide GoAir's resumption application; this regulatory process was a factor in the Court declining to decide the appeals at this stage.

Final Conclusion: The Division Bench declined to decide the substantive disputes on the appeals and disposed of the appeals by (i) directing that the learned Single Judge expeditiously hear and decide the writ petitions, (ii) modifying the interim order to permit the Resolution Professional to carry out maintenance of the thirty aircrafts (with requisite permissions) while allowing Lessors periodic inspections, and (iii) permitting DGCA to process and decide GoAir's resumption application, all without expressing any opinion on the merits.

Deletion of party from array of parties - amendment of cause title - issuance of notice - condonation of delay in filing special leave petition - tagging of matters

Deletion of party from array of parties - amendment of cause title - Application for deletion of petitioner no. 1 from the array of parties was allowed and the petitioners were directed to amend the cause title. - HELD THAT: - The Court considered the application filed seeking deletion of petitioner no. 1 and, upon hearing learned counsel for the petitioners, allowed the application. Consequential directions were given to the petitioners to amend the cause title of the special leave petition to reflect the deletion. No reasons for deletion are recorded in the order beyond the allowance of the application and the consequential administrative direction to amend the cause title.

Petitioner no. 1 deleted from the array of parties and petitioners directed to amend the cause title.

Issuance of notice - condonation of delay in filing special leave petition - tagging of matters - Notice was issued to the respondent on the special leave petition and on the application seeking condonation of delay; the matter was ordered to be tagged with another special leave petition. - HELD THAT: - The Court ordered issuance of notice to the respondent both in respect of the special leave petition and the interlocutory application for condonation of delay. Additionally, the Court directed that the matter be tagged with SLP (C) D. No.29038 of 2020, thereby administratively associating the proceedings for listing or hearing. The order records these procedural directions without further adjudication on the merits of the condonation application.

Notice issued to the respondent on the SLP and on the condonation application; matter to be tagged with SLP (C) D. No.29038 of 2020.

Final Conclusion: Application to delete petitioner no. 1 allowed and cause title to be amended; notice issued to respondent on the SLP and on the application for condonation of delay; matter ordered to be tagged with SLP (C) D. No.29038 of 2020.

Obligation to determine service tax within prescribed timelines under Section 73(4B) - inordinate and unexplained delay vitiating adjudication of a show cause notice - effect of merger and amalgamation on the noticee and frustration of proceedings - quashing of show cause notice where adjudication is rendered impossible by lapse of time

Obligation to determine service tax within prescribed timelines under Section 73(4B) - inordinate and unexplained delay vitiating adjudication of a show cause notice - Whether the prolonged delay in adjudicating the show cause notice dated 12 March 2010 was permissible and whether Section 73(4B) may be treated as merely directory thereby permitting adjudication after an inordinate lapse of time. - HELD THAT: - The Court held that Section 73(4B) imposes an obligation (use of the word 'shall') on the adjudicating officer to determine the amount due within the timelines prescribed (six months or one year as applicable) 'where it is possible to do so'. While a limited relaxation is permissible for reasons that make conclusion impossible within the timeline, that relaxation cannot be read to nullify the statutory time-limits or permit unexplained, unreasonable and inordinate delays. The legislative words 'where it is possible to do so' allow only a narrow discretion, not unfettered liberty to defer adjudication for years. Accepting the departmental contention that the provision is not mandatory would defeat the statutory purpose of expeditious adjudication and established principles that show cause notices under fiscal statutes must be taken to logical conclusion within a reasonable period. The respondent did not furnish acceptable or plausible reasons to justify the multi-year inaction; the adduced explanations (intermittent hearings, cadre restructuring, file transfers) did not suffice to excuse the long lapse in this case. [Paras 15, 16, 17, 18, 19]

The delay in adjudication was inordinate and unjustified; Section 73(4B) cannot be treated as merely directory so as to permit the show cause notice to be validly adjudicated after the prolonged delay.

Effect of merger and amalgamation on the noticee and frustration of proceedings - quashing of show cause notice where adjudication is rendered impossible by lapse of time - Whether the show cause notice issued to the original entity (IDFC Ltd.) could be adjudicated after that entity had ceased to exist by merger and subsequent reconstitution, and whether the proceedings were thereby frustrated requiring quashing. - HELD THAT: - The Court found that significant corporate changes occurred after issuance of the notice: IDFC Ltd. merged into IDFC Bank Ltd. in 2015, and later a further merger produced IDFC First Bank Ltd. The petitioner (IDFC First Bank Ltd.) was not the original noticee and had no knowledge or records relating to the 2010 show cause notice. The prolonged inaction by the department caused irreversible changes that frustrated adjudication: the original noticee had ceased to exist and the department pointed to no acceptable legal or factual basis to subrogate the petitioner to the original noticee or to resurrect the non-existent entity for the purpose of adjudication. In these circumstances the petitioner could not meaningfully defend proceedings the material for which was not available to it, and the adjudication was effectively impossible. [Paras 4, 5, 6, 20, 21]

Adjudication was frustrated by the lapse of time and the corporate mergers; the show cause notice could not proceed and must be quashed and set aside.

Final Conclusion: Writ petition allowed: the Court quashed and set aside the show cause notice dated 12 March 2010 on the grounds of inordinate, unexplained delay contrary to the mandate of Section 73(4B) and because mergers and restructuring had caused the original noticee to cease to exist, frustrating any meaningful adjudication.

Quashing of show cause notice for unexplained inordinate delay - statutory timelines under Section 73(4B) of the Finance Act - reasonableness of delay in adjudication - duty of the adjudicating officer to conclude proceedings within prescribed period - prejudice to the assessee and potential prejudice to the revenue from protracted inaction

Quashing of show cause notice for unexplained inordinate delay - reasonableness of delay in adjudication - duty of the adjudicating officer to conclude proceedings within prescribed period - Whether the show cause notice dated 21 October 2010 required to be quashed on account of prolonged, unexplained and inordinate delay in adjudication by the Commissioner of Central GST. - HELD THAT: - The Court found that the show cause notice issued on 21 October 2010 remained pending without adjudication for prolonged periods in two tranches (from August 2011 to February 2016 and from May 2016 to February 2021), and that the respondent offered no plausible or contemporaneous justification for such inaction. The Court applied the settled legal principle that a show cause notice must be adjudicated within a reasonable period and, where statutory timelines exist, in accordance with those timelines; reliance was placed on the obligation created by Section 73(4B) of the Finance Act (as analysed in the Court's earlier decision in Coventry Estates) which prescribes periods within which determination should be made. The reply affidavit filed by a Deputy Commissioner was held to be inadequate to explain the delay; alleged hearings in February 2021 were not supported by documentary proof and could not excuse the more than a decade-long non-adjudication. The Court observed that inordinate administrative delay causes prejudice to the noticee and may also adversely affect the revenue, and that no provision permits condonation of such unexplained delay by the adjudicating officer. Applying these principles to the facts, the Court concluded that the extended, unexplained delay rendered continued adjudication impermissible and justified quashing the show cause notice. [Paras 4, 14, 17, 18]

The show cause notice dated 21 October 2010 was quashed and further proceedings pursuant thereto were prohibited.

Final Conclusion: The writ petition was allowed: the impugned show cause cum demand notice dated 21.10.2010 was quashed for inordinate and unexplained delay in adjudication and the respondents were prohibited from taking further steps pursuant to that notice; a copy of the order is to be forwarded to the Secretary, Ministry of Finance and to the Central Board of Customs and Indirect Taxes.

Adjustment of pre-deposit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - pre-deposit in appellate proceedings - deduction of pre-deposit when issuing the statement indicating amount payable - application of Section 124(2) of the SVLDRS, 2019 - payment remitted to a different Commissionerate not barring adjustment

Adjustment of pre-deposit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - pre-deposit in appellate proceedings - application of Section 124(2) of the SVLDRS, 2019 - payment remitted to a different Commissionerate not barring adjustment - Whether the petitioner was entitled under the SVLDRS, 2019 to have the entire pre-deposit (paid at different stages and before different Commissionerates) adjusted against the amount payable under the Scheme. - HELD THAT: - The Court examined the declaration filed under the SVLDRS and the payments made by the petitioner: an initial pre-deposit of 7.5% at the time of first appeal and a subsequent pre-deposit of 10% (paid before a different Commissionerate), together constituting 17.5% of the disputed tax. Relying on the statutory language of Section 124(2) of the SVLDRS, 2019, which provides that any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit shall be deducted when issuing the statement of amount payable, the Court held that the location or the Commissionerate before which the pre-deposit was made does not defeat the statutory entitlement to deduction. The respondents' contention that amounts paid before a different Commissionerate could not be adjusted was rejected because the statutory provision mandates deduction of pre-deposits paid at any stage; consequently, the entire pre-deposit paid by the petitioner must be adjusted against the SVLDRS liability. [Paras 8, 9, 18, 19]

The petitioner is entitled to adjustment of the entire pre-deposit amount paid (by challans dated 05.04.2016 and 30.11.2017) against the amount payable under the SVLDRS; respondents directed to make the adjustment.

Final Conclusion: Writ petition allowed; respondents directed to adjust the entire pre-deposit paid by the petitioner under the SVLDRS, 2019. No costs.

Business Auxiliary Service - tax paid on MRP - double taxation - principal-agent relationship (commercial characterisation)

Business Auxiliary Service - tax paid on MRP - double taxation - Liability to service tax on commission/discount received by the appellant for sale of prepaid SIM cards/recharge coupons and whether such receipts fall within the taxable category of Business Auxiliary Service for the stated periods. - HELD THAT: - The Tribunal examined the contractual and commercial matrix and followed earlier coordinate decisions which held that where the telecom operator (or principal) has discharged service tax on the full MRP of SIM cards/recharge coupons, the commission/discount paid to distributors is subsumed in that MRP and no separate service tax can be levied on the distributor without resulting in double taxation. The Tribunal observed that the factual pattern in the present case does not justify treating the appellant's receipts as a separate taxable Business Auxiliary Service because the end-user is the recipient of the service from the principal (BSNL) and the principal has collected and remitted tax on the gross MRP. The Tribunal relied on its prior decisions including the unchallenged Goyal Automobiles and subsequent decisions (including GR Movers and Devangi Communications) and on judicial affirmations to conclude that the imposition of additional service tax on the commission/discount is not sustainable. The Revenue's reliance on a principal-agent characterisation and on certain High Court decisions was rejected as distinguishable on facts and not sufficient to override the established view that tax paid by the operator on MRP precludes further tax liability on distributors in these circumstances. [Paras 12, 13, 14, 16, 17]

The demand of service tax, interest and penalties insofar as based on treating the appellant's commission/discount as taxable Business Auxiliary Service for the stated periods is set aside; the appeal is allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order insofar as it confirmed service tax, interest and penalties founded on the view that the appellant's commission/discounts were taxable as Business Auxiliary Service for the periods 01.04.2005 to 31.03.2010 and 01.04.2008 to 31.03.2010, holding that tax already discharged by the operator on the full MRP precludes a further levy on the distributor.

Taxability of bank charges deducted by foreign banks under "Banking and Other Financial Services" - service received in India - recipient of service - application of co-ordinate Bench precedents

Taxability of bank charges deducted by foreign banks under "Banking and Other Financial Services" - service received in India - recipient of service - application of co-ordinate Bench precedents - Amount deducted by foreign banks as collection/bank charges is not taxable as "Banking and Other Financial Services" when the service was rendered to the Indian bank and not to the exporter during the period 1.4.2007 to 31.5.2012. - HELD THAT: - The Tribunal examined whether foreign banks' deduction of charges from export proceeds attracted service tax under the "Banking and Other Financial Services" category. It followed co-ordinate Bench decisions (including SKM Egg Products Export (I) Ltd. and earlier Tribunal precedents) holding that where exporters instruct Indian banks to collect proceeds and the Indian bank engages foreign banks, the foreign bank's services are rendered to the Indian bank and not to the exporter. In such circumstances the exporter is not the recipient of the foreign bank's service; hence service tax does not attach to the amounts deducted by the foreign banks. The Tribunal applied that reasoning to the facts of the present case and found the matter squarely covered by those decisions, obviating the need to separately consider extended period or penalties. [Paras 7, 8]

Impugned order demanding service tax on foreign bank charges set aside; appeal allowed with consequential relief, if any.

Final Conclusion: The Tribunal allowed the appeal, holding that charges deducted by foreign banks for collection of export proceeds are not taxable as "Banking and Other Financial Services" on the exporter for the period 1.4.2007 to 31.5.2012, and set aside the impugned order.

Service tax on services received from outside India - import of services rules (Rule 3(ii)) - storage and warehousing services - taxable services performed in India - treatment of taxable services provided from outside India and received in India

Storage and warehousing services - service tax on services received from outside India - taxable services performed in India - import of services rules (Rule 3(ii)) - Service tax is not exigible on storage and warehousing services which were provided and performed outside India, even if benefit accrued to the appellant. - HELD THAT: - The Tribunal examined the scope of Section 66A and the Rules dealing with taxable services provided from outside India and received in India. The taxation rule (Rule 3(ii)) treats certain services as taxable only when such services are performed in India; where the storage and warehousing service was both provided and received outside India, it cannot be treated as received in India for purposes of Section 66A. The Tribunal noted that the services in question were performed and consumed outside India and therefore did not fall within the import-of-services charge. The Tribunal also observed that the appellant's subsequent assessment period was decided in its favour by the Commissioner and that earlier CESTAT precedents were supportive of the view that services performed outside India are not exigible to service tax. Applying these principles, the Tribunal held the demand unsustainable and set aside the impugned order. [Paras 10, 11, 12]

Demand of service tax on the storage and warehousing services received/provided outside India is set aside; appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the impugned order confirming service tax demand on storage and warehousing services provided and performed outside India is set aside and the appellant is entitled to consequential relief in law.

Limitation under Section 11B of the Central Excise Act, 1944 - credit transfer to GST TRAN I and date of reversal as triggering event for refund claim - unjust enrichment - proof of excess payment due to cancellation of invoices - binding effect of Tribunal precedents - remand for fresh consideration and verification

Limitation under Section 11B of the Central Excise Act, 1944 - credit transfer to GST TRAN I and date of reversal as triggering event for refund claim - binding effect of Tribunal precedents - Refund claim held not time barred as limitation ran from date of reversal of TRANS I credit and refund was filed within one year thereafter. - HELD THAT: - The Tribunal applied its earlier decision in Pujan Builders Engineers & Contractors (cited in the record) and concluded that where excess service tax was transferred into TRANS I and later reversed on departmental objection, the cause of action for refund arises only on reversal. The appellant had carried forward excess service tax for the quarter April, 2017 to June, 2017 into TRANS I and the amount was reversed on 24.11.2020; the refund was filed on 22.07.2021, which falls within one year from the reversal date. The authorities below erred in ignoring the binding precedent and in treating limitation as running from the date of payment or earlier credit rather than from the date of reversal; accordingly the impugned order on limitation was set aside and the appeal allowed to that extent. [Paras 4]

Limitation objection under Section 11B rejected; refund claim not time barred and matter remanded for merits.

Unjust enrichment - proof of excess payment due to cancellation of invoices - remand for fresh consideration and verification - Issues of unjust enrichment and whether excess service tax was in fact paid (due to cancelled invoices) were not decided on merits and are remanded to the Commissioner (Appeals) for fresh consideration. - HELD THAT: - The Adjudicating Authority had rejected the refund on grounds of unjust enrichment and for want of documentary proof of excess payment. The Tribunal found that these contentions were not finally decided by the Commissioner (Appeals) and that the appellant should be granted an opportunity to adduce documents and details demonstrating cancellation of invoices (allegedly five in number) and that the incidence of duty was not passed to customers. The matter is therefore remitted to the Commissioner (Appeals) to examine unjust enrichment and the existence of excess payment on merits, permitting the appellant to produce relevant evidence. [Paras 5]

Unjust enrichment and factual entitlement to refund remanded to Commissioner (Appeals) for fresh adjudication; appellant granted liberty to produce documents.

Final Conclusion: The appeal is allowed in part: the Tribunal set aside the limitation rejection under Section 11B (refund held not time barred) and remanded the remaining issues of unjust enrichment and proof of excess payment to the Commissioner (Appeals) for fresh consideration, with liberty to the appellant to furnish supporting documents.

Manpower Recruitment or Supply Agency Service - job-work / fabrication as manufacture - turnkey contract - control and supervision of workmen - classification of activity as service tax liable service or manufacturing - verifiability of discharge of service tax on repair work - sustainability of penalties

Manpower Recruitment or Supply Agency Service - control and supervision of workmen - turnkey contract - Whether the appellant's fabrication, assembly and erection of barges under the contract is taxable as Manpower Recruitment or Supply Agency Service - HELD THAT: - The Tribunal examined the memorandum of understanding and sample invoice and found the contract to be for fabrication, assembly and erection of barges on a turnkey basis with lump-sum or per ton charges and with the owners supplying raw materials and machinery (except welding consumables). The workmen were employed and controlled by the appellant and the service receiver had no role in supervising or paying the workmen. The presence of the term 'labour charges' in the contract was held to denote job-work components in construction parlance and not evidence of supply of manpower as a separate taxable service. In the absence of any material showing supply of manpower (such as numbers, duration, reimbursement of wages or supervision by the recipient), the activity could not be classified as Manpower Recruitment or Supply Agency Service. The Tribunal applied consistent precedent from coordinate benches holding that job-work/manufacturing contracts with labour under contractor's control are not manpower-supply services and set aside the service-tax demand accordingly. [Paras 6, 7, 8, 9, 12]

The activity is not taxable as Manpower Recruitment or Supply Agency Service; the impugned service-tax demand (except as noted separately) is set aside.

Job-work / fabrication as manufacture - classification of activity as service tax liable service or manufacturing - Whether the appellant's fabrication activity amounts to manufacture (supporting exclusion from manpower-supply classification) - HELD THAT: - The Tribunal noted that with effect from 01.03.2011 Central Excise duty was levied on manufacture of tugs and barges and the appellant had taken Central Excise registration and paid duty for 2011-12 and 2012-13. This factual posture reinforces that the appellant's activity is manufacturing/job-work in nature and not merely supply of manpower. The Tribunal observed that if the Revenue's contention were correct, it would have conflicting consequences as to who is the manufacturer, which is not the case on the record. [Paras 5, 10]

The factual classification as manufacturing/job-work supports the conclusion that the activity is not a manpower-supply service.

Verifiability of discharge of service tax on repair work - Whether service tax alleged on repair-related value has been discharged by the appellant - HELD THAT: - The appellant asserted that service tax pertaining to repair of barges (specified value) had been discharged and produced registration/records for the period in question. The Tribunal recorded the appellant's claim and observed that the Revenue remains at liberty to verify the appellant's contention and the correctness of discharge of tax in respect of the repair services. [Paras 3, 11]

Revenue may verify the appellant's claim of discharge of service tax in respect of the repair-related value; no demand is sustained without such verification.

Sustainability of penalties - Whether penalties confirmed against the appellant are sustainable - HELD THAT: - Having found that the substantive service-tax demand (except the repair-related portion subject to verification) was not sustainable, the Tribunal held that the penalties imposed could not be maintained. The Tribunal therefore set aside the penalties in view of the overall findings on the character of the activity and the absence of material showing supply of manpower. [Paras 11, 12]

Penalties are not sustainable and are set aside.

Final Conclusion: On the facts and contract terms the fabrication and delivery of barges/tugs by the appellant is job-work/manufacture and not supply of manpower; the service-tax demand (other than the repair-related amount which the Revenue may verify) is set aside and penalties are vacated; appeals are allowed with consequential relief as per law.

Rejection of VCES declaration under Section 106(2) of the Finance Act, 2013 - roving enquiry - giving of notice - service completes on receipt - Circulars binding on the Department and strict/narrow construction of Section 106(2)

Roving enquiry - rejection of VCES declaration under Section 106(2) of the Finance Act, 2013 - Circulars binding on the Department and strict/narrow construction of Section 106(2) - Enquiry relied upon by Revenue for rejecting the VCES declaration was of a roving nature and therefore did not attract Section 106(2) for rejection. - HELD THAT: - The letter dated 18.02.2013 sought a broad range of documents and information without reference to any specific transaction, period or particular issue. Such general requisitionting of documents, devoid of particularised details, amounted to a roving enquiry. The Tribunal applied the administrative clarifications in the Board Circulars - in particular the circular stating that the conditions in Section 106(2) are to be construed strictly and that only requisitions made under statutory authority for specific accounts/documents would attract the provision - and found that the communication did not demonstrate initiation of an enquiry of the kind contemplated by Section 106(2). Reliance was placed on precedent and the binding nature of the Board Circulars to hold that the declaration could not be rejected on the ground of a roving enquiry. [Paras 11]

Declaration could not be rejected on the ground that an enquiry of the kind envisaged by Section 106(2) was pending, because the enquiry was of a roving nature.

Giving of notice - service completes on receipt - rejection of VCES declaration under Section 106(2) of the Finance Act, 2013 - Circulars binding on the Department and strict/narrow construction of Section 106(2) - The show cause notice to reject the VCES declaration was time-barred as it was 'given' beyond the thirty-day period required by the Board Circular. - HELD THAT: - The appellant filed the declaration on 27.12.2013. Although the notice bore the date 24.01.2014, postal records showed receipt by the appellant on 03.02.2014. The Board Circular required the designated authority to give a notice of intention to reject within thirty days of filing. The Tribunal adopted the legal principle that 'giving' a notice is complete only on its being offered to or received by the addressee (as held by the Supreme Court), and therefore computed the thirty-day period from the date of receipt. Since receipt occurred after thirty days, the notice was time-barred and could not be acted upon. The Tribunal also noted that the Circulars mandate scrupulous adherence to the thirty-day timeline. [Paras 12, 13]

Show cause notice was barred by time and therefore ineffective to reject the declaration.

Final Conclusion: The impugned rejection of the VCES declaration was set aside: the enquiry relied upon was of a roving nature and did not attract Section 106(2), and the notice of intention to reject was given beyond the thirty-day period and thus time-barred; the Revenue is directed to accept the declaration.

Providing corporate guarantee - credit protection fee - Banking and Other Financial Services - body corporate - consideration - extended period

Providing corporate guarantee - credit protection fee - Banking and Other Financial Services - consideration - Liability to service tax for fees received for corporate guarantee and credit protection services by the appellant - HELD THAT: - The Tribunal examined the nature and purpose of corporate guarantees vis-a -vis bank guarantees and held that both instruments serve substantially the same function of providing assurance to creditors, the distinction being limited to the identity of the guarantor and the usual availability of bank guarantees to the public. The appellant, a company within the meaning of body corporate, received periodic fees from its related concern for providing corporate guarantee and credit protection. As the payments constituted consideration received for services akin to banking/financial assurances, they fall within the ambit of taxable "Banking and Other Financial Services" and attract service tax. The Tribunal rejected the appellant's submission that corporate guarantee is excluded from the statutory definition because the specific enumeration in the definition refers to "providing bank guarantee"; the absence of express mention of "corporate guarantee" does not preclude taxability where consideration is received and the service is in substance identical to a bank-provided assurance. The Tribunal recognised divergence in earlier decisions but concluded that, on the facts, the appellant's receipt of fees for corporate guarantees and credit protection renders it liable for service tax for the relevant period, subject to the separate treatment of extended period liabilities. [Paras 7, 8, 9]

The demand for service tax in respect of fees for corporate guarantee and credit protection services is sustainable and the appellant is liable to pay service tax for the period under adjudication, except as modified on the issue of extended period.

Extended period - consideration - Sustainability of demand for the extended period - HELD THAT: - While upholding the substantive taxability of the services, the Tribunal noted that the matter had attracted divergent judicial opinions and that the question of extended period liability required consideration in that context. Given the unsettled nature of the legal position in earlier fora and the appellant's acceptance and payment for the period post 1 July 2012, the Tribunal found the extended period demand unsustainable and modified the adjudicator's order accordingly. The Tribunal therefore limited interference to confirm tax liability on merits but set aside liabilities imposed for the extended period. [Paras 3, 9, 10]

Liabilities for the extended period are set aside; other confirmed liabilities remain subject to the findings on taxability.

Final Conclusion: The appeal is allowed in part: the Tribunal affirms that fees received for providing corporate guarantees and credit protection are taxable as financial/banking-related services where consideration is received, but the demands raised for the extended period are set aside and the Commissioner's order is modified accordingly.

Admissibility of CENVAT credit where service tax was incorrectly paid by supplier - denial of input credit at receiver's end where provider's classification is not questioned - classification of electricity as goods and not a taxable service

Admissibility of CENVAT credit where service tax was incorrectly paid by supplier - denial of input credit at receiver's end where provider's classification is not questioned - CENVAT credit availed by the respondent on service tax charged in respect of proportionate electricity consumption cannot be denied at the receiver's end merely because the tax was not leviable on electricity. - HELD THAT: - The Tribunal applied the principle that credit taken at the receiver's end, where service tax has been accepted by the receiver and the legality of payment by the supplier is not impeached at the supplier's end, cannot be denied to avoid creating a non-revenue-neutral situation. Relying on the reasoning in Bajaj Allianz General Insurance Co Ltd (as relied upon by the Commissioner (Appeals)), the Tribunal held that wrongly paid service tax, which would otherwise be refundable, does not justify denial of credit to the recipient; the recipient's entitlement to credit remains where the tax was in fact paid and accepted. The Tribunal accordingly confirmed the Commissioner (Appeals) order setting aside the denial of credit for the periods in issue. [Paras 6, 7]

The denial of CENVAT credit for 2013-14 and 2014-15 is set aside and the Commissioner (Appeals) order is confirmed.

Classification of electricity as goods and not a taxable service - The contention that bills raised by the respondent with a service-tax component for electricity constituted a valid taxable service under the Service Tax laws was rejected as not determinative to deny credit to the receiver. - HELD THAT: - The Tribunal observed that the classification question - whether electricity constitutes a service - has been treated in precedent as electricity being 'goods' and not a service, and that the facts of the earlier judgment relied upon by the respondent were distinguishable (in that case conversion and supply of low-tension power was treated differently). The Tribunal held that any error in classification or levy could have been examined at the provider/owner's end, but such an error does not operate to deny CENVAT credit at the recipient's end where the tax was accepted by the recipient. Consequently, the argument that the respondent's billing practice established a taxable service was found to be on a different footing and not a ground for denying credit. [Paras 6]

The submission that electricity charges billed with service tax constituted a taxable service was rejected and cannot be used to deny the respondent's CENVAT credit.

Final Conclusion: The Revenue's appeal is dismissed; the Commissioner (Appeals) order allowing CENVAT credit for 2013-14 and 2014-15 is confirmed and the respondent's cross-objection is disposed of as not maintainable.

Condonation of delay - time limit for filing appeal before Commissioner (Appeals) - extended period for filing appeal under satisfaction of sufficient cause - opportunity to explain delay where appeal registered without noting delay

Condonation of delay - time limit for filing appeal before Commissioner (Appeals) - Liberty to the appellant to move an application for condonation of delay despite no such application having been filed before the Commissioner (Appeals). - HELD THAT: - The Tribunal found that the impugned order dated 30.03.2016 was received on 12.04.2016 and the appeal was filed on 11.07.2016, which falls within the further period of one month contemplated under section 85(3)(a) of the Finance Act if the Commissioner (Appeals) is satisfied that sufficient cause prevented filing within two months. Although the appellant did not file an application for condonation of delay before the Commissioner (Appeals), the Tribunal considered authority holding that where an appeal is registered without noting delay the office should bring the delay to the appellant's notice and afford opportunity to explain. In view of these circumstances and the appellant's submission that it believed a 90 day period applied, the Tribunal deemed it appropriate to permit the appellant to file an application for condonation of delay so that the Commissioner (Appeals) may examine sufficiency of cause. [Paras 7, 9, 10]

Order of Commissioner (Appeals) dismissing the appeal for delay is set aside and appellant is granted liberty to file an application for condonation of delay within one month.

Extended period for filing appeal under satisfaction of sufficient cause - opportunity to explain delay where appeal registered without noting delay - Remand to the Commissioner (Appeals) to decide any application for condonation of delay on merits. - HELD THAT: - The Tribunal directed that if the appellant files an application for condonation of delay within the stipulated one month period, the Commissioner (Appeals) shall consider and decide that application on merits. The Tribunal did not pre-empt the merits of such an application but required fresh adjudication by the Commissioner (Appeals) in accordance with law and relevant facts, thereby remitting the question of sufficiency of cause for decision by the first appellate authority. [Paras 10, 11]

The matter is remitted to the Commissioner (Appeals) to decide any condonation application filed by the appellant on merits.

Final Conclusion: The order of the Commissioner (Appeals) dismissing the appeal for being time barred is set aside; the appellant is granted one month to file an application for condonation of delay and the Commissioner (Appeals) is directed to decide that application on merits.

Applicability of exemption Notification No.4/2006 - Central Excise - Concurrent findings of fact and law - Interference on appellate review of concurrent findings

Applicability of exemption Notification No.4/2006 - Central Excise - Concurrent findings of fact and law - Interference on appellate review of concurrent findings - Whether the exemption under Notification No.4/2006 - Central Excise dated 01.03.2006 applied to the appellant and whether the Court should interfere with the concurrent findings of the authorities. - HELD THAT: - The Court recorded that it had considered the matter in detail and noted that all the authorities had reached concurrent findings on the applicability of Notification No.4/2006. Having examined those findings, the Court was not inclined to disturb them. The determinative approach adopted was to decline interference with concurrent findings of fact and law where the appellate court finds no compelling reason to upset the conclusions reached by the authorities below.

The concurrent findings that the exemption Notification No.4/2006 did not apply to the appellant were upheld and interference was refused; the appeals are dismissed.

Final Conclusion: Appeals dismissed; court declines to interfere with the concurrent findings on the applicability of Notification No.4/2006 - Central Excise; parties to bear their own costs.

Retrospective amendment of subordinate legislation - Applicability of retrospective amendment to pending disputes - Obligation under Rule 6 of the CENVAT Credit Rules, 2004 - Proportionate reversal of CENVAT credit - Option between maintenance of separate accounts and reversal/payment mechanisms under Rule 6 - Interpretation of the Seventh Schedule to the Finance Act, 2010

Retrospective amendment of subordinate legislation - Applicability of retrospective amendment to pending disputes - Interpretation of the Seventh Schedule to the Finance Act, 2010 - Amendment to Rule 6 of the CENVAT Credit Rules, 2004 introduced by the Finance Act, 2010 is applicable to disputes relating to the period 10 September 2004 to 31 March 2008 where the dispute was pending on the date the Finance Bill, 2010 received assent. - HELD THAT: - The Court examined the scope and effect of the retrospective amendment effected by the Finance Act, 2010 to Rule 6 of the CCR, 2004. The determinative consideration was not the date of issuance of a show cause notice but whether the dispute in relation to adjustment of credit or exemption for the period 10 September 2004 to 31 March 2008 was pending on the date the Finance Bill received assent. Applying the retrospective amendment as set out in the Seventh Schedule, the Court agreed with the CESTAT that the amendment enabled assessees in such pending disputes to avail the benefit of the altered mechanism under Rule 6, including proportionate reversal of credit. The Court rejected the revenue's contention that applicability depended on issuance of the show cause notice on the assent date, holding instead that pendency of the dispute for the relevant period was the operative criterion and that the CESTAT correctly applied the retrospective amendment in the respondent's case. [Paras 23, 26]

The retrospective amendment made by the Finance Act, 2010 to Rule 6 of the CCR, 2004 applied to the respondent in respect of the period 10 September 2004 to 31 March 2008 where the dispute was pending on the assent date.

Obligation under Rule 6 of the CENVAT Credit Rules, 2004 - Proportionate reversal of CENVAT credit - Option between maintenance of separate accounts and reversal/payment mechanisms under Rule 6 - Where common inputs/input services are used for both dutiable and exempted goods and separate accounts for input services are not maintained, the assessee had the option (as amended) to either maintain separate accounts or to reverse proportionate CENVAT credit (or pay the prescribed percentage) and the respondent's retrospective proportionate reversal was permissible. - HELD THAT: - The Court construed Rule 6 as amended to identify the available alternatives for a manufacturer/provider using common inputs and input services for both exempted and dutiable supplies. Rule 6(2) requires maintenance of separate accounts; sub rule (3) and (3A) provide alternatives when separate accounts are not maintained, including proportionate reversal following the prescribed procedure or payment of a percentage of value. The Court found, on the facts accepted by the CESTAT, that the respondent did not maintain separate accounts for input services and therefore the appropriate remedies under Rule 6 (as retrospectively amended) were available. The respondent had reversed the proportionate credit for the pre 2008 period and had already reversed/payments with interest for the 1 April 2008 to 31 December 2010 period before the show cause notice; the Court held that such proportionate reversal was permissible in view of the retrospective amendment and applicable authorities. [Paras 24, 25]

The respondent was entitled to rely on the option of proportionate reversal (or alternative mechanisms under Rule 6) where separate accounts for input services were not maintained, and its retrospective reversals/payments were permissible.

Final Conclusion: The appeal is dismissed. The High Court upheld the CESTAT's conclusion that the Finance Act, 2010 retrospective amendment to Rule 6 of the CENVAT Credit Rules applied to the respondent for the period 10 September 2004 to 31 March 2008 where the dispute was pending on the assent date, and that the respondent was entitled to proportionately reverse CENVAT credit (or otherwise follow the options under Rule 6) for the relevant periods; result affirmed in favour of the respondent and against the revenue.

Extinguishment of claims under approved Resolution Plan - Effect of omission to lodge statutory claims in CIRP - Recovery under Section 11A of the Central Excise Act, 1944 - Cenvat credit entitlement and reversal - Availability of writ jurisdiction despite alternate statutory remedy - Refund of pre-deposit with interest where order set aside

Recovery under Section 11A of the Central Excise Act, 1944 - Cenvat credit entitlement and reversal - Whether the impugned orders are proceedings for recovery under Section 11A of the Central Excise Act, 1944 or merely determination of entitlement to Cenvat credit. - HELD THAT: - The Court examined the impugned orders and found they not only denied part of the Cenvat credit but also directed recovery of the balance under Section 11A read with Rule 14 of the Cenvat Credit Rules, 2004 and imposed penalty under Section 11AC. On that basis the orders were characterised as recovery orders and not merely adjudications of entitlement; therefore they fall within the ambit of recovery proceedings rather than being excluded from the insolvency resolution process. The Court rejected the contention that the orders only determined liability without effecting recovery, holding the composite directions (denial plus recovery) amount to recovery proceedings. [Paras 6]

The impugned orders were held to be orders of recovery under Section 11A of the Central Excise Act, 1944.

Extinguishment of claims under approved Resolution Plan - Effect of omission to lodge statutory claims in CIRP - Whether amounts sought to be recovered by the impugned orders can be pursued when no claim in respect of those amounts was made or accepted in the corporate insolvency resolution process and the resolution plan was approved. - HELD THAT: - Relying on the ratio in Ghanashyam Mishra And Sons, the Court noted that after approval of a resolution plan all dues not part of the approved plan stand extinguished and no proceedings in respect of such pre-approval dues may be continued. The record showed the relevant statutory claims and the periods in question were not made part of the CIRP/Resolution Plan (claims were either not lodged in proper format or were disallowed). Accordingly, the Court concluded that the departmental claims forming the basis of the impugned recovery orders stood extinguished and could not be pursued further. [Paras 7, 8, 12]

Claims in respect of the amounts sought to be recovered stood extinguished for failure to form part of the approved Resolution Plan and the impugned recovery could not be pursued.

Availability of writ jurisdiction despite alternate statutory remedy - Refund of pre-deposit with interest where order set aside - Whether the High Court should entertain the writ petition despite availability of a statutory appeal and whether the petitioners are entitled to refund of any pre-deposit with interest. - HELD THAT: - The Court observed that availability of an alternate statutory remedy is not an absolute bar to exercise of extraordinary writ jurisdiction when the challenge is to a jurisdictional defect. Since the petition raised a jurisdictional point - that the recovery orders sought to pursue claims extinguished by the approved resolution plan - the Court found it appropriate to exercise jurisdiction under Article 226. Having set aside the impugned orders on that ground, the Court applied precedent to hold that any pre-deposit made by the petitioners in respect of the impugned adjudication is refundable with interest at prevailing bank rates and directed refund within eight weeks. [Paras 6, 9, 13]

Writ jurisdiction was exercised on the jurisdictional ground; the impugned orders were set aside and any pre-deposit is to be refunded with interest.

Final Conclusion: The High Court set aside the impugned orders dated 31.07.2020 and 31.12.2020 as they directed recovery of amounts which stood extinguished for not being part of the approved Resolution Plan; the writ petition was entertained despite availability of statutory appeal on the jurisdictional ground, and any pre-deposit made by the petitioners is to be refunded with interest within eight weeks.

Suo-moto Cenvat re-credit for duty paid twice - restoration of duty paid twice as Cenvat credit - legality and maintainability of show cause notice after reversal of credit - departmental audit and regularisation of excess payment

Suo-moto Cenvat re-credit for duty paid twice - restoration of duty paid twice as Cenvat credit - Appellant was entitled to take suo-moto re-credit of the duty which was paid twice and to have that amount restored in Cenvat account. - HELD THAT: - The Tribunal found that it was an admitted fact that duty on a particular clearance was paid twice - once at the time of clearance and again while making the monthly payment. Where the second payment is not disputed and no discrepancy is shown in the record, the appellant was entitled to have that amount restored as Cenvat credit. The appellant had in fact taken the suo-moto re-credit and, on audit pointing it out, reversed it; there was no substantive finding of irregularity in the double payment or in the re-credit. The adjudicatory authority therefore had no basis to treat the re-credit as unlawful; the authorities could have regularised the position but not sustain a demand where the second payment and re-credit were factually established and uncontested. [Paras 4]

Suo-moto re-credit taken by the appellant in respect of duty paid twice was legal and the appellant was entitled to re-credit the amount in their Cenvat account.

Legality and maintainability of show cause notice after reversal of credit - departmental audit and regularisation of excess payment - The show cause notice issued to demand and appropriate the re-credit (after the appellant had reversed it on audit direction) was void and unsustainable. - HELD THAT: - The Tribunal held that once the factual position of double payment and entitlement to re-credit was established and no discrepancy was found, issuance of a show cause notice to demand the same amount and to appropriate it (together with interest and penalty) was not justified. The appellant had reversed the credit on audit direction and had made submissions before the adjudicating authority; instead of regularising the re-credit the department proceeded to adjudicate and confirm demand, interest and penalty. In these circumstances the show cause notice was held to be vitiated ab initio and the consequent demand could not be sustained. [Paras 4]

Show cause notice challenging the suo-moto re-credit and demanding appropriation, interest and penalty was void and the consequential demand could not be sustained.

Final Conclusion: Impugned order is set aside; appeal allowed and the appellant's entitlement to re-credit restored, with the show cause notice and the demand based thereon held void.

Excisability of incidental products (waste v. by-product) - classification of spent earth arising from oil refining - eligibility for exemption under Notification No. 89/1995-CE - saleability/value not determinative of manufacture - precedential value of co-ordinate Tribunal decisions and res-integra principle

Classification of spent earth arising from oil refining - excisability of incidental products (waste v. by-product) - eligibility for exemption under Notification No. 89/1995-CE - Spent earth arising during the refinery/bleaching process is not liable to central excise duty and is covered by Notification No. 89/1995-CE. - HELD THAT: - The Tribunal held that the material (spent earth and incidental products such as gums, waxes and fatty acid distillate) arise as unwanted residues removed during the process of refining crude vegetable oil to produce the intended final product. Applying the ratio of higher authority decisions on excisability, a mere change or recoverable saleable value does not convert such residues into manufactured goods liable to excise. The process is directed to manufacture refined oil; the incidental products are not the object of manufacture and are therefore waste/refuse. On that basis they fall within the exemption conferred by Notification No. 89/1995-CE. The Tribunal further recorded that the question is no longer res-integra in view of consistent earlier decisions and, following those precedents, set aside the demand and allowed the appeal.

Demand set aside; appeal allowed - spent earth and analogous incidental residues treated as waste and entitled to exemption under Notification No. 89/1995-CE.

Saleability/value not determinative of manufacture - precedential value of co-ordinate Tribunal decisions and res-integra principle - Commercial saleability or realisable value of the residues cannot be the sole criterion to treat them as manufactured excisable goods; consistent Tribunal decisions make the issue no longer res-integra. - HELD THAT: - The Tribunal rejected the Revenue's contention that the ability to sell the residues for consideration renders them manufactured goods liable to excise. Reliance was placed on the principle that 'manufacture' requires transformation into a new article with a distinct character; incidental residues removed in the refining process do not meet that test merely because they may fetch a price. The Tribunal observed that multiple co-ordinate decisions have addressed the same question and concluded that the issue is settled (no longer res-integra), warranting acceptance of the exemption claim under the notified entry.

Revenue's value-based argument rejected; precedent followed and issue treated as settled, supporting allowance of the appeal.

Final Conclusion: The impugned demand was quashed and the appeals allowed: spent earth and similar residues arising from the refining/bleaching of vegetable oil are wastes (not manufactured excisable goods) and are eligible for exemption under Notification No. 89/1995-CE; the issue is no longer res-integra in view of consistent Tribunal authority.

Job work removals without payment of duty - inputs and partially processed goods - by-product, waste and scrap distinction - CENVAT Credit Rules, Rule 4(5)(a) - binding force of Larger Bench precedent - application of ratio upheld by Supreme Court

Job work removals without payment of duty - inputs and partially processed goods - by-product, waste and scrap distinction - CENVAT Credit Rules, Rule 4(5)(a) - binding force of Larger Bench precedent - Validity of demand of duty, penalty and interest on removal of brass cutting waste to a job worker without payment of duty - HELD THAT: - The Tribunal accepted the appellant's contention that brass cutting waste sent to a job worker for conversion into brass wire and returned for use in manufacture falls within the ambit of inputs/partially processed goods permissible to be sent under the pari materia provisions of Rule 4(5)(a) of the CENVAT Credit Rules. The Larger Bench decision in Wyeth Laboratories Ltd. construes 'waste' narrowly - restricting it to converted inputs that are not intended to be reused in manufacture - and recognizes that commercial and technological considerations may lead a manufacturer to reconvert or reprocess by-products, scrap or waste for use as inputs. That ratio was upheld by the Supreme Court in CCE, Kerala v. Binani Zinc Ltd. and has been consistently followed by subsequent tribunal decisions. The impugned orders relied upon the minority view in Wyeth Laboratories Ltd., which is contrary to the binding majority view; reliance on the minority view by the lower authority therefore rendered the demands unsustainable. Applying these precedents, the Tribunal held that duty, and consequently the penalty and interest premised on that demand, could not be sustained. [Paras 11, 12, 13, 14]

Impugned orders confirming duty, penalty and interest on removal of brass cutting waste to job worker are set aside; appeals allowed with consequential relief as per law.

Final Conclusion: Following the binding ratio of the Larger Bench in Wyeth Laboratories Ltd., as affirmed by the Supreme Court and consistently followed thereafter, the Tribunal held that the brass cutting waste sent for conversion and returned as usable input could be sent without payment of duty; the demands (and attendant penalty and interest) confirmed by the lower authorities were set aside and the appeals allowed with consequential relief.

Invocation of extended period for suppression of facts - time-bar and limitation for demand - proportionate reversal of Cenvat credit with interest - application of Rule 6(3) and option to pay percentage of value of exempted goods - remand for verification of quantum of reversal

Invocation of extended period for suppression of facts - time-bar and limitation for demand - Whether the demand for amounts equal to 10%/6%/5% of the value of exempted goods raised for extended period was time-barred and liable to be dropped. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the department had prior knowledge of the assessee's practice from earlier audit reports and communications, including audit reports covering April 2000 to March 2005, April 2005 to May 2007 and a letter dated 17.08.2010 which reflected departmental awareness. On that basis the Tribunal found there was no suppression of facts justifying invocation of the extended period. Consequently the extended period could not be invoked and the demand could only be confined to the normal limitation period. The Tribunal accepted the Commissioner's calculation as limiting the demand to clearances from May, 2013 to March, 2014, given the show cause notice dated 28.05.2014 (served 29.05.2014) and the ER-1 filing chronology. [Paras 4]

Revenue's appeal dismissed; extended period could not be invoked and demand confined to the normal period (clearances from May, 2013 to March, 2014).

Proportionate reversal of Cenvat credit with interest - application of Rule 6(3) and option to pay percentage of value of exempted goods - remand for verification of quantum of reversal - Whether the assessee, having reversed proportionate Cenvat credit (with interest, if any), remains liable to pay 10%/6%/5% of the value of exempted goods, or whether reversal suffices to negate imposition of the percentage levy. - HELD THAT: - The Tribunal observed that established precedent recognises that where proportionate reversal of Cenvat credit is made and, if applicable, interest is paid, such reversal is to be treated as if credit had not been availed ab initio and therefore the percentage payment under Rule 6(3)(i) (5%/6%/10%) is not automatically sustainable. The Tribunal noted that the Adjudicating Authority did not verify the correctness and adequacy of the reversal within the normal period of limitation and thus did not determine whether the reversed amount (with interest) satisfied the requirement for proportionate reversal. Applying the cited authorities, the Tribunal held the principle in favour of the assessee but directed remand for factual verification of the quantum and propriety of the reversal during the normal period. [Paras 4]

Assessee's appeal remitted to the Adjudicating Authority for de novo adjudication limited to verification of the correctness and sufficiency of the proportionate reversal (and interest, if any); if reversal is found adequate, the percentage demand and penalties are to be set aside.

Final Conclusion: The Revenue's appeal is dismissed as the extended period could not be invoked; the assessee's challenge is remitted for de novo verification limited to the adequacy of the proportionate reversal of Cenvat credit (with interest, if applicable), failing which the percentage demand may be sustained; the adjudicating authority to decide expeditiously.

SSI exemption - specified goods bearing the brand name or trade name of another person - components or parts as original equipment - procedure under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 - exclusion from aggregate value of clearances - penalty under Rule 26

SSI exemption - specified goods bearing the brand name or trade name of another person - components or parts as original equipment - procedure under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 - Whether bracelets manufactured by the appellant bearing the brand name of third parties are eligible for exemption under Notification No. 08/2003-CE - HELD THAT: - The notification generally excludes specified goods bearing the brand name of another person from SSI exemption, subject to a narrowly drawn exception where such goods are components or parts cleared as original equipment for use in manufacture of the relevant machinery/equipment/appliances and the procedural safeguards under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 are followed. The Tribunal found as a matter of fact and law that the bracelets are finished goods sold as such and cannot be treated as components or parts used only in manufacture of wrist watches. Further, the appellant did not comply with the prescribed procedure under the said Rules for clearance as original equipment. Consequently the condition for the exception is not satisfied and the bracelets bearing third party brand names are not eligible for SSI exemption under the notification. The Tribunal distinguished the authorities relied upon by the appellant on their facts (packaging material, assignment of brand, or different legal issues) and held those ratios inapplicable to the present facts. [Paras 4, 5]

The appellant is not entitled to SSI exemption under Notification No. 08/2003-CE in respect of branded bracelets bearing the brand name of other persons.

Penalty under Rule 26 - Whether the penalty imposed on Shri Arvindbhai M Limbasiya under Rule 26 is sustainable - HELD THAT: - The Tribunal held that the question of penalty turned on interpretation of the notification and the attendant facts showed clearances made under invoices to organised companies without any proved mala fide intention by the individual. In those circumstances, and having regard to the nature of the dispute being one of interpretation rather than dishonest concealment, the imposition of penalty on the co appellant was not sustainable and was set aside. [Paras 6]

The penalty imposed on Shri Arvindbhai M Limbasiya under Rule 26 is set aside.

Final Conclusion: The appeal of Sonic Chain Pvt. Ltd. is dismissed for lack of entitlement to SSI exemption on branded bracelets; the appeal of Shri Arvindbhai M. Limbasiya is allowed by setting aside the penalty imposed under Rule 26.

Classification of chlorinated paraffins (liquid form) under Heading 3824 - non-applicability of Heading 2712 20 10 to chlorinated paraffin in liquid form - retrospective effect of administrative clarification - reliance on Board Circular for tariff classification - vitiation of show-cause notice where foundational classification fails

Classification of chlorinated paraffins (liquid form) under Heading 3824 - non-applicability of Heading 2712 20 10 to chlorinated paraffin in liquid form - reliance on Board Circular for tariff classification - Chlorinated paraffin manufactured and cleared by the assessee in liquid form is not classifiable under Tariff Item No. 2712 20 10 but under sub heading 3824 90. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's categorical finding that the goods manufactured and cleared by the appellant were in liquid form (as recorded in the impugned order). The Board's Circular No. 950/1/2011 CX (01.08.2011) explains that chloroparaffins/chlorinated paraffins in liquid form fall within Heading 38.24 and are classifiable under sub heading 3824 90, whereas the deleted Budget 2010 entry 27122010 concerned chlorinated paraffin waxes in solid form (classifiable under 3404.90). Since the product before the Tribunal was liquid chlorinated paraffin, the revenue's case for classification under 2712 20 10 fails; consequently the show cause proceedings founded on that classification are vitiated. The Tribunal further noted that any difference between the appellant's declared entry (3812 20 90) and the Board's cited sub heading 3824 90 does not assist the revenue once the claim under 2712 20 10 is rejected. [Paras 4]

The classification of the goods as chlorinated paraffin in liquid form under 2712 20 10 is rejected; they are classifiable under sub heading 3824 90 and the proceedings based on the 2712 20 10 classification do not sustain.

Retrospective effect of administrative clarification - reliance on Board Circular for tariff classification - The Board's classification circular operates retrospectively and, therefore, the clarification that liquid chlorinated paraffins are classifiable under 3824 90 applies to the periods in question. - HELD THAT: - The Tribunal held that a clarification interpreting existing law does not change the law but explains its correct scope; accordingly such clarification has retrospective effect from the enactment of the relevant law. The Adjudicating Authority's contention that removal of the specific tariff entry in Finance Budget, 2010 rendered the circular prospective was rejected: the removal affected only solid chlorinated paraffin waxes, not liquid chlorinated paraffins which were correctly classifiable under Heading 38 even prior to Budget 2010. Therefore the Board's clarification applies retrospectively to the period for which differential duty was claimed by the revenue. [Paras 4]

The Board Circular's clarification has retrospective effect and precludes classifying liquid chlorinated paraffins under Tariff Item No. 2712 20 10 for the periods under challenge.

Final Conclusion: The Tribunal set aside the impugned order, allowed the appeal and held that the appellant's chlorinated paraffin in liquid form is classifiable under sub heading 3824 90; the revenue's classification under 2712 20 10 and proceedings based thereon do not sustain.

Availability of cenvat credit on components, parts and accessories of machinery - classification of inputs as capital goods - time barred demand / limitation and extended period for recovery - suppression, wilful mis statement and mens rea for invoking extended period - declaration of credit in ER 1 returns and bona fide belief

Availability of cenvat credit on components, parts and accessories of machinery - classification of inputs as capital goods - Whether the appellant was entitled to cenvat credit on items such as CR, SS Sheet, HR, SS Coil, old and used Aluminum structure parts and Aluminum coil when used in the pressing machine and kiln - HELD THAT: - The Tribunal noted that on merits the appellant was prima facie entitled to claim cenvat credit as the goods in question were used with machinery and kiln and could be regarded as parts/accessories or capital goods. However, the adjudication was disposed on limitation. The appellant had regularly reflected the credit in ER 1 returns and maintained a bona fide belief in availability of credit. There existed conflicting decisions at different levels (benches of the Tribunal, larger bench and High Courts) creating an arguable view on the legal question. The show cause notice for the period 19.10.2006 to 14.08.2007 was issued on 25.06.2010, beyond the normal one year period. Applying the principle that the extended period can be invoked only upon proof of wilful suppression or mis statement with intent to evade duty (mens rea), as explained in Continental Foundation and followed in other cited decisions, the Tribunal found no evidence of mala fide or wilful suppression by the appellant. Where facts were disclosed in returns and there was scope for judicial doubt due to conflicting precedents, the requisites for invoking the longer period were not satisfied. For these reasons the demand was held to be barred by limitation. [Paras 4, 5]

Demand set aside as time barred; appeal allowed

Final Conclusion: Although the appellant may be prima facie entitled to cenvat credit on the goods as parts/accessories of machinery, the show cause notice was issued beyond the normal limitation period and, in the absence of proved wilful suppression or mens rea, the extended period could not be invoked; accordingly the impugned order is set aside and the appeal is allowed.

Classification of goods - fertilizer versus pesticide - Burden of proof on the revenue to displace assessee's classification - Primary use versus incidental/secondary use in classification - Admissibility and requirement of cross-examination under Section 9D of the Central Excise Act - Principle of natural justice - right to personal hearing - Remand for fresh adjudication (de novo) where evidence and procedure not properly considered

Classification of goods - fertilizer versus pesticide - Burden of proof on the revenue to displace assessee's classification - Primary use versus incidental/secondary use in classification - Admissibility and requirement of cross-examination under Section 9D of the Central Excise Act - Principle of natural justice - right to personal hearing - Remand for fresh adjudication (de novo) where evidence and procedure not properly considered - Whether the product 'Neem Blended Organic Manure Gronimix' is correctly classified as a fertilizer (CETH 31010099) or as a pesticide (CETH 38089910), and whether the adjudication complied with evidentiary and natural justice requirements. - HELD THAT: - The Tribunal held that the question of classification was fact-sensitive and debatable on the materials before it. It found that the revenue had not discharged the burden to conclusively displace the assessee's classification, noting that the same pamphlet described the product both as a fertilizer and as a pesticide and that composition alone (presence of neem) was not determinative. The Adjudicating Authority had relied on dealers' statements and other materials without permitting the requested cross-examination; the Tribunal treated this refusal as a violation of the statutory requirement governing admissibility and cross-examination under Section 9D of the Central Excise Act and as breaching the principles of natural justice. The Tribunal also observed that laboratory/test reports and affidavits from users submitted by the appellant, which supported classification as a fertilizer, were not adequately considered. Because procedural and evidentiary infirmities permeated the adjudication, the Tribunal did not decide classification on merits but required a fresh de novo adjudication after allowing cross-examination, full consideration of test reports and affidavits, and an opportunity for personal hearing. [Paras 4]

Impugned order set aside and matter remanded for de novo adjudication; appellant to be afforded cross-examination and personal hearing, and a fresh order to be passed within two months.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the Adjudicating Authority directed to decide classification afresh (de novo) after permitting cross-examination, considering the test reports and affidavits, and hearing the appellant; the de novo order to be passed within two months for the period 2007 to 2014.

Burden of proof - rejection of books of account - presumption of absence of claimed circumstances - proof of actual physical movement of goods - genuineness of transactions for exemption/relief - treatment of purchases as from unregistered dealers - levy of entry tax on goods treated as purchased from outside local area

Burden of proof - rejection of books of account - presumption of absence of claimed circumstances - Whether the Tribunal was justified in deleting the tax imposed by the assessing authority after confirming rejection of books of account and in shifting the burden of proof onto the Department. - HELD THAT: - The Court held that section 16 places the burden upon the dealer to prove facts which are specially within his knowledge, including circumstances bringing the case within any exemption or relief; the assessing authority is entitled to presume absence of those circumstances. Merely producing invoices, banking receipts or mandi forms is not sufficient to discharge that burden. Reliance was placed upon the reasoning of the Apex Court in The State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited , which affirmed that the purchasing dealer must prove the genuineness of transactions and actual physical movement of goods and that mere production of invoices and cheque payments does not satisfy the statutory burden. The Tribunal's approach in shifting the negative burden to the Department was therefore contrary to section 16 and perverse. [Paras 12, 13, 14, 17]

The Tribunal erred in shifting the burden of proof to the Department; the burden remained on the dealer and the Tribunal's deletion of the tax on that basis was set aside.

Proof of actual physical movement of goods - genuineness of transactions for exemption/relief - treatment of purchases as from unregistered dealers - levy of entry tax on goods treated as purchased from outside local area - Whether the dealer discharged the burden to prove that purchases were bona fide inter-state purchases (actual physical movement) so as to avoid purchase-tax/entry-tax and whether the assessing authority's enhancement and levy were justified. - HELD THAT: - The Court found that the assessing authority's presumption treating purchases as from unregistered dealers was justified because the dealer failed to establish actual physical movement of goods. Verification of vehicle registration numbers supplied by the dealer showed some entries to be non-traceable and others to correspond to two wheelers, small three wheelers or passenger vehicles, undermining the claim of bona fide transport of goods. Given this failure to prove movement and genuineness of transactions, the dealer could not claim non-taxability; the assessing authority's fixation of turnover and levy of entry tax (including on HDEP bags treated as purchases from outside the local area) was sustained. [Paras 11, 16, 18, 19]

The dealer failed to prove actual physical movement and genuineness of purchases; the presumption of purchases from unregistered dealers and the consequent levy of entry tax were justified and restored.

Final Conclusion: Both revisions are allowed. The impugned Tribunal order deleting the assessed tax is set aside and the assessing authority's determinations (including treatment of purchases as from unregistered dealers and levy of entry tax) are sustained. Costs awarded to the revisionist; compliance to be filed as directed.

Incidental or ancillary power to grant interlocutory orders including stay - stay of collection of tax pending disposal of appeal - express embargo on stay power under a statute - continuance of earlier stay by higher authority - exercise of writ jurisdiction under Article 226 for interim relief

Incidental or ancillary power to grant interlocutory orders including stay - express embargo on stay power under a statute - stay of collection of tax pending disposal of appeal - Whether the AP VAT Appellate Tribunal has jurisdiction to entertain and decide a stay application filed directly before it in the circumstances of this case. - HELD THAT: - The court held that an appellate tribunal ordinarily possesses incidental power to pass interlocutory orders, including stays, as an adjunct of its substantive appellate jurisdiction. That principle, however, yields where the legislature has expressly or by necessary implication taken away such ancillary power. Examination of the AP VAT Act shows Section 33(6)(b) expressly provides that payment of tax and penalty shall not be stayed pending disposal of the appeal before the Appellate Tribunal. Given this clear statutory embargo, the incidental power to grant stay cannot be exercised by the VAT Appellate Tribunal in the present situation where the petitioner sought stay for the first time before that Tribunal and there was no earlier stay granted under Section 31(3)(a) or by revision under Section 31(3)(b). Consequently, the Tribunal is not vested with jurisdiction to entertain or grant the stay application in the facts of this case. [Paras 16]

Tribunal has no power to entertain or grant the stay application filed directly before it in the present circumstances; point answered accordingly.

Continuance of earlier stay by higher authority - Rule 40 - continuance of stay by Additional/Joint Commissioner - exercise of writ jurisdiction under Article 226 for interim relief - Whether the High Court could, by exercise of its writ jurisdiction, grant interim relief restraining recovery pending the appeal and on what terms. - HELD THAT: - Although the statutory scheme did not permit the Appellate Tribunal to grant the stay sought by the petitioner, the court observed that the petitioner had not availed the routes under Section 31(3)(a)/(b) and Rule 40 for obtaining or continuing a stay. Notwithstanding the statutory bar on the Tribunal, the High Court retained plenary powers under Article 226 to mould interim relief to meet the ends of justice. Applying that jurisdiction, the court directed a stay of collection of the tax demanded by the assessment order pending disposal of the appeal before the Appellate Tribunal, imposing the condition that the petitioner deposit 75% of the demanded tax (inclusive of any earlier deposits) within four weeks of receipt of the order. [Paras 17, 18]

High Court granted stay of collection of the demanded tax pending disposal of the appeal subject to the petitioner depositing 75% of the demanded tax within four weeks.

Final Conclusion: The AP VAT Appellate Tribunal lacks jurisdiction to entertain the petitioner's stay application filed for the first time before it because Section 33(6)(b) of the AP VAT Act expressly bars staying payment pending such appeals; however, exercising its Article 226 powers, the High Court stayed recovery of the demanded tax pending the appeal on the condition that the petitioner deposits 75% of the demanded tax within four weeks.

Entitlement to interest on tax refund - effect of suo motu revision on interest liability - computation and re computation of interest - refund under Section 24(4) of the TNGST Act, 1959

Entitlement to interest on tax refund - effect of suo motu revision on interest liability - Petitioner is entitled to interest on the refund despite the Department's suo motu revision and related proceedings. - HELD THAT: - The Court held that the Department's revision of the Appellate Assistant Commissioner's order and subsequent proceedings (including the Joint Commissioner's order dated 28.05.2003 and its affirmation) do not defeat the petitioner's entitlement to interest. Once the order of the Joint Commissioner was set aside and the first appellate order restored by this Court in W.P.No.35839 of 2003, the legal basis for denying interest during the interregnum ceased to exist. The respondent's contention that a stay or the revision proceedings extinguished the petitioner's right to interest was rejected, and the Court accepted that the petitioner remained entitled to interest as earlier directed by this Court and as reflected in the Department's own earlier communication dated 30.11.2021. [Paras 14]

Respondents' contention that no interest is payable during the pendency of revision proceedings is rejected; petitioner entitled to interest.

Computation and re computation of interest - refund under Section 24(4) of the TNGST Act, 1959 - Court accepted the petitioner's computation of interest and directed payment of the claimed interest after adjustment, within a specified period. - HELD THAT: - Having found entitlement to interest, the Court examined the rival calculations and observed that the Department's earlier communication of 30.11.2021 recognised interest payable. The Court concluded that the petitioner's computation (claiming Rs. 6,21,919.74) was to be given effect to, subject to adjustment for any interest already paid in the interregnum. Consequently, the respondents were directed to refund the interest amount as claimed by the petitioner, after adjusting any amounts already paid, within two weeks from receipt of the order. The directive implements the earlier directions for recomputation and payment given in the Court's prior orders and the consequent compliance by the Department. [Paras 14, 15]

Respondents directed to refund the interest amount claimed by the petitioner (Rs. 6,21,919.74) after adjusting any interim payments, within two weeks.

Final Conclusion: Writ petition allowed; respondents directed to refund the interest claimed by the petitioner (after adjusting any amount already paid) within two weeks, with no order as to costs.

Issuance of non-bailable warrant and process under Section 82 Cr.P.C. - Personal liberty and caution before issuing non-bailable warrants - Dispensation of personal attendance under Section 205 Cr.P.C. - Presumption under Section 139 of the Negotiable Instruments Act and rebuttal on preponderance of probabilities - Requirement to disclose source of funds in complaints under Section 138 N.I. Act

Issuance of non-bailable warrant and process under Section 82 Cr.P.C. - Personal liberty and caution before issuing non-bailable warrants - Validity of impugned order dated 23.10.2019 issuing non-bailable warrant and process under Section 82 Cr.P.C. against the applicant - HELD THAT: - The Court held that issuance of a non-bailable warrant and process under Section 82 Cr.P.C. simultaneously, without proper application of mind and without following the graduated approach prescribed by the Supreme Court, is impermissible. Reliance was placed on Inder Mohan Goswami and Raghuvansh Dewanchand Bhasin which require preference for summons or bailable warrants and careful scrutiny before resorting to non-bailable warrants because of the interference with personal liberty. Having found that the applicant is a woman and a senior citizen and that the non-bailable warrant and Section 82 process were issued in a mechanical manner, the Court found such issuance to be patently illegal and unsustainable. [Paras 11, 12, 13, 19]

Impugned order dated 23.10.2019 issuing non-bailable warrant and process under Section 82 Cr.P.C. is quashed.

Dispensation of personal attendance under Section 205 Cr.P.C. - Whether the trial court should consider dispensation of the applicant's personal attendance - HELD THAT: - The Court noted Section 205 Cr.P.C. which permits the Magistrate to dispense with personal attendance of the accused and to permit appearance by pleader, while retaining discretion to direct personal attendance when necessary. In view of the applicant being a woman and a senior citizen, the High Court directed that if the applicant moves an appropriate application for dispensation of personal attendance, the trial court is expected to consider and decide it, permitting appearance by pleader subject to the trial court directing personal appearance whenever it finds physical presence necessary. [Paras 14, 15]

Trial court to consider any application under Section 205 Cr.P.C. to dispense with the applicant's personal attendance and may permit appearance by pleader, while reserving power to summon her if physical presence is necessary.

Requirement to disclose source of funds in complaints under Section 138 N.I. Act - Presumption under Section 139 of the Negotiable Instruments Act and rebuttal on preponderance of probabilities - Treatment of complainant's failure to disclose source of funds alleged to have been lent and the trial court's role in examining that aspect - HELD THAT: - The High Court observed that the complainant has not disclosed the source of funds which he allegedly raised from relatives to lend to the accused. While the summoning order was not specifically challenged and the High Court did not express a final view on the sustainability of the whole proceeding, it referred to Rajaram (and principles under Section 139 N.I. Act) to note that once a cheque's execution is admitted a presumption of debt arises but is rebuttable on preponderance of probabilities. The Court directed that the learned trial court, while finally disposing of the complaint, must examine whether the complaint contains averments as to the source of funds and decide the question in accordance with the evidence and applicable law. [Paras 16, 17, 18]

Trial court to examine, at the final disposal of the complaint, whether the complainant pleaded and established the source of funds and decide the matter on merits in accordance with law; no interference with the summoning order at this stage.

Final Conclusion: Application under Section 482 Cr.P.C. is partly allowed: the non-bailable warrant and process under Section 82 Cr.P.C. issued vide order dated 23.10.2019 are quashed; the trial court is directed to consider any application under Section 205 Cr.P.C. to dispense with the applicant's personal attendance and to examine, while finally deciding the complaint, whether the complainant has pleaded and proved the source of funds in accordance with the law governing Section 138 N.I. Act.