TaxTMI Updates e-Newsletter
Aug 31,2024

Jurisdiction under Article 226 - discretionary refusal of writ relief - unclean hands / fraudulent petition - failure to co-operate with statutory proceedings and non appearance at summons/personal hearing - forensic examination of signatures indicating benami/dummy operation - investigation for aiding and abetting forgery and fraud - costs for vexatious or fraudulent litigation

Jurisdiction under Article 226 - discretionary refusal of writ relief - unclean hands / fraudulent petition - failure to co-operate with statutory proceedings and non appearance at summons/personal hearing - forensic examination of signatures indicating benami/dummy operation - Exercise of this Court's discretionary writ jurisdiction in respect of challenge to provisional attachment under the CGST Act - HELD THAT: - The Court found material on record indicating that the petitioner had given inconsistent particulars, had not complied with summons and personal hearing notices, and had made contradictory statements about residence and business address. The affidavit in reply relied upon the petitioner's statement recorded under Section 70, panchnamas showing non existence of the business at the stated address, and forensic reports comparing signatures which strengthened suspicion that the enterprise was a dummy/benami operation. These factors led the Court to conclude that the petitioner had not approached the Court with clean hands and that the petition appeared to be part of a broader fraud intended to obstruct investigation and conceal actual beneficiaries. In view of these findings the Court declined to exercise its discretionary jurisdiction under Article 226 and dismissed the petition. [Paras 6, 7, 8]

Petition dismissed and Court declined to exercise jurisdiction under Article 226 on grounds of unclean hands and indicia of fraud and non cooperation with statutory proceedings.

Investigation for aiding and abetting forgery and fraud - costs for vexatious or fraudulent litigation - Directions as to further investigation and imposition of costs for conduct of litigation - HELD THAT: - Having concluded that the writ and related petitions appeared to be part of a fraudulent scheme, the Court directed the competent authorities to investigate all persons involved in filing the present petition and specified related writs so as to uncover the truth and take appropriate legal action including offences relating to forgery and fraud. The Court also exercised its incidental powers to award costs against the petitioner, finding such an order appropriate in the circumstances to penalise and deter frivolous or fraudulent litigation. [Paras 9, 10]

Authorities directed to investigate persons involved in filing this and specified related writs for possible offences including aiding and abetting forgery and fraud; petitioner ordered to pay costs to respondent no.2.

Final Conclusion: The petition was dismissed and the High Court refused to exercise its discretionary writ jurisdiction on account of findings suggestive of fraud, non cooperation, and inconsistent pleadings; the Court directed a formal investigation into persons involved in this and related petitions and awarded costs in favour of respondent no.2.

Condonation of delay in filing appeals - applicability of the Limitation Act to a special or local law - exclusion of Section 5 of the Limitation Act by necessary implication - interpretation of Section 107(4) of the APGST Act

Condonation of delay in filing appeals - exclusion of Section 5 of the Limitation Act by necessary implication - interpretation of Section 107(4) of the APGST Act - Whether the appellate authority under Section 107 of the APGST Act can invoke the Limitation Act (Section 5) to condone delay beyond the additional one month permitted by Section 107(4). - HELD THAT: - Section 107(1) and (2) of the APGST Act prescribe limitation periods of three months and six months respectively for appeals and Section 107(4) permits the Appellate Authority to allow an additional period of one month if satisfied that the appellant was prevented by sufficient cause. The Court reviewed the doctrine under Section 29(2) of the Limitation Act and the line of Supreme Court decisions addressing whether provisions of the Limitation Act apply where a special statute prescribes its own limitation scheme. The Court accepted that where the special law prescribes a fixed limited extension period, that restriction may, by necessary implication, exclude the operation of Section 5 of the Limitation Act. Applying that principle to Section 107, the Court held that the statutory scheme confines the power to condone delay to the one month allowed by Section 107(4) and that Section 5 of the Limitation Act cannot be invoked to extend limitation beyond that period. The Court distinguished cases where a statute granted an open-ended power to condone delay and where Section 5 was therefore held applicable. Accordingly, the appellate authority has no power to condone delay beyond the further period of one month specified in Section 107(4). [Paras 28, 29, 31, 32, 33]

Section 5 of the Limitation Act is excluded in relation to appeals under Section 107 of the APGST Act; the Appellate Authority cannot condone delay beyond the one month permitted by Section 107(4).

Final Conclusion: Writ petitions dismissed; appeals filed beyond the period permitted by Section 107(4) could not be condoned under the Limitation Act and the appellate authority had no power to extend limitation beyond the one month specified in Section 107(4).

Provisional attachment of bank accounts - seizure and retention of documents and electronic devices - right to obtain copies of seized documents under Section 67(5) of the CGST Act - return of seized goods within 30 days under Section 67(3) of the CGST Act - refund of allegedly coerced deposit and right to seek statutory refund without awaiting adjudication - right to claim compensation for loss of seized items

Seizure and retention of documents and electronic devices - right to obtain copies of seized documents under Section 67(5) of the CGST Act - return of seized goods within 30 days under Section 67(3) of the CGST Act - Permissible period and conditions for retention of seized documents and electronic devices and entitlement to copies of seized data - HELD THAT: - The Court observed that the petitioners are entitled to obtain copies of documents seized and extracts of data under the CGST Act. The Commissioner may retain seized documents, records, laptops, CPUs and mobile phones only so long as they are required for the investigation but in any event not later than 30 days after issuance of the notice, consistent with the time-limit in the CGST Act. Meanwhile, the respondents are directed to ensure that copies of documents and data on the seized devices are made available to the petitioners. The Court also requested the Commissioner to examine the petitioners' contention that they have already provided a one-terabyte hard disk and are being compelled to provide further storage, and to ensure that data is not withheld from the petitioners. [Paras 10, 13, 14, 15, 16]

Seized documents and devices may be retained only till required and not beyond 30 days after notice; petitioners entitled to copies of data and the Commissioner to ensure data is made available and not withheld.

Refund of allegedly coerced deposit and right to seek statutory refund without awaiting adjudication - Whether the petitioners are entitled to immediate refund of the sum claimed to have been deposited under compulsion - HELD THAT: - The Court declined to adjudicate or direct a refund at this stage given the contentious facts (including dispute whether deposit was voluntary or coerced and whether it was made during search or after statement). The challan indicates the deposit was made 'under protest' and in presence of the GST officer, and there are conflicting accounts about the officer accompanying the director to the bank. In view of these disputed facts and absence of the respondents' counter-affidavit on record, the Court found it inappropriate to order an immediate refund in these proceedings but clarified that the petitioners are entitled to apply for refund in accordance with law without waiting for adjudication of the show-cause notice. [Paras 9]

No direction for immediate refund; petitioners may apply for refund as per law without awaiting adjudication.

Right to claim compensation for loss of seized items - Liability and remedies in respect of laptops reported stolen from GST authorities' custody - HELD THAT: - The respondents stated that all hard disks and other articles have been returned except two laptops which were reported stolen from the office of the GST authorities and for which an FIR has been lodged. The Court observed the position and expressly reserved all rights of the petitioners to seek compensation for the loss of those laptops. [Paras 10, 11]

Petitioners' right to seek compensation for the stolen laptops is reserved.

Final Conclusion: The petition is disposed of: no interim order for refund of the deposited sum is granted but the petitioners may seek statutory refund; seized materials may be retained only as long as required and not beyond 30 days from notice while copies of data must be provided; petitioners' claim for compensation for stolen laptops is reserved.

Cancellation of bail under Section 439(2) Cr.P.C. - conditions of bail - violation of bail conditions - cooperation with investigation - investigating officer's power to call for documents - economic offence and investigatory stage - distinction between denial of bail and cancellation of bail - test for cancelling bail

Cancellation of bail under Section 439(2) Cr.P.C. - conditions of bail - violation of bail conditions - cooperation with investigation - economic offence and investigatory stage - Whether the State has made out grounds for cancellation of bail granted in favour of the respondent. - HELD THAT: - The petitioner's case rested on two contentions: that the respondent has not produced required documents and has concocted documents, and that he has violated conditions of bail by not cooperating with the investigation. The Court noted that the respondent is required to upload particulars and supporting documents on the statutory web portal and that the uploaded materials are available online. If additional documents are thought necessary, the Investigating Officer may call for them; however the IO cannot compel production of a specific document during the investigation. Given that the matter is an economic offence at an initial stage of investigation and that assessment proceedings may follow investigation, the proper course for the State is to press for production of documents during investigation or raise specific allegations of withholding or concoction to expedite inquiry and assessment. The Court observed that cancellation of bail withdraws an accused's liberty and therefore requires strong and compelling grounds; mere non-production of documents, without clear proof of deliberate withholding or other breach of bail conditions, does not meet that standard. Reliance on the Apex Court decision cited by the State was found to be inapplicable on facts. The Sessions Court's order granting bail was a reasoned order which had taken the facts into account and the petitioner failed to demonstrate any compelling reason to disturb it. [Paras 9, 10, 11, 12, 13]

State has not made out grounds for cancellation of bail; bail shall not be cancelled.

Final Conclusion: The petition seeking cancellation of bail is dismissed; the Sessions Court's reasoned order granting bail is sustained for lack of strong grounds to withdraw the liberty already granted.

Economic offences bail jurisprudence - gravity of offence and sentence as factor in bail - presumption of innocence and trial not commenced - custodial interrogation unnecessary where incriminating material is under departmental custody - conditions of bail and verification of sureties

Economic offences bail jurisprudence - gravity of offence and sentence as factor in bail - presumption of innocence and trial not commenced - custodial interrogation unnecessary where incriminating material is under departmental custody - conditions of bail and verification of sureties - Whether the applicant Lalit Kumar Chaudhary is entitled to bail in the prosecution under the C.G.S.T. Act arising from alleged availment of fraudulent ITC from non-existent suppliers. - HELD THAT: - The Court examined the nature of the allegations, materials collected during search and investigation, and applicable precedents on bail in economic offences. Noting authorities which state that bail is the rule and refusal the exception, and that gravity of offence and prescribed sentence are relevant factors, the Court observed that the trial has not commenced and the accused's complicity is yet to be adjudicated. The Court further noted that relevant incriminating material is in the custody of the department and there is nothing on record to demonstrate that the applicant, if enlarged on bail, would adversely affect the trial. The prescribed maximum sentence for the alleged offence is five years; having regard to these factors and without commenting on merits, the Court concluded that the applicant has made out a case for bail. Bail is therefore granted subject to furnishing personal bond and two heavy sureties, verification of sureties, surrender of passport (if any), prohibition on similar offences, non-tampering with witnesses or evidence, and other customary conditions; prosecution may move for cancellation on breach. [Paras 12, 13, 14]

Bail allowed on furnishing personal bond and two heavy sureties with specified conditions; sureties to be verified and standard conditions (appearance, non-commission of similar offence, non-tampering, surrender of passport) imposed.

Final Conclusion: The bail application is allowed and the applicant is ordered released on furnishing a personal bond and two heavy sureties subject to verification and the conditions specified by the Court; prosecution may move for cancellation on breach of conditions.

Return of seized documents and electronic devices - copies and extracts of seized documents - time-limit for retention of seized property under Section 67(3) of the CGST Act, 2017 - provision to make available copies of data stored on seized devices - refund of amounts allegedly coerced during search

Return of seized documents and electronic devices - copies and extracts of seized documents - time-limit for retention of seized property under Section 67(3) of the CGST Act, 2017 - provision to make available copies of data stored on seized devices - Entitlement to copies and limited retention of seized documents, laptops, CPUs, mobile phones and other records and the obligations of the Commissioner in that regard - HELD THAT: - The petitioners are entitled to obtain copies of documents and extracts of seized material under the statutory scheme. Section 67(3) of the CGST Act requires that documents, books or things seized under Section 67(2) be returned to the person from whom they were seized within a period not exceeding 30 days from issuance of the notice. The Commissioner considered these provisions and has permitted the petitioners to obtain copies and data on seized devices on a mutually convenient date. Consistent with the statutory mandate, the Commissioner may retain the seized documents, records, laptops, CPUs and mobile phones only for so long as they are required for the investigation and, in any event, not later than 30 days after issuance of the notice. Meanwhile, the Commissioner must ensure that copies of documents and of data available on the seized devices are provided to the petitioners. The Commissioner should also examine the petitioners' grievance that additional hard disks are being insisted upon and ensure that data already recorded on devices is not withheld from the petitioners. [Paras 11, 12, 13, 14, 16]

Petitioners entitled to copies and extracts; Commissioner may retain seized items only while required and not later than 30 days after notice; Commissioner to ensure provision of copies/data and examine demand for additional hard disks.

Refund of amounts allegedly coerced during search - requirement to file counter-affidavit - Claim for refund of Rs. 22,00,000 allegedly deposited under coercion during search remitted for further consideration - HELD THAT: - The petitioners claim that they were compelled to deposit the stated amount during the search and seek refund. The Court noted precedents referred to by the petitioners but observed that the respondents' counter-affidavit is not on record. The matter requires further consideration on the basis of the respondents' response and argument. [Paras 17, 18, 19, 20]

Question of refund listed for further hearing; respondents directed to place counter-affidavit on record and matter listed on the next specified date.

Final Conclusion: The petition is directed to proceed on the questions relating to return of seized material and the claimed refund: the petitioners shall be provided copies of seized documents and data; seized items may be retained only as required and not later than 30 days after notice; the refund claim is listed for further hearing and the respondents must file their counter-affidavit.

Release of seized goods on execution of bond - confiscation and fine in lieu of confiscation - security by immovable property as guarantee for liability - undertaking against alienation of property pending proceedings - appellate remedy before tribunal pending constitution - court not expressing opinion on merits

Release of seized goods on execution of bond - confiscation and fine in lieu of confiscation - security by immovable property as guarantee for liability - undertaking against alienation of property pending proceedings - Direction to release the seized gold on execution of bonds and related undertakings - HELD THAT: - The Court directed that the entire quantity of seized gold (1647.970 grams) shall be released on the execution by the specified persons of bonds in the manner and form required by the adjudicating authority. The bonds are to be executed by the designated persons identified in the petition and shall include an undertaking not to alienate the immovable properties produced as security (Exts. P9 and P10) until the culmination of the proceedings. The release is permitted notwithstanding the State's contention as to confiscation, because it is settled that goods may be released on payment of fine in lieu of confiscation; the court, without deciding the merits, provided a security mechanism by way of bond and immovable property to safeguard the State's interest and to ensure recoverability of any tax, penalty or fine ultimately adjudicated. [Paras 7]

Seized gold released subject to execution of bonds by the specified persons and their undertaking not to alienate the properties forming security.

Appellate remedy before tribunal pending constitution - court not expressing opinion on merits - Treatment of merits and future appellate consideration - HELD THAT: - The Court expressly declined to adjudicate the substantive merits of the competing contentions between the parties, noting that the GST Appellate Tribunal has not yet been constituted. The parties remain entitled to approach the Appellate Tribunal when constituted, and any appeal filed before it shall be considered on merits without being influenced by the observations in this judgment. The order therefore leaves the ultimate questions of confiscation, penalty and fine to be finally decided by the appropriate appellate forum. [Paras 3, 7]

Merits not decided; appeals to be considered by the Appellate Tribunal (when constituted) on merits, untrammelled by this judgment.

Final Conclusion: The writ petitions are disposed by directing immediate release of the seized gold upon execution of bonds and undertakings as ordered, while leaving all substantive issues regarding confiscation, penalty and fine to be adjudicated by the Appellate Tribunal when constituted; the Court has not expressed any view on the merits.

Jurisdiction of Deputy Commissioner under Rule 86A(1) of the OGST Rules, 2017 - blocking of input tax credit (ITC) on suspicion of fraudulent or ineligible credit - principles of natural justice in issuance of show-cause/blocking orders - applicability of Central GST circulars to State GST

Jurisdiction of Deputy Commissioner under Rule 86A(1) of the OGST Rules, 2017 - blocking of input tax credit (ITC) on suspicion of fraudulent or ineligible credit - Impugned orders blocking ITC were within jurisdiction of the Deputy Commissioner under Rule 86A(1) of the OGST Rules, 2017. - HELD THAT: - Rule 86A(1) of the OGST Rules, 2017 empowers the Commissioner or an officer authorised by him in that behalf, not below the rank of an Assistant Commissioner, to act where there are reasons to believe that input tax credit in the electronic credit ledger has been fraudulently availed or is ineligible. The Deputy Commissioner who issued the impugned orders is senior in rank to an Assistant Commissioner. Therefore the orders impugned, being passed by an officer not below the minimum rank specified, are within the statutory jurisdiction conferred by Rule 86A(1). The Court further observed that the Central Government circular relied upon by the petitioner is directed to Central Tax authorities and does not, by itself, extend to State GST unless adopted by the State Government; no adoption was shown. [Paras 6, 7]

The contention that the Deputy Commissioner lacked jurisdiction to pass the blocking orders is rejected; the impugned orders are intra vires under Rule 86A(1) of the OGST Rules, 2017.

Principles of natural justice in issuance of show-cause/blocking orders - applicability of precedents on requirement of hearing before blocking ITC - The challenge based on non-compliance with principles of natural justice in passing the impugned orders is not maintainable in view of this Court's earlier decisions. - HELD THAT: - The petitioner argued that the orders were passed without complying with principles of natural justice. The Court referred to its earlier decisions in W.P.(C) No. 25433 of 2023 (M/s. Bizzare Ispat Pvt. Ltd.) and W.P.(C) No. 22236 of 2023 (M/s. Innojet Projects Pvt. Ltd.), observing that those decisions dispose of the contention regarding non-compliance with natural justice in similar circumstances. Relying on those precedents, the Court found that the petitioner cannot successfully raise the ground of non-compliance of natural justice in the present matter. [Paras 5, 8]

The plea of violation of principles of natural justice is negatived by application of the Court's earlier decisions; the challenge on that ground fails.

Final Conclusion: The writ petition is dismissed. The impugned orders blocking ITC, having been passed by a Deputy Commissioner competent under Rule 86A(1) of the OGST Rules, 2017, and in the absence of a sustainable grievance on non-compliance of natural justice, are not liable to be quashed.

Cancellation of registration - limitation for filing statutory appeal - condonation of delay in statutory appeal - amnesty scheme for restoration of registration - availability of alternative remedy - doctrine of laches/delay

Limitation for filing statutory appeal - condonation of delay in statutory appeal - doctrine of laches/delay - Whether the writ petition can be entertained despite the appeal against cancellation of registration having been filed after the prescribed limitation and without a condonation application. - HELD THAT: - The court noted that the appeal against the cancellation order ought to have been filed within three months from the order and, if delayed, within an additional month by seeking condonation. The appeal was filed after expiry of the limitation period and no condonation of delay was sought. The petitioner did not controvert the allegation that returns were not furnished for a continuous period of six months. In these circumstances the court applied the principle that law favours the diligent and not the indolent and held that the delay militates against entertaining equitable relief by writ. [Paras 2, 3, 5, 6]

Writ petition cannot be entertained because the statutory appeal was filed beyond the limitation period without seeking condonation; delay and laches operate against the petitioner.

Amnesty scheme for restoration of registration - availability of alternative remedy - Whether failure to avail the Government's amnesty scheme for restoration of registration affected the petitioner's entitlement to relief by writ. - HELD THAT: - The court observed that the Government had promulgated an Amnesty Scheme permitting restoration of registration on payment of dues within a specified window. The petitioner did not avail himself of that remedy. The existence of the amnesty scheme, coupled with the petitioner's failure to utilize it, weighed against exercise of discretionary writ jurisdiction. The unexhausted alternative remedy and the unexplained delay contributed to refusal of equitable relief. [Paras 4]

Failure to avail the amnesty scheme was a relevant factor militating against interference by writ jurisdiction; discretion declined.

Final Conclusion: The writ petition is dismissed and the exercise of discretionary writ jurisdiction is declined because the statutory appeal was filed after the prescribed limitation without condonation and the petitioner also failed to avail the available amnesty remedy; delay and non availing of alternative remedy disentitle the petitioner to relief.

Blocking of input tax credit - exercise of discretion under Rule 86A of the GST Rules - guidelines in CBEC Circular dated 02.11.2021 against mechanical exercise of discretion - show cause notice under Section 74(1) of the CGST Act, 2017 - relegation to alternate remedy of statutory adjudication - judicial restraint in belated interference under Article 226

Blocking of input tax credit - exercise of discretion under Rule 86A of the GST Rules - guidelines in CBEC Circular dated 02.11.2021 against mechanical exercise of discretion - show cause notice under Section 74(1) of the CGST Act, 2017 - Validity of the intimation (Ext.P2) blocking the assessee's input tax credit and the effect of the Circular's guidelines on such intimation - HELD THAT: - The Court examined whether Ext.P2, an intimation blocking the electronic credit ledger, suffered from jurisdictional infirmity or inherent illegality because the detailed reasons were set out in subsequently issued show cause notices (Ext.P6 and P7). The Court held that Clause 3.4.1 of the CBEC Circular provides procedural guidance that the discretion under Rule 86A is to be exercised with circumspection and on objective material, and does not convert the guideline into a mandatory nullifying requirement for an intimation where reasons have been gathered and communicated subsequently. On the facts, the Department's materials indicated suspicion of availment of input tax credit based on bogus invoices, and those reasons were articulated in the later show cause notices. In those circumstances there was no jurisdictional error in issuing Ext.P2 and the petitioner was required to pursue the statutory adjudicatory process rather than seek belated writ relief.

Ext.P2 intimation was not interfered with; the petitioner must reply to Exts.P6 and P7 and pursue the alternate statutory remedy.

Relegation to alternate remedy of statutory adjudication - judicial restraint in belated interference under Article 226 - Whether the High Court should exercise writ jurisdiction belatedly after the petitioner delayed approaching the court despite receipt of show cause notices - HELD THAT: - The Court considered the temporal conduct of the petitioner who received the intimation on 19.06.2023, was served with detailed show cause notices by 17.10.2023, but did not approach the High Court until January 2024. Given the availability of an effective statutory remedy in the form of adjudication on the show cause notices and the absence of any demonstrated inordinate delay by the respondents in issuing those notices, the learned Single Judge rightly declined to exercise extraordinary writ jurisdiction. The Court emphasised that belated interference is inappropriate where the petitioner has an adequate alternate remedy and has not shown circumstances justifying departure from the statutory process.

Writ relief was refused on grounds of delay and available alternate remedy; the petitioner to pursue adjudication under the statute.

Final Conclusion: The Writ Appeal is dismissed. The High Court declined belated interference with the intimation blocking input tax credit and directed the petitioner to pursue the statutory adjudication in response to the show cause notices.

Opportunity to be heard - proof of movement of goods - remand for fresh consideration - condition of interim deposit for remand - setting aside impugned order - raising/lifting of attachment as consequence of order

Setting aside impugned order - remand for fresh consideration - condition of interim deposit for remand - Impugned order dated 30.08.2023 set aside and the matter remanded for reconsideration subject to conditions. - HELD THAT: - The court found that the petitioner had filed a reply to the show cause notice and produced documents (original tax invoices, bank statement, ledger account and relevant returns), and that the impugned order confirmed the tax proposal largely for lack of proof of actual movement of goods. In the circumstances it was just to set aside the impugned order and remit the matter for fresh consideration so that the petitioner may place additional documents to establish movement of goods. The remand, however, is made conditional on the petitioner remitting 20% of the disputed tax demand within two weeks as agreed, and on timely production of additional documents; upon receipt of these, the respondent must provide a reasonable opportunity including personal hearing and pass a fresh order within two months of receiving the additional documents. [Paras 6, 7]

Impugned order set aside; matter remanded for reconsideration on condition that petitioner pays 20% of the disputed demand within two weeks and is permitted to file additional documents, after which the authority shall provide hearing and pass fresh order within two months.

Opportunity to be heard - proof of movement of goods - Petitioner entitled to an opportunity to produce documents to establish actual movement of goods and to be heard before finalising tax demand. - HELD THAT: - Although the respondent had issued reminders for personal hearing (all subsequent to the petitioner's reply), the appellate court noted that the petitioner had not had a fair opportunity to place documents such as e-way bills, lorry receipts or weighment slips to demonstrate movement of goods. Given that the tax proposal was confirmed mainly for lack of such proof, and that the petitioner had already placed substantial documentary material showing payment and GST return details, the court directed that the petitioner be allowed to file additional evidence and be afforded a reasonable opportunity including personal hearing before a fresh decision is taken. [Paras 5, 6, 7]

Petitioner permitted to submit additional documents to prove movement of goods and to be granted a personal hearing prior to a fresh order.

Raising/lifting of attachment as consequence of order - Attachment of the petitioner's bank account is lifted as a consequence of setting aside the impugned order. - HELD THAT: - The court set aside the impugned order and expressly recorded that, as a consequence of that order being set aside, the earlier order of attachment dated 18.03.2024 is raised. This follows from the remand and conditional relief granted to the petitioner pending fresh consideration by the authority. [Paras 7]

Order of attachment raised consequent to setting aside the impugned order.

Final Conclusion: Writ petition disposed by setting aside the impugned order dated 30.08.2023 and remanding the matter for fresh consideration on condition of a 20% interim deposit by the petitioner and allowance to file additional documents and seek personal hearing; attachment of the bank account is lifted accordingly.

Direction to bear additional tax liability - update Schedule of Rates incorporating GST - representation to administrative authority for adjudication - interim protection from coercive recovery on deposit - entertainment of writ in absence of statutory appellate forum - obligation to pass a reasoned and speaking order

Direction to bear additional tax liability - update Schedule of Rates incorporating GST - representation to administrative authority for adjudication - obligation to pass a reasoned and speaking order - Liberty granted to petitioner to place representation before the Additional Chief Secretary, Finance Department for consideration of bearing additional tax liability and updating State Schedule of Rates to incorporate GST; administrative decision directed within a specified time with opportunity of hearing. - HELD THAT: - The court declined to adjudicate the substantive claim itself and instead granted the petitioner liberty to file an appropriate representation before the Additional Chief Secretary, Finance Department within four weeks. The Additional Chief Secretary is directed to take a final decision on that representation within four months of receipt, after consulting relevant departments and after giving the petitioner or his authorised representative an opportunity of hearing. The order expressly requires that the decision be a reasoned and speaking order and that relevant High Court judgments relied upon by the petitioner be considered. Failure by the petitioner to file the representation within the stipulated time renders the order inapplicable to him. [Paras 4, 5, 6]

Representation to be filed within four weeks; Additional Chief Secretary to decide within four months after consultation and hearing; decision to be reasoned and speaking.

Interim protection from coercive recovery on deposit - entertainment of writ in absence of statutory appellate forum - Interim protection granted against coercive recovery arising from the impugned appellate order under the WBGST Act, conditional on deposit of a specified portion of the disputed tax; further pleadings directed. - HELD THAT: - The court noted that the impugned order dated 30th January, 2024 is ordinarily appealable to the statutory tribunal, but since that forum is not available, the writ petition is entertained. The court held that the issues cannot be finally adjudicated without affidavits from respondents and therefore directed respondents to file affidavit-in-opposition within four weeks and allowed the petitioner to file a reply within two weeks thereafter. Meanwhile, no coercive steps for recovery shall be taken if the petitioner deposits a further twenty per cent of the remaining disputed tax within ten days; failure to make the deposit removes the interim protection. These directions preserve the parties' rights while ensuring procedural opportunity for evidence and counter-affidavits. [Paras 7, 8, 9, 10]

Respondents to file affidavit-in-opposition; petitioner may reply; interim bar on coercive recovery if petitioner deposits further 20% of disputed amount within ten days, otherwise protection lapses.

Final Conclusion: Petition entertained partly for administrative adjudication: petitioner permitted to file representation for consideration of GST impact and update of State SOR, with the Additional Chief Secretary directed to decide within four months after hearing and to pass a reasoned order; separate interim relief granted against coercive recovery of the disputed tax subject to the conditional deposit and filing of affidavits for further adjudication.

Exemption for pure services relating to functions entrusted under Article 243G/243W - Classification under SAC 998399 - Other professional, technical and business services - Effect of deletion of the words "governmental authority or entity" from exemption notification - Recipient under Section 2(93) - person liable to pay and inclusion of agent - Payment through PFMS does not by itself make Central/State Government the recipient

Classification under SAC 998399 - Other professional, technical and business services - Classification and rate applicable to the applicant's services where exemption is not available - HELD THAT: - The Authority found that the services supplied by the applicant are technical consultancy for project development and management support, which are pure services and fall under SAC/HSN code 998399 (Other professional, technical and business services n.e.c.). Such services are taxable under Notification No. 11/2017 - Heading 9983 (Sr. No. 21 (ii)) at the rate of 18% (9% CGST and 9% SGST) wherever exemption is not applicable. [Paras 5]

Services classifiable under SAC 998399 and taxable at 18% where no exemption applies

Exemption for pure services relating to functions entrusted under Article 243G/243W - Effect of deletion of the words "governmental authority or entity" from exemption notification - Applicability of exemption Entry No. 3 of Notification No. 12/2017 to supplies where time of supply is on or before 31-12-2021 - HELD THAT: - The Authority held that (i) the applicant's services are pure services rendered in relation to functions specified in Articles 243G and 243W (water supply, sanitation etc.), and (ii) Maharashtra Jeevan Pradhikaran (MJP) was set up by State Legislature and thus qualified as a "Governmental Authority" for the purpose of Notification No. 12/2017 prior to omission. Consequently, supplies to MJP with time of supply on or before 31-12-2021 are covered by Sr. No. 3 of Notification No. 12/2017 (NIL rate) and are exempt. [Paras 5]

Supplies with time of supply on or before 31-12-2021 are exempt under Sr. No. 3 of Notification No. 12/2017

Effect of deletion of the words "governmental authority or entity" from exemption notification - Exemption for pure services relating to functions entrusted under Article 243G/243W - Applicability of exemption Entry No. 3 of Notification No. 12/2017 to supplies where time of supply is on or after 01-01-2022 - HELD THAT: - The Authority recorded that the words "or a Governmental authority or a Government Entity" were omitted from Sr. No. 3 by Notification No. 16/2021 (w.e.f. 01-01-2022). Applying the settled principle that tax exemptions must be strictly construed, and having found that the applicant failed to discharge the burden to show the Central/State Governments were the persons liable to pay, the Authority concluded that supplies to MJP on or after 01-01-2022 do not fall within Sr. No. 3 and therefore are not exempt. Such supplies are taxable at 18% under Notification No. 11/2017 (Sr. No. 21 Heading 9983). The Authority relied on the language of the notification and precedent that exemptions cannot be read into the statute. [Paras 5]

Supplies with time of supply on or after 01-01-2022 are not covered by Sr. No. 3 and are taxable at 18%

Recipient under Section 2(93) - person liable to pay and inclusion of agent - Payment through PFMS does not by itself make Central/State Government the recipient - Whether supplies made to MJP under Jal Jeevan Mission are in fact supplies to Central/State Governments (i.e., whether the Governments are the recipient under Section 2(93)) by virtue of grants and PFMS payments - HELD THAT: - The applicant argued that (i) water supply is a sovereign function and (ii) payments flowing through budgetary grants and PFMS made the Central/State Governments the persons liable to pay, or that MJP acted as agent of the Governments so that supplies should be treated as to the Governments. The Authority examined the contract terms, the MJA Act and the PFMS mechanism and found: (a) the empanelment contract expressly contemplates MJP as the contracting and paying party; (b) MJP is a body corporate established by State legislation with powers to contract and hold funds; (c) PFMS is a web-based payment and monitoring system through which implementing agencies operate their own bank accounts and does not convert grant flows into direct payments by the Central/State Governments to vendors; and (d) the applicant produced no legal instrument (e.g., a Finance Act provision or specific budgetary clause) making the Governments directly liable to pay the applicant. On these bases the Authority rejected the contention that the Central/State Governments are the recipients for GST purposes and held that MJP is the service receiver under Section 2(93). [Paras 5]

Maharashtra Jeevan Pradhikaran is the recipient of services under Section 2(93); payments via PFMS or grant funding do not by themselves make Central/State Governments the recipients

Exemption for pure services relating to functions entrusted under Article 243G/243W - Whether appointment of MJP as implementing agency amounts to delegation of sovereign function such that MJP is performing functions under Articles 243G & 243W (Question 6) - HELD THAT: - The Authority expressly declined to answer this constitutional question on merits. It observed that the question falls outside the scope of Section 97(2) of the GST Act and therefore did not adjudicate whether appointment of MJP constitutes delegation of sovereign function under the Constitution. [Paras 6]

Not answered - question outside the purview of Section 97(2) of the GST Act

Final Conclusion: The Advance Ruling: (a) Technical consultancy services supplied to Maharashtra Jeevan Pradhikaran are classifiable under SAC 998399 and taxable at 18% where exemption does not apply; (b) supplies to MJP with time of supply on or before 31-12-2021 are exempt under Sr. No. 3 of Notification No. 12/2017; (c) supplies with time of supply on or after 01-01-2022 are not covered by that exemption (words "governmental authority or entity" omitted) and are taxable at 18%; (d) MJP is the recipient of services under Section 2(93) for payments made by it, and PFMS or grant disbursal does not by itself convert the Central/State Governments into the service recipient; (e) the constitutional question whether appointment of MJP amounts to delegation of sovereign function was not decided.

Exemption under Notification No. 12/2017 - entry 41 - long-term lease premium exemption - industrial plot / industrial business area and permitted use - ownership/control by Government for eligibility - incorporation of exemption clause in lease agreement - burden of proof and strict interpretation of exemption notifications

Exemption under Notification No. 12/2017 - entry 41 - long-term lease premium exemption - industrial plot / industrial business area and permitted use - ownership/control by Government for eligibility - incorporation of exemption clause in lease agreement - burden of proof and strict interpretation of exemption notifications - Whether the upfront premium paid for grant of long-term lease of the plot by SMPK to the applicant is exempt under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The Authority examined the cumulative conditions prescribed by entry 41 and applied them to the facts. The lease period condition (thirty years or more) is satisfied from the allotment letter; likewise the applicant's status as an industrial unit is not in dispute. However, the exemption also requires that the leased plots be used for industrial or financial activity in an industrial or financial business area and that the lease documents incorporate the statutory conditions and exemption undertaking. The allotment letter and tender documents describe the lease purpose as for setting up a "commercial office complex" and explicitly refer to payment of GST on the upfront premium; no documents were produced to establish that the area is a declared industrial business area or that the proposed use will amount to industrial activity as required by the provisos to the entry. Further, the lease documentation does not incorporate the exemption undertaking mandated by the notification. On the question whether SMPK qualifies as a "State Government Industrial Development Corporation or Undertaking" or as an entity with 20% or more Government ownership, the Authority found that statutory scheme of the Major Port Authority Act and the governance and financial autonomy of the Board indicate autonomous control by the Board in normal course; supervisory or audit control by Central Government (including C&AG audit or tax-deductor status) does not demonstrate the requisite ownership/control for the purpose of the exemption. The Authority also applied the principle that exemption notifications are to be strictly construed and that the onus to establish applicability lies on the applicant. Because the applicant failed to prove that (a) the plot/use meets the industrial/industrial-business-area requirement and (b) SMPK meets the ownership/control threshold, the composite conditions of entry 41 are not fulfilled in the instant case.

The services by way of grant of long-term lease of land by SMPK to the applicant for setting up a commercial office complex are not covered by entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and therefore the upfront premium cannot be treated as an exempt supply.

Final Conclusion: The Authority ruled that the upfront premium payable for the grant of long-term lease by SMPK to the applicant is not exempt under entry 41 of Notification No. 12/2017-Central Tax (Rate), since the prescribed conditions in the notification (use in an industrial/financial business area, incorporation of the exemption undertaking in lease documents, and requisite government ownership/control of the lessor) were not established.

Exemption for services by an unincorporated body to its own members by way of reimbursement of charges or share of contribution up to Rs. 7,500 per month per member - member-specific application of exemption - GST chargeability of Resident Welfare Association (RWA) on monthly subscriptions/contributions

Exemption for services by an unincorporated body to its own members by way of reimbursement of charges or share of contribution up to Rs. 7,500 per month per member - member-specific application of exemption - GST chargeability of Resident Welfare Association (RWA) on monthly subscriptions/contributions - Taxability of amounts collected by a RWA from its members where some members pay more than Rs. 7,500 per month and others pay less, and whether the exemption under Serial No. 77 applies member-wise. - HELD THAT: - The Authority consolidated the repetitive questions into a single issue and examined the exemption under Serial No. 77 to Notification No. 12/2017 (as amended) together with Circular No. 109/28/2019-GST. The notification exempts services by an unincorporated body to its own members by way of reimbursement or share of contribution up to Rs. 7,500 per month per member for sourcing goods or services for common use. The Circular clarifies that the ceiling is to be applied per member (and, as a matter of business sense, per residential apartment where a person owns multiple flats). The Authority therefore held that the exemption is member-specific: where the amount collected from a particular member does not exceed Rs. 7,500 per month, that amount is not taxable even if other members pay in excess of Rs. 7,500 per month. The Authority illustrated the principle by example and applied it to the applicant's facts, concluding that collections up to Rs. 7,500 per month per member are not liable to GST. [Paras 4]

Collections from a member by way of reimbursement of charges or share of contribution not exceeding Rs. 7,500 per month per member are not liable to GST; the exemption is applied member-wise.

Final Conclusion: The Authority ruled that the applicant RWA shall not be liable to pay GST on amounts collected from individual members where such amounts do not exceed Rs. 7,500 per month per member, the exemption being applied on a member-specific basis.

Substantial question of law - perversity in findings of fact - final fact finding authority of the Tribunal - scope of High Court under Section 260 A of the Income Tax Act - burden of proof under Section 68 of the Income tax Act, 1961 - appellate interference with concurrent findings

Substantial question of law - perversity in findings of fact - final fact finding authority of the Tribunal - scope of High Court under Section 260 A of the Income Tax Act - burden of proof under Section 68 of the Income tax Act, 1961 - No substantial question of law arises from the Tribunal's order so as to admit the appeal under Section 260 A; the Tribunal's findings are not perverse. - HELD THAT: - The High Court held that an appeal under Section 260 A lies only where a substantial question of law is involved and such question must be formulated. The Court applied settled principles that the High Court will not ordinarily interfere with concurrent factual findings of the authorities below unless the Tribunal's finding is perverse, based on no evidence, or reached by misreading or ignoring relevant admissible material. On the facts, the challenges advanced by the Revenue amounted to disputes with the Tribunal's factual conclusions-contesting identity, creditworthiness and genuineness of creditors and transactions-rather than raising any debatable legal question. The Tribunal had addressed the grounds raised, recorded reasons and discharged its fact finding role; the Revenue failed to demonstrate perversity in those findings. Consequently, the matter did not satisfy the statutory threshold under Section 260 A for admission of the appeal. [Paras 18, 19, 20]

Appeal dismissed in limine; no substantial question of law arises from the Tribunal's order and there is no warrant for interference with its findings.

Final Conclusion: The High Court dismissed the Revenue's appeal in limine under Section 260 A, holding that no substantial question of law arose from the Tribunal's order and there was no perversity in the Tribunal's fact finding to justify interference.

Apportionment of expenditure under Section 14A - Expenditure "in relation to" exempt income - Rule 8D determination linked to exempt income - Dominant purpose test versus apportionment theory - Prospective application of the Explanation to Section 14A (Finance Act, 2022)

Apportionment of expenditure under Section 14A - Expenditure "in relation to" exempt income - Rule 8D determination linked to exempt income - Disallowance under Section 14A must be linked to and apportioned against exempt income and cannot exceed the exempt income earned in the relevant year; Rule 8D applies to determine expenditure in relation to exempt income. - HELD THAT: - The Court followed the settled exposition in Walfort, Maxopp and the coordinate authority (Caraf Builders) that section 14A is aimed at preventing deduction of expenditure attributable to income which does not form part of total income. The words "in relation to" must be read expansively to capture expenditure connected with exempt income; accordingly, the principle of apportionment governs identification of that part of expenditure which is attributable to exempt income. Rule 8D is the prescribed machinery for the Assessing Officer to quantify such expenditure and, by its terms, links computation to investments/income which do not form part of total income. Consistently with precedent, any disallowance computed even in accordance with Rule 8D cannot exceed the exempt income for that year, and in the absence of exempt income in the relevant year Section 14A exclusion cannot be invoked. [Paras 24, 25, 26]

The Tribunal and CIT(A) were correct in restricting disallowance under Section 14A to the expenditure attributable to exempt income, determined by apportionment and Rule 8D, and not permitting disallowance beyond the exempt income earned in the year.

Dominant purpose test versus apportionment theory - Expenditure "in relation to" exempt income - The dominant purpose test is not the governing test under Section 14A where exempt income arises incidentally; apportionment, not the predominant motive of investment, determines disallowance. - HELD THAT: - Relying on Maxopp and earlier Supreme Court dicta, the Court rejected the submission that the assessee's dominant purpose in acquiring shares (e.g., to gain control or hold as stock in trade) excludes application of section 14A. Even if dominant purpose was not to earn exempt income, where expenditure is attributable to exempt income that expenditure must be apportioned and disallowed. The Court accepted the apportionment theory as the statutory and purposive interpretation of "in relation to". [Paras 21, 22, 23]

The Tribunal was right to apply apportionment; the dominant purpose test is not decisive for invoking Section 14A where expenditure can be related to exempt income.

Prospective application of the Explanation to Section 14A (Finance Act, 2022) - The Explanation inserted into Section 14A by the Finance Act, 2022 does not operate retrospectively to alter the law for assessment years prior to 1 April 2022; it applies from 1 April 2022 (assessment year 2022 23) onwards. - HELD THAT: - The Court held that the amendment by way of an Explanation, though framed "for removal of doubts", cannot be treated as retrospective if it changes the prior legal position. Following the reasoning in Era Infrastructure and cited Supreme Court authority, the Memorandum to the Finance Bill affirming that the amendment takes effect from 1 April 2022 is determinative. Thus the Explanation cannot be read to apply to earlier assessment years with which these appeals are concerned. [Paras 29, 30, 31, 32, 33]

The Explanation to Section 14A introduced by the 2022 Act is prospective and applies to assessment year 2022 23 and subsequent years; it does not alter the law applicable to the assessment years under challenge.

Final Conclusion: The appeals are dismissed: disallowance under Section 14A must be apportioned to expenditure "in relation to" exempt income and cannot exceed the exempt income of the year (to be determined in accordance with Rule 8D); the dominant purpose of investment is not a substitute for apportionment; and the 2022 Explanation to Section 14A is prospective, applying from AY 2022 23 onwards.

Jurisdictional notice under Section 148 - notice issued to a deceased person invalidates reopening - service of notice as condition precedent to reopening - section 159 inapplicable where proceedings were not pending during lifetime - absence of statutory duty on legal representatives to intimate death - consistency in administrative action

Jurisdictional notice under Section 148 - notice issued to a deceased person invalidates reopening - service of notice as condition precedent to reopening - Validity of proceedings under Section 148 where reopening notice was issued in the name of a deceased assessee - HELD THAT: - The Court held that issuance of a notice under Section 148 is the foundation for reopening an assessment and that valid service upon the correct person is a condition precedent to exercise jurisdiction. A notice issued in the name of a deceased assessee cannot be validly served and therefore vitiates the jurisdiction to reopen. The Court applied the principles in Savita Kapila and Vikram Bhatnagar, observed that the petitioner had informed the Revenue of the assessee's death, and concluded that initiation of action under Section 148 in the present case was impermissible because the impugned notices were issued to a dead person and the Assessing Officer proceeded without applying mind to that fact. [Paras 10, 16, 18]

Impugned notices, assessment order and consequential proceedings for AY 2013-14 issued/initiated in the name of the deceased assessee are quashed.

Consistency in administrative action - section 159 inapplicable where proceedings were not pending during lifetime - absence of statutory duty on legal representatives to intimate death - Effect of Revenue having earlier dropped proceedings for prior assessment years and the obligation (or lack thereof) on legal representatives to intimate death - HELD THAT: - The Court noted that the Revenue had earlier dropped proceedings for AYs 2010-11 and 2012-13 on the ground that notices were issued to a dead person or on de-activated PANs. Applying the principle of consistency, and observing authorities which hold there is no statutory duty on legal representatives to intimate death, the Court found that the Revenue ought not to have proceeded for AY 2013-14 when there was no change in the factual matrix. The Court also observed that section 159 does not apply where proceedings were not pending during the assessee's lifetime. [Paras 12, 16, 17]

Proceedings for AY 2013-14 are unsustainable in view of prior administrative practice and settled law; Revenue's action was set aside, subject to liberty to proceed against legal heirs in accordance with law.

Final Conclusion: Writ petitions allowed: notices dated 31.03.2021 and 19.04.2021 under Section 148A(b), the assessment order dated 31.03.2022 under Sections 147/143, order dated 20.07.2022 under Section 148A(d) and consequential notice under Section 148 for AY 2013-14 are set aside and quashed; Revenue granted liberty to proceed against legal heirs if permissible by law.

Reopening of assessment - reason to believe / reasons recorded for reopening - escaped assessment - Explanation 3 to Section 147 - fresh notice under Section 148 required when original ground fails - exercise of writ jurisdiction under Article 226

Exercise of writ jurisdiction under Article 226 - Whether this Court should exercise its discretionary jurisdiction under Article 226 to entertain the challenge to the notice under Section 148 and consequential proceedings. - HELD THAT: - The Court examined the availability of alternative remedies under the tax statutes and the established principle that exercise of constitutional writ jurisdiction is discretionary. In the facts, the petitioner challenged the Section 148 notice and obtained an interim stay; despite that stay the respondents issued the assessment order. Having regard to the plenary but discretionary nature of Article 226, the existence of an alternative remedy was a material factor but not an absolute bar. The Court concluded that, in the overall facts and circumstances, including the respondents' action in proceeding to pass the assessment order notwithstanding the interim stay, this was an appropriate case to exercise discretionary jurisdiction. [Paras 7]

The Court exercised its discretionary jurisdiction under Article 226 to entertain the petition.

Reopening of assessment - reason to believe / reasons recorded for reopening - escaped assessment - Explanation 3 to Section 147 - fresh notice under Section 148 required when original ground fails - Validity of the notice under Section 148 and the consequential assessment order where reassessment was initiated on a specified ground but no addition was made on that ground and the assessing officer proceeded to make other additions. - HELD THAT: - The Court analysed Section 147 and Explanation 3 and followed the binding ratio of the Division Bench decisions (as discussed in the judgment) that Explanation 3 permits the Assessing Officer, in proceedings validly initiated on a reason recorded under Section 148, to assess other income which comes to notice during those proceedings. However, if the Assessing Officer accepts the assessee's contention that the income which gave rise to the belief of escapement has, in fact, not escaped assessment, the original basis for assuming jurisdiction under Section 147/148 falls away; in that situation the Assessing Officer cannot proceed to assess other income under the original notice and must issue a fresh notice under Section 148 if he intends to proceed on different grounds. In this case the communicated reason for reopening was the deletion of land from books without offering capital gains, but the assessment order records that no addition was made in respect of that transaction (no capital gain). Since reassessment could not be sustained on the stated ground that triggered reopening, the subsequent additions made cannot be sustained on the basis of the original Section 148 notice. [Paras 11, 15, 16]

The notice under Section 148 and the assessment order are quashed; respondents may, if so advised, initiate fresh reassessment proceedings in accordance with law.

Final Conclusion: Writ petition allowed: the Court exercised its discretion to entertain the challenge, quashed the notice under Section 148 and the assessment order for AY 2013-14 because reassessment proceeded notwithstanding that the triggering ground (deletion of land without offering capital gains) yielded no addition; respondents are at liberty to initiate fresh proceedings in accordance with law.

Obligation to place copy of objections before the Assessing Officer - effect of e-filing portal failure on compliance with procedural requirement - timely filing of objections before the Dispute Resolution Panel - quashing of assessment order for failure to consider DRP objections

Timely filing of objections before the Dispute Resolution Panel - obligation to place copy of objections before the Assessing Officer - effect of e-filing portal failure on compliance with procedural requirement - quashing of assessment order for failure to consider DRP objections - Whether the assessment order dated 24.11.2023 must be quashed because the DRP received the objections within time but the Assessing Officer issued the assessment order unaware of those objections due to inability to e-file a copy - HELD THAT: - The court found on the record that the objections in Form 35A were received by the Dispute Resolution Panel on 27.10.2023, i.e. within the statutory time limit for filing objections. Although the Income-tax Code requires that a copy of objections filed before the DRP be placed before the Assessing Officer, the petitioner produced evidence that the e-filing facility did not permit uploading the copy to the AO and that an e-mail of 30.10.2023 attaching the objections was sent to inform the Assessing Officer. The Assessing Officer proceeded to complete the assessment on 24.11.2023 on the basis that no objections had been filed, and thereby determined a higher total income without the DRP having examined the petitioner's objections. The court held that this resulted in prejudice to the petitioner because its objections were not considered by the DRP before completion of assessment. On this limited but determinative ground the assessment order warranted interference. [Paras 5, 6, 7]

Impugned assessment order quashed; Assessing Officer directed to await decision of the Dispute Resolution Panel and not to issue a fresh assessment order until the DRP has examined and adjudicated the objections.

Final Conclusion: The writ petition is allowed in part: the assessment order dated 24.11.2023 for assessment year 2020-21 is quashed and the Assessing Officer is directed to await the DRP's decision on the objections filed before the DRP; no order as to costs.

Final assessment order passed without awaiting Dispute Resolution Panel directions - objections filed before Dispute Resolution Panel - requirement to intimate Assessing Officer under Section 144C(2)(b)(ii) - obligation of Assessing Officer to follow DRP directions in final order - setting aside assessment order and directing fresh assessment post-DRP

Final assessment order passed without awaiting Dispute Resolution Panel directions - objections filed before Dispute Resolution Panel - requirement to intimate Assessing Officer under Section 144C(2)(b)(ii) - obligation of Assessing Officer to follow DRP directions in final order - Validity of the final assessment order dated 16th November, 2023 where the assessee had filed objections before the DRP but had not intimated the Assessing Officer as required - HELD THAT: - The Court accepted that the petitioner had filed detailed objections before the DRP within the prescribed period but had inadvertently failed to intimate the Assessing Officer under Section 144C(2)(b)(ii). Relying on its earlier reasoning in a recent decision and the principle that the Assessing Officer's final order must incorporate directions of the DRP where objections have been submitted to the DRP, the Court held that the final assessment passed without awaiting the DRP's directions could not stand. The Court observed that setting aside the impugned order would not prejudice the revenue which may pass a fresh assessment after receiving DRP directions. The Court expressly refrained from adjudicating the merits of the disputed tax issues. [Paras 6]

Impugned final assessment order, notice of demand and penalty dated 16th November, 2023 set aside.

Setting aside assessment order and directing fresh assessment post-DRP - obligation of Assessing Officer to follow DRP directions in final order - Direction regarding the course to be followed after setting aside the impugned orders - HELD THAT: - The Court granted liberty to the revenue to pass a fresh assessment order after receipt of directions from the DRP. The order emphasises that the Assessing Officer may reconsider and pass a fresh assessment in light of the DRP's directions; the Court did not express any view on the substantive merits of the case and left all rights and contentions open to be considered afresh by the authorities. [Paras 6, 7]

Writ petition allowed; respondents permitted to pass fresh assessment order post receipt of DRP directions; rights and contentions of the parties left open.

Final Conclusion: The impugned assessment order, notice of demand and penalty dated 16th November, 2023 for AY 2020-21 are set aside; the revenue is permitted to pass a fresh assessment after receiving and considering directions of the Dispute Resolution Panel, with no adjudication on merits by this Court.

Applicability of Section 153C vis-a -vis Section 147/148 - non-obstante clause and special procedure under Sections 153A-153D - jurisdictional twin conditions for invocation of Section 153C - prevalence of special search-assessment procedure over general reassessment

Applicability of Section 153C vis-a -vis Section 147/148 - jurisdictional twin conditions for invocation of Section 153C - prevalence of special search-assessment procedure over general reassessment - Whether the Assessing Officer was justified in proceeding under Section 147/148 instead of invoking Section 153C in respect of incriminating material seized during search of the Surendra Kumar Jain Group relating to the assessee - HELD THAT: - The Tribunal held that where incriminating material seized during a search of one person relates to or belongs to another person, the statutory scheme under Sections 153A-153D, and in particular Section 153C, is the special procedure which applies and prevails over the general reassessment provisions in Section 147/148. The Court noted the twin prerequisites for invoking Section 153C: (i) the AO dealing with the person searched must be satisfied that the seized material belongs to or relates to another person and hand over the material to the AO having jurisdiction over that other person, and (ii) the receiving AO must be satisfied that the material has a bearing on determination of the total income of that other person for the relevant years. On the facts, the search conducted in the Surendra Kumar Jain Group yielded material relating to the assessee; this Bench's earlier decision in M/s Mah Impex Pvt. Ltd. (which involved the same group) was found squarely applicable. Reliance was placed on judicial pronouncements treating the special procedure as prevailing over general reassessment provisions and on the reasoning in the cited High Court decisions that Section 153C must be resorted to where the twin conditions are satisfied. In consequence, proceedings initiated under Section 147/148 were not in accordance with the special procedure envisaged for search cases and were quashed. [Paras 9, 10]

Additional Ground No. 11 allowed; notice and assessment under Section 147/148 quashed as Section 153C was the applicable procedure.

Final Conclusion: Appeal allowed. The Tribunal held that the assessment initiated under Section 147/148 was improperly invoked in respect of incriminating material seized during the search of the Surendra Kumar Jain Group which related to the assessee; the special procedure under Section 153C applies and the impugned notices/orders are quashed.

Capital or revenue expenditure - abandoned project expenditure treated as revenue expenditure - enduring benefit test - no new asset brought into existence - deductibility under Section 37(1) as expenditure wholly and exclusively for business

Capital or revenue expenditure - abandoned project expenditure treated as revenue expenditure - enduring benefit test - no new asset brought into existence - deductibility under Section 37(1) as expenditure wholly and exclusively for business - Whether the amounts written off as Project Development Expenses in respect of the abandoned software project "ProHR" are capital in nature and rightly disallowed, or are revenue expenses allowable as business expenditure. - HELD THAT: - The Tribunal found that the Assessing Officer and the first appellate authority proceeded on an incorrect presumption that the software project had been completed. The assessee was in the business of software development and the ProHR product never came into existence nor was it put to initial trial or use; the project was abandoned due to technological obsolescence and market competition. Applying the relevant tests and precedents (including the enduring benefit test and the distinction in Indo Rama and subsequent authorities), the Tribunal held that where an expenditure is incurred in the course of the assessee's existing business and no new asset of enduring benefit is brought into existence, the outlay is part of the profit-earning process and is revenue in nature. Consequently, expenses incurred on an infructuous or abandoned project in the same line of business are deductible as business expenditure under the statutory principle embodied in deductibility under Section 37(1) as expenditure wholly and exclusively for business, and are not to be treated as capital expenditure merely because a project was intended to result in an asset had it been completed. [Paras 7, 9, 10]

The disallowance of the project development expenses written off was deleted and the expenditure held to be revenue in nature and allowable.

Final Conclusion: The Tribunal allowed the assessee's appeal, deleted the addition of the written off project development expenses relating to the abandoned ProHR software, and held the expenditure to be revenue in nature and allowable as business expenditure for Assessment Year 2013-14.

Condonation of delay - maintainability of application under section 80G(5)(iii) - provisional registration under section 80G(5)(iv) - curable procedural defect / treat application as filed under clause (i) of the first proviso to section 80G(5) - reconsideration and remand for decision on merits - mandatory time limits for filing applications for approval under section 80G(5)

Condonation of delay - inadvertent non-receipt of order / service - Whether delay in filing the appeal should be condoned - HELD THAT: - The Tribunal found sufficient cause for the delay because the assessee did not receive the hard copy of the rejection order and accessed/downloaded it from the portal only after a lapse of time. The delay was held neither mala fide nor resulting in any benefit to the assessee. In view of these circumstances the Tribunal exercised its discretion to condone the delay of 77 days and adjudicated the appeal on merits. [Paras 5]

Delay of 77 days condoned and appeal admitted for hearing on merits.

Maintainability of application under section 80G(5)(iii) - provisional registration under section 80G(5)(iv) - curable procedural defect / treat application as filed under clause (i) of the first proviso to section 80G(5) - reconsideration and remand for decision on merits - mandatory time limits for filing applications for approval under section 80G(5) - Whether the application filed under clause (iii)/clause (iv) should be treated as an application under clause (i) and how the Commissioner ought to proceed - HELD THAT: - The Tribunal observed that the assessee was an existing trust with earlier registration under section 12AA and earlier approval under section 80G, but the application and Form No.10AC erroneously referred to the proviso clause for a new trust (clause (iv)) instead of clause (i) applicable to existing trusts. The Tribunal treated this error as a curable procedural defect because Form No.10AC was filed in time and the wrong clause was a technical mistake admitted by the assessee. While the Commissioner had relied on mandatory time limits for filing under section 80G(5)(iii)/(i) and CBDT circulars to reject the application as non-maintainable and cancel provisional approval, the Tribunal held that the Commissioner should have sought clarification rather than dismiss the application on the technical ground. Accordingly, the Tribunal set aside the CIT(E)'s order and directed that the application be treated as filed under clause (i) of the first proviso to section 80G(5) and be considered on merits after giving the assessee opportunity to file necessary evidence. [Paras 12, 13]

Impugned order set aside; application to be treated as filed under clause (i) to the first proviso to section 80G(5) and the CIT(E) directed to decide the application on merits within two months, with the assessee to furnish necessary evidence.

Final Conclusion: Delay in filing the appeal was condoned; the Tribunal treated the assessee's mis stated proviso clause as a curable technical defect and set aside the CIT(E)'s rejection and cancellation, directing the application to be considered as having been filed under clause (i) of the first proviso to section 80G(5) and remitted the matter to the CIT(E) to decide on merits within two months.

Validity of reopening under section 147/148 - Requirement of sanction under section 151 - Limitation for issuance of reassessment notice under section 149(1)(b) - Applicability of TOLA/Relaxation Act and the 'travel back' doctrine - Procedural compliance under section 148A

Requirement of sanction under section 151 - Applicability of TOLA/Relaxation Act and the 'travel back' doctrine - Procedural compliance under section 148A - Validity of the reassessment proceedings insofar as sanction and temporal applicability of pre-amendment procedures - HELD THAT: - The Tribunal examined whether the sanction obtained and procedural route followed rendered the reopening notice valid. The assessment was reopened by notice dated beyond 1st April 2021; the Tribunal relied on judicial pronouncements (including the Bombay High Court decision reproduced in the order and the Supreme Court direction in Ashish Agarwal) holding that notices issued after 1st April 2021 must comply with the amended regime and that the Relaxation Act/TOLA does not create a legal fiction by making such notices 'travel back' to earlier dates so as to validate issuance under erstwhile provisions. The Tribunal also noted that conversion of earlier notices into notices under section 148A(b) (as directed by the Supreme Court in Ashish Agarwal) does not authorise bypassing the statutory sanctioning authority defined by the amended law, nor does it permit indefinite retrospective application of instructions issued by CBDT inconsistent with the amended provisions. Instruction No.1/2022 had no application to the impugned notice dated 31 July 2022. In short, the reopening did not satisfy the amended procedural requirements and sanction rules applicable to notices issued after 1st April 2021. [Paras 6, 31, 32]

Reopening notice was without jurisdiction as the procedural and sanction requirements applicable post-amendment were not complied with; the notice is invalid on this ground.

Limitation for issuance of reassessment notice under section 149(1)(b) - Validity of reopening under section 147/148 - Whether the reassessment notice is barred by limitation because alleged escapement of income was below the threshold for extended limitation - HELD THAT: - The Tribunal considered the quantum of alleged escapement and the statutory scheme introduced by the Finance Act, 2021 which reduced the normal reopening period to three years and allowed extension to ten years only in specified 'serious tax evasion' cases where escaped income is Rs. 50 lakhs or more. The reasons recorded showed escapement of income of only Rs. 9,00,000/-, which is below the threshold for invoking the extended limitation. The Tribunal followed the reasoning of the Delhi High Court (and other authorities referred to in the order) that where escapement is below the statutory threshold, notices issued beyond three years cannot be sustained. Having regard to those principles, the notice in this case, issued beyond the three-year period, was held to be barred by limitation. [Paras 7]

Reopening notice is time-barred under the amended limitation regime since the alleged escapement is below the statutory threshold for extended limitation; the notice is invalid on this ground.

Final Conclusion: The reassessment notice issued under section 148 and the consequent reassessment order for Assessment Year 2017-18 are set aside as without jurisdiction (procedural/sanction non-compliance and time-barred under the amended limitation regime); appeal allowed.

Deletion of addition treated as unexplained cash credit under section 68 on account of alleged entry / conversion of demonetised currency - deletion of addition treating cash deposits as unexplained in absence of material to doubt stock, purchases or books - acceptance of books of account and statutory returns (VAT) as corroborative evidence of transactions - exceptional effect of demonetisation on concentration of cash sales - onus on Assessing Officer to point out defects in purchases/stock before rejecting book results

Deletion of addition treated as unexplained cash credit under section 68 on account of alleged entry / conversion of demonetised currency - acceptance of books of account and statutory returns (VAT) as corroborative evidence of transactions - onus on Assessing Officer to point out defects in purchases/stock before rejecting book results - Deletion of addition of Rs. 70,91,351 treated as unexplained cash credit received from Mr. Dhanraj G. Parmar. - HELD THAT: - The Tribunal examined the materials and records and noted that the Assessing Officer accepted receipt of payments from the purchaser through banking channels and did not dislodge the assessee's books. The CIT(A) had recorded that the sales to the purchaser were declared as revenue receipts, the books were not doubted and the VAT return was accepted without modification. Revenue's challenge was confined to doubting the sales bills but did not dispute the bank receipts. In these circumstances, and absent any positive finding by the AO pointing to defects in purchases, stock or the accounting, the deletion of the addition under the head of unexplained cash credit was affirmed. The Tribunal found no infirmity in the CIT(A)'s conclusion that the declared transactions and bank receipts rebutted the presumption of unexplained credit. [Paras 5]

Addition of Rs. 70,91,351 treated as unexplained cash credit deleted and Revenue's grounds 1 and 2 dismissed.

Deletion of addition treating cash deposits as unexplained in absence of material to doubt stock, purchases or books - exceptional effect of demonetisation on concentration of cash sales - acceptance of books of account and statutory returns (VAT) as corroborative evidence of transactions - Deletion of addition of Rs. 48,98,152 claimed to be unexplained cash deposit on 08/11/2016. - HELD THAT: - The Tribunal noted that the assessee produced sales register, purchase register, stock statement, cash book and bank records, which the AO did not show to be defective. The AO's sole basis for the addition was the concentration of cash sales on a single day; the assessee explained this by reference to the announcement of demonetisation on that date which caused an exceptional spike in cash purchases of gold. The CIT(A) concluded, and the Tribunal agreed, that in absence of any material to doubt availability of stock or the correctness of purchases/sales and given acceptance of VAT returns, the AO could not treat the deposits as undisclosed income. Consequently the deletion of the addition was sustainable. [Paras 9]

Addition of Rs. 48,98,152 on account of cash deposit deleted and Revenue's ground 3 dismissed.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal upholds the CIT(A) in deleting the additions treated as unexplained cash credit and unexplained cash deposits, and accordingly dismisses the remaining grounds as not requiring separate adjudication.

Taxation of unexplained cash deposits under section 69A read with section 115BBE - presumptive taxation under section 44AD and application of presumptive net profit rate - treatment of cash receipts as business income where receipts are from retail cash sales - onus on assessee to establish creditworthiness and genuineness of alleged creditor

Taxation of unexplained cash deposits under section 69A read with section 115BBE - onus on assessee to establish creditworthiness and genuineness of alleged creditor - Whether cash deposits of Rs. 32,00,000/- could be treated as unexplained and taxable under section 69A read with section 115BBE or were attributable to business receipts - HELD THAT: - The Tribunal found that the assessee is engaged in retail business of ladies garments and that cash sales were regularly deposited in bank. The assessee's claim that Rs. 27,00,000/- were returned by a debtor (M/s. Sarita Exports) was not substantiated: the assessee failed to produce sale documents, delivery challans, address or PAN of the party and the enquiries disclosed that the party denied liability. Given these findings and the absence of any other source or investments, the Tribunal concluded that the cash deposits were attributable to unrecorded business sales rather than some independent unexplained source. Consequently, the amounts were treated as income from business and not as unexplained cash liable to be taxed under section 69A read with section 115BBE. [Paras 4]

Cash deposits of Rs. 32,00,000/- treated as unaccounted business receipts and not taxed under section 69A read with section 115BBE

Presumptive taxation under section 44AD and application of presumptive net profit rate - treatment of cash receipts as business income where receipts are from retail cash sales - Quantum of addition to be made where cash deposits are treated as business receipts in case of a presumptive taxpayer - HELD THAT: - The Tribunal applied the presumptive net profit rate of 8% (the rate under section 44AD which the assessee had been applying consistently) to the total cash deposits of Rs. 32,00,000/-, treating the deposits as business receipts and computing taxable income therefrom. The Tribunal reasoned that the assessee conducts petty retail business with low ticket prices and has no other income or investments to suggest alternative sources; accordingly, it is appropriate to adopt the presumptive net profit rate to estimate income from the unaccounted sales. On that basis the addition was restricted to the net profit of 8% on the cash deposits. [Paras 4]

Addition restricted to 8% of the cash deposits (treated as business income), resulting in a reduced addition in place of the AO's full addition under section 69A read with section 115BBE

Final Conclusion: The appeal is partly allowed: the Tribunal held the cash deposits to be unrecorded business receipts (not unexplained cash taxed under section 69A/115BBE) and restricted the addition by applying the presumptive net profit rate of 8% to the deposits for A.Y. 2017-18.

Addition on account of unexplained cash under section 69A - explanation by production of cash book as evidence of ownership - reliability of post-search cash books and afterthought documents - allocation of cash found among family members reflected in panchnama - burden on revenue to disprove explanation offered for cash seized during search

Addition on account of unexplained cash under section 69A - explanation by production of cash book as evidence of ownership - allocation of cash found among family members reflected in panchnama - Addition made in assessment on account of cash found during search, as sustained by the Commissioner (Appeals), is not sustainable and is deleted. - HELD THAT: - During search Rs. 14,18,100/- was found and a panchnama recorded names including the assessee and his family members. The assessee produced a cash book purporting to show that the seized cash belonged to 24 family members. The Assessing Officer did not contest the authenticity of the cash book on merits nor dispute that the names were family members residing together. The Commissioner (Appeals) disbelieved the cash book solely on the general notion that individuals do not ordinarily maintain cash books and treated a part of the amount as explained on an estimated basis, without any positive finding undermining the document's veracity. The Tribunal found the CIT(A)'s conclusion to be baseless and perverse because the cash book was on record, not controverted by the AO, and the panchnama corroborated that cash related to family members. In those circumstances the explanation offered by production of the cash book discharged the claim of unexplained cash and the addition under section 69A could not be sustained. [Paras 6]

Addition sustained by the lower authorities is deleted and the appeal is allowed.

Final Conclusion: The Tribunal deleted the addition made in respect of cash seized during search, holding that the assessee's contemporaneous cash book and the panchnama sufficiently explained the cash as belonging to family members and that the lower authorities' rejection of that explanation was without basis.

Denial of exemption under section 11 for non-filing of Form No.10B - condonation of delay in furnishing audit report (Form No.10B) - powers of authorities to condone delay in statutory filings - assessment under section 143(1) and rectification under section 154

Denial of exemption under section 11 for non-filing of Form No.10B - condonation of delay in furnishing audit report (Form No.10B) - powers of authorities to condone delay in statutory filings - Whether the exemption under section 11 could be denied because Form No.10B was not e filed before the original due date when the audit report was, in fact, furnished within the extended due date announced by CBDT. - HELD THAT: - The Tribunal found on the record that the assessee e filed Form No.10B on 30.10.2018 which was within the extended due date notified by the CBDT. The NFAC had upheld the denial of exemption on the basis that Form No.10B was not e filed before the original due date and had proceeded ex parte after multiple opportunities; however, the revenue did not dispute the assessee's evidence of filing within the extended date. The Tribunal relied on the established principle that authorities possess discretionary power to condone delay in furnishing statutory documents and on consistent judicial and tribunal precedents which hold that exemption cannot be denied merely on the ground of belated filing when condonation is permissible. In view of the undisputed filing within the CBDT extended date and the cited consistent decisions, the Tribunal directed the Jurisdictional Assessing Officer to consider Form No.10B and allow the claim of exemption under section 11. [Paras 8]

Assessee's claim for exemption under section 11 is allowed and the Assessing Officer is directed to consider Form No.10B and grant the exemption.

Final Conclusion: The appeals are allowed: the Tribunal held that Form No.10B was filed within the CBDT extended due date and directed the Assessing Officer to consider it and allow the exemption under section 11; the related appeal against the rectification under section 154 is rendered infructuous.

Permanent establishment - dependent agent permanent establishment - attribution of profits to PE - transfer pricing analysis / arm's length price - conduit entity and beneficial treaty entitlement - application of India-Ireland DTAA - precedential effect of coordinate bench and Supreme Court decisions (Morgan Stanley, E Funds)

Conduit entity and beneficial treaty entitlement - application of India-Ireland DTAA - Benefit of the India Ireland DTAA cannot be denied on the ground that the assessee is a conduit entity; the contention that the assessee is a conduit was held baseless and treaty benefits were upheld. - HELD THAT: - The Assessing Officer's alternative allegation that the appellant was a conduit entity and hence not entitled to treaty benefits was considered and rejected. The Dispute Resolution Panel had already held that the conduit contention lacked basis and allowed treaty benefits. The Tribunal, noting there was no factual distinction pointed out by Revenue for the year under appeal and no contrary material, affirmed that the appellant is entitled to the beneficial provisions of the India-Ireland DTAA. [Paras 3]

Conduit finding rejected and India-Ireland DTAA benefits upheld for the appellant.

Permanent establishment - dependent agent permanent establishment - transfer pricing analysis / arm's length price - attribution of profits to PE - precedential effect of coordinate bench and Supreme Court decisions (Morgan Stanley, E Funds) - No further profits could be attributed to an alleged dependent agent PE in India where the transactions between the non resident and its Indian associated enterprise have been found to be at arm's length; the finding of PE was held to be without cogent basis and the additions deleted. - HELD THAT: - The Tribunal followed its earlier coordinated decisions for prior assessment years and the ratio of the Supreme Court in Morgan Stanley and the decision in E Funds that, where a transfer pricing analysis in respect of the Indian associated enterprise establishes arm's length pricing and is accepted, there is no scope for additional profit attribution to an alleged dependent agent PE. The Assessing Officer and the DRP had relied on prior orders but did not point to any change in facts. The Tribunal found the PE finding to be unsupported by cogent evidence and held that, in view of the accepted ALP determination for the Indian AE, attributing further profits to the PE would be contrary to settled law; accordingly the additions made in assessment were deleted. [Paras 5, 6]

Finding of PE rejected as lacking cogent basis and no additional profit attributable to PE; additions deleted and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2021-22: treaty benefits under the India-Ireland DTAA were sustained (conduit allegation rejected), the PE finding was held unsupported and, following accepted transfer pricing/ALP conclusions and binding precedents, no further profit was attributed to any PE, resulting in deletion of the additions and allowance of the appeal; the stay application was rendered infructuous.

Principles of natural justice - non-speaking order - Liability under Section 28AAA of the Customs Act, 1962 - appropriation of payments - refund with interest - remand for further investigation - transferability of Focus Product Scheme license

Principles of natural justice - non-speaking order - Whether the Adjudicating Authority's order dated 17th August 2021 complied with principles of natural justice and contained adequate reasons - HELD THAT: - The Court found that the Adjudicating Authority did not consider or deal with petitioner's submissions made during personal hearing and passed a non speaking order that merely recorded recovery and reproduced statutory provisions without application to the facts. The Adjudicating Authority failed to make any finding against the petitioner on the core question of liability and adopted a shortcut approach instead of addressing the incomplete investigation and the petitioner's consistent stance that payments were made under protest to remove an alert on its IEC. Such omission amounted to denial of a reasoned decision and violation of principles of natural justice warranting judicial intervention. [Paras 8, 14]

Impugned order dated 17th August 2021 quashed and set aside for being non speaking and for failure to apply mind to the submissions and investigation.

Liability under Section 28AAA of the Customs Act, 1962 - transferability of Focus Product Scheme license - Whether Section 28AAA could be validly applied to fasten liability on the petitioner in the facts of this case - HELD THAT: - On the material on record the Revenue itself had accepted that the FPS license initially issued to petitioner was transferred in a chain (petitioner M/s. Ashish Enterprises M/s. R.K. Exports ultimate user) and there was no allegation that petitioner obtained the FPS license by collusion or willful suppression of facts. In that factual matrix the Court observed that applicability of Section 28AAA was not established and the Adjudicating Authority did not explain how that provision applied to petitioner; consequently Section 28AAA could not be treated as a valid basis for confirming liability without proper investigation and findings. [Paras 8]

Section 28AAA was not shown to be applicable to petitioner on the record before the Adjudicating Authority; the provision could not sustain the order impugned.

Remand for further investigation - refund with interest - appropriation of payments - What remedial steps were required in view of the defective adjudication and incomplete investigation - HELD THAT: - The Court directed that the matter required proper investigation to ascertain how a forged scrip was re registered at JNCH, how the re registered license was utilized by importers at ICD Tughlakabad, why those parties were not summoned and why re registration was permitted despite procedural safeguards in the public notice. The Court held that further inquiry was necessary to trace the true facts and identify the guilty, and therefore directed respondent no. 2 to conduct the investigation. Pending such remedial steps the Court also directed refund of the amounts paid by the petitioner, together with interest from 1st October 2017, subject to petitioner furnishing such bond or indemnity as may be required by respondent no. 2 in accordance with law. [Paras 15, 16]

Matter remitted for fresh investigation by respondent no. 2; respondent no. 2 to refund the amounts paid to petitioner with applicable interest within four weeks on petitioner furnishing the requisite bond or indemnity.

Final Conclusion: The High Court quashed and set aside the Adjudicating Authority's order dated 17th August 2021 for being non speaking and for failing to apply mind to the incomplete investigation and petitioner's submissions; directed a fresh investigation into the forged re registration and related lapses and ordered refund of the amounts paid by the petitioner with interest subject to a lawful bond or indemnity.

Power to seize under the Customs Act in a Special Economic Zone - notified offence under the Special Economic Zones Act - designation and assignment of proper officer functions - confiscation under Section 111(m) of the Customs Act - vehicle confiscation under Section 115(2) of the Customs Act - penalty under Sections 112(a), 112(b) and Section 114AA of the Customs Act

Power to seize under the Customs Act in a Special Economic Zone - notified offence under the Special Economic Zones Act - Whether officers posted in the SEZ had authority to detain and seize goods on the basis of Section 110 of the Customs Act - HELD THAT: - The Tribunal held that Section 110 of the Customs Act was not a notified offence for the purposes of the SEZ Act as per Notification No. S.O. 2665(E) dated 05.08.2016; therefore, notwithstanding any internal designation of NSEZ officers as officers of customs, those officers had no power under the SEZ scheme to detain or seize goods under Section 110. The adjudicating authority and Commissioner (Appeals) had failed to demonstrate how the SEZ Act and SEZ Rules were contravened to justify seizure and confiscation under the Customs Act. Consequently, the initial detention and seizure carried out by NSEZ officers under Section 110 lacked legal foundation and jurisdiction. [Paras 9, 10, 11]

Seizure under Section 110 by the NSEZ officers was beyond their authority and legally unsustainable.

Confiscation under Section 111(m) of the Customs Act - penalty under Sections 112(a), 112(b) and Section 114AA of the Customs Act - Whether confiscation of the goods and the penalties imposed on the appellant could be sustained after the challenge to seizure authority - HELD THAT: - Because the seizure was held to be without lawful authority, consequential confiscation under Section 111(m) could not be sustained. The Tribunal found that the adjudicating authorities had not established contravention of the specified Customs provisions in the context of the SEZ Rules and that confiscation based on the defective seizure was bad in law. On the same basis, the imposition of penalties under Sections 112(a), 112(b) and Section 114AA was held to be unwarranted and was set aside. [Paras 9, 11, 13]

Confiscation of the goods and the penalty imposed on the appellant were set aside.

Vehicle confiscation under Section 115(2) of the Customs Act - Whether the subject vehicles were liable for confiscation under Section 115(2) of the Customs Act - HELD THAT: - The Tribunal examined the requirement under Section 115(2) that a vehicle be used for carrying goods in a manner attracting confiscation and noted that the subject vehicles had been used to carry goods out of and into the NSEZ without the knowledge of the owner or person in charge. On the material before it, the Tribunal concluded that confiscation of the vehicles was unwarranted and the appeal against vehicle confiscation was allowed. [Paras 12]

Confiscation of the subject vehicles under Section 115(2) was unwarranted and is set aside.

Final Conclusion: The appeals are allowed: the seizure under Section 110 by NSEZ officers was without authority, consequent confiscation of goods and vehicles and the penalties imposed are set aside, and the impugned orders are cancelled with consequential relief as per law.

Transaction value as assessable value - rejection of transaction value under Rule 12 of the Customs Valuation Rules - sequential application of Customs Valuation Rules (Rules 4 to 9) - re-determination of assessable value on production of true invoices - confiscation of imported goods for mis-declaration - import of restricted goods without requisite licence - redemption fine and penalties under the Customs Act

Transaction value as assessable value - rejection of transaction value under Rule 12 of the Customs Valuation Rules - re-determination of assessable value on production of true invoices - sequential application of Customs Valuation Rules (Rules 4 to 9) - Assessee's declared transaction value could be re-determined by the proper officer on account of the assessee's own production of 'true invoices' and statements, and the re-determination did not require further valuation under Rules 4 to 9 where the appellant accepted and produced the higher true transaction value. - HELD THAT: - The Tribunal found that Section 14 makes transaction value the assessable value but Rule 12 permits rejection of the declared transaction value where the proper officer has reasonable doubt. The appellant's proprietor, in a subsequent statement, produced alternate invoices described as the 'true invoices' showing a higher per kg value and admitted mis-declaration of value. Given the appellant's own concession and documentary production, the proper officer was justified in rejecting the originally declared value and in re-assessing the Bills of Entry at the transaction value reflected in the 'true invoices'. The Tribunal further held that had the newly tendered transaction value been rejected, the officer would then have proceeded through Rules 4-9; however, the officer accepted the transaction value shown in the true invoices and there was therefore no requirement to apply the alternative valuation steps. [Paras 14, 15]

Re-determination of assessable value by accepting the 'true invoices' produced by the appellant was lawful and the reassessment stands.

Confiscation of imported goods for mis-declaration - import of restricted goods without requisite licence - redemption fine and penalties under the Customs Act - Confiscation of the goods, imposition of redemption fine and penalties were sustainable where the imported goods were found to be non mutilated used clothing (restricted imports), quantity and description were mis-declared, and the proprietor admitted import and mis-declaration. - HELD THAT: - The Tribunal recorded that on examination the consignments contained non mutilated old and used garments whose import is restricted. The proprietor admitted that the description was mis-declared (mutilated vs non mutilated), that declared weights were understated to save charges, and that he had imported the restricted articles without requisite licence. These findings in the statements and the panchnama supported the conclusions reached by the lower authorities. In view of the undisputed mis declaration of nature, quantity and value, and the importation of restricted goods without licence, the measures of confiscation, redemption fine and penalties imposed under the Customs Act and allied foreign trade rules were held to be warranted. [Paras 3, 4, 6, 16]

Confiscation of the goods, redemption fine and penalties are upheld.

Final Conclusion: The impugned order, which re determined the assessable value by accepting the 'true invoices' produced by the appellant and sustained confiscation, redemption fine and penalties for mis declaration and import of restricted goods without licence, is upheld and the appeal is dismissed.

Provisional release of seized goods - bond and bank guarantee as condition for provisional release - seizure under the Customs Act - investigation and verification by DRI - reduction of security on provisional release

Seizure under the Customs Act - provisional release of seized goods - Whether the impugned goods, claimed to be domestically procured and on which GST was discharged, could remain subject to provisional seizure under the Customs Act and whether provisional release should be granted - HELD THAT: - The Tribunal noted that the goods were seized following primary investigation by the Department and that the DRI entertained a reasonable belief of diversion from KASEZ to DTA. At the same time, the appellant produced documentary evidence including E-way bills, e-invoices and payment details showing domestic purchase and discharge of GST. The Tribunal observed that detailed investigation to conclusively establish clandestine import or diversion was yet to be completed. In view of the ongoing inquiry and the documentary evidence produced, the Tribunal found it appropriate to permit provisional release subject to security rather than uphold a continued effective embargo without enquiry. The Tribunal therefore modified the provisional release order so as to effectuate release on specified security, balancing the Department's investigative concern with the appellant's documentary showing of domestic transactions.

Provisional release granted on execution of bond for the specified value, subject to furnishing a bank guarantee (as modified by the Tribunal)

Bond and bank guarantee as condition for provisional release - reduction of security on provisional release - investigation and verification by DRI - Whether the quantum of bank guarantee and bond imposed for provisional release was just and required interference - HELD THAT: - The Tribunal recorded that the Adjudicating Authority had imposed a bond equal to the value of the goods and a bank guarantee corresponding to the alleged duty based on the DRI's investigative inputs. Having noted that the detailed investigation remained to be completed and that the appellant had placed documents indicating domestic procurement and GST payment, the Tribunal found the originally imposed bank guarantee amount to be excessive and harsh in the facts of the case. Exercising appellate authority to temper the provisional conditions while preserving revenue safeguard, the Tribunal reduced the bank guarantee to a lower quantified amount while leaving the bond requirement intact.

Bank guarantee reduced; provisional release to be on bond for the specified value with a bank guarantee as fixed by the Tribunal

Final Conclusion: The Tribunal modified the impugned provisional release order: the seized goods are to be provisionally released on execution of bond for the value specified by the Adjudicating Authority, with the bank guarantee reduced as directed by the Tribunal; the matter of detailed investigation into alleged diversion remains open for further verification.

Classification of imported goods - Aluminium Scrap Tassel (ISRI) - Coils of Aluminium Wire - Admissibility and primacy of independent technical certification - Principle of natural justice - right to re-examination / second opinion - Re-determination of assessable value

Classification of imported goods - Aluminium Scrap Tassel (ISRI) - Coils of Aluminium Wire - The goods imported were correctly classifiable as Aluminium Scrap Tassel (ISRI) and not as Coils of Aluminium Wire of uniform diameter, and therefore the classification under RITC 76020010 stands. - HELD THAT: - The adjudicatory finding that the consignment consisted of 'Coils of Aluminium Wire of Uniform Diameter of 10MM' rested on the examining officer's report. The appellant produced an independent Chartered Engineer's certificate describing the material as discarded/defective wire rod in loose and strapped bundles with surface defects, cuts and intermingled pieces, concluding that the material constituted discarded rolling process leftovers/rejects generally sold as scrap. The Tribunal examined the ISRI specification for 'Tassel' which expressly covers old, unalloyed aluminium wire and cable (including rejected wire forms). Given the Engineer's detailed description showing defects and discarded nature, the Tribunal concluded that notwithstanding an initial visual impression of coils, the material in fact met the ISRI description of Aluminium Scrap Tassel and could not be treated as fresh coils requiring classification under the chapter heading relied upon by revenue. The Tribunal therefore held the classification declared in the bill of entry to be correct and found the revenue's re-classification unsustainable. [Paras 4, 5]

Classification upheld in favour of the appellant; goods are Aluminium Scrap Tassel as per ISRI and not Coils of Aluminium Wire.

Principle of natural justice - right to re-examination / second opinion - Admissibility and primacy of independent technical certification - Denial of the appellant's request for re-examination under supervision of a Chartered Engineer violated the principles of natural justice and the independent technical certificate was entitled to weight. - HELD THAT: - The appellant had sought a re-examination and second opinion by a Chartered Engineer after disputing the examining officer's report; this request was refused by the Assistant Commissioner. The Tribunal found that a fair opportunity to rebut the examination report should have been afforded. The independent Chartered Engineer's certificate, together with the pre-shipment inspection report certifying the goods as scrap, provided a cogent technical basis to contest the dock examination. In these circumstances, denial of re-examination amounted to procedural unfairness and the Engineer's report was properly relied upon to determine the true nature of the goods. [Paras 4]

Denial of re-examination was a violation of natural justice; the independent technical certificate was correctly accepted and relied upon.

Re-determination of assessable value - Admissibility and primacy of independent technical certification - Enhancement of transaction value and consequent increase in duty based on the revenue's re-classification was not sustainable once the Tribunal accepted the appellant's classification and technical evidence. - HELD THAT: - The Additional Commissioner had re-determined assessable value and increased the rate of duty after treating the goods as fresh coils. Having concluded that the goods were scrap as declared, the foundational basis for applying a different valuation (and higher duty rate) ceased to exist. The Tribunal therefore held that the enhancement of value consequent to the revenue's classification change could not be sustained. [Paras 4, 5]

Enhancement of value and higher duty assessment set aside as unsustainable once classification as scrap was upheld.

Final Conclusion: The adjudication order under challenge is set aside: the goods are held to be Aluminium Scrap Tassel as per ISRI, denial of re-examination violated natural justice, the re-determination of value and higher duty is unsustainable, and the appeal is allowed.

Countervailing duty (CVD) liability on imported goods - prospective effect of notifications and non-retroactivity (Section 159A, Customs Act, 1962) - exemption of imports under Advance Authorisation/Advance Licence from customs duties - confiscation and penalties for improper importation and mis-declaration (Sections 111, 112, 114AA, Customs Act, 1962) - power to amend shipping bills and conversion of shipping bills (Section 149, Customs Act, 1962) - relaxation of procedural requirements for duty drawback claims and proviso to Rule 13(1)(a) of the Drawback Rules - claim of Countervailing Duty as duty drawback / fixation of brand rate (Section 75, Drawback Rules)

Countervailing duty (CVD) liability on imported goods - prospective effect of notifications and non-retroactivity (Section 159A, Customs Act, 1962) - exemption of imports under Advance Authorisation/Advance Licence from customs duties - Liability for payment of CVD on the stainless steel imports made prior to 13.10.2017 - HELD THAT: - The Tribunal examined the levy of CVD imposed by Notification No.01/2017-Customs dated 07.09.2017 and the subsequent amendment by Notification No.79/2017-Customs dated 13.10.2017 which included countervailing duty within the duties exempted for imports against Advance Authorisation. Applying Section 159A of the Customs Act, 1962, the Tribunal held that the amending notification of 13.10.2017 cannot be given retrospective effect and therefore cannot negate the levy which was in force between 07.09.2017 and 12.10.2017. Consequently, imports effected on the impugned Bills of Entry dated 12.10.2017 are liable for CVD; the original authority's confirmation of the CVD demand in the impugned order is legally sustainable. [Paras 7, 10]

Confirmation of Countervailing Duty demanded in the impugned order is upheld.

Confiscation and penalties for improper importation and mis-declaration (Sections 111, 112, 114AA, Customs Act, 1962) - Sustainability of confiscation and penalties imposed on the appellant company and its directors - HELD THAT: - The Tribunal analysed the facts that the appellants had produced Advance Authorisations at the time of clearance and the departmental authorities had permitted clearance without payment of CVD, and that the appellants later paid the CVD following investigation. The Tribunal found no evidence of prohibition, concealment, fraudulent export or material mis-declaration that would make the goods liable to confiscation under Section 111(d) or justify penalties under Sections 112(a) and 114AA. Reliance was placed on authorities and on the factual matrix to conclude that penal provisions were not attracted. Accordingly, the Tribunal set aside the findings of confiscation and the penalties imposed on the company and its directors. [Paras 8, 10]

Confiscation and penalties imposed under Sections 111(d), 112(a) and 114AA are not sustainable and are set aside.

Power to amend shipping bills and conversion of shipping bills (Section 149, Customs Act, 1962) - relaxation of procedural requirements for duty drawback claims and proviso to Rule 13(1)(a) of the Drawback Rules - claim of Countervailing Duty as duty drawback / fixation of brand rate (Section 75, Drawback Rules) - Validity of denial by Commissioner of Customs of (a) conversion/amendment of shipping bills and (b) exemption from compliance with Rule 13(1)(a) in respect of the appellants' drawback claim - HELD THAT: - The Tribunal considered the CBIC Circular No.49/2017-Cus and the DGFT clarification that CVD is rebatable as drawback under Section 75 and may be claimed by fixation of Brand Rate under the Drawback Rules. It noted that appellants had submitted requisite details and that the departmental practice of permitting imports under Advance Authorisations without CVD and subsequent administrative clarifications entitled claimants to seek drawback. The Tribunal further examined Circular No.36/2010 (requiring a three month time limit for conversion) and surveyed judicial authorities holding that such a time limit cannot be read into Section 149 and that procedural requirements under drawback rules are to be construed liberally. Concluding that the impugned letter rejecting conversion and denying exemption under Rule 13(1)(a) was inconsistent with law and settled judicial position, the Tribunal set aside the impugned letters and directed the jurisdictional Commissioner to examine the appellants' application and grant relief as per law. [Paras 9, 10]

Impugned communications denying amendment/conversion of shipping bills and denying exemption under Rule 13(1)(a) are set aside; the Commissioner is directed to reconsider the appellants' drawback application and provide relief in accordance with law.

Final Conclusion: The appeals are allowed partly: the Tribunal upholds the CVD liability for imports made prior to 13.10.2017, but sets aside the confiscation and penalties imposed on the appellants and their directors; the Tribunal also sets aside the Commissioner's denial of shipping bill amendment/conversion and denial of relief under Rule 13(1)(a), and directs the jurisdictional Commissioner to re examine the appellants' drawback application and grant relief as per law.

Classification of imported goods under the Customs Tariff - primary forms of polymers - waste, parings and scrap - Chapter Note 6 and Chapter Note 7 to Chapter 39 - specific gravity criterion for polyethylene - reliance on accredited laboratory test reports - import restrictions under DGFT Public Notice No.392 (92-97) dated 01.01.1997 - confiscation, redemption fine and penalty under the Customs Act - prior examination under the second proviso to Section 46 of the Customs Act, 1962

Reliance on accredited laboratory test reports - prior examination under the second proviso to Section 46 of the Customs Act, 1962 - Whether the test reports of CIPET, Aurangabad and Envirocare Labs Pvt. Ltd. are reliable and whether mis-declaration could properly be alleged after permitting prior examination - HELD THAT: - The Tribunal held that two recognized laboratories - CIPET (a Government laboratory accredited as an inspection body) and Envirocare (NABL accredited) - tested the representative samples and reported the material to be HDPE regrind composed of a single thermoplastic with specific gravity more than 0.94 and within limits under the Hazardous Waste Rules, 2016. The in-house CRCL (JNCH) report could not be relied upon for classification as that laboratory had publicly notified inability to analyse reprocessed/recycled plastics and its observations were largely visual and non-conclusive. Further, where the importer sought and was permitted prior examination under the second proviso to Section 46, it was improper to initiate a mis-declaration action under Section 111(m) based on that permitted examination. The Tribunal therefore accepted the accredited laboratory findings as determinative on composition and physical parameters and rejected reliance on the CRCL visual report for purposes of classification and confiscation. [Paras 7, 8]

Accredited laboratory reports (CIPET and Envirocare) are reliable and CRCL JNCH report is not a valid basis for reclassification or mis-declaration after prior examination was permitted.

Classification of imported goods under the Customs Tariff - primary forms of polymers - Chapter Note 6 and Chapter Note 7 to Chapter 39 - specific gravity criterion for polyethylene - Whether the imported material is classifiable under CTI 3901 2000 as HDPE in primary forms or under CTI 3915 1000 as waste, parings and scrap - HELD THAT: - Applying the General Rules for interpretation of the Customs Tariff and the relevant Chapter Notes, the Tribunal found that headings 3901-3914 cover 'primary forms' including granules, flakes and similar bulk forms (Chapter Note 6), and that heading 3915 expressly does not apply to waste, parings and scrap of a single thermoplastic material transformed into primary forms (Chapter Note 7). The accredited test reports established that the consignments were HDPE regrind composed of a single thermoplastic with specific gravity above 0.94, matching the description of CTI 3901 2000. Visible contamination, mixed colours or presence of some oily pieces did not, without more, convert the whole consignments into waste/scrap for classification under 3915. The Tribunal also noted that only a small portion of bags showed oily flakes and that the statutory and normative criteria for CTH 3901 were satisfied. [Paras 8, 9]

The imported goods are correctly classifiable under CTI 3901 2000 (Polyethylene having specific gravity of 0.94 or more) and not under CTI 3915 1000.

Import restrictions under DGFT Public Notice No.392 (92-97) dated 01.01.1997 - waste, parings and scrap - Whether the DGFT restriction in Public Notice No.392 (92-97) prohibiting import of plastic waste/scrap without a license applied to the consignments - HELD THAT: - Because the accredited laboratories concluded that the consignments were HDPE regrind in primary form and not waste/scrap, the DGFT restriction applicable to plastic waste/scrap (except PET bottle waste/scrap) did not apply. The Tribunal relied on those test results and on precedent of the Tribunal holding that regrind granules from single thermoplastic materials are classifiable under CTH 3901 and not as waste/scrap subject to DGFT licensing. The presence of some visible impurities or oily pieces did not convert the tested material into regulated waste for purposes of the DGFT public notice. [Paras 8, 10]

DGFT Public Notice No.392 (92-97) restriction is not attracted as the consignments are not plastic waste/scrap but HDPE regrind in primary form.

Confiscation, redemption fine and penalty under the Customs Act - Whether the confiscation, order for re-export on payment of redemption fine and penalties imposed by the original authority and upheld in appeal were legally sustainable - HELD THAT: - Since the Tribunal concluded that the consignments were properly classifiable under CTI 3901 2000 and not subject to DGFT restriction, the foundational premise for confiscation and penalties (that the goods were prohibited plastic waste/scrap imported without license) failed. The Tribunal found the impugned appellate order upholding confiscation, redemption fine and penalties to be legally unsustainable in light of the reliable laboratory findings and applicable tariff interpretation, and therefore set aside the impugned order. [Paras 9, 11, 12]

Confiscation, redemption fine direction and penalties confirmed below are not sustainable and the impugned order is set aside.

Final Conclusion: The Tribunal allowed the appeal, held the consignments to be HDPE regrind classifiable under CTI 3901 2000 (specific gravity 0.94) based on reliable accredited laboratory reports, found DGFT import restriction inapplicable, rejected reliance on the in-house CRCL visual report, and set aside the impugned order confirming confiscation, redemption fine and penalties.

Obligations of Customs Broker - Regulation 10(d) CBLR, 2018 - Regulation 10(e) CBLR, 2018 - failure to exercise due diligence - advise client to comply with Customs law - suspension and revocation of Customs Broker license - directory nature of timelines under CBLR - natural justice - opportunity to be heard - penalty as remedial action

Regulation 10(d) CBLR, 2018 - advise client to comply with Customs law - Obligations of Customs Broker - Appellants liable for contravention of Regulation 10(d) of CBLR, 2018 - HELD THAT: - The Tribunal found on the material on record, including the tri party service agreement and contemporaneous documents, that the appellants had actual possession of correct packing lists and other information showing true description and quantity of imported goods but did not file B/Es in accordance with those documents nor inform Customs or the importers to rectify the mis declaration. The agreement recovered from the appellants' premises delineated broad value added services and allocated responsibility, undermining the contention that appellants only performed limited clearance services. Given these facts, the appellants failed to advise their clients to comply with the Customs law and to bring discrepancies to the notice of appropriate Customs officers, and therefore the finding of contravention of Regulation 10(d) is sustained. [Paras 6, 7]

Regulation 10(d) contravention sustained and appellants held liable for failure to advise and act proactively.

Regulation 10(e) CBLR, 2018 - failure to exercise due diligence - Obligations of Customs Broker - Charge under Regulation 10(e) CBLR, 2018 not sustainable against the appellants - HELD THAT: - The Tribunal held that the charge under Regulation 10(e) could not be sustained on the basis of parallel adjudication in separate customs proceedings. The impugned order relied upon findings from different adjudications, but the independent inquiry under CBLR required specific findings based on documents and facts established in the inquiry. As the appellants did not impart specific incorrect information themselves and the conclusion on mis declaration in the other proceedings could not be used to independently sustain the 10(e) charge in the present inquiry, the finding of contravention of Regulation 10(e) was held to be without adequate basis and therefore unsustainable. [Paras 8]

Regulation 10(e) contravention set aside for lack of basis in the inquiry record.

Directory nature of timelines under CBLR - natural justice - opportunity to be heard - Delays in issuance of show cause notice and inquiry report did not vitiate the proceedings - HELD THAT: - The Tribunal examined the timeline of suspension, show cause notice, inquiry and adjudication and found only slight delay in issuing the SCN and submission of the inquiry report. Having regard to the authorities relied upon and the fact that the appellants were afforded post decisional hearing and opportunities to present their case, the Tribunal accepted that the time limits in CBLR are directory and that there was no inordinate or undue delay sufficient to nullify the inquiry or adjudication. [Paras 6, 9]

Delay not fatal; proceedings and impugned adjudication not vitiated on account of timelines.

Suspension and revocation of Customs Broker license - penalty as remedial action - Revocation and forfeiture set aside; a reduced monetary penalty imposed for Regulation 10(d) breach - HELD THAT: - Balancing the findings, the Tribunal concluded that while the charge under Regulation 10(e) could not be sustained and therefore the extreme sanctions of revocation and forfeiture were not justified, the proven failure under Regulation 10(d) warranted regulatory response. Relying on precedents recognising the important role and obligations of Customs Brokers, the Tribunal held revocation and forfeiture excessive in the circumstances but upheld the need for a penalty. The impugned order was accordingly modified by setting aside revocation and forfeiture and imposing a reasonable penalty for the proven contravention of Regulation 10(d). [Paras 7, 9, 10]

Impugned order modified: revocation and forfeiture set aside; penalty of Rs.10,000 imposed on appellants.

Final Conclusion: Appeal allowed in part. The Tribunal set aside the findings and sanctions based on contravention of Regulation 10(e) and accordingly quashed the revocation of the Customs Broker licence and forfeiture of security deposit; however, finding a proven contravention of Regulation 10(d), the Tribunal imposed a reduced penalty of Rs.10,000 on the appellants.

Classification under Customs Tariff - Chapter Note 2(c) to Chapter 70 - preferential benefit under Notification No. 46/2011-Cus (AIFTA) - extended period under Section 28(4) of the Customs Act, 1962 - provisional assessment under Section 17 - burden of proof of classification - confiscation, redemption fine and penalty under Customs Act

Classification under Customs Tariff - Chapter Note 2(c) to Chapter 70 - burden of proof of classification - Imported Clear Float Glass is classifiable under CTH 70051090 and not under CTH 70052990. - HELD THAT: - The Tribunal examined the tariff entries, Chapter Note 2(c) and test reports from CSIR-CGCRI which recorded a microscopically thin tin layer on one side of the glass that is absorbent/non-reflective and fluorescent under UV illumination. The Tribunal accepted that the tariff and chapter note require only the presence of an absorbent, reflecting or non-reflecting microscopically thin coating of metal or chemical compound and do not prescribe which side must bear the layer or require that it be the result of a separate post-manufacture coating process. Prior orders of coordinate benches (including Kolkata and Chennai Tribunal decisions and advance rulings) dealing with identical facts were held to be persuasive. In view of the admitted presence of the tin layer and the settled principle that classification must follow the specific heading where applicable, the Tribunal held the imported goods are correctly classifiable under CTH 70051090. [Paras 10, 11, 12]

Classification under CTH 70051090 is confirmed.

Preferential benefit under Notification No. 46/2011-Cus (AIFTA) - classification under Customs Tariff - Appellant is entitled to the FTA exemption benefit under Sl. No. 934 of Notification No. 46/2011-Cus, subject to fulfillment of origin documentation requirements. - HELD THAT: - As the Tribunal held that the imported Clear Float Glass is classifiable under CTH 70051090, entitlement to the exemption under Sl. No. 934 of Notification No. 46/2011-Cus follows, subject to the appellant producing valid Certificates of Origin and meeting the conditions under the Determination of Origin Rules. The Tribunal therefore set aside the reclassification-based denial of the notification benefit. [Paras 12]

FTA exemption under Sl. No. 934 of Notification No. 46/2011-Cus is available to the appellant, subject to production of required origin evidence.

Extended period under Section 28(4) of the Customs Act, 1962 - provisional assessment under Section 17 - confiscation, redemption fine and penalty under Customs Act - Extended period under Section 28(4) is not invokable; consequent confiscation, redemption fine and penalty are set aside. - HELD THAT: - The Tribunal found no evidence of suppression, wilful misstatement or collusion by the appellant. Many bills were provisionally assessed and later finalised after receipt of test reports; the Department itself had earlier accepted classification under CTH 70051090 in related assessments. Misclassification, when goods are correctly described and a bona fide classification is adopted, cannot be equated with misdeclaration for invoking the extended period. Given absence of positive suppression and that the challenge arose from a CAG audit objection rather than concealment by the importer, invocation of the extended period and imposition of mandatory penalties and confiscation were held unsustainable. [Paras 11]

Extended limitation period not attracted; confiscation, redemption fine and penalties set aside.

Final Conclusion: The Tribunal allowed the appeal: the imported Clear Float Glass is classified under CTH 70051090, the appellant is entitled to the Sl. No. 934 exemption under Notification No. 46/2011-Cus (subject to origin proof), and the Department's invocation of the extended period and consequent confiscation, fine and penalty were disallowed; the impugned Order-in-Original dated 09.06.2023 is set aside.

Procedure under Regulation 17(7) of the Customs Brokers Licensing Regulations, 2018 - deemed revocation of licence - show cause notice and maintainability of proceedings - obligations of a Customs Broker under Regulation 10 of CBLR, 2018 - KYC verification and verification by digital means under Regulation 10(n) - co-operation with authorities under Regulation 10(q) - engagement, authorisation and supervisory responsibility under Regulation 13 of CBLR, 2018 - forfeiture of security deposit and penalty

Procedure under Regulation 17(7) of the Customs Brokers Licensing Regulations, 2018 - deemed revocation of licence - Validity of the adjudicating authority's contemporaneous order of 'deemed revocation' and its compliance with Regulation 17(7) CBLR, 2018. - HELD THAT: - Regulation 17 prescribes a sequential inquiry procedure culminating in an order by the Principal Commissioner/Commissioner to revoke or not revoke a licence within ninety days from submission of the inquiry report. There is no statutory provision for issuing an order of 'deemed revocation' which is made to take effect upon a future event (for instance, suspension being set aside by an appellate authority). Where a licence was already revoked/suspended by an earlier order of the same authority and was the subject matter of an earlier appeal, the licensing authority cannot validly pass another order purporting to revoke the same licence prospectively contingent on an appellate outcome. The impugned order dated 23.11.2023 contravened the procedure and concept envisaged by Regulation 17(7) and therefore is not sustainable. [Paras 7, 10, 12]

Impugned order of 'deemed revocation' is invalid and unsustainable for being contrary to Regulation 17(7) and the statutory procedure.

Show cause notice and maintainability of proceedings - Maintenability of the show cause notice dated 08.07.2022 which purported to seek revocation/forfeiture where licence had already been revoked by an earlier order. - HELD THAT: - Sub-regulation (1) of Regulation 17 requires a show cause notice to propose revocation or penalty. Where the licence had already been revoked by an earlier Order-in-Original, the proposal in the subsequent SCN to revoke and forfeit is ab initio void. The Tribunal held that the SCN issued in such circumstances could not be sustained as it sought a result already effected by an earlier order of the same authority. [Paras 7]

The show cause notice dated 08.07.2022 is not legally sustainable as it proposed revocation/forfeiture despite an earlier revocation order being in existence.

Obligations of a Customs Broker under Regulation 10 - exercise of due diligence under Regulation 10(e) - Whether the appellants contravened Regulation 10(e) by failing to exercise due diligence in ascertaining correctness of information. - HELD THAT: - The adjudicating authority's finding that the broker failed to exercise due diligence rested on the fact that documents were received via an intermediary and the broker did not meet the importer personally. The Tribunal noted that the mis-declaration and undervaluation allegations primarily related to acts of the importer and that acceptance of documents through a logistics operator/intermediary is not prohibited under CBLR (citing earlier Tribunal precedent). In the absence of material demonstrating that the broker actively participated in or caused the mis-declaration, the finding of violation of Regulation 10(e) could not be sustained. [Paras 8]

Violation of Regulation 10(e) not established; finding in the impugned order set aside.

KYC verification and verification by digital means under Regulation 10(n) - Whether the appellants failed to comply with KYC obligations under Regulation 10(n). - HELD THAT: - Regulation 10(n) requires verification of IEC, GSTIN, identity and functioning at declared address using reliable, independent documents. The appellants had obtained and verified KYC documents through digital means (IEC certificate, bank verification etc.), and the inquiry authority itself had dropped the charge initially. The Tribunal observed Circular guidance that any two specified documents may suffice for KYC and relied on Tribunal and High Court authorities holding that a broker is not expected to second guess the genuineness of every transaction beyond prescribed KYC checks. On that basis, there was no legal foundation to uphold the allegation of failure to comply with Regulation 10(n). [Paras 9]

Violation of Regulation 10(n) not established; impugned finding on this charge set aside.

Co-operation with authorities under Regulation 10(q) - Whether the appellants failed to cooperate with customs investigations in breach of Regulation 10(q). - HELD THAT: - The inquiry officer recorded that the appellants' representative had appeared and given voluntary statement promptly and therefore the charge of non-cooperation was held not proved. The impugned order contains internal inconsistencies (mis references and contradictory passages) but on the facts the Tribunal accepted the inquiry finding of no apparent non-cooperation. The error in the impugned order's drafting does not convert a finding of no violation into one of breach. [Paras 10]

Violation of Regulation 10(q) not proven; impugned finding on this charge set aside.

Engagement, authorisation and supervisory responsibility under Regulation 13 of CBLR, 2018 - Whether the appellants violated Regulations 13(3), 13(4), 13(7) and 13(12) by unauthorised engagement/allowing unauthorised persons to transact on behalf of the broker. - HELD THAT: - Although the adjudicating authority found that certain persons acted in an unauthorised manner, the Tribunal noted that the broker had obtained approvals/permissions from the Deputy/Assistant Commissioner for transaction through an authorised G card holder and later for an authorised F card signatory (public notices recorded). Acceptance of documents via an intermediary is permissible under precedent. In the absence of evidence proving lack of approval or that the authorised persons were not those approved by Customs, the findings of violations under Regulation 13 could not be sustained. [Paras 11, 12]

Violations of Regulations 13(3), 13(4), 13(7) and 13(12) not established; corresponding findings in the impugned order set aside.

Final Conclusion: The Tribunal set aside the impugned order dated 23.11.2023: the show cause notice and the consequential order of 'deemed revocation', forfeiture and penalty are unsustainable for being contrary to the procedure in Regulation 17(7) and because the alleged violations of Regulations 10(e), 10(n), 10(q) and 13(3), 13(4), 13(7) and 13(12) were not established on the record; the appeal is allowed.

Customs duty exemption under India-Sri Lanka Free Trade Agreement - determination of origin under the Free Trade Agreement - certificate of origin issued by exporting country's authority - re testing of samples and trade facilitation guidelines - minimum import price compliance for "Free" imports - burden on department to prove circumvention of origin

Determination of origin under the Free Trade Agreement - certificate of origin issued by exporting country's authority - burden on department to prove circumvention of origin - Imported areca nuts declared as Sri Lanka origin are eligible for exemption under the ISFTA notification subject to proof of origin. - HELD THAT: - The Tribunal reviewed the documentary and corroborative material and found that the appellants produced Certificates of Origin issued by the Ministry of Industry & Commerce, Sri Lanka and that the issuing authority in Sri Lanka reconfirmed those COOs. The departmental test report from ARDF and the importer's FSSAI approved laboratory report were held to be inconclusive for establishing origin. The customs authorities did not follow prescribed verification and re testing procedures in Circulars/CBEC guidelines and did not obtain conclusive evidence to displace the COOs. In these circumstances the Tribunal took a prima facie view that the declared country of origin (Sri Lanka) was supported by the certified COOs and that the Department failed to discharge any onus to prove circumvention of the rules of origin under the ISFTA. [Paras 7, 10]

The imported goods are eligible for exemption under the India-Sri Lanka FTA notification; the departmental contrary conclusion is not sustained.

Minimum import price compliance for "Free" imports - customs duty exemption under India-Sri Lanka Free Trade Agreement - Whether the imports complied with DGFT Minimum Import Price (MIP) requirement to claim import as "Free". - HELD THAT: - The appellants furnished bank account statements showing payments in eight transactions to the overseas supplier and produced documentary evidence that Sri Lanka customs amended the export declarations to reflect the higher values. On the basis of the declared B/E value and the amended export documents the Tribunal found the average value per kg to be Rs.252/-, which exceeds the notified MIP of Rs.251/-. In view of this compliance the Tribunal concluded that the imports qualified to be allowed as "Free" and that the findings of violation under Section 111(d) and 111(m) of the Customs Act premised on MIP non compliance were not sustainable in the absence of contrary admissible evidence from the Department. [Paras 8]

The MIP requirement is satisfied; the conclusion of MIP breach and consequent confiscation/redemption fine is unsustainable.

Re testing of samples and trade facilitation guidelines - burden on department to prove circumvention of origin - Sustainability of the impugned appellate order confirming adjudication and penalties imposed by the original authority. - HELD THAT: - The Tribunal examined the appellate and original authorities' reliance on the departmental test report and other inspection observations. It observed that the departmental testing was not conducted in accordance with CBEC/Board guidelines on testing and re testing, that the re testing facility was not appropriately afforded, and that the departmental evidence did not conclusively rebut the authenticated COOs and documentary proof of payment/amendment of export documents. Precedents were noted where non accredited reports and mere suspicion were held insufficient to displace certified origin documents. On the cumulative record the Tribunal found the appellate confirmation of the original adjudication untenable. [Paras 6, 7, 10, 11]

The impugned order confirming the adjudged demands is set aside; the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that (i) the imported areca nuts are prima facie of Sri Lankan origin supported by certified COOs, (ii) the imports meet the DGFT MIP requirement and qualify as "Free", and (iii) the appellate order confirming confiscation, duty demands and penalties is not legally sustainable and is set aside with consequential relief as per law.

Classification of Clear Float Glass under Customs Tariff Heading 7005 10 90 versus 7005 29 90 - Chapter Note 2(c) - meaning of "absorbent, reflecting or non-reflecting layer" - eligibility for preferential tariff benefit under Notification No. 46/2011-Cus (Sl. No. 934) - extended period of limitation under Section 28(4) - invocation and requirements - misclassification versus misdeclaration - burden of proof on the Department for re-classification

Classification of Clear Float Glass under Customs Tariff Heading 7005 10 90 versus 7005 29 90 - Chapter Note 2(c) - meaning of "absorbent, reflecting or non-reflecting layer" - burden of proof on the Department for re-classification - Imported Clear Float Glass is classifiable under CTH 7005 10 90 (70051090) and not under CTH 7005 29 90. - HELD THAT: - A conjoint reading of the tariff heading, Chapter Note 2(c) and the manufacturing/test reports establishes that clear float glass has a microscopically thin tin layer on one side which satisfies the description of an "absorbent, reflecting or non-reflecting layer" contemplated by Note 2(c). The testing agency (CSIR-CGCRI) reports and analogous findings in coordinate tribunal and appellate orders (including decisions in Calcutta and Chennai benches and relevant Advance Rulings) support that presence of the tin layer brings the product within 7005 10 90. The Department's contention that the layer must be a separately applied coating or must be on a specific side (air side) is not mandated by the tariff provision or chapter note; the adjudicating authority cannot add conditions to the tariff entry or chapter note. Where the Department sought to reclassify contrary to earlier departmental stance and to test reports relied on at provisional finalisation, it failed to discharge the burden of proof required to overturn the assessee's declared classification. [Paras 10, 11, 12]

Classification under CTH 7005 10 90 is confirmed and the re-classification to CTH 7005 29 90 is set aside.

Eligibility for preferential tariff benefit under Notification No. 46/2011-Cus (Sl. No. 934) - classification of Clear Float Glass under Customs Tariff Heading 7005 10 90 - The importer is eligible for the benefit of Notification No. 46/2011-Cus (Sl. No. 934) in respect of the imported Clear Float Glass, subject to fulfillment of origin documentation conditions. - HELD THAT: - Because the imported goods are held to be correctly classifiable under CTH 7005 10 90, the appellant qualifies for the preferential exemption under the cited notification, provided the importer produces valid certificates of origin in accordance with the Determination of Origin Rules. The Tribunal applied its classification finding to conclude entitlement to the exemption, following the established requirement that origin documentation be produced for each import. [Paras 12]

Benefit of Notification No. 46/2011-Cus (Sl. No. 934) is available to the appellant, subject to compliance with origin-document conditions.

Extended period of limitation under Section 28(4) - invocation and requirements - misclassification versus misdeclaration - Invoking the extended period of limitation and imposing related penalties/redemption fine is not sustainable in the absence of positive suppression or mis-declaration by the appellant. - HELD THAT: - The proceedings originated from an audit objection but the Department had earlier treated identical imports as provisionally assessed and later finalised under CTH 7005 10 90 after receipt of test reports. There is no finding of positive suppression or deliberate mis-declaration by the importer; bona fide classification choice does not amount to mis-declaration. Given that assessments were provisionally finalised and the Department itself earlier accepted the classification, it was not open to invoke the extended limitation period retrospectively on the basis of the CRA objection. Consequently, confiscation, redemption fine and penalties premised on extended period invocation and wilful mis-declaration were set aside. [Paras 11]

Extended period invocation and consequent confiscation, redemption fine and penalties are disallowed; the related orders are set aside.

Final Conclusion: The Tribunal allowed the appeal: imported Clear Float Glass is held to be classifiable under CTH 7005 10 90, the appellant is entitled to the benefit of Notification No. 46/2011-Cus (Sl. No. 934) subject to origin documentation, and the Department's re-classification, demands for differential duty for the period 13.09.2017 to 01.04.2022, invocation of extended limitation, confiscation, redemption fine and penalties were set aside.

Abuse of FII route - manipulative and deceptive device - fraudulent and unfair trade practices - misrepresentation and concealment of material fact - beneficial ownership concealment - natural justice - audi alteram partem and waiver - delay in initiation and reasonableness of investigation - SEBI's powers under Section 11 and 11B

Delay in initiation and reasonableness of investigation - The preliminary objection of egregious delay in initiation of proceedings is rejected. - HELD THAT: - SEBI traced the origin of the inquiry to a 2010 communication from the FSA and described an extended, multi-jurisdictional fact-finding process (including requests to FCA/other foreign regulators, appointment of an Investigating Authority in 2014, and receipt of information in tranches through 2020-21) which culminated in the SCN dated April 13, 2023. Given the complexity of cross-border data collection and the chronology showing efforts to obtain and furnish relevant material to the Noticee, the delay was held to be explicable and not violative of the requirement to exercise powers within a reasonable period. The adjudicating officer further found that the relied-upon documents were provided to the Noticee during the proceedings, and that the Noticee did not substantively defend the charges but raised delay as a tactic to evade participation. On these bases the objection of delay was held to be without merit. [Paras 14, 15, 22]

Objection of delay rejected and proceedings continued on merits.

Natural justice - audi alteram partem and waiver - The contention that the opportunity of hearing was an empty formality is rejected; the Noticee is treated as having waived the right to be heard by not availing multiple hearing opportunities and by not filing a substantive reply. - HELD THAT: - The record shows that the Noticee was given multiple opportunities (inspection of documents and three separate personal hearing dates) and extensions to file a reply; documents relied upon were supplied. The adjudicating officer applied the principle that denial of a real, reasonable and effective opportunity renders proceedings void, but found that sufficient and repeated opportunities were provided. Since the Noticee did not appear or file a substantive defence and persisted in characterising hearings as mere formality, the officer concluded that the Noticee voluntarily waived the right to be heard and could not later plead denial of natural justice to avoid the proceedings. [Paras 8, 23, 25, 26]

Opportunity of hearing held to have been adequate; Noticee deemed to have waived right to be heard and proceedings proceeded on the material on record.

Abuse of FII route - beneficial ownership concealment - fraudulent and unfair trade practices - misrepresentation and concealment of material fact - manipulative and deceptive device - On merits, the Noticee abused the FII/sub-account route by funding and using overseas entities under his beneficial ownership to effect purchases and sales in securities of his group companies, thereby violating Regulations 3(a), (b) and (d) and Regulation 4(2)(f) of the PFUTP Regulations, 2003 and Sections 12A(a) and 12A(c) of the SEBI Act, 1992. - HELD THAT: - The investigation established that multiple overseas accounts and entities (Birchwood, Bayside, Suncoast, VNHL, Highland Trading etc.) were ultimately beneficially owned by the Noticee; funds from those accounts were routed into Venture New Holding Ltd and then transferred to Matterhorn Ventures (a registered FII sub-account), which promptly purchased large block deals in Herbertsons and later received USL shares on merger. Email communications between the Noticee and a UBS employee, contemporaneous trading data and bank statements corroborated that the transfers funded the purchases and that significant gains were realized. The officer applied the statutory framework and judicial guidance that mens rea is not indispensable and that findings may be based on preponderance of probabilities. Concluding from the totality of materials, the conduct was held to be a designed masking of identity, use of manipulative/deceptive devices and concealment of material facts (promoter-funded shareholding portrayed as non-promoter FII holding), detrimental to market integrity and investors. [Paras 44, 51, 52, 53]

Findings of violation of PFUTP Regulations and SEBI Act sustained against the Noticee.

Final Conclusion: SEBI, invoking its powers under Sections 11(1) and 11B read with Section 19 of the SEBI Act, directed immediate market restraints: the Noticee is restrained from accessing the securities market, dealing in securities or associating with listed/proposed listed companies for three years, with existing holdings frozen and limited provisions for settlement/squaring off of pending transactions as specified in the order.

Principles of natural justice - facilitative role of the resolution professional - no judicial adjudication at the stages envisaged in Sections 95 to 99 - adjudicatory function under Section 100 - report of the resolution professional is recommendatory - binding nature of Supreme Court precedent

Binding nature of Supreme Court precedent - principles of natural justice - Whether the order of this Tribunal dated 30.05.2023 can be read so as to exclude or displace the law declared by the Hon'ble Supreme Court in Dilip B Jivrajka - HELD THAT: - The Tribunal held that its earlier order dated 30.05.2023, passed prior to the Supreme Court judgment in Dilip B Jivrajka, cannot be interpreted so as to negate or exclude the binding law declared by the Supreme Court. The Supreme Court has authoritatively delineated that while principles of natural justice apply, the statutory scheme contemplates a facilitative role for the resolution professional at the stages under Sections 95-99 and that no adjudicatory determination is to be undertaken by the adjudicating authority at the stage of appointment of the RP. Consequently, the Tribunal's directions permitting the personal guarantor to file objections do not operate to oust the applicability of the Supreme Court's doctrine; the adjudicatory assessment of objections is to be carried out in accordance with the Supreme Court's judgment. The Tribunal therefore clarified that its earlier order must be read consistently with the law laid down in Dilip B Jivrajka and not as excluding that judgment. [Paras 11, 12, 18]

Order dated 30.05.2023 cannot be read to exclude the applicability of the Supreme Court judgment in Dilip B Jivrajka; the Supreme Court's law prevails.

Facilitative role of the resolution professional - report of the resolution professional is recommendatory - adjudicatory function under Section 100 - Whether objections raised by the personal guarantors are to be considered at the stage of adjudication under Section 100 and whether the RP may submit its report in proceedings under Section 95 - HELD THAT: - Relying on the Supreme Court's exposition, the Tribunal held that the true adjudicatory function commences under Section 100 after submission of the RP's report. Sections 95-99 envisage a facilitative exercise by the RP, who may seek information and submit a recommendatory report; that report does not bind the adjudicating authority. Accordingly, objections of personal guarantors are to be decided at the hearing under Section 100, and the RP is not precluded from filing its report in proceedings under Section 95. Issues of nondisclosure or merits raised by the guarantors may be pressed before the adjudicating authority at Section 100; the Tribunal refrained from expressing any view on merits at this stage. [Paras 12, 13, 17, 20]

Objections of personal guarantors are to be adjudicated at the Section 100 stage; the RP is at liberty to file its report under Section 95.

Binding nature of Supreme Court precedent - Whether the Resolution Professional has locus to file the interlocutory applications in this Tribunal seeking clarification - HELD THAT: - The Tribunal rejected the contention that the RP lacked locus to file the applications. The appeals had challenged the order appointing the RP; the RP ought to have been impleaded in the appeals and the appellants could not take advantage of that omission. Further, an order of the Adjudicating Authority recorded lack of assistance from the RP, which warranted the RP seeking clarification. On these bases the Tribunal held that the RP had sufficient locus to move the Tribunal for clarification. [Paras 16]

The Resolution Professional has locus to file the applications seeking clarification.

Final Conclusion: IA Nos.5603, 5595 and 5598 of 2024 are disposed of by clarifying that the Adjudicating Authority shall proceed in the Section 95 proceedings in accordance with the law declared by the Hon'ble Supreme Court in Dilip B Jivrajka; objections of personal guarantors are to be decided at the Section 100 hearing and the RP is free to file its report; no order as to costs.

Clarification of order - sealed cover awards - interim injunction restraining enforcement - modification limited to paragraph 2 - right to enforce awards during interim stay - show cause notice for continuation of interim order

Sealed cover awards - modification limited to paragraph 2 - clarification of order - Scope of the Tribunal's order dated 26.05.2022 and whether it modified or vacated the interim injunction dated 15.10.2018 - HELD THAT: - The Tribunal held that the order dated 26.05.2022 only directed that awards kept in sealed cover be opened and communicated to the parties and expressly stated that it was only a modification of paragraph 2 of the order dated 11.01.2019. The Tribunal did not decide the rival contentions or the future course of action on enforcement and did not vary or discharge the interim injunction dated 15.10.2018 which restrained institution or continuation of proceedings against IL&FS and its group entities. Consequently, opening the sealed cover did not entitle award-holders to proceed with enforcement while the interim order of 15.10.2018 remained in force. [Paras 13, 14, 16, 17]

Order dated 26.05.2022 is clarified to be only a modification of paragraph 2 of 11.01.2019 directing opening of sealed cover; it did not modify or lift the interim injunction of 15.10.2018 and does not permit enforcement of the awards against IL&FS and its group entities while that injunction continues.

Interim injunction restraining enforcement - right to enforce awards during interim stay - show cause notice for continuation of interim order - Whether the interim injunction of 15.10.2018 should be permitted to continue indefinitely and procedure for deciding continuation of that injunction - HELD THAT: - The Tribunal observed that the interim injunction of 15.10.2018 was intended to preserve the corporate corpus for resolution and was not meant to operate indefinitely. Given the passage of time and progress in resolution of several IL&FS group entities, the Tribunal concluded that sufficient time has elapsed to reconsider the continuing operation of the injunction. The Tribunal therefore declined to finally adjudicate the continued existence of the injunction in the interlocutory applications then before it and instead directed that IL&FS and its group entities be put on notice to show cause why the order dated 15.10.2018 should not cease to operate with effect from 15.10.2024. The matter was directed to be listed for further consideration on 14.10.2024. [Paras 20, 21, 22]

IL&FS and its group entities are directed to show cause why the interim injunction dated 15.10.2018 should not be allowed to cease to operate with effect from 15.10.2024; further consideration listed for 14.10.2024.

Final Conclusion: The Tribunal clarified that its order of 26.05.2022 only directed opening of awards kept in sealed cover and did not modify or lift the interim injunction of 15.10.2018; enforcement of the awards against IL&FS group entities remains prohibited while that injunction continues. Separately, the Tribunal put IL&FS and its group entities on notice to show cause why the interim injunction should not cease to operate from 15.10.2024 and directed further listing for consideration on 14.10.2024.

Interim moratorium under Section 96 of the IBC - moratorium applicable in respect of a debt (as distinct from a debtor) - effect of insolvency proceedings against a personal guarantor under Part III - interaction between IBC moratorium and enforcement of security under SARFAESI - IBC as a complete code prevailing over inconsistent provisions of other laws - distinction between moratorium under Section 14 and moratorium under Section 96/101

Interim moratorium under Section 96 of the IBC - interaction between IBC moratorium and enforcement of security under SARFAESI - effect of insolvency proceedings against a personal guarantor under Part III - Whether the appellant-bank could continue SARFAESI proceedings and retain/restore possession of the mortgaged property after initiation of insolvency proceedings against the personal guarantor and commencement of the interim moratorium under Section 96 of the IBC. - HELD THAT: - The Tribunal held that the interim moratorium under Section 96 operates "in relation to all the debts" and is intended to restrain initiation or continuation of legal action or proceedings in respect of the debt; consequently enforcement steps under the SARFAESI Act qua the mortgaged property are barred once the moratorium commences in respect of that debt. The decision relies on the reasoning reproduced from the Delhi High Court decision in Sanjay Dhingra Vs IDBI Bank Ltd & Ors , which in turn applies the principle that the interim moratorium under Part III protects the debt (not merely the debtor) and therefore applies to security interests created by a personal guarantor. The Tribunal further applied the Supreme Court authority as discussed in the quoted precedents, including Indian Overseas Bank Versus RCM Infrastructure Limited (holding that sale not complete until balance payment received and post-moratorium steps cannot continue) and the distinction drawn between Section 14 and the moratorium under Part III in State Bank of India Versus V. Ramakrishnan . In view of these authorities and the settled principle that the IBC is a complete code prevailing over inconsistent provisions of other laws, the Tribunal concluded that prior symbolic or physical possession under SARFAESI (or steps taken before the moratorium) does not permit continuation of SARFAESI proceedings after commencement of the interim moratorium in respect of the debt. The Tribunal therefore declined to interfere with the NCLT order directing restoration of possession to the IRP and restrained the appellant from proceeding further under SARFAESI qua the subject property until the moratorium is lifted. [Paras 8, 9]

The appellant cannot proceed further under the SARFAESI Act with respect to the subject property while the interim moratorium under Section 96 of the IBC operates in relation to the debt; the NCLT order is not interfered with.

Final Conclusion: The appeal is dismissed. The appellant is restrained from further proceeding under the SARFAESI Act in respect of the subject property until the interim moratorium under Part III of the IBC is lifted; pending applications are disposed of.

Reason to believe - judicial review under Article 226 - doctrine of election - seizure and confirmation under FEMA - tangible material - appellate remedy under the FEMA regime

Judicial review under Article 226 - seizure and confirmation under FEMA - Whether the High Court Bench erred in declining to substitute its own view for the Competent Authority and Seizing Officer when exercising judicial review under Article 226. - HELD THAT: - The Court held that a Constitutional court exercising judicial review under Article 226 is confined to limited scrutiny and is not an appellate forum to re weigh evidence or substitute its view for that of the Competent Authority. The Division Bench found that the learned Single Judge examined the material and legal principles and applied the restricted contours of judicial review. The Single Judge identified and considered the tangible material relied upon by the Seizing Officer and the Competent Authority and appropriately limited interference to the scope allowed by precedent, concluding that no substitution of fact finding was warranted. [Paras 14, 21]

The exercise of jurisdiction by the learned Single Judge under Article 226 was appropriate and within the limits of judicial review; no substitution of the Competent Authority's factual conclusions was justified.

Doctrine of election - appellate remedy under the FEMA regime - Whether the appellant could challenge the Confirmation Order in writ proceedings after having withdrawn the statutory appeal before the Appellate Tribunal. - HELD THAT: - The Court found on the record that the appellant voluntarily withdrew its appeal before the Tribunal after being permitted to do so and thus elected its remedy. The orders of 13.09.2022 and 12.10.2022 demonstrate that the appellant understood and accepted the risk of withdrawal and reserved rights to agitate issues in the writ petition. The Division Bench held that a party which knowingly elects to forgo a statutory appellate remedy cannot later contend it was constrained to pursue a writ and cannot complain of consequences flowing from that election. [Paras 16, 17]

The appellant had elected to withdraw the statutory appeal and, having knowingly chosen that course, cannot fault the consequence of that election.

Reason to believe - tangible material - Whether the Seizing Officer and the Competent Authority had tangible material to form 'reason to believe' for making and confirming the seizures. - HELD THAT: - Relying on the Confirmation Order and the Seizure Orders, the Court concluded there was objective material analysed by the authorities sufficient to form 'reason to believe'. The Single Judge and this Bench referred to settled law that 'reason to believe' must be founded on tangible material and held that the authorities had recorded materials and reasons which bore a rational connection to their conclusion. Given the nature of the inquiry, the Constitutional Court limited itself to assessing existence of objective material and refrained from reappraising evidentiary weight. [Paras 19, 21]

There was tangible material before the Seizing Officer and Competent Authority sufficient to constitute 'reason to believe', and the seizures and their confirmation were not shown to be without objective basis.

Seizure and confirmation under FEMA - judicial review under Article 226 - Whether it was appropriate for the writ court to decline to decide all disputed factual issues and to relegate the controversy to the Adjudicating Authority. - HELD THAT: - The Bench found that many contested questions-classification of transactions as capital or current account, identity and commercial relationship of foreign entities, and factual disputes about transfer pricing and beneficial ownership-were factually intensive and required adjudication on evidence. The learned Single Judge noted substantial hearings pending before the Adjudicating Authority and, having examined the material within the limits of judicial review, declined to exercise discretionary writ relief so as to avoid preempting the statutory adjudicatory process. [Paras 22, 23]

Relegation of the appellant to the Adjudicating Authority for detailed factual determination was appropriate; no interference was called for in the writ proceedings.

Final Conclusion: Appeal dismissed. The Division Bench held that the Single Judge acted within the restricted scope of judicial review: the appellant had elected to withdraw its statutory appeal; the Seizing Officer and Competent Authority had objective material to form 'reason to believe'; and factual disputes are to be adjudicated by the Adjudicating Authority rather than by a writ court.

Maintainability of writ petition in presence of alternative statutory remedy - Scope of judicial interference under Article 226 where alternative remedy exists - Assessment of jurisdiction and natural justice in tax adjudication - Onus on assessee to produce documentary evidence for exemption claim - Admissibility and authenticity of documents in tax proceedings

Maintainability of writ petition in presence of alternative statutory remedy - Scope of judicial interference under Article 226 where alternative remedy exists - Writ petition dismissed for non-availment of statutory appeal remedy - HELD THAT: - The Court found that as against the order-in-original an appeal lay to the Commissioner (Appeals) and that the petitioner had bypassed the available statutory remedy. In such circumstances, judicial interference under Article 226 was not justified. The Court emphasised that absence of a demonstrated jurisdictional error or violation of natural justice that could not be remedied on appeal militated against entertaining the writ petition. Consequently the petition was dismissed on the ground of availability of an alternative statutory remedy. [Paras 8, 15, 16]

Writ petition dismissed on the ground of existence of an efficacious alternative remedy by way of appeal.

Assessment of jurisdiction and natural justice in tax adjudication - Onus on assessee to produce documentary evidence for exemption claim - Adjudicating authority did not act without jurisdiction or in breach of natural justice in passing the assessment order - HELD THAT: - The Court recorded that the assessing authority considered the petitioner's objections and noted absence of supporting documents such as agreement, work orders or completion report entries linking the petitioner to the work. The petitioner had multiple opportunities but failed to place requisite material before the authority. On the material available, the authority recorded a factual finding that there was no evidence of the petitioner having executed the work. The Court held that these circumstances did not establish that the authority exceeded jurisdiction or violated principles of natural justice. [Paras 9, 10, 13, 14]

Findings of the adjudicating authority that there was no material to substantiate the exemption claim stand; no jurisdictional infirmity or breach of natural justice shown.

Admissibility and authenticity of documents in tax proceedings - Onus on assessee to produce documentary evidence for exemption claim - Alleged subcontract agreement (P-4) prima facie not relied upon and treated as unreliable - HELD THAT: - The Court examined the alleged agreement (P-4) produced by the petitioner and noted internal inconsistencies-specifically the use of a district name that came into existence only after 2022-leading to the conclusion that the document could not be relied upon. The document was also not produced before the adjudicating authority. In view of these factors the Court treated P-4 as prima facie fabricated or otherwise unreliable and refused to admit it for adjudication of the dispute in the writ proceedings. [Paras 11, 12]

P-4 regarded as prima facie unreliable and cannot be relied upon to establish the petitioner's claim of being a subcontractor.

Final Conclusion: The writ petition challenging the service-tax assessment and attachment is dismissed on the ground that an alternative remedy by way of statutory appeal was available; the taxing authority's factual findings-including the absence of supporting documents and the unreliability of the alleged agreement-were not shown to be vitiated by jurisdictional error or breach of natural justice.

Extended period of limitation and invocation based on third party information - abatement under Rule (2C) of the Service Tax (Determination of Value) Rules, 2006 - limitation of demand to the period 01.10.2012 to 31.03.2013 - penalty not imposable

Extended period of limitation and invocation based on third party information - limitation of demand to the period 01.10.2012 to 31.03.2013 - Demand could be sustained only for the period 01.10.2012 to 31.03.2013 and extended period beyond that could not be invoked. - HELD THAT: - The show cause notice dated 06.09.2018 sought to cover periods from 2012-13 onwards. The Bench held that the period prior to 01.10.2012 fell beyond even the extended period and therefore could not be the basis for confirming any demand. Having regard to the timing of the notice and the material on record, the confirmation of duty could be maintained only for the period 01.10.2012 to 31.03.2013. The Bench accepted the appellant's concession and fairness in limiting liability to the legally tenable period and confined the adjudication to that time-frame. [Paras 6, 7, 8]

Demand confirmed only for 01.10.2012 to 31.03.2013; extended period not invoked for earlier periods.

Abatement under Rule (2C) of the Service Tax (Determination of Value) Rules, 2006 - Claim for 60% abatement in respect of Outdoor Catering Service allowed and applied in quantifying the confirmed duty. - HELD THAT: - The appellant asserted that only Outdoor Catering Service was rendered and therefore entitled to the 60% abatement under Rule (2C). The Bench found no reason to disbelieve the appellant's contention that only that service was provided and held that failure to obtain registration or to file returns did not disentitle the appellant from a legally available abatement. Applying the abatement resulted in the admitted and confirmed liability for the limited period being reduced to the amount accepted by the appellant. [Paras 6, 8]

60% abatement under Rule (2C) allowed; confirmed duty reduced accordingly to Rs.42,013 for the period 01.10.2012 to 31.03.2013 (with interest).

Penalty not imposable - No penalty is imposable on the appellant for the confirmed period. - HELD THAT: - Although the Revenue urged imposition of penalties on account of non-registration and non-filing of returns, the Bench, on consideration of the facts and the appellant's conduct (including acceptance of limited liability), exercised its discretion against imposing any penalty. The Bench found that in the circumstances there was no occasion to levy penalty in respect of the confirmed duty for the limited period. [Paras 7]

Penalties not imposed.

Final Conclusion: The appeal is partially allowed: demand confirmed for the period 01.10.2012 to 31.03.2013 after allowing 60% abatement (confirmed duty reduced to the amount accepted by the appellant) with interest; extended period not invoked for earlier periods; no penalties imposed.

Refund of service tax on taxable services used for export - refund of service tax on GTA services - port services - admissibility of refund limited to services from ICD to port of export - refund of service tax on inspection and testing charges - admissibility of C & F agent services from specified effective date - procedural non-compliance not a bar to substantive refund claim - remand to Original Authority for verification

Refund of service tax on GTA services - port services - admissibility of refund limited to services from ICD to port of export - procedural non-compliance not a bar to substantive refund claim - remand to Original Authority for verification - Entitlement to refund of service tax paid on Goods Transport Agency (GTA) services claimed in relation to exports - HELD THAT: - The Tribunal accepted that service tax paid on GTA services used for export can qualify for refund under Notification No.41/2007-S.T. where the services relate to exportation and are verifiable as having been used for ultimate export. However, refund in respect of GTA services is confined to those services availed for transportation from the Inland Container Depot (ICD) to the Port of export and not for transportation from the place of removal to the port. Documentary deficiencies such as non-mentioning of container/shipping bill numbers in GTA invoices are not an absolute bar where the invoices can be correlated by other documents; nevertheless, the factual claim that specific GTA services were availed from the ICD to the port must be verified by the Original Authority. The Tribunal relied on earlier decisions and CBEC clarification treating services provided within the port as qualifying for refund, but directed a remand for factual verification of the appellants' claims. [Paras 8, 9, 10]

Refund of service tax on GTA services allowed in principle but limited to GTA services availed from ICD to the Port of export; matter remanded to the Original Authority for verification of the claim.

Refund of service tax on inspection and testing charges - remand to Original Authority for verification - Entitlement to refund of service tax on inspection and testing charges claimed in relation to exports - HELD THAT: - The appellants did not place before the Original Authority the agreements or copies showing the contractual arrangement with foreign buyers in respect of inspection and testing services. The Tribunal held that such charges may qualify for refund if the agreements and relevant documents demonstrate use for exportation, but directed that the Original Authority must verify the relevant agreements and documents before granting refund. [Paras 6, 9, 10]

Refund of service tax on inspection and testing charges is not finally allowed or disallowed but remanded to the Original Authority for verification of the relevant agreements and documentary proof.

Admissibility of C & F agent services from specified effective date - Admissibility period for refund of service tax paid on C & F agent services - HELD THAT: - The Tribunal noted that refund of service tax on C & F agent services is prospectively admissible only from the date specified in the notification/amendment and recorded that C & F services are admissible for refund with effect from 07.12.2008. The Tribunal therefore limited the admissibility of refund in respect of C & F charges to the period from 07.12.2008. [Paras 6, 9, 10]

Refund of service tax paid on C & F charges held admissible only w.e.f. 07.12.2008 (as directed).

Refund of banking charges subject to documentary proof - remand to Original Authority for verification - Entitlement to refund of service tax on banking charges - HELD THAT: - The Tribunal found that refund of service tax on banking charges can be allowed provided the appellant furnishes documentary proof establishing that such banking services were used in relation to exports. It directed the Original Authority to permit refund upon production and verification of the requisite documents. [Paras 10]

Refund of service tax on banking charges allowed subject to production and verification of documentary proof by the Original Authority.

Final Conclusion: The appeals are partly allowed: in principle refunds are permitted for GTA services (limited to ICD-to-Port movement), inspection/testing charges and banking charges subject to documentary verification, and C&F charges are admissible only from 07.12.2008; all matters remanded to the Original Authority for verification and determination in accordance with these directions.

Classification of taxable service - management or business consultant services - chartered accountant services - market research agency services - export of service - delivery and use outside India - privity of contract - limitation and extended period - proviso to Section 73 - interest and penalty contingent on unsustainable demand

Classification of taxable service - management or business consultant services - chartered accountant services - market research agency services - Classification of services rendered by the appellant - HELD THAT: - The Tribunal held that the appellant, a private limited incorporated company, was not engaged in the practice of chartered accountancy and therefore its services could not be classified as 'practicing chartered accountant' services. The nature of the appellant's engagements-consultancy, assistance in mergers and acquisitions, due diligence, diagnostic reviews and evaluation of financial viability-constituted management or business consultancy rather than market research, which requires being engaged in conducting market research as a primary activity. The Tribunal observed that marketing-related work formed only a small segment of the appellant's broader consultancy services and that the appellant did not perform services as statutorily envisaged for practicing chartered accountants; hence classification under CA Services or Market Research Agency Services was incorrect and the services are properly classifiable as Management or Business Consultant Services. [Paras 9, 10, 11]

Services rendered by the appellant are Management or Business Consultant Services and not Chartered Accountant Services or Market Research Agency's Services; the impugned order's classification was incorrect.

Export of service - delivery and use outside India - privity of contract - Whether services provided to foreign network firms qualify as export of service under the Export of Service Rules, 2005 - HELD THAT: - The Tribunal found that the appellant had privity of contract with PwC overseas network firms and supplied reports/reports were delivered to those overseas entities, who were the ultimate users of the services. Relying on precedent including the Tribunal's earlier decision in the appellant's own case and the ratio in CST v. B.A. Research India Ltd., it held that performance of service is complete on delivery of report and where such reports are delivered abroad and used outside India the service qualifies as export of service. Applying this principle, the Tribunal concluded that although work was performed in India, the ultimate benefit accrued outside India and therefore the services fall within the Export of Service Rules and are not taxable as domestic service. [Paras 12, 13, 17]

Services provided to PwC overseas network firms, whose use and receipt occurred outside India, qualify as export of service and thus are not liable to service tax.

Limitation and extended period - proviso to Section 73 - Invocability of extended period of limitation and validity of adjudication given delay in passing order - HELD THAT: - The Tribunal noted the show cause notice dated 20.04.2012 and the impugned order dated 29.11.2019 and observed that the adjudicating authority failed to act within the statutory period prescribed under Section 73(4B). It held that invocation of the extended period under the proviso to Section 73 could not be sustained in the absence of any evidence of fraud, collusion, wilful misstatement, suppression of facts or contravention of law with intent to evade tax. Further, where the dispute principally involved classification and interpretation of statutory provisions, the extended period was not attracted. In view of these findings and consistent authority, the Tribunal concluded that the adjudication was time-barred and the show cause notice/order required quashing on limitation grounds. [Paras 14, 15]

Extended period under the proviso to Section 73 cannot be invoked; order passed after undue delay is unsustainable and the show cause notice/order is liable to be set aside on limitation grounds.

Interest and penalty contingent on unsustainable demand - Liability for interest and penalty linked to the sustainability of the tax demand - HELD THAT: - Given the Tribunal's conclusions that the services were misclassified and qualified as export of service, and that the adjudication was time-barred, it held that the underlying service tax demand could not be sustained. Consequently, the imposition of interest and penalty flowing from that demand could not stand. The Tribunal accordingly recorded that when the tax demand is unsustainable, associated interest and penalty fall away. [Paras 16]

Interest and penalty cannot be sustained once the primary service tax demand is held unsustainable.

Final Conclusion: The impugned order confirming service tax, interest and penalty is set aside: the appellant's services are correctly classifiable as Management or Business Consultant Services and, on facts and precedent, qualify as export of service; the extended period under Section 73 is not attracted and the adjudication is time-barred; consequential relief follows.

Classification beyond the scope of Show Cause Notice - Construction of Residential Complex service - Works Contract service - Principles of natural justice - Time bar / limitation and suppression - Taxability prior to 01.07.2010 - Void ab initio of an order for exceeding SCN

Classification beyond the scope of Show Cause Notice - Construction of Residential Complex service - Principles of natural justice - Void ab initio of an order for exceeding SCN - Whether the Adjudicating Authority exceeded the scope of the Show Cause Notice by confirming demand as Construction of Residential Complex service for periods covered by an SCN proposing Works Contract service, and the consequences thereof. - HELD THAT: - The Tribunal found that the SCN proposed taxability under the category Works Contract service for the period 01.06.2007 to 31.03.2011, whereas the Adjudicating Authority confirmed the demand under Construction of Residential Complex service for that period as well as for 01.04.2007 to 31.05.2007. The Adjudicating Authority thereby adjudicated a different classification without having put the assessee on notice to meet that alternative case, which the Tribunal held to be beyond the scope of the SCN and contrary to the requirements of principles of natural justice. Relying on precedent of this Tribunal, the bench reasoned that an order confirming demand on a classification not pleaded in the SCN is legally non-sustainable and is void ab initio. Consequently, the confirmed demand under the impugned classification could not be sustained and had to be set aside. [Paras 12, 13, 14, 17, 19]

The Adjudicating Authority erred in confirming demand as Construction of Residential Complex service beyond the scope of the SCN; that part of the order is void and is set aside.

Taxability prior to 01.07.2010 - Construction of Residential Complex service - Works Contract service - Whether Service Tax could be levied on the services in question for the period up to 01.07.2010 under either classification. - HELD THAT: - The Tribunal noted consistent judicial and tribunal authority (including this Bench) that Service Tax on Construction of Complex service could not be levied prior to 01.07.2010 and that the same limitation applied to services rendered as Works Contract service for the period 01.06.2007 to 01.07.2010. Applying this precedent to the facts, the Tribunal held that demand confirmed for the period up to 01.07.2010 was not legally sustainable irrespective of the classification under which the service might fall, and therefore that portion of the confirmed demand must be set aside. [Paras 6, 16, 17]

No Service Tax could be charged for the period up to 01.07.2010; the confirmed demand for that period is set aside.

Time bar / limitation and suppression - Whether the extended portion of the demand was time-barred or could be sustained on account of suppression by the assessee. - HELD THAT: - The Tribunal examined the material relied upon in the SCN (including ST3 and VAT returns) and observed that the assessee was duly registered and regularly filed returns, and that the relevant facts were in the public domain and available to the Department. Given the shifting legal position on taxation of the services and ongoing litigation and clarifications from CBIC, the Tribunal concluded that the matter involved issues of interpretation and that the assessee could not be fastened with suppression. On this basis the Tribunal found force in the plea of limitation and set aside the confirmed demand for the extended period on time-bar grounds. [Paras 7, 18]

The confirmed demand for the extended period is liable to be set aside on account of time bar; suppression was not established.

Final Conclusion: The Appellant's appeal is allowed: the adjudication confirming demand as Construction of Residential Complex service (when the SCN proposed Works Contract service) is void for exceeding the SCN and is set aside; no Service Tax is chargeable for the period up to 01.07.2010; the extended demand is also set aside on limitation grounds. The Revenue's appeal is dismissed.

Classification of composite contracts as Works Contract service - taxability prior to 01.06.2007 - Management, Maintenance & Repair Service (MMRS) v. Works Contract - Construction of Industrial Complex Service (CICS) v. Works Contract - entitlement to Cenvat credit on capital goods used for both taxable and exempted services - requirement of documentary proof for Cenvat under Rule 9 - treatment of short payments and appropriation - treatment of Goods Transport Agency (GTA) demands and evidence of services - imposition of penalty in view of bona fide contention on classification

Classification of composite contracts as Works Contract service - taxability prior to 01.06.2007 - Management, Maintenance & Repair Service (MMRS) v. Works Contract - Construction of Industrial Complex Service (CICS) v. Works Contract - Whether the services classified as MMRS/CICS were in fact composite works contracts and, if so, whether demands up to 31.05.2007 should be dropped - HELD THAT: - The Tribunal accepted that the appellant's case is that goods were supplied along with services and that VAT treatment consistent with works contracts had been adopted. It observed that established decisions hold that composite works contracts were not liable to service tax till 31.05.2007. Rather than deciding classification on the papers before it, the Tribunal directed that the Adjudicating Authority should examine the documentary evidence (including VAT treatment and other records) and, if satisfied that the transactions are works contracts or otherwise exempt (including government recipient exemption where applicable), drop the demands for the period up to 31.05.2007. The Tribunal thus remitted the factual verification and / or classification to the Adjudicating Authority for a considered decision after giving opportunity to the appellant. [Paras 2, 10, 11]

Remit for fresh verification by the Adjudicating Authority; if found to be works contracts or otherwise not taxable, demands up to 31.05.2007 to be dropped

Treatment of short payments and appropriation - classification of services for remaining short payment - Validity of demand raised on account of short payments and whether the balance short payment relates to services not taxable prior to 01.06.2007 - HELD THAT: - The Tribunal recorded that the appellant had admitted and paid a substantial part of the short payments which was appropriated. For the remaining balance, the Tribunal directed the Adjudicating Authority to verify the appellant's plea that the balance relates to works contract services prior to 01.06.2007; if so established, that part of the demand should be dropped. The matter is therefore remitted for factual verification of the nature of services corresponding to the balance short payment. [Paras 3, 11]

Remit to the Adjudicating Authority to verify classification; if balance short payment pertains to non-taxable period/works contract, the demand to be dropped

Entitlement to Cenvat credit on capital goods used for both taxable and exempted services - requirement of documentary proof for Cenvat - Whether Cenvat credit on capital goods was rightly denied on the ground that the goods were received at other places or used for exempted services - HELD THAT: - The Tribunal found the appellant had placed documentary material and now produced a CA certificate certifying use of capital goods for both taxable and exempted services. It directed the Adjudicating Authority to verify the documents and CA certificate together and pass an order. The Tribunal recognised that Rule 4(1) is not applicable to capital goods and that credit not recoverable if used both for exempted and taxable services under erstwhile Rule 6(4) but left factual determination to the Adjudicating Authority. Thus the question of entitlement to credit is remitted for consideration of the evidence. [Paras 4, 12]

Remit to the Adjudicating Authority to examine the documentary evidence and CA certificate and decide entitlement to Cenvat credit on capital goods

Requirement of documentary proof for Cenvat under Rule 9 - admission of liability where invoices not produced - Validity of denial of Cenvat credit where original invoices or even photocopies were not produced and consequences for amounts admitted by the appellant - HELD THAT: - The appellant conceded inability to produce any document for a portion of the denied credit and has paid that portion with interest; the Tribunal directed that amount to be paid. For the balance, the Tribunal permitted production of photocopies and corroborative ledger evidence and remitted the matter to the Adjudicating Authority to decide on the basis of such evidence, noting the requirement of proper documents under the Cenvat rules. [Paras 5, 12]

Appellant directed to pay the admitted amount for which no documents exist; remainder remitted to the Adjudicating Authority for decision on proof (photocopies plus corroborative evidence)

Treatment of Goods Transport Agency (GTA) demands and evidence of services - Whether GTA service demand should stand in view of amounts already paid and evidence to be produced for the balance - HELD THAT: - The Tribunal recorded the appellant's position that a major portion of the GTA demand has been paid and directed the appellant to pay applicable interest on that amount and to produce evidence explaining why the balance demand is not payable. The Adjudicating Authority is to consider the evidence and recover any outstanding amount with interest if proper evidence is not furnished. The factual determination of liability for the balance is remitted. [Paras 6, 13]

Remit to the Adjudicating Authority to examine evidence and adjust amounts; outstanding GTA demand recoverable with interest if appellant fails to prove otherwise

Imposition of penalty in view of bona fide contention on classification - Appropriateness of penalties imposed in light of appellant's contention on classification and payments made - HELD THAT: - The Tribunal noted that the appellant had advanced a bona fide contention that the services may be works contracts not taxable till 31.05.2007 and that in many instances tax (with or without interest) had been paid. Consequently, the Tribunal directed the Adjudicating Authority to consider factual details and impose penalty in accordance with statutory provisions, taking into account the appellant's contentions and payments. The Tribunal did not itself impose or set aside penalties but remitted the matter for considered exercise of statutory discretion. [Paras 14]

Remit to the Adjudicating Authority to consider facts and impose or adjust penalty in accordance with law

Final Conclusion: Appeal disposed by remitting multiple factual issues to the Adjudicating Authority for verification: classification of services as works contracts and taxability up to 31.05.2007; balance short payments; entitlement to Cenvat credit on capital goods and inputs subject to production of documents; resolution of GTA demand; and reconsideration of penalties - with specific directions to accept payments already admitted and to recover amounts or interest where documentary proof is not furnished.

Classification of services - violation of principles of natural justice by confirming demand beyond the show cause notice - works contract service - site formation and clearance, excavation and earthmoving and demolition - inability to re classify demand in adjudication beyond allegations in show cause notice - consequential relief

Violation of principles of natural justice by confirming demand beyond the show cause notice - inability to re classify demand in adjudication beyond allegations in show cause notice - Impugned orders are vitiated because the demand was confirmed by changing the classification of services beyond what was alleged in the show cause notices. - HELD THAT: - The Tribunal found that the show cause notices proposed classification under 'Commercial or Industrial Construction Service' whereas the impugned orders confirmed demand under the distinct head 'Site Formation and clearance, excavation and Earthmoving and Demolition'. Re classification of the demand in the adjudication stage, where it departs from the allegations in the show cause notice, is impermissible and offends principles of natural justice and the settled precedents relied upon by the appellant. Having regard to those authorities and the material on record, the Tribunal concluded that the impugned orders are bad in law for having gone beyond the scope of the show cause notices. [Paras 14]

The confirmations of demand effected by altering the classification beyond the show cause notices are set aside.

Works contract service - classification of services - site formation and clearance, excavation and earthmoving and demolition - The services rendered by the appellant are classifiable as 'works contract service' and therefore the demand as confirmed under the head 'site formation and clearance, excavation and earthmoving and demolition' is not sustainable. - HELD THAT: - It was undisputed on the record that the appellant's performance included supply of material (earth from borrow pits) along with service activities such as excavation, earth filling and transportation. On this basis the Tribunal held that the transaction falls within the ambit of 'works contract service' which involves both supply of goods and provision of service. Once classified as works contract service, the demand confirmed under the specific head of site formation and related services could not be sustained. Applying the ratio of the precedents cited and the material admitted in the proceedings, the Tribunal allowed the appellant's challenge to the tax demand on this ground. [Paras 14, 15]

The demand as confirmed under 'site formation and clearance, excavation and earthmoving and demolition' is unsustainable because the services are works contract services; the impugned orders are set aside.

Final Conclusion: Both appeals are allowed; the impugned orders are set aside and the appellant is granted consequential relief as per law.

Export of service - Place of Provision of Services Rules, 2012 - Rule 3 - Place of Provision of Services Rules, 2012 - Rule 4 - destination-based consumption tax - eligibility for refund of Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004

Export of service - Place of Provision of Services Rules, 2012 - Rule 3 - Place of Provision of Services Rules, 2012 - Rule 4 - Whether clinical trial services performed in India on drugs supplied by a foreign service recipient qualify as export of service and are not taxable under Rule 4 of the Place of Provision of Services Rules, 2012 - HELD THAT: - The Tribunal held that the appellant performed clinical studies on drugs supplied by a foreign recipient and delivered technical reports to the recipient located outside India, with consideration received in convertible foreign exchange. Applying the reasoning in a consistent line of decisions, the Tribunal distinguished Rule 4 (which applies to services in respect of goods that remain in the same form and must be physically made available by the recipient) from Rule 3 and the general export principle. Because the goods were subject to alteration in the course of research and the essence of the service was research/testing culminating in delivery of a report consumed outside India, Rule 4 was not attracted. The Tribunal relied on the principle that service tax is a destination-based consumption tax and that export of services is to be recognised where the benefit is received outside India; consequently the activity falls within the ambit of export of service under the applicable rules and precedents. On that basis the Tribunal set aside the demand and held the services to be export of service, allowing the appeal with consequential relief.

The clinical trial services are export of service; Rule 4 does not apply; the impugned demand is set aside and the appeal is allowed.

Final Conclusion: Following consistent tribunal and judicial authorities and applying Rule 3 rather than Rule 4 of the Place of Provision of Services Rules, 2012, the Tribunal held that clinical trial services performed on drugs supplied by a foreign recipient constituted export of service and set aside the service-tax demand for the period 01.07.2012 to 2013-2014, allowing the appeal with consequential relief.

Applicability of abatement under Notification No.32/2004-ST to services received on reverse charge - Limitations of administrative Circulars vis-a -vis statutory Exemption Notifications - Procedural lapse not a ground to deny substantive abatement/CENVAT benefit

Applicability of abatement under Notification No.32/2004-ST to services received on reverse charge - Notification No.32/2004-ST abatement is not inapplicable to the appellants merely because endorsement regarding non-availment of CENVAT credit is absent when service tax is discharged by the recipient under reverse charge. - HELD THAT: - The condition in Notification No.32/2004-ST is directed to GTA providers who themselves discharge service tax and precludes abatement where the provider has availed CENVAT credit. That condition is not attracted where the recipient pays tax under the reverse charge mechanism. Reading the Notification to extend that condition to cases where the recipient pays under reverse charge imports an a contrario application not warranted by the Notification's scope. The Tribunal therefore held that the Department was reading beyond the Notification and wrongly denied abatement on that basis. [Paras 6]

Abatement under Notification No.32/2004-ST is available to the appellants who paid GTA service tax on reverse charge and cannot be denied for lack of endorsement by the transporter.

Limitations of administrative Circulars vis-a -vis statutory Exemption Notifications - A Circular cannot impose a new condition or curtail the scope of a statutorily issued Exemption Notification. - HELD THAT: - The Tribunal applied the principle affirmed by the Hon'ble Supreme Court that an administrative circular cannot take away or whittle down the effect of a statutorily issued exemption notification by imposing additional conditions. Reliance was placed on the Apex Court's exposition that a circular cannot restrict the scope of an exemption notification, and thus the endorsement prescribed by CBEC Circular cannot be read to supplant or narrow the Notification's scope in respect of reverse charge transactions. [Paras 6]

The endorsement requirement in the CBEC Circular cannot be used to curtail the statutory abatement conferred by Notification No.32/2004-ST.

Procedural lapse not a ground to deny substantive abatement/CENVAT benefit - The appellants cannot be denied the benefit of abatement for mere procedural lapses such as absence of endorsement on transporter documents. - HELD THAT: - The Tribunal observed that any lapse by the appellants was procedural and that the established line of authorities, including the CESTAT decision in Sandoz (P) Ltd., supports that substantive benefits like abatement or CENVAT credit cannot be denied on account of procedural deficiencies. When the transporter has not paid service tax, the absence of endorsement does not imply availment of CENVAT by the transporter; accordingly, denial of benefit on this ground is not justified. The Tribunal therefore declined to uphold the demand and penalties on this basis. [Paras 7, 8]

Procedural lapses such as missing endorsements do not warrant denial of abatement; the appellants are entitled to the benefit on merits.

Final Conclusion: The appeals are allowed on merits: the abatement under Notification No.32/2004-ST applies to the appellants who paid GTA service tax on reverse charge; the CBEC Circular cannot impose conditions inconsistent with the Notification; and procedural lapses do not disentitle the appellants to the abatement. Consequential relief, if any, to be given as per law.

Exemption by way of admission to a museum - ordinary meaning of an undefined statutory term - inapplicability of technical/ICOM definition for statutory interpretation - scope of Mega Exemption Notification entry

Exemption by way of admission to a museum - ordinary meaning of an undefined statutory term - inapplicability of technical/ICOM definition for statutory interpretation - Entry fee charged for admission to the appellants' vintage car display qualifies as admission to a museum and is exempt under the notification entry incorporated w.e.f. 01.04.2015. - HELD THAT: - The Tribunal found that Entry No. 45 of Notification No. 25/2012-ST (as amended w.e.f. 01.04.2015) exempts services by way of admission to a "museum" and that the term "museum" is not defined in the statute. In such circumstances the term must be given its ordinary and popular meaning rather than a technical definition. The Tribunal relied on dictionary definitions which describe a museum as a place or institution housing objects of historical, scientific or cultural interest for collection and exhibition. The authorities below erred in relying upon the ICOM technical definition. The admitted facts establish that the appellants maintained a specific area at their hotels where vintage/historical cars were exhibited and entry fees were charged for visitors to view the display. Those admitted facts satisfy the ordinary meaning of a museum; accordingly amounts collected as entry fee were for admission to a museum and fall within the exemption. The departmental contention that the cars were in working condition and were sometimes hired out for shooting did not negate the nature of the display as a museum, particularly since tax was separately discharged on amounts charged for hiring the cars. The notification imposes no additional conditions for availing the exemption; therefore the confirmed demands insofar as they relate to entry fees to the vintage car display are unsustainable and are set aside. [Paras 9, 10, 11, 12]

Demand of service tax confirmed in respect of entry fees to the vintage car display is set aside and the entry fees are exempt as admission to a museum.

Scope of Mega Exemption Notification entry - Reversal of Cenvat credit of the amount accepted by the appellant is upheld. - HELD THAT: - The appellant in M/s Garden Hotels accepted the reversal of the specified Cenvat credit and did not contest that finding before the Tribunal. Consequently the Tribunal upheld the original adjudication to the extent the appellant had accepted liability for reversal of Cenvat credit. [Paras 13, 14]

The order confirming reversal of the accepted Cenvat credit is upheld; the appeal is otherwise allowed to the extent indicated.

Final Conclusion: Both appeals concerning service tax on entry fees to vintage car displays were allowed insofar as the Tribunal set aside the confirmed demands by holding such entry fees to be exempt as admission to a museum; in M/s Garden Hotels the reversal of the admitted Cenvat credit was upheld and that appeal is partly allowed, whereas the appeal of M/s Lake Palace Hotels & Motels Private Limited is allowed in full on the issue of entry-fee demand.

Renting of Immovable Property Service - exemption circular 2006 strict construction - mandatory versus discretionary statutory function - Rule 45 - Market Committee Fund does not convert fee into statutory levy - Negative List placement post 1-7-2012 supports pre-1-7-2012 taxability - repeal and savings clause - jurisdiction of adjudicating authority post-GST - time-bar / limitation

Renting of Immovable Property Service - exemption circular 2006 strict construction - mandatory versus discretionary statutory function - Rule 45 - Market Committee Fund does not convert fee into statutory levy - Negative List placement post 1-7-2012 supports pre-1-7-2012 taxability - Taxability of allotment/lease/renting of shops/land/platform/space by Agricultural Produce Market Committees for the period 01.04.2012 to 30.06.2012. - HELD THAT: - The Tribunal applied the decision of the Hon'ble Supreme Court which held that the 2006 exemption circular must be strictly construed and that exemption is available only where the activity is a mandatory statutory function and the fee has the character of a compulsory statutory levy deposited into Government Treasury. Section 9(2) of the RAPM Act uses the word "may", rendering allotment/lease/renting a discretionary, not mandatory, function; consequently the activity does not attract the exemption. Rule 45 governs the treatment of funds but does not convert amounts received into statutory levies payable into the Government Treasury; such receipts remain Market Committee funds. The subsequent placement of the activity in the Negative List from 1-7-2012 reinforces that Market Committees were not entitled to blanket exemption pre-1-7-2012. On these grounds the activity falls within the taxable ambit of "Renting of Immovable Property Service" for the specified period.

The allotment/lease/renting activity of the appellant for 01.04.2012 to 30.06.2012 is exigible to service tax and the impugned finding on taxability is upheld.

Repeal and savings clause - jurisdiction of adjudicating authority post-GST - Validity of adjudication where the Show Cause Notice was issued before GST but the order was passed after introduction of GST. - HELD THAT: - The Tribunal held that adjudication is a quasi judicial departmental function and that Section 174 of the CGST Act, 2017 (repeal and savings clause) preserves rights, obligations and liabilities arising under the erstwhile law so as to ensure continuity. The SCN in this case was issued on 19.06.2014 (pre GST) and thus survived the transition; authorities appointed under the post GST frame could validly adjudicate matters initiated earlier. The Tribunal noted supporting precedent wherein courts sustained continuity of enforcement powers post repeal to avoid disruption of the levy's administration.

Objection to jurisdiction of the adjudicating authority on account of the GST transition is rejected; the adjudication is valid.

Time-bar / limitation - Whether the demand for the period 01.04.2012 to 30.06.2012 is barred by limitation. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) had limited the demand to the normal period in the impugned order. As the learned Commissioner (Appeals) sustained demand only for the normal (non barred) period, the appellant's contention on limitation was not tenable before the Tribunal.

Limitation plea fails insofar as the sustained demand relates only to the normal period; the time bar objection does not succeed.

Final Conclusion: The appeal is dismissed; the impugned order upholding service tax liability for the period 01.04.2012 to 30.06.2012 is affirmed, the jurisdictional objections and limitation plea are rejected.

Vitiation of adjudication by citing a repealed provision - Requirement of opportunity to meet a changed statutory basis - Effect of incorrect statutory pleading in a show cause notice - Limitation for recovery of MODVAT/CENVAT credit

Vitiation of adjudication by citing a repealed provision - Effect of incorrect statutory pleading in a show cause notice - Requirement of opportunity to meet a changed statutory basis - Whether the Commissioner could proceed to confirm denial of MODVAT credit under Rule 57AH when the show cause notice was issued under the repealed Rule 57U and the appellant was not put on notice or given an opportunity to be heard on the basis of Rule 57AH. - HELD THAT: - The show cause notice was issued under Rule 57U though that Rule had been omitted prior to issuance; subsequent proceedings and the remand order proceeded on the same mistaken premise. The Commissioner, upon remand, applied Rule 57AH (which replaced 57U) without informing the appellant that the adjudication would be governed by a different Rule and without affording an opportunity to address the consequences of the changed statutory basis. The Tribunal noted that while mere citation of a wrong Rule in an SCN may not always vitiate proceedings, the present case was distinguishable because the cited Rule did not exist at the relevant time and the alternate Rule (57AH) increased the period of limitation (and thereby the appellant's liability). Given the lengthy interval between remand and final adjudication and the absence of any indication that the appellant was informed that Rule 57AH would be invoked, the proceeding effectively sprung a new case on the appellant without giving a fair opportunity to defend. The Tribunal held that where the change in statutory basis materially affects the liability and the party has not been put on notice, the adjudication is vitiated for breach of the requirement to afford an opportunity to meet the altered case. [Paras 15, 16, 17, 18, 19]

Proceedings confirmed under Rule 57AH without notice to the appellant vitiated the impugned order; appeal allowed and the impugned order set aside.

Final Conclusion: The appeal is allowed; the impugned adjudication confirming denial of MODVAT credit under Rule 57AH (when the SCN had been issued under the repealed Rule 57U and the appellant was not informed or given an opportunity to meet the changed statutory basis) is set aside with consequential relief to the appellant.

CENVAT credit admissibility and adjustment against confirmed demands - job work manufacture versus provision of service - invocation of extended period of limitation - penalty for suppression and evasion - personal penalty under Rule 26(1) for dealing in non duty paid goods - confiscation and fines as consequence of non payment

CENVAT credit admissibility and adjustment against confirmed demands - job work manufacture versus provision of service - Eligibility of the appellant to avail CENVAT credit on inputs used in manufacture of job worked profiled roofing sheets and adjustment of such credit against the confirmed excise demand; refund of service tax paid on job work. - HELD THAT: - The Tribunal held that the conversion of coils into profiled roofing sheets on job work amounted to manufacture and, accordingly, inputs used therein are eligible for CENVAT credit subject to verification of duty paid documents and compliance with CENVAT Credit Rules. The adjudicating authority had prematurely quantified demand without completing verification; delay by jurisdictional officers cannot be used to deny a substantive right. Board Circular No. 962/05/2012 CX clarified that CENVAT credit accrued subsequent to the relevant period can be utilized for demands confirmed under Section 11A and supports adjustment of later earned credit against such confirmed demands. Consequently the question of quantum of eligible credit is remanded to the original adjudicating authority for verification of duty paid invoices, endorsement/transfer as required, and re quantification of duty liability after allowing adjusted credit. The Tribunal also accepted that the appellant is entitled to claim refund of service tax paid on job work in accordance with law. [Paras 15, 16]

Appellant eligible for CENVAT credit on inputs used in job work subject to verification; matter remanded for limited purpose of verification and re quantification; appellant entitled to claim refund of service tax paid on job work.

Invocation of extended period of limitation - job work manufacture versus provision of service - Whether the extended period of limitation for recovery of duty was invocable in respect of the period of non payment. - HELD THAT: - The Tribunal found that the appellant commenced job work manufacture from June 2010 and neither paid excise duty nor service tax until audit objection was raised on 16.03.2012, and that records, labour bills and admissions show that the activity involved roll forming and crimping (manufacturing) rather than mere cutting. The appellants had not disclosed manufacture in returns or otherwise, and the conduct (including altered descriptions in documents) showed suppression. On these facts the Tribunal held that invocation of the extended period was justified and that the department rightly invoked the larger period for recovery of duty; confiscation orders and fines connected thereto were also upheld. [Paras 17, 18, 22, 23]

Extended period of limitation was rightly invoked and duty demand for the extended period is maintainable; confiscation and fines upheld.

Penalty for suppression and evasion - personal penalty under Rule 26(1) for dealing in non duty paid goods - confiscation and fines as consequence of non payment - Justifiability and quantum of penalties and personal penalties imposed on the appellants and suppliers. - HELD THAT: - The Tribunal affirmed the finding of deliberate suppression and collusion between the job worker and suppliers, holding that the executive director and the supplying traders were aware of the manufacturing nature of the activity and had connived in clearance of non duty paid goods. Therefore penalties and personal liability under Rule 26(1) were justified. However, after assessing overall facts and equities the Tribunal considered the imposed penalties excessive and reduced them to specified lower amounts for each appellant, while directing that the mandatory penalty will be equivalent to net duty payable after adjusting eligible CENVAT credit. [Paras 24, 25, 26]

Penalties and personal penalties are legally sustainable but reduced in quantum by the Tribunal; mandatory penalty to be limited to net duty after allowing eligible CENVAT credit.

Final Conclusion: Appeals partly allowed and partly remanded: demand and invocation of extended period upheld; entitlement to CENVAT credit accepted but remanded for verification and re quantification; service tax refund claim allowed subject to law; penalties sustained in principle but reduced in quantified amounts; consequential reliefs to follow.

Levy of Special Additional Excise Duty (SAED) as surcharge - levy of Road and Infrastructure Cess (AED) as additional duty of excise - adoption of Central Excise Act provisions by Finance Acts 'as far as may be' - taxable event and territorial scope of charging provision - exclusion of goods produced or manufactured in Special Economic Zones from charge under Section 3(1) - subordinate legislation cannot create a charging provision where none exists - overriding effect of the SEZ Act

Levy of Special Additional Excise Duty (SAED) as surcharge - levy of Road and Infrastructure Cess (AED) as additional duty of excise - exclusion of goods produced or manufactured in Special Economic Zones from charge under Section 3(1) - adoption of Central Excise Act provisions by Finance Acts 'as far as may be' - taxable event and territorial scope of charging provision - SAED under Section 147 of the Finance Act, 2002 and AED under Section 112 of the Finance Act, 2018 do not apply to goods manufactured in an SEZ unit (whether cleared to DTA or exported). - HELD THAT: - The Finance Acts levy SAED and AED as additional duties of excise and expressly provide that provisions of the Central Excise Act and rules shall, 'as far as may be', apply to their levy and collection. The Finance Acts, read standalone, do not specify the territorial scope of the taxable event; the corresponding uncertainty is resolved by applying the Central Excise Act charging provisions, which specify that excise applies to goods produced or manufactured in India and expressly exclude goods produced or manufactured in SEZs under Section 3(1). A surcharge or cess that is an increment to an existing excise duty cannot extend to goods excluded from the principal charge. Applying the Central Excise Act to the Finance Acts therefore shows the taxable event excludes SEZ manufacture, and the additional levies cannot be imposed on such goods. [Paras 4]

SAED and AED are not leviable on goods manufactured in SEZ unit; the impugned demand is set aside and paid duties are refundable.

Subordinate legislation cannot create a charging provision where none exists - exemption Notification cannot create a charge - adoption of Central Excise Act provisions by Finance Acts 'as far as may be' - Notification No.19/2022-CE (exempting SAED and AED for SEZ exports w.e.f. 20-7-2022) cannot be read as creating a charge for the prior period; an exemption notification cannot, by itself, create the underlying charging provision absent statutory levy. - HELD THAT: - Where the primary statute (Central Excise Act read with the Finance Acts) shows no levy on SEZ manufacture, a subsequent exemption notification cannot be relied upon to infer that a charge previously existed. Subordinate legislation cannot override or create a charge contrary to the primary charging provision. Accordingly, the exemption notification does not establish that SAED/AED were leviable on SEZ exports during 1-7-2022 to 19-7-2022. [Paras 4]

Notification No.19/2022-CE does not and cannot create a retrospective charging provision for the period 1-7-2022 to 19-7-2022; it does not negate the statutory exclusion of SEZ manufacture from the levy.

Maintainability of refund of duties paid under protest - appeal against self-assessment not required where no adjudication by subordinate officer - The refund claim filed by the respondent in respect of SAED and AED paid under protest was maintainable and the respondent was not obliged to prefer an appeal to the Commissioner (Appeals) against a so-called self-assessment. - HELD THAT: - The Tribunal recorded that the Revenue did not dispute the Commissioner (Appeals)'s finding on maintainability - namely, that appeal under Section 35 lies only against an order/decision of a Central Excise officer lower in rank than a Principal Commissioner, and a payment made under protest as a self-assessment did not constitute such an order requiring a prior appeal. Consequently the adjudicatory route challenged by Revenue did not bar the refund claim. [Paras 1, 5]

The refund claim was maintainable; the Commissioner (Appeals) rightly entertained and allowed the refund.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal holds that SAED and AED, being additional duties of excise which incorporate the Central Excise Act 'as far as may be', do not extend to goods manufactured in SEZs (for the period 1-7-2022 to 19-7-2022); the exemption notification cannot be used to create an antecedent charge; the respondent's refund claim was maintainable and the amounts paid are refundable in accordance with law.

Interpretation of "disputed tax" in Section 406(8) - distinction between tax, interest and penalty - pre-condition for entertaining appeal under Section 406(8) - administrative forms and rule-based segregation of tax, interest and penalty - remand for de novo consideration with directions on personal hearing

Interpretation of "disputed tax" in Section 406(8) - distinction between tax, interest and penalty - pre-condition for entertaining appeal under Section 406(8) - administrative forms and rule-based segregation of tax, interest and penalty - Whether the phrase "disputed tax" in Section 406(8) of the Maharashtra Municipal Corporations Act, 1949 includes interest and penalty for the purpose of entertaining an appeal. - HELD THAT: - The Court examined the statutory scheme for levy and collection of Local Body Tax (LBT) under Section 127 read with the LBT Rules, noting that the Rules and prescribed Forms consistently differentiate between the LBT, interest and penalty. Rule provisions (including Rules 5, 27, 33, 40, 41 and 48) and various Forms (Form E-I, E-II, Form-J, Form-S and bank challans) require separate specification of tax, interest and penalty and permit incorporation of orders imposing interest or penalty into an assessment order, thereby treating them as distinct components. On this factual and legal matrix the Court held that the legislature's use of the phrase "disputed tax" in Section 406(8) denotes the tax component alone and does not, by necessary implication, import interest and penalty as payable prerequisites for entertaining an appeal. The Court distinguished precedents concerning property tax and penalties under Sections 128-A/129/267-A (where penalty was held to operate as tax in that statutory context) as inapplicable because those provisions and factual matrices differ from the LBT scheme. Concluding that the petitioner having deposited the disputed tax satisfied the statutory pre-condition, the Court found no requirement to deposit interest or penalty to institute the appeal. [Paras 7, 8, 9, 14, 16]

Disputed tax does not include interest and penalty for the purpose of Section 406(8); petitioner having deposited the disputed tax complied with the statutory pre-condition and need not deposit interest or penalty to entertain the appeal.

Remand for de novo consideration with directions on personal hearing - Relief to be granted following determination that interest and penalty are not part of 'disputed tax'. - HELD THAT: - The Court quashed the impugned order to the extent it required deposit of interest and penalty and remanded the matter for fresh adjudication. The appellate authority is directed to hear the appeal afresh, grant a personal hearing with at least five working days' notice, provide in advance any Court or Tribunal judgments it intends to rely upon so the petitioner may address or distinguish them, permit the petitioner to file written submissions within four working days after the personal hearing, and to pass a reasoned and detailed order dealing with all submissions. [Paras 17]

Impugned order set aside; matter remanded for de novo consideration with specified procedural directions for personal hearing, disclosure of authorities, opportunity to file written submissions and requirement of a reasoned detailed order.

Final Conclusion: The Court held that for the purposes of Section 406(8) of the Maharashtra Municipal Corporations Act, 1949, "disputed tax" refers only to the tax component and does not include interest or penalty; the impugned order was quashed and the appeal remanded for fresh adjudication with directions to afford a personal hearing, disclose relied authorities in advance, permit post-hearing written submissions and pass a reasoned detailed order.

Production of Form C and Form F after assessment - sufficient cause for delay in furnishing declarations - power of assessing authority to accept delayed declarations and modify assessment - correction of arithmetical or clerical mistakes in assessment orders - stay on recovery pending consideration of representations

Production of Form C and Form F after assessment - sufficient cause for delay in furnishing declarations - power of assessing authority to accept delayed declarations and modify assessment - Assessing authority must consider and may accept Form C/Form F produced after passing assessment if the dealer shows sufficient cause for delay; passing assessment does not preclude consideration of subsequently filed Forms and modification of the assessment. - HELD THAT: - Rule 12(7) of the CST (R&T) Rules prescribes furnishing of Form C/Form F within three months, but contains a proviso permitting the prescribed authority to allow a further time if satisfied that the person was prevented by sufficient cause. Earlier Division Benches of the erstwhile High Court interpreted the proviso to permit filing after assessment so long as sufficient cause is shown, and held that an assessing authority need not wait for Forms before passing an assessment if limitation for assessment is in danger of expiring, yet must consider any Forms filed subsequently and may modify the assessment. This Court agreed with those precedents and directed that the assessing authority consider the petitioner's application and the Forms produced, subject to satisfaction that sufficient cause for the delay has been shown. The Court therefore remitted the matter to the assessing authority for fresh consideration of the delayed Forms in light of the stated legal principle. [Paras 11, 12, 13, 15]

Petitioner's Form C/Form F may be considered post-assessment if sufficient cause is shown; matter remitted to assessing authority to decide on this question and to modify assessment if appropriate.

Correction of arithmetical or clerical mistakes in assessment orders - Arithmetical or clerical discrepancies in the assessment order must be examined and corrected by the assessing authority after considering the objections raised by the dealer. - HELD THAT: - A prima facie reading of the assessment order discloses discrepancies in the figures which amount to arithmetical or clerical mistakes. The petitioner pointed out such mistakes by letter and sought correction; the assessing authority declined, contending corrections should await an appeal. This Court held that the assessing authority should consider the objections and correct any arithmetical or clerical mistakes in the assessment order, directing the authority to do so after examining the petitioner's representations. [Paras 14, 15]

Assessing authority directed to consider the petitioner's objections and correct arithmetical or clerical mistakes in the assessment order.

Stay on recovery pending consideration of representations - No coercive recovery action shall be taken until the assessing authority considers the petitioner's application for acceptance of Forms and corrects the arithmetical or clerical mistakes. - HELD THAT: - In order to give effect to the directions to consider delayed Forms and to correct clerical/arithmetic errors, the Court restrained coercive recovery of tax pending the assessing authority's consideration of the petitioner's application and objections. This interim protection is conditional upon the authority undertaking the mandated consideration and corrections. [Paras 15, 16]

Recovery proceedings stayed; no coercive steps to be taken until the authority completes consideration and corrections.

Final Conclusion: Writ petition disposed directing the assessing authority to consider the petitioner's belated Form C/Form F upon satisfaction of sufficient cause, to examine and correct arithmetical or clerical mistakes in the assessment order, and restraining coercive recovery until such consideration and corrections are completed; no order as to costs.

Corrugation not creating a new commodity - commercial character of goods after alteration of shape - interpretation by commercial parlance - Entry 70 (vi) of the IV Schedule of the AP VAT Act: inclusion of plain and corrugated sheets

Corrugation not creating a new commodity - Entry 70 (vi) of the IV Schedule of the AP VAT Act: inclusion of plain and corrugated sheets - interpretation by commercial parlance - Whether corrugating plain iron/steel sheets or coils into corrugated sheets renders them a different commodity outside Entry 70 (vi) of the IV Schedule of the AP VAT Act. - HELD THAT: - The Court applied the principle that where a statutory entry itself includes both plain and corrugated forms, mere alteration of shape by corrugation does not change the commercial identity of the goods. Entry 70 (vi) expressly enumerates sheets as "plain and corrugated," and therefore corrugating plain sheets or coils does not move the product outside the sub-entry. The Court rejected the contention that subsequent bending or cutting to customer specifications converts corrugated sheets into a different commodity; sheets retain their character as sheets and the phrase "straight lengths" must be read to include sheets. Reliance on the Calcutta High Court's reasoning that statutory interpretation should follow commercial parlance (not technical/scientific meanings) and on the cited Supreme Court authorities informed this conclusion. For these reasons the revisional orders treating corrugated sheets as unclassified goods were set aside. [Paras 5, 6, 14, 16, 18]

Corrugated iron/steel sheets produced by corrugating plain sheets or coils fall within Entry 70 (vi) of the IV Schedule of the AP VAT Act; revisional orders treating them as unclassified are set aside.

Commercial character of goods after alteration of shape - Consequences of the decision for the writ petition challenging refusal to defer proceedings (W.P. No. 28038 of 2013). - HELD THAT: - The petition in W.P. No. 28038 of 2013 challenged the Deputy Commissioner's rejection of a request to defer action until resolution of the substantive question now decided. Having decided that corrugated sheets fall within Entry 70 (vi), the Court held that any further revision, assessment or reassessment must conform to the legal position declared. In view of this determination, the grievance about refusal to defer no longer survives as a live controversy requiring separate relief. [Paras 19, 20]

W.P. No. 28038 of 2013 disposed of as infructuous in light of the Court's decision; further action must be in accordance with the law declared herein.

Final Conclusion: The revisional orders holding corrugated sheets to be unclassified goods are quashed and the writ petitions seeking that relief are allowed; the separate petition challenging refusal to defer is disposed of as moot, and further revision/assessment must follow the legal position declared.

Summary order. Writ petition dismissed as withdrawn.

Force majeure clause - extension of the Scheduled Commissioning Date - reduction of tariff under the Power Purchase Agreement - liquidated damages for delay - appellate jurisdiction under Section 125 of the Electricity Act - substantial question of law - reappreciation of evidence by the Appellate Tribunal - Article 8.3(a)(vi) inability despite complying with legal requirements to obtain approvals - Article 8.3(b)(i) notice requirement

Force majeure clause - Article 8.3(a)(vi) inability despite complying with legal requirements to obtain approvals - extension of the Scheduled Commissioning Date - reduction of tariff under the Power Purchase Agreement - liquidated damages for delay - Applicability of the force majeure clause and consequent entitlement to extension of the Scheduled Commissioning Date, with effect on tariff and liability for liquidated damages. - HELD THAT: - The Court held that Article 8.3(a)(vi) of the PPA - inability despite complying with legal requirements to obtain approvals - can cover delays in obtaining statutory approvals where the SPD is not negligent. The central controversy was factual: whether delay in securing approvals was attributable to the respondents. The APTEL reappreciated evidence (including delay in PTCL issuance, confusion over deemed conversion, and delays in evacuation approvals) and found the delay was not due to the respondents' negligence. The Supreme Court found no error in that reappreciation, observed that the DISCOM had itself granted a 6 month extension after scrutiny, and concluded that the respondents were entitled to the benefit of Article 2.5 read with Article 8.3. Consequentially, the tariff could not be reduced under Article 5.1 and liquidated damages under Articles 2.2 and 2.5.7 could not be imposed. [Paras 10, 11, 12]

The force majeure clause applied; extension of the SCD was warranted; tariff reduction and liquidated damages were not justified.

Appellate jurisdiction under Section 125 of the Electricity Act - substantial question of law - reappreciation of evidence by the Appellate Tribunal - Scope of the Supreme Court's appellate jurisdiction under Section 125 and whether a substantial question of law arose to warrant interference with APTEL's factual findings. - HELD THAT: - The Court analysed Section 125 against the backdrop of jurisprudence on tribunal appeals and held that the Supreme Court's interference is confined to substantial questions of law. Tribunals and regulatory appellate bodies have the competence to develop sectoral law and to reappraise facts; not every legal interpretation or fact finding by the APTEL will constitute a substantial question of law. In the present appeals the primary contest was factual - attribution of delay - and the APTEL's findings were neither illegal nor unreasonable. Consequently, no substantial question of law arose to justify interfering with APTEL's decision. [Paras 7, 8, 13]

No substantial question of law arose; the Supreme Court will not interfere with APTEL's factual reappreciation in these appeals.

Article 8.3(b)(i) notice requirement - late payment surcharge under the PPA - Whether non compliance with the PPA's notice requirement or absence of specific pleading before the KERC precluded the APTEL from directing restoration of tariff and payment of late payment surcharge. - HELD THAT: - The Court rejected the appellant's contention that force majeure could not be invoked for want of the notice contemplated in Article 8.3(b)(i) given the facts (including the DISCOM's prior grant of extension) and APTEL's findings on due diligence. Further, the APTEL's direction to restore the contracted tariff and to pay the difference with late payment surcharge was held to be founded on the PPA's terms and the tribunal's factual determination; the fact that late payment surcharge was not separately pleaded before KERC did not render the APTEL's direction impermissible as it flowed from the contractual entitlement reinstated by the tribunal. [Paras 11, 14]

Notice/non pleading contentions rejected; APTEL's direction to restore tariff and award late payment surcharge upheld.

Final Conclusion: The appeals are dismissed. The Appellate Tribunal's decision that the respondents were entitled to an extension under the PPA's force majeure clause is upheld; consequentially the tariff restoration and award of late payment surcharge are sustained, and imposition of liquidated damages and reduction of tariff are set aside. No costs.

Entitlement to export subsidy under a government resolution - equal treatment and non discrimination under Article 14 - mandatory consultation with the Finance Department under Rules of Business versus implementation of judicial orders

Entitlement to export subsidy under a government resolution - equal treatment and non discrimination under Article 14 - Payment of export subsidy to the petitioner for milk powder exported from stock existing on 30th June 2018 and parity with a similarly placed entity. - HELD THAT: - The Court held that the petitioner had exported 1617 metric tonnes out of stock existing on 30th June 2018 and that Respondent No.2's order dated 4th March 2022 and report dated 26th May 2022 confirmed the petitioner's entitlement and the quantum of subsidy. The bench noted that the State had implemented the same relief in favour of an identically situated party (Indapur) pursuant to this Court's orders dated 20th March 2023 and 26th April 2023. Refusal to pay the petitioner on the grounds raised by the State would result in differential treatment of persons identically situated and thus violate Article 14; accordingly, the petitioner must be paid the subsidy. The Court therefore directed release of the subsidy to the petitioner within six weeks, kept contentions on interest open for determination in appropriate proceedings, and refused a stay of its order given the long deprivation of the petitioner's money. [Paras 11, 12, 28, 29, 32]

Respondents directed to release the export subsidy of Rs.8,08,50,000/- to the petitioner within six weeks; interest claims left open; no stay granted.

Mandatory consultation with the Finance Department under Rules of Business versus implementation of judicial orders - Validity of the State's reliance on non concurrence of the Finance Department and need for Cabinet/finance approval to withhold payment ordered by the Court. - HELD THAT: - The Court rejected the Respondents' contention that the Government Resolution dated 31st July 2018 could not be implemented because it lacked prior concurrence of the Finance Department or a Cabinet resolution. The bench observed that this argument had already been considered and negatived by this Court in its orders of 20th March 2023 and 26th April 2023, which directed the State to act on the Principal Secretary's order of 4th March 2022 and disburse the principal amount. The Court held that the Finance Department could not treat itself as having authority to sit in appeal over the Court's order or to delay compliance by purporting to withhold approval; the State's application for extension was rejected and the State's present reliance on Rules of Business to deny payment was not accepted. [Paras 21, 24, 26, 27]

State's defence based on lack of Finance Department concurrence or Cabinet approval rejected for purposes of compliance; State directed to implement prior orders without relying on such delay.

Final Conclusion: The rule is made absolute: the State is directed to pay the export subsidy of Rs.8,08,50,000/- to the petitioner within six weeks; claims regarding interest are left open for appropriate proceedings; no costs and request for stay is refused.

Interpretation of "otherwise traffics in" in Section 489B IPC - Distinction between offence of trafficking (Section 489B) and possession (Section 489C) of FICN - Requirement that charge enable accused to know the case against him - Active transportation and concealed possession as indicia of trafficking - Burden under Section 106 of the Evidence Act where explanation lies within accused's knowledge

Interpretation of "otherwise traffics in" in Section 489B IPC - Distinction between offence of trafficking (Section 489B) and possession (Section 489C) of FICN - Requirement that charge enable accused to know the case against him - Whether the trial court rightly framed and sustained conviction under Section 489B IPC in addition to Section 489C IPC - HELD THAT: - The Court examined competing authorities on the meaning of the phrase "or otherwise traffics in" and considered whether the charge as framed enabled the accused to know the case against him. Having regard to the circumstances - recovery of 71 counterfeit notes concealed in the appellant's waist at a public ferry ghat, expert opinion that all notes were counterfeit and the absence of any satisfactory explanation by the accused in response to questions under Section 313 Cr.P.C. - the Court concluded that the facts established active transportation/trafficking within the ambit of Section 489B and that the charge language ('you brought' and 'for circulating') was sufficient to inform the accused of the offence charged. The Court rejected the submission that only an offence under Section 489C was made out, stressing that sizable concealed currency in a public thoroughfare and failure to explain attracts the application of Section 489B and shifts evidentiary burden under Section 106 Evidence Act.

Convictions under Section 489B and Section 489C IPC are sustained; no prejudice found from the language of the charge.

Principles governing sentencing for offences under Sections 489B and 489C IPC - Concurrent sentences and modification in appellate exercise of discretion - Whether the sentence imposed by the trial court required interference - HELD THAT: - While upholding convictions, the Court exercised appellate discretion to moderate the sentence considering the period already undergone in custody and the nature of the incident dated 2013. The Court reduced the substantive terms while leaving the fines as imposed and directed that both sentences run concurrently. The Court also addressed consequential directions relating to bail and surrender.

Sentence under Section 489B reduced from seven years to five years RI with fine (original fine unaltered); sentence under Section 489C reduced to three years RI with fine (original fine unaltered); sentences to run concurrently; bail cancelled and appellant directed to surrender.

Final Conclusion: The appellate court upheld the appellant's convictions under Sections 489B and 489C IPC on the facts (sizeable concealed counterfeit notes, expert report and absence of explanation) but in exercise of appellate discretion reduced the substantive sentences; fines were maintained, sentences directed to run concurrently, bail cancelled and surrender ordered.