TaxTMI Updates e-Newsletter
Sep 09,2024

Failure to give reasons - Principle of natural justice - Re-adjudication on merits - Opportunity of hearing - Section 107 of the CGST/WBGST Act, 2017 - Order passed under Section 74 adjudication

Failure to give reasons - Principle of natural justice - Validity of the appellate authority's order which confirmed the adjudication under Section 74 without recording reasons - HELD THAT: - The appellate authority, although the appellant was absent on the earlier hearing date, proceeded to decide the appeal on merits and recorded satisfaction that the order passed by the proper officer under Section 74(9) was correct and complete. The appellate order did not set out reasons nor did it address the specific grounds advanced in the appeal. The absence of reasons prevents understanding the basis of the appellate authority's satisfaction and, by depriving the appellant of explanation of the decision, offends the principle of natural justice. Accordingly, the appellate order is vitiated for want of reasons. [Paras 2, 5]

The appellate order confirming the Section 74 adjudication is set aside for failure to give reasons, as such omission violates natural justice.

Re-adjudication on merits - Opportunity of hearing - Section 107 of the CGST/WBGST Act, 2017 - Remedial direction issued to the appellate authority following setting aside of its order - HELD THAT: - In light of the vitiated appellate order, the matter is remanded to the appellate authority to hear and dispose of the appeal on merits in accordance with Section 107 of the Act. The appellate authority is directed to afford the petitioners an opportunity of hearing and to re-adjudicate expeditiously. The Court has indicated a preferred timeline of disposing the appeal, if possible, within eight weeks from communication of this order, but the core mandate is fresh adjudication with reasons. [Paras 6]

The matter is remanded for fresh adjudication on merits by the appellate authority with an opportunity of hearing and for reasons to be recorded.

Final Conclusion: The appellate order dated 25th January, 2024 confirming the adjudication under Section 74 for the tax period May, 2018 to October, 2018 is set aside for failure to give reasons; the matter is remanded to the appellate authority to re-adjudicate the appeal under Section 107 after granting an opportunity of hearing and to record reasons, preferably within eight weeks of communication of this order.

Prohibition against dual proceedings in respect of the same subject matter - territorial and subject matter overlap between Central and State GST proceedings - Section 6(2)(b) of the WBGST Act 2017 and allocation of jurisdiction between Central and State authorities - validity of show cause notices and consequential adjudication where prior proceedings exist - permissibility of state proceedings limited to non overlapping subject matter or periods

Prohibition against dual proceedings in respect of the same subject matter - Section 6(2)(b) of the WBGST Act 2017 and allocation of jurisdiction between Central and State authorities - validity of show cause notices and consequential adjudication where prior proceedings exist - State show cause notice dated 27th December 2023, the adjudication order dated 27th April 2024 and the demand in Form GST DRC 07 of even date cannot be sustained to the extent they concern subject matter already the subject of earlier Central proceedings. - HELD THAT: - The Court examined the effect of an earlier show cause cum demand notice issued by Central authorities on 30th September 2022 in relation to overlapping subject matter and applied the allocation of jurisdiction under Section 6(2)(b) of the WBGST Act 2017. Noting that the State notice dated 27th December 2023 covers the same subject matter, at least partially, as the Central notice and that the State order and demand were issued in a composite manner, the Court held that the State proceedings insofar as they duplicate or impinge upon the subject matter already proceeded upon by the Central authorities are unsustainable. Consequently the impugned State notice, order and demand were quashed. The Court's conclusion rests on preventing dual adjudication on the same subject matter and giving effect to the statutory allocation of jurisdiction between Central and State GST authorities. [Paras 2]

The State show cause notice dated 27th December 2023, the adjudication order dated 27th April 2024 and the demand in Form GST DRC 07 are set aside and quashed insofar as they concern subject matter already covered by the Central notice dated 30th September 2022.

Permissibility of state proceedings limited to non overlapping subject matter or periods - territorial and subject matter overlap between Central and State GST proceedings - State authorities may proceed against the petitioners for periods or subject matter covered by the State notice provided such proceedings do not concern the same subject matter as the earlier Central proceedings. - HELD THAT: - While quashing the overlapping portions of the State proceedings, the Court clarified that its order does not preclude the State authorities from pursuing adjudication in respect of those parts of the period covered by the State notice which do not overlap in subject matter with the Central proceedings. The State may therefore continue only where the subject matter is demonstrably distinct from what was adjudicated or pursued by the Central notice dated 30th September 2022. [Paras 3]

State authorities are permitted to proceed on the State notice for non overlapping subject matter or periods, provided there is no duplication of the subject matter covered by the earlier Central proceedings.

Final Conclusion: Writ petition disposed by quashing the impugned State show cause notice dated 27th December 2023, the adjudication order dated 27th April 2024 and the demand in Form GST DRC 07 insofar as they overlap with prior Central proceedings; State may proceed only in respect of non overlapping subject matter or periods. No order as to costs.

Input Tax Credit eligibility - requirement to furnish vehicle movement documents for ITC - failure to produce mandatory supporting documents - maintainability of writ against tax assessment order - availability of alternate remedy by statutory appeal - Article 14

Requirement to furnish vehicle movement documents for ITC - failure to produce mandatory supporting documents - Input Tax Credit eligibility - Assessment order blocking ITC upheld due to non-production of vehicle movement particulars required for claiming credit - HELD THAT: - The Court recorded that Section 16(2)(b) of the CGST Act mandates that a taxpayer seeking to avail Input Tax Credit must furnish particulars such as vehicle movement details, Lorry Receipt and TRIP Sheet with proper explanation. On the facts before the Court, the petitioner did not produce those required particulars. The respondent thereupon passed the impugned order blocking the credit ledger balance. The Court accepted the respondent's justification that non-furnishing of the mandated documents warranted the impugned assessment action and found no ground in the petition to interfere with that exercise of assessment authority. [Paras 6]

The assessment order blocking the ITC is not interfered with on the ground of non-production of required vehicle movement particulars.

Maintainability of writ against tax assessment order - availability of alternate remedy by statutory appeal - Article 14 - Writ petition challenging the assessment order is not maintainable in view of the alternate efficacious remedy of statutory appeal - HELD THAT: - The Court observed that, notwithstanding the petitioner's grievance and contention invoking Article 14, an alternate and efficacious remedy in the form of an appeal before the Appellate Authority was available to the petitioner against the impugned order. Rather than pursuing the statutory appellate remedy, the petitioner invoked writ jurisdiction. The Court declined to entertain the writ at the admission stage and was not inclined to grant relief in lieu of the alternative remedy provided under the statutory scheme. [Paras 6, 7]

Writ petition dismissed as not maintainable; petitioner granted liberty to file statutory appeal within four weeks.

Final Conclusion: Writ petition dismissed for want of maintainability; the assessment order blocking the ITC for non-production of required vehicle movement particulars is not interfered with, and the petitioner is granted liberty to challenge the order by filing an appeal before the Appellate Authority within four weeks.

Cancellation of registration for continuous non-filing of returns - restoration of registration subject to filing of returns and payment of tax, interest, fine and penalty - pragmatic approach to protect revenue recovery by enabling continued business operations - direction to activate portal to enable compliance

Cancellation of registration for continuous non-filing of returns - pragmatic approach to protect revenue recovery by enabling continued business operations - Validity of order cancelling the petitioner's GST registration on ground of continuous non-filing of returns and whether cancellation should be set aside - HELD THAT: - The Court found that the registration was cancelled solely for non-filing of returns and there was no material or allegation that the petitioner engaged in any fraudulent or tax-evasion scheme. The Court observed that suspension or revocation of registration may be counterproductive to the revenue because it prevents the assessee from issuing invoices and thereby hinders tax recovery. Applying a pragmatic approach and having regard to a Division Bench direction in Subhakar Golder (supra), the Court concluded that the cancellation order should be set aside subject to conditions enabling the authorities to determine final liability once the returns are filed. The Court therefore directed conditional restoration to facilitate compliance and eventual determination of tax liability rather than leave the petitioner non-functional. [Paras 8, 9, 10]

Order cancelling registration dated 24th August, 2022 set aside subject to petitioner filing returns for the entire period of default and paying requisite tax, interest, fine and penalty, if not already paid.

Restoration of registration subject to filing of returns and payment of tax, interest, fine and penalty - direction to activate portal to enable compliance - Remedial directions for restoration of registration and facilitation of compliance - HELD THAT: - The Court directed that if the petitioner complies with the conditions (filing outstanding returns and payment of tax, interest, fine and penalty) within four weeks from receipt of the order, the jurisdictional officer shall restore the petitioner's registration. The Court further directed the respondents to activate the portal within one week so that the petitioner may file returns and make payments. The order makes clear that failure to comply within the stipulated period will result in automatic dismissal of the writ petition and denial of the benefit of restoration. [Paras 10, 11, 12]

Registration to be restored upon compliance within four weeks; respondents to activate portal within one week; non-compliance to result in automatic dismissal of the writ petition.

Final Conclusion: The writ petition is disposed of by setting aside the cancellation of GST registration dated 24th August, 2022 on the footing that the petitioner shall file all outstanding returns and pay tax, interest, fine and penalty within four weeks (portal to be activated within one week); failure to comply will result in dismissal of the petition and no restoration of registration.

Condonation of delay in filing GSTR-3B - Deemed withdrawal of assessment under Section 62(1) of the TNGST Act, 2017 - Effect of amendment to Section 62(2) extending period for filing return - Liability for interest under Section 50(1) and late fee under Section 47 despite deemed withdrawal

Condonation of delay in filing GSTR-3B - Deemed withdrawal of assessment under Section 62(1) of the TNGST Act, 2017 - Effect of amendment to Section 62(2) extending period for filing return - Liability for interest under Section 50(1) and late fee under Section 47 despite deemed withdrawal - Delay in filing GSTR-3B on 02.07.2023 is condoned and the assessment order dated 22.05.2023 under Section 62(1) is to be deemed withdrawn. - HELD THAT: - The Court examined the statutory scheme under Section 62 and the effect of the legislative amendment extending the period for filing the return (amendment to Section 62(2) of the CGST Act, 2017, as carried into the TNGST Act, 2017). Although the respondent contended that the amendment was not in force during the period in dispute and relied on authorities concerning delay, the Court concluded that, in light of the amendment, the delay in filing the GSTR-3B on 02.07.2023 ought to be condoned. Consequently, the assessment order passed under Section 62(1) dated 22.05.2023 is to be treated as deemed withdrawn. The Court qualified this relief by retaining the revenue's rights to recover any tax shortfall and to claim interest under Section 50(1) and late fee under Section 47 of the applicable GST enactments. [Paras 3, 4, 7, 8]

Writ petition allowed; delay condoned, assessment dated 22.05.2023 deemed withdrawn, subject to revenue's rights to recover tax, interest and late fee.

Final Conclusion: The writ petition is allowed: the delay in filing GSTR-3B is condoned and the assessment under Section 62(1) dated 22.05.2023 is deemed withdrawn, without prejudice to revenue's rights to recover tax, interest and late fee.

Quashing of impugned orders and remand for fresh adjudication - deposit as condition for grant of interim relief - treatment of impugned orders as addendum to show cause notices - exercise of discretionary writ jurisdiction - laches and limitation of appellate remedy

Quashing of impugned orders and remand for fresh adjudication - exercise of discretionary writ jurisdiction - laches and limitation of appellate remedy - Validity of the impugned orders for the assessment years 2021-22 and 2022-23 and appropriate relief - HELD THAT: - The Court, noting that the petitioner had not replied to the notices which preceded the impugned orders and that the orders were issued after notices in DRC 01A and DRC 01, nevertheless found that the petitioner had an arguable case on merits. Although the respondent relied on laches and limitation of remedy, the Court exercised its discretionary writ jurisdiction to set aside the impugned orders and remit the matters to the respondent for fresh adjudication on merits. The Court imposed a condition of interim relief, directing the petitioner to deposit 25% of the disputed tax to the respondent's account from its Electronic Cash Register within 30 days of receipt of the order. The Court thereby balanced the existence of an arguable case with the respondent's contention regarding delay and limitation by granting conditional relief rather than outright quashing without further adjudication. [Paras 10]

Impugned orders quashed and matters remitted for fresh orders on merits subject to deposit of 25% of disputed tax within 30 days.

Treatment of impugned orders as addendum to show cause notices - procedure for filing reply and timeline for fresh adjudication - deposit as condition for grant of relief - Consequential procedural directions on how the remanded matters are to be proceeded with by the parties and authority - HELD THAT: - The Court directed that the quashed impugned orders shall be treated as addenda to the respective show cause notices that preceded them, thereby preserving procedural continuity. The petitioner was directed to file its reply within 30 days from receipt of this order together with the deposit ordered. The respondent was directed to consider the matter afresh, hear the petitioner, and pass fresh orders on merits and in accordance with law expeditiously, preferably within two months. These directions ensure the respondent decides the substantive controversy on merits after affording the petitioner an opportunity to be heard, while the deposit condition secures the revenue interest during the interim period. [Paras 11, 12]

Impugned orders to be treated as addenda to the show cause notices; petitioner to file reply within 30 days with deposit; respondent to pass fresh orders after hearing, preferably within two months.

Final Conclusion: Writ petitions disposed by quashing the impugned orders for AYs 2021-22 and 2022-23 and remitting the matters for fresh adjudication on merits; relief granted conditionally on deposit of 25% of disputed tax, with directions for filing reply and expeditious disposal by the respondent.

Illegality of retrospective GST deduction on payments relating to contracts executed when Value Added Tax prevailed - Right to refund of illegally deducted tax - Administrative disposal of representations for refund within a prescribed reasonable time

Illegality of retrospective GST deduction on payments relating to contracts executed when Value Added Tax prevailed - Right to refund of illegally deducted tax - Petitioner permitted to withdraw the writ petition with liberty to seek refund of GST deducted from payments for a contract executed in 2009 and completed before 2015 on the ground that VAT was the prevailing levy at the relevant time. - HELD THAT: - The petitioner informed the Court that the admitted dues have been paid but that the authorities deducted GST at 18% from payments relating to a contract entrusted in 2009 and completed before 2015, a period when VAT - not GST - prevailed. In view of this grievance, the Court allowed the petitioner to withdraw the writ petition while preserving the petitioner's right to approach the appropriate authorities for a refund of the GST allegedly deducted without lawful basis. The Court did not adjudicate the substantive refund claim on merits but afforded the petitioner an avenue for administrative redress.

Writ petition disposed of as withdrawn with liberty to approach authorities for refund of the GST deducted.

Administrative disposal of representations for refund within a prescribed reasonable time - Authorities directed to consider and dispose of any representation submitted by the petitioner for refund of the deducted GST strictly in accordance with law and expeditiously, preferably within eight weeks from the date of representation. - HELD THAT: - Recognising that the petitioner may pursue a refund application, the Court mandated that any representation made by the petitioner be disposed of strictly in accordance with law. The Court imposed a timeline, expressing a preference that the authorities conclude the disposal as expeditiously as possible and preferably within eight weeks from receipt of the representation. The direction is administrative and confined to prompt consideration; no substantive determination on entitlement to refund was made by the Court.

Authorities to dispose of the petitioner's representation for refund strictly in accordance with law, preferably within eight weeks.

Final Conclusion: The writ petition is disposed of as withdrawn while preserving the petitioner's right to seek refund of GST allegedly deducted in respect of a contract executed in 2009 and completed before 2015; any representation made by the petitioner shall be disposed of by the authorities in accordance with law, preferably within eight weeks.

Breach of principles of natural justice - quashing and setting aside of assessment order - remand for fresh consideration - conditioning remand on deposit of a portion of disputed demand - opportunity of personal hearing

Breach of principles of natural justice - quashing and setting aside of assessment order - Impugned assessment order set aside on grounds of breach of principles of natural justice where the petitioner's reply was not considered. - HELD THAT: - The Court examined the record including the reply dated 29.12.2023 and the acknowledgment placed on file. The acknowledgment prima facie indicates that the reply was received after the impugned order was issued. The assessment order itself records that no reply was received and confirms defects on that basis. In those circumstances the order was unsustainable for failure to consider the petitioner's reply and thereby infringing the principles of natural justice; consequently the impugned order is set aside to enable adjudication on merits. [Paras 5, 6]

Impugned order dated 30.12.2023 is set aside for breach of natural justice and to afford adjudication on merits.

Remand for fresh consideration - conditioning remand on deposit of a portion of disputed demand - opportunity of personal hearing - Matter remanded for fresh consideration on terms that the petitioner deposits 10% of the disputed tax demand, may file reply, and be afforded a hearing before a fresh assessment is passed within a stipulated period. - HELD THAT: - In the interest of justice the Court granted a conditional remand rather than outrightly directing adjudication on merits. The petitioner agreed to remit 10% of the disputed demand as a precondition for remand. The Court directed that the petitioner shall remit 10% of the disputed tax demand within two weeks from receipt of this order and submit a reply within the same period. Upon verifying receipt of the 10% deposit and receipt of the reply, the respondent shall provide a reasonable opportunity including a personal hearing and thereafter pass a fresh assessment order within three months from receipt of the petitioner's reply. [Paras 7]

Matter remanded on specified terms: 10% deposit within two weeks, submission of reply within that period, provision of personal hearing and fresh assessment within three months of receipt of the reply.

Final Conclusion: Writ petition disposed of by setting aside the assessment order dated 30.12.2023 for breach of natural justice and remitting the matter to the assessing authority for fresh consideration on the petitioner complying with the specified conditional terms; no order as to costs.

Opportunity of hearing - remand for fresh adjudication - conditioning remand on partial payment - penalty for non-response to show cause notice - mismatch between GSTR-3B and GSTR-1

Opportunity of hearing - penalty for non-response to show cause notice - mismatch between GSTR-3B and GSTR-1 - Impugned order dated 14.07.2023 set aside and petitioner granted opportunity to contest the tax demand subject to conditions. - HELD THAT: - The court noted that the confirmed tax proposal arose from a mismatch between the petitioner's GSTR-3B returns and the GSTR-1 statement and that a penalty of 100% was imposed without hearing because the petitioner did not respond to the show cause notice. Accepting the petitioner's assertion of non-receipt of communication, the interest of justice required that the petitioner be given a reasonable opportunity to contest the demand. The Court therefore set aside the impugned order on condition that the petitioner remit an additional portion of the disputed demand and be allowed to file a reply within the prescribed period. The petitioner agreed to remit an additional 5% in addition to the 10% already paid as the condition for such relief. [Paras 5, 6]

Order dated 14.07.2023 set aside on condition that the petitioner remit an additional 5% of the disputed tax demand (in addition to the earlier 10%) within two weeks and be permitted to submit a reply to the show cause notice within that period.

Remand for fresh adjudication - conditioning remand on partial payment - opportunity of hearing - Matter remanded to the second respondent for fresh consideration and issuance of a fresh order after affording a personal hearing, subject to receipt of aggregate remittance. - HELD THAT: - The Court directed that upon receipt of the petitioner's reply and being satisfied that 15% of the disputed tax demand has been received in the aggregate (10% earlier remitted plus 5% additional), the second respondent must provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh order. The fresh adjudication is to be completed within three months from receipt of the petitioner's reply. The remand is therefore for fresh consideration on merits after compliance with the stated conditions and affording of the hearing. [Paras 6]

Proceedings remanded to the second respondent to afford a personal hearing and pass a fresh order within three months upon receipt of the petitioner's reply and aggregate remittance of 15% of the disputed demand.

Final Conclusion: Writ petition allowed by setting aside the order dated 14.07.2023 on the conditions that the petitioner remit an additional 5% within two weeks (in addition to the earlier 10%) and submit a reply; on receipt of the reply and aggregate remittance of 15%, the second respondent shall afford a personal hearing and pass a fresh order within three months.

Lack of reasonable opportunity - personal hearing - remand on condition of part-deposit - opportunity to file reply to show cause notice - fresh adjudication on merits - GSTR-3B returns

Lack of reasonable opportunity - opportunity to file reply to show cause notice - personal hearing - GSTR-3B returns - Impugned assessment order set aside for want of opportunity to contest tax demand and petitioner permitted to reply and be afforded hearing - HELD THAT: - The Court found that the assessment confirming the tax proposal proceeded because the petitioner did not reply to the show cause notice and that the proposal related solely to discrepancies in the petitioner's GSTR-3B returns concerning amounts shown under a particular Table. In these circumstances the interest of justice required that the petitioner be given a chance to contest the demand on merits. The Court therefore set aside the impugned order and directed that, upon receipt of the petitioner's reply and after providing a reasonable opportunity including a personal hearing, the respondent shall pass a fresh order within a stipulated time frame. [Paras 5, 6]

Impugned order dated 25.10.2023 set aside and petitioner permitted to submit reply and be given personal hearing before fresh adjudication

Remand on condition of part-deposit - remand on condition of part-deposit - Remand conditional on deposit of 10% of disputed tax demand within specified time - HELD THAT: - The petitioner offered to remit 10% of the disputed demand and the Court placed the setting aside of the impugned order on that condition. The Court directed that the petitioner must remit 10% of the disputed tax demand within two weeks from receipt of the order; on receipt of such deposit and the petitioner's reply, the respondent is to provide a hearing and pass a fresh order within three months. [Paras 3, 6]

Order set aside subject to petitioner remitting 10% of disputed tax demand within two weeks and respondent to reconsider after receipt and hearing

Final Conclusion: Writ petition allowed by setting aside the assessment dated 25.10.2023 on the conditions that the petitioner deposits 10% of the disputed tax demand within two weeks and is permitted to file a reply; the respondent shall afford a personal hearing and pass a fresh order within three months thereafter. No costs.

Refund under the GST Acts - electronic credit ledger - GSTN portal technical defect - re credit facility - mandamus - opportunity of hearing

Refund under the GST Acts - electronic credit ledger - GSTN portal technical defect - re credit facility - opportunity of hearing - Respondents directed to consider the petitioner's representation regarding alleged shortfall in refunds arising from GSTN portal allocation of electronic credit ledger balances and to afford an opportunity of hearing before recording findings. - HELD THAT: - The petitioner filed refund claims for November 2017, December 2017 and January 2018 and contended that the GSTN portal allocated available balance in the Electronic Credit Ledger to the November 2017 claim when the later claims were filed, resulting in lower refunds for December 2017 and January 2018. The petitioner further submitted that the portal did not then provide a facility to re credit excess amounts and that the re credit facility was made available only in 2019. In view of these contentions and the technical problems alleged on the GSTN portal, the Court did not adjudicate the merits of the refund claim but directed that the representation made by the petitioner be considered afresh. The respondents are to give the petitioner an opportunity of hearing, record their findings and place those findings on the court record within the stipulated time.

Respondents to consider the petitioner's representation within four weeks, after giving an opportunity of hearing, and place the findings and conclusion on the record of the petition.

Final Conclusion: The petition was not finally decided on merits; the Court directed respondents to consider the petitioner's representation about GSTN portal allocation of Electronic Credit Ledger balances, afford a hearing, record findings within four weeks and placed the matter for further hearing on 28th February 2024.

Show Cause Notice - Intelligibility requirement of notice - Principles of natural justice - Cancellation of GST registration - Retrospective cancellation - Restoration of registration - Appeal under Section 107 of the CGST Act

Show Cause Notice - Intelligibility requirement of notice - Principles of natural justice - Validity of the Show Cause Notice proposing cancellation of GST registration where the notice merely records "Others" without stating intelligible allegations. - HELD THAT: - The court found that the impugned Show Cause Notice did not specify any intelligible reason for proposing cancellation and merely recorded the ground as "Others", likely selected from a dropdown. A SCN must disclose the allegations so that the noticee can meaningfully respond; the impugned SCN failed this standard. Because the petitioner was not informed of the case to be met, the impugned order based on that SCN was passed in violation of the principles of natural justice. The court did not consider extraneous portal entries or unpleaded factual allegations in the SCN, holding that absence of a stated allegation renders the notice legally defective and the consequent adverse order unsustainable. [Paras 7, 8, 11]

The Show Cause Notice was not intelligible and its use to cancel the GST registration violated the principles of natural justice; the impugned order cannot be sustained on that basis.

Cancellation of GST registration - Retrospective cancellation - Whether the impugned order's conclusion that registration was obtained by fake documents could be sustained when that allegation was not set out in the Show Cause Notice and no material was placed on record. - HELD THAT: - The impugned order contained a tentative conclusion that the petitioner had obtained registration by fake documents and cancelled registration for "the sake of govt. revenue". The court observed that this specific allegation was not contained in the SCN and there was no material before the court showing how the proper officer reached that conclusion. An adverse finding not foreshadowed in the notice and unsupported by disclosed material cannot form the basis of cancellation. Accordingly, the finding of fictitious documents in the impugned order was not sustained. [Paras 9, 15]

The cancellation based on the unpleaded conclusion of fake documents was unsupported and cannot be upheld.

Restoration of registration - Appeal under Section 107 of the CGST Act - Relief to be granted and permission for further proceedings after setting aside the impugned order. - HELD THAT: - Given the defective SCN and the consequent unsustainability of the cancellation order, the court set aside the impugned SCN and order and directed immediate restoration of the petitioner's GST registration. The court, however, clarified that this decision would not preclude the revenue from commencing proceedings afresh, or initiating proceedings for statutory non-compliance or recovery of dues, in accordance with law. The pendency and time-bar aspects of the appeal filed by the petitioner were noted but did not alter the direction to restore registration. [Paras 16, 17]

Impugned SCN and order set aside; GST registration restored forthwith; respondent permitted to initiate fresh proceedings in accordance with law.

Final Conclusion: Impugned Show Cause Notice and cancellation order set aside for want of intelligible allegations and breach of natural justice; GST registration restored immediately, subject to the respondent's right to commence fresh proceedings in accordance with law.

Cancellation of GST registration without reasons - Requirement of reasons in administrative and quasi judicial orders - Compliance with Article 14 - reasoned decision making - Doctrine of merger not applying where appeal dismissed as time barred - Remand for fresh adjudication with opportunity of hearing

Cancellation of GST registration without reasons - Requirement of reasons in administrative and quasi judicial orders - Compliance with Article 14 - reasoned decision making - Validity of the order cancelling the petitioner's registration which contained no reasons - HELD THAT: - The cancellation order dated 23.07.2022 was set aside because it does not disclose any reasons and was passed without application of mind. The Court reiterated that reasons are the "heart and soul" of any administrative or quasi judicial order and that an order affecting the right to carry on business must satisfy the test of fairness under Article 14. Reliance was placed on earlier decisions of this Court holding that an order of cancellation without reasons is vitiated and must be set aside. In the present facts the omission to assign reasons rendered the cancellation order legally unsustainable and therefore quashed. [Paras 9, 12]

The order of cancellation dated 23.07.2022 is quashed for want of reasons and absence of application of mind.

Doctrine of merger not applying where appeal dismissed as time barred - Remand for fresh adjudication with opportunity of hearing - Procedure to be followed after quashing the cancellation order and effect of appellate dismissal for delay - HELD THAT: - The Court observed that because the appeal was dismissed as barred by limitation, the doctrine of merger would not apply in the circumstances of this case. Having set aside the cancellation order for lack of reasons, the matter was remitted to the Adjudicating Authority for fresh consideration. The petitioner was directed to file a reply to the show cause notice within three weeks, and the Assistant Commissioner was directed to pass a fresh order after affording an opportunity of hearing and considering the petitioner's defense and documents. The appellate order rejecting the appeal on limitation ground was noted but the primary relief granted was remand for fresh adjudication on merits in accordance with law. [Paras 9, 13, 14]

Petitioner to file reply within three weeks; matter remitted to the Assistant Commissioner for fresh adjudication after hearing; appellate dismissal for delay does not preclude remand in the present facts.

Final Conclusion: Writ petition allowed: the cancellation order dated 23.07.2022 is quashed for want of reasons and the matter is remitted to the Assistant Commissioner for fresh decision after giving the petitioner an opportunity to be heard and filing a reply within three weeks.

Return of original non-relied documents - scope of review under Order XLVII CPC - error apparent on the face of the record - Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules - responsibility for originals - limits of review jurisdiction in writ proceedings - compliance of search and seizure with CBIC guidelines

Scope of review under Order XLVII CPC - error apparent on the face of the record - limits of review jurisdiction in writ proceedings - Maintainability and merits of the review petition challenging the High Court's order of 20.05.2024 - HELD THAT: - The Court applied the narrowly confined principles governing review under Order XLVII CPC, reiterating that review lies only for discovery of new evidence, mistake apparent on the face of the record, or other sufficient reasons and is not an opportunity to re-argue merits. The Court examined the parties' contentions and the authorities on review jurisdiction and concluded that nothing in the review petition disclosed a material error apparent on the face of the impugned order or new evidence warranting rehearing. The earlier conclusions were supported by statutory provisions and binding precedent, and the review could not be used to relitigate matters already considered and decided. [Paras 10, 11, 12, 13, 14]

Review petition dismissed for failure to show error apparent on the face of the record or other grounds warranting review.

Return of original non-relied documents - Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules - responsibility for originals - compliance of search and seizure with CBIC guidelines - Validity and continuation of the High Court's direction to hand over original non-relied documents to the Respondent - HELD THAT: - The Court considered the earlier direction that original non-relied documents seized in the search be handed over so the respondent could file reply and exercise rights of cross-examination. The petitioners' contention that originals were lost and that scanned copies (with certificates under Section 145 of the CGST Act and other provisions) ought to suffice was examined against Section 67(3) CGST and Rule 27, as well as the need to maintain integrity of evidence. While objections were raised about alleged non-compliance with CBIC search-and-seizure guidelines and gaps in the panchnama, the Court found the impugned order to be supported by law and precedent and declined to interfere, maintaining the earlier directions as just and proper. [Paras 2, 3, 4, 14]

The directions in the order dated 20.05.2024 to hand over original non-relied documents and to afford opportunity to the respondent are maintained.

Final Conclusion: The review petition is dismissed. The High Court's order dated 20.05.2024 directing return of original non-relied documents and providing the respondent opportunity to file reply and seek cross-examination is upheld; no error apparent on the face of the record is shown to warrant review.

Zero Rated Supplies - Refund of IGST on exports - Section 16(3)(b) of the IGST Act (zero-rated export by payment of IGST) - Section 54 of the CGST Act (refund mechanism) - Rule 96 of the CGST Rules (shipping bill as refund application) - Drawback at higher rate (Column "A") vs lower rate (Column "B") - Deduction of differential drawback from IGST refund - Drawback scheme as an independent and complete Code

Refund of IGST on exports - Section 16(3)(b) of the IGST Act (zero-rated export by payment of IGST) - Section 54 of the CGST Act (refund mechanism) - Rule 96 of the CGST Rules (shipping bill as refund application) - Drawback at higher rate (Column "A") vs lower rate (Column "B") - Deduction of differential drawback from IGST refund - Entitlement to refund of IGST paid on exported goods where exporter selected Column "A" and claimed drawback at the higher rate - HELD THAT: - The Court held that exports are zero-rated under Section 16(3)(b) of the IGST Act and refund of IGST paid is governed by Section 54 of the CGST Act and the procedure under Rule 96 of the CGST Rules (shipping bill to be treated as refund application). The Drawback provisions form an independent code; notifications and circulars clarify conditions for claiming higher drawback but do not directly negate the statutory entitlement to IGST refund. Prior decisions show two lines of outcomes: (a) where rates under Column A and B are identical, refund of IGST is ordered because no double benefit arises; and (b) where higher drawback has been claimed but the exporter has repaid or the differential drawback is adjusted, courts have allowed IGST refund subject to deduction of the differential drawback. Applying these authorities and facts, the Court observed that the petitioner voluntarily selected Column "A" to claim higher drawback and had not refunded or offered to refund the differential amount. Granting IGST refund without adjustment would result in double benefit, because higher duty drawback reflects erstwhile Customs/Central Excise and Service Tax components subsumed in GST. Consequently, the petitioner is entitled to IGST refund but only after deduction of the differential amount of drawback, with statutory interest, rather than unconditional refusal of refund. [Paras 29, 30, 31, 32, 33]

Refund of IGST to be granted after deducting the differential amount of duty drawback; refund to be paid within 12 weeks with interest at 7% p.a.

Final Conclusion: The petition succeeds in part: respondents are directed to grant the petitioner the IGST refund on exports for July, August and September 2017 after deducting the differential drawback, within 12 weeks, with interest at 7% p.a.; the impugned order of 6th October 2023 is modified accordingly; no order as to costs.

Document Identification Number (DIN) - Validity of communication issued without DIN - CBDT Circular No.19/2019 - applicability to notices and orders - Manual communication exceptions under the Circular - Invalidity under paragraph 4 of the Circular - Exercise of power under section 119 of the Income-tax Act, 1961 - Impleading necessary party (CBDT) for interpretation of departmental circular - Interim stay of assessment proceedings

Validity of communication issued without DIN - CBDT Circular No.19/2019 - applicability to notices and orders - Invalidity under paragraph 4 of the Circular - Manual communication exceptions under the Circular - Whether an assessment order issued without a computer-generated DIN falls to be treated as invalid under Circular No.19/2019 and whether paragraph 4 operates to invalidate the impugned assessment order - HELD THAT: - The Court noted that the principal contention of the petitioner is that the impugned assessment order was issued without a DIN and therefore is hit by paragraph 4 of CBDT Circular No.19/2019 which declares any communication not conforming with paragraphs 2 and 3 to be invalid. The Court observed that the scope of the word "order" in paragraph 1 and the relationship between paragraph 4 and the exceptions in paragraph 3 (which permit manual communication in specified circumstances) raise substantial questions of construction. Because the CBDT, which issued the circular, was not a party to earlier decisions addressing the point, the Court concluded that the question of whether an assessment order without DIN is invalid under the Circular requires consideration with the CBDT's participation so that the extended scope, exceptions and practical implications of the Circular can be fully addressed. [Paras 3]

The question whether the impugned assessment order without a DIN is invalid under the Circular was not finally decided on merits and requires consideration with CBDT impleaded as a party.

Impleading necessary party (CBDT) for interpretation of departmental circular - CBDT Circular No.19/2019 - applicability to notices and orders - Addition of CBDT as a necessary party and directions for impleadment and reply - HELD THAT: - The Court granted leave to the petitioner to amend the petition to implead the CBDT so that the correctness, scope and interpretation of Circular No.19/2019 may be examined with the Board's participation. The petitioner was permitted to amend the petition by a specified date and serve the CBDT; notice to the added respondent was ordered returnable on the listed date and the CBDT was directed to file a reply affidavit, if any, on the issues identified. The Court recorded that such impleadment is necessary because earlier decisions considered the Circular without the CBDT as a party, and clarification from the issuing authority is necessary to resolve the contested questions. [Paras 4]

Leave granted to amend the petition to implead CBDT; notice issued to CBDT and directions given for filing a reply.

Interim stay of assessment proceedings - Interim protection of the petitioner against operation of the impugned assessment order and proceedings thereunder - HELD THAT: - Pending the returnable date and further consideration after impleadment of the CBDT, the Court considered it in the interest of justice to protect the petitioner. Consequently, the impugned assessment order and the proceedings thereunder, including demand and penalty, were stayed until the next listed hearing. [Paras 6]

The impugned assessment order and proceedings of demand and penalty are stayed until the adjourned date of hearing.

Final Conclusion: The petition is directed to be amended to implead the CBDT for determination of whether an assessment order issued without a computer-generated DIN is invalid under CBDT Circular No.19/2019; CBDT is to be served and may file a reply. Pending further hearing, the impugned assessment order and proceedings of demand and penalty are stayed.

Validity of notice under Section 148 - Faceless assessment scheme under Section 151A - Requirement of issuance by Faceless Assessing Officer and not Jurisdictional Assessing Officer - Applicability of the Notification dated 29 March 2022 to proceedings under Section 148A and Section 148 - Non-compliance with statutory procedure vitiates proceedings - Exclusion of central charges from the faceless scheme

Validity of notice under Section 148 - Faceless assessment scheme under Section 151A - Requirement of issuance by Faceless Assessing Officer and not Jurisdictional Assessing Officer - Non-compliance with statutory procedure vitiates proceedings - Impugned notices under Section 148A(b), order under Section 148A(d) and consequent notice under Section 148 issued by the Jurisdictional Assessing Officer are invalid for non-compliance with the scheme under Section 151A and the Notification dated 29 March 2022. - HELD THAT: - The Court held that the faceless mechanism mandated by Section 151A and the Notification dated 29 March 2022 governs issuance of notices and related proceedings under Section 148A and Section 148. Reliance was placed on the Division Bench decision in Hexaware which declares that issuance of notice under Section 148 must follow the automated allocation and faceless scheme so that either the FAO or the JAO has jurisdiction as per the scheme and there is no concurrent jurisdiction. The present record shows the notices and order were issued by the JAO and not by an FAO as required by the scheme. Where an authority acts contrary to the statutory scheme, the act is required to be quashed without the petitioner having to demonstrate further prejudice; non-compliance with the prescribed procedure itself vitiates the action. Applying these principles, the Court concluded that the manner in which proceedings were initiated is vitiated for non-compliance with Section 151A and the Notification. [Paras 3, 5, 9]

Notices and order issued by the JAO in the present case are invalid for non-compliance with Section 151A and the Notification dated 29 March 2022; the petition is allowed on this ground.

Applicability of the Notification dated 29 March 2022 to proceedings under Section 148A and Section 148 - Exclusion of central charges from the faceless scheme - The contention that cases pertaining to central charges fall outside the faceless scheme and are excluded by earlier orders is rejected; the scheme applies to central and international charge matters for issuance of notices under Section 148A and Section 148. - HELD THAT: - The Court considered and followed earlier decisions of this Court (including Kairos Properties and Abhin Anilkumar Shah) which examined whether prior orders dated 31 March 2021 and 6 September 2021 exempt central or international charges from the scheme. The Court observed those prior orders relate to assessment orders and do not dilute or override the independent scheme notified under Section 151A. Reading the scheme to include the exclusions urged by Revenue would amount to adding to or rewriting the scheme contrary to Section 151A. Consistent precedent of this Court and the Division Bench of Telangana were relied upon to hold that central and international charges are subject to the faceless procedure for issuance of notices under Section 148A/148 as notified on 29 March 2022. [Paras 6, 7, 8]

Revenue's plea that central charge cases are excluded from the faceless scheme is rejected; the faceless scheme applies to issuance of notices under Section 148A and Section 148 even in central charge matters.

Final Conclusion: Writ petition allowed: the impugned notice dated 07.03.2024 under Section 148A(b), the order dated 18.03.2024 under Section 148A(d) and the notice dated 18.03.2024 under Section 148 are quashed for non-compliance with Section 151A and the Notification dated 29 March 2022; other issues left open.

Mandatory compliance with the faceless assessment scheme under Section 151A - jurisdiction of Faceless Assessing Officer versus Jurisdictional Assessing Officer - issuance of notice under Section 148 in faceless mode - invalidity of administrative action taken contrary to statutory scheme

Mandatory compliance with the faceless assessment scheme under Section 151A - jurisdiction of Faceless Assessing Officer versus Jurisdictional Assessing Officer - issuance of notice under Section 148 in faceless mode - invalidity of administrative action taken contrary to statutory scheme - Validity of notices under Sections 148A(b), 148A(d) and 148 of the Income Tax Act when issued by the Jurisdictional Assessing Officer instead of a Faceless Assessing Officer in breach of the Scheme notified under Section 151A. - HELD THAT: - The Court held that the Notification dated 29 March 2022 and the Scheme framed thereunder pursuant to Section 151A mandate automated allocation and faceless conduct of proceedings, including issuance of notice under Section 148. The Scheme entrusts jurisdiction to the officer to whom the case is randomly allocated and does not permit concurrent jurisdiction of the JAO and the FAO. Reliance was placed on the Division Bench decision in Hexaware which declared that notices under Section 148 must be issued by the FAO in terms of the Scheme and that non compliance with the Scheme renders the action illegal. The Court observed that the challenged notices and order in the present case were issued by the JAO and not by an FAO, thereby violating the statutory scheme. When an authority acts contrary to the statutory scheme, the act is liable to be quashed without the assessee having to establish further prejudice. The Court also noted subsequent precedents of this High Court (including Kairos and Nainraj) reaching the same conclusion as to the applicability of the Scheme to steps under Section 148A and issuance of notice under Section 148. Having found non compliance with Section 151A and the notified Scheme, the Court held that the proceedings initiated in that manner are vitiated and unsustainable. [Paras 5, 6, 8, 9, 10]

Impugned notices under Section 148A(b), the order under Section 148A(d), and the notice under Section 148 issued by the JAO are quashed for non compliance with the faceless Scheme under Section 151A; the Writ Petition is allowed on this ground.

Final Conclusion: The Court allowed the petition and quashed the impugned show cause notice dated 5 March 2024, the order dated 8 April 2024 and the consequential notice dated 8 April 2024, holding that issuance by the JAO in breach of the Scheme under Section 151A rendered the proceedings invalid; no opinion was expressed on other grounds raised.

Principles of natural justice - opportunity of personal hearing under Section 127(1) of the Income Tax Act - transfer/centralisation of assessment proceedings - validity of transfer based on place of business and incriminating material seized

Transfer/centralisation of assessment proceedings - validity of transfer based on place of business and incriminating material seized - The respondents had sufficient material to transfer the petitioner's case from Coimbatore to Central Circle, Kolkata and the transfer was valid. - HELD THAT: - The show cause notice disclosed that a search and seizure under Section 132 was carried out on 12.10.2023 by the Kolkata Investigation office and a number of incriminating documents were seized which were inter connected and affected the petitioner's assessment. The respondents contended, and the Court found, that those materials were located in the Kolkata Circle and required coordinated examination together at that place. The petitioner, though having a registered office at Coimbatore, was shown to have business connections linked to Kolkata and incriminating material relevant to assessment was seized there. The Court held that where incriminating material is found at the place of business, it is appropriate to make the assessment through the Circle where such material was seized, and Section 127 empowers transfer in such circumstances. Having considered the show cause notice, the petitioner's written reply and the provenance of seized documents, the Court found no infirmity in the decision to centralise the file at Kolkata and concluded that the transfer was justified. [Paras 8, 12, 13, 15]

Transfer to Central Circle, Kolkata was justified and valid.

Principles of natural justice - opportunity of personal hearing under Section 127(1) of the Income Tax Act - The petitioner was afforded opportunity to file a reply and there was no breach of the principles of natural justice in issuing the transfer notification. - HELD THAT: - The show cause notice expressly invited written objections within 15 days and the petitioner filed a reply on 13.04.2024 outlining objections including inconvenience and preference for Coimbatore. The Court examined the record and found that the respondents had considered the petitioner's reply before issuing the notification dated 17.05.2024. While the petitioner sought a personal hearing, the Court recorded that sufficient opportunity to file objections in writing had been given and there was no material showing denial of a fair opportunity that would vitiate the transfer order. Having regard to the nature of the materials seized and the respondents' consideration of the petitioner's written reply, the Court found no violation of natural justice requiring interference. [Paras 9, 10, 11, 14]

No breach of principles of natural justice; opportunity to reply was afforded and the transfer notification is not vitiated on this ground.

Final Conclusion: Writ petitions dismissed; the notification dated 17.05.2024 centralising the petitioner's case in Central Circle, Kolkata is sustained as justified by seized materials and not vitiated for lack of opportunity to be heard.

Binding effect of approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code - extinguishment of pre-CIRP statutory claims and prohibition on initiation or continuation of proceedings - clean slate doctrine for a corporate debtor post-approval of resolution plan - inapplicability of subsequent tax reassessment to debts antecedent to approval of resolution plan

Binding effect of approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code - extinguishment of pre-CIRP statutory claims and prohibition on initiation or continuation of proceedings - clean slate doctrine for a corporate debtor post-approval of resolution plan - Whether reassessment proceedings and related notices issued by the Revenue in respect of AY 2016-17 (relating to a period prior to the approved resolution plan) can be initiated or continued against the corporate debtor after approval of the resolution plan under Section 31 of the IBC. - HELD THAT: - The Court held that once the adjudicating authority approves a resolution plan under Section 31(1) of the IBC the plan is binding on the corporate debtor and, inter alia, the Central Government and its agencies in respect of payment of statutory dues. Reliance was placed upon the Supreme Court's exposition in Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, which explains that the approval of a resolution plan freezes the claims provided in the plan and extinguishes all other claims not part of the plan, so that no person may initiate or continue proceedings in respect of such extinguished claims. The Court observed that the reassessment proceedings in question pertain to a period antecedent to the CIRP and prior to approval of the resolution plan; continuation of those proceedings would therefore seek to re-agitate tax claims which, by operation of the binding resolution plan and the principle that a successful resolution applicant must start with a clean slate, stand extinguished. The Revenue's contention that the moratorium and restrictions end with the CIRP and that proceedings could be revived post-approval was held to be inconsistent with the statutory scheme and the authoritative exposition in Ghanshyam Mishra that the 2019 amendment and the IBC's provisions operate to preclude initiation or continuation of proceedings in respect of pre-approval dues. Applying these principles, the Court found the reassessment notices and subsequent communications to be legally untenable and in conflict with the binding effect of the approved resolution plan. [Paras 15, 16, 17, 19, 20]

All impugned reassessment proceedings, notices and communications in respect of AY 2016-17 (relating to the period prior to approval of the resolution plan) are quashed and set aside as barred by the binding effect of the approved resolution plan under Section 31 of the IBC.

Final Conclusion: The writ petition is allowed: reassessment notices and all consequential communications issued by the Revenue in respect of AY 2016-17 (pertaining to the period prior to approval of the resolution plan) are quashed and set aside; the petitioner, having been resolved under an approved resolution plan, stands entitled to the protection that pre-approval claims are extinguished and cannot be pursued.

Addition to completed/unabated assessments in absence of incriminating material - scope of block assessment jurisdiction under Section 153A in search/requisition cases - reopening of assessments under Sections 147/148 saved notwithstanding search proceedings - binding effect of Higher Court precedent on coordinate tribunals and lower fora

Addition to completed/unabated assessments in absence of incriminating material - scope of block assessment jurisdiction under Section 153A in search/requisition cases - Assessing Officer cannot make additions to completed/unabated assessments in absence of incriminating material seized or unearthed during search/requisition; scope of Section 153A does not permit such additions for the unabated years in the absence of incriminating material. - HELD THAT: - The Tribunal had allowed the assessee's appeals for AYs 2005-06 to 2007-08 on the basis that the Assessing Officer made additions without reference to any seized or incriminating material, and that those assessments were unabated/concluded as on the date of search. This Court observed that the issue is covered by its decision in Continental Warehousing Corporation and, more importantly, by the Supreme Court's authoritative pronouncement in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., which concluded that where no incriminating material is unearthed in a search/requisition, the AO cannot assess or reassess completed/unabated assessments on the basis of other material. Applying that principle, the appeals filed by the revenue do not raise a question of law meriting interference with the Tribunal's orders insofar as additions to the specified assessment years are concerned. [Paras 2, 3, 6]

Tribunal's allowance of the assessee's appeals for AYs 2005-06 to 2007-08 is upheld; additions made to completed/unabated assessments without incriminating material are unsustainable.

Reopening of assessments under Sections 147/148 saved notwithstanding search proceedings - Power of the Assessing Officer to reopen completed/unabated assessments under Sections 147/148 remains available, subject to fulfillment of statutory conditions. - HELD THAT: - While the Court upheld that additions cannot be made to unabated/completed assessments in absence of incriminating material from search/requisition proceedings, it expressly clarified that the statutory power to reopen assessments under Sections 147/148 is preserved. Reopening is permissible only upon satisfaction of the conditions required by those provisions; that question and related contentions remain open for adjudication in appropriate proceedings. [Paras 6, 7]

Reopening under Sections 147/148 is not barred by the conclusions on search/requisition; such powers are saved and subject to the conditions in those sections.

Binding effect of Higher Court precedent on coordinate tribunals and lower fora - Reliance by the Tribunal on this Court's decision in Continental Warehousing Corporation and related coordinate/tribunal orders was appropriate, and the apprehension about pending proceedings in higher fora does not sustain a question of law here in view of the Supreme Court's pronouncement. - HELD THAT: - The revenue contended that the Tribunal erred in relying on Continental Warehousing Corporation and on a coordinate ITAT decision while proceedings in higher courts were pending. This Court noted that the Supreme Court, in Abhisar Buildwell (P.) Ltd., has approved the view that no additions can be made to completed/unabated assessments absent incriminating material. Given that authoritative pronouncement, the questions urged by the revenue no longer require consideration and cannot sustain interference with the Tribunal's orders. [Paras 3, 5, 7]

Tribunal's reliance on earlier decisions is upheld and does not constitute a ground for reversing its orders in these appeals.

Final Conclusion: In view of the Supreme Court's decision in Abhisar Buildwell (P.) Ltd. and this Court's precedent, the revenue's appeals are dismissed: additions to the specified completed/unabated assessment years made without incriminating material are unsustainable, while the Assessing Officer's statutory power to reopen assessments under Sections 147/148 remains available subject to prescribed conditions.

Mandatory compliance with notice under section 143(2) - reassessment under section 147/148 - inapplicability of decision in Ashok Chaddha to non-search reassessment - section 292BB inapplicable to absence of issuance of notice

Mandatory compliance with notice under section 143(2) - reassessment under section 147/148 - section 292BB inapplicable to absence of issuance of notice - Failure to issue a notice under Section 143(2) after reassessment proceedings renders the reassessment invalid. - HELD THAT: - The Court held that in reassessment proceedings the Assessing Officer is obliged to issue a notice under Section 143(2) and that absence of such notice is a jurisdictional defect. The judgment notes a consistent line of precedents of this Court treating issuance of a Section 143(2) notice as mandatory in reassessment matters and rejects the contention that Section 292BB can cure a complete absence of issuance of notice. Section 292BB, the Court observed, can cure infirmities in service of a notice but does not operate where no notice has emanated from the department. In the present cases the failure to comply with Section 143(2) was conceded and was therefore fatal to the reassessment. [Paras 8, 9, 10, 13, 14]

Reassessment proceedings and the consequent assessment orders were quashed for failure to comply with the mandatory requirement of issuing a notice under Section 143(2).

Inapplicability of decision in Ashok Chaddha to non-search reassessment - reassessment under section 147/148 - The decision in Ashok Chaddha does not apply to reassessments not based on search assessments under Section 153A. - HELD THAT: - The Court distinguished Ashok Chaddha on its factual and legal matrix: that decision addressed procedure for assessments under Section 153A in the context of search/requisition and concluded that issuance of a separate notice under Section 143(2) was not mandatory in that special context. By contrast, the present matters relate to reassessment under Sections 147/148 where the consistent view of this Court requires issuance of notice under Section 143(2). Thus Ashok Chaddha is not an authority for dispensing with Section 143(2) in ordinary reassessment proceedings. [Paras 3, 4, 7, 11]

Ashok Chaddha was distinguished and held not to be applicable to the reassessment proceedings before the Court.

Final Conclusion: Writ petitions allowed; impugned notices dated 30.03.2021 and 30.05.2022 under Sections 147/148 and the assessment orders dated 27.03.2022 and 26.07.2022 are quashed for failure to comply with the mandatory requirement of issuing a notice under Section 143(2).

Objections filed before the Dispute Resolution Panel (DRP) suspend Assessing Officer action under Section 144C(13) - assessing officer obliged to await directions of the DRP before completing assessment - non-intimation of objections to Assessing Officer is a lapse but does not validate assessment where objections were filed before DRP - setting aside of assessment order where Assessing Officer proceeded despite pending DRP objections

Objections filed before the Dispute Resolution Panel (DRP) suspend Assessing Officer action under Section 144C(13) - non-intimation of objections to Assessing Officer is a lapse but does not validate assessment where objections were filed before DRP - Validity of the assessment order passed while objections filed before the DRP were pending despite non-intimation to the Assessing Officer - HELD THAT: - The Court held that where the assessee filed objections before the DRP against the draft assessment, the Assessing Officer ought not to have proceeded to complete the assessment until the DRP had considered those objections and issued directions. Although there was a lapse in not separately intimating the Assessing Officer of the objections within the time prescribed, that lapse did not empower the Assessing Officer to ignore the fact that objections were pending before the DRP and to conclude the assessment. The Court relied on the reasoning in Open Silicon Research (P) Ltd to construe Section 144C as requiring the Assessing Officer to await DRP directions once objections are filed, and therefore held that the assessment passed in disregard of pending DRP objections was liable to be set aside. [Paras 5]

The assessment order passed notwithstanding objections filed before the DRP is set aside.

Assessing officer obliged to await directions of the DRP before completing assessment - setting aside of assessment order where Assessing Officer proceeded despite pending DRP objections - Consequent direction on further proceedings after setting aside the assessment - HELD THAT: - The Court directed that the matter be restored to the stage of Section 144C(13) and ordered that the Assessing Officer shall proceed further only in conformity with the directions issued by the DRP. Time for action under Section 144C(13) was directed to commence from the date of receipt of the certified copy of the order by the Assessing Officer. The Court emphasised that the Assessing Officer must follow the DRP's directions and proceed accordingly, thereby remitting the matter for further consideration in light of the DRP's directions and the objections filed by the petitioner. [Paras 6]

Matter remitted to proceed under Section 144C(13) with the Assessing Officer to follow the DRP's directions; time for compliance to run from receipt of certified copy of this order.

Final Conclusion: The petition is allowed: the assessment order for Assessment Year 2021-2022 passed despite pending objections before the DRP is set aside and the matter is remitted to the Assessing Officer to proceed in accordance with the DRP's directions, with time to run from receipt of the certified copy of this order.

Capital versus revenue expenditure - enduring benefit test - expenditure for feasibility study - same line of business / expansion versus new business

Expenditure for feasibility study - capital versus revenue expenditure - enduring benefit test - same line of business / expansion versus new business - Treatment of amount paid to M/s. RITES for Techno Economic Feasibility Report as revenue expenditure and deduction under section 37 for A.Y. 2014-15. - HELD THAT: - The Tribunal found that the assessee incurred Rs. 5,56,18,200/- for preparing a Techno Economic Feasibility Report to examine setting up a new major port at Dugarajapatnam, which is in the same line of business as the assessee. The project did not progress and was abandoned after more than three years; no new capital asset of enduring benefit came into existence. Applying the established tests-particularly whether an enduring benefit was created or a new asset brought into being-the facts were held analogous to the decision in Tamilnadu Magnesite Ltd. v. ACIT where expenditure on an unrealised project (without creation of a new asset) was treated as revenue. The Tribunal rejected the Revenue's reliance on decisions distinguishing other factual matrices (such as forfeiture or acquisition of capital assets) and accepted the assessee's contention that the feasibility expenditure related to the same business/activity and, in the absence of any enduring asset, was revenue in nature and correctly charged to profit and loss. [Paras 6, 7, 8]

The addition disallowing the amount paid for the feasibility report is deleted and the expenditure is held to be revenue in nature for A.Y. 2014-15.

Final Conclusion: The appeal is allowed: expenditure on the Techno Economic Feasibility Report for the proposed port at Dugarajapatnam is held to be revenue expenditure (no enduring capital asset was created) and the addition is deleted for A.Y. 2014-15.

Penalty under section 271(1)(c) - penalty not leviable for additions made on estimate - furnishing inaccurate particulars versus concealment of income - bonafide difference of opinion on allowability of claim

Penalty under section 271(1)(c) - penalty not leviable for additions made on estimate - furnishing inaccurate particulars versus concealment of income - Whether penalty under section 271(1)(c) can be levied where disallowance is made on estimate basis. - HELD THAT: - The Tribunal noted that the addition/disallowance of labour expenditure was made by estimation both by the Assessing Officer and subsequently by the Commissioner (Appeals). It was also recorded that the assessee had furnished details of income and expenditure in the return and that the disallowance arose because the claim was not acceptable to the revenue. Relying on the Supreme Court precedent in CIT v. UP State Bridge Corporation Ltd. and the Tribunal's earlier decision in Potluri Phanendra Babu v. ITO, the Tribunal held that where an addition is made on estimate basis and the assessee has filed the relevant particulars which are not shown to be inaccurate, mere non-acceptance of the claim by the revenue does not amount to concealment of income or furnishing of inaccurate particulars attracting penalty under section 271(1)(c). Applying that principle, the Tribunal found the levy of penalty unsustainable and deleted the penalty. The Tribunal further observed that, having decided Grounds 8 to 10 in favour of the assessee by deleting the penalty, adjudication of the remaining grounds became academic. [Paras 7, 8]

Penalty under section 271(1)(c) deleted as the disallowance was made on estimate basis and did not constitute concealment or furnishing of inaccurate particulars.

Final Conclusion: Appeal allowed; penalty order under section 271(1)(c) set aside because the disallowance was by estimate and the assessee's particulars were not shown to be inaccurate.

Condonation of delay - sufficient cause - exemption under section 80P(2)(d) - interest income on deposits with cooperative banks - adjudication on merits where issue is settled law

Condonation of delay - sufficient cause - Whether the National Faceless Appeal Centre was justified in refusing to condone the delay of 90 days in filing the appeal. - HELD THAT: - The Tribunal examined the explanation offered by the appellant (delay due to distance of the society from District Headquarter and delay in obtaining legal advice) and the reasoning of the NFAC which simply refused condonation on the ground of the period of delay and reliance on precedent. The Tribunal reiterated the settled principle that the question is not the length of delay but whether the cause shown amounts to "sufficient cause"; if so, delay must be condoned regardless of its length. The NFAC failed to consider whether the appellant's explanation constituted sufficient cause and did not indicate why that explanation was inadequate. Applying these principles, the Tribunal held that the NFAC ought to have condoned the 90-day delay and proceeded to decide the appeal on merits. [Paras 6]

Delay of 90 days should have been condoned; NFAC's refusal to condone was unjustified.

Exemption under section 80P(2)(d) - interest income on deposits with cooperative banks - adjudication on merits where issue is settled law - Whether the interest income earned by the cooperative society on deposits made with cooperative banks is exempt under section 80P(2)(d). - HELD THAT: - The Tribunal observed that interest was admittedly earned on deposits with Cooperative Banks. Section 80P(2)(d) exempts income derived by a cooperative society from investments held with other cooperative societies. The Tribunal followed the approach in coordinate decisions and the Karnataka High Court's view that interest on investments with cooperative banks falls within section 80P(2)(d) (distinguishing applicability of other clauses relied upon by the AO). As the question was settled by precedent and did not require factual verification, the Tribunal decided the issue on merits rather than remitting it. Applying the legal test, the Tribunal concluded that interest earned on deposits with cooperative banks qualifies for deduction under section 80P(2)(d). [Paras 8]

Interest income on deposits with cooperative banks is exempt under section 80P(2)(d); appeal allowed on merits.

Final Conclusion: The Tribunal held that the NFAC erred in refusing to condone the 90-day delay and, on merits, allowed the appeal by holding that interest earned on deposits with cooperative banks is exempt under section 80P(2)(d) for A.Y. 2020-21.

Section 56(2)(vii) - treatment of stamp duty valuation as full value of consideration - stamp duty valuation - valuation by Stamp Valuation Officer - referral to Valuation Officer (DVO)

Section 56(2)(vii) - treatment of stamp duty valuation as full value of consideration - stamp duty valuation - Whether the difference between stamp duty value and declared consideration is taxable as income under Section 56(2)(vii). - HELD THAT: - The Tribunal affirmed that where the stamp duty valuation adopted by the Stamp Valuation Officer exceeds the consideration mentioned in the sale deed, the stamp duty value is to be taken as the full value of consideration under Section 56(2)(vii). The assessee paid stamp duty and registration charges on the property as valued at 783.4 sq ft and Rs. 2,00,17,500/-, whereas the consideration recorded in the deed was lower. The Court held that, in view of the statutory mandate of Section 56(2)(vii), the excess of stamp duty value over the declared consideration constituted income of the assessee and the addition made by the AO/CIT(A) was sustained. [Paras 8]

Addition of Rs. 30,17,500/- by treating stamp duty value as full consideration under Section 56(2)(vii) is justified and upheld.

Valuation by Stamp Valuation Officer - referral to Valuation Officer (DVO) - Whether the assessee's contention that stamp duty valuation should be proportionately reduced for non-usable area and whether the matter should have been referred to the Valuation Officer (DVO). - HELD THAT: - The Tribunal noted that the property was registered with the Sub-Registrar for the area on which stamp duty was paid and that, if the carpet area in the instrument was incorrect, the assessee could have sought correction from the Sub-Registrar. The court found no merit in the contention that stamp duty valuation should be reduced because certain areas were non-usable, and observed that no impediment was shown to prevent the assessee from seeking correction of the registered description. The Tribunal also recorded that the request for reference to DVO was not acceded to by the lower authorities but treated the primary question as one of statutory application of Section 56(2)(vii) to the stamp duty value adopted in the record. [Paras 8]

Claim for proportional reduction of stamp duty valuation on account of non-usable area and the plea for referral to DVO not accepted; no error in not directing DVO reference.

Final Conclusion: The appeal is dismissed; the addition under Section 56(2)(vii) by treating stamp duty value as full value of consideration is sustained for Assessment Year 2015-16.

Order under section 263 passed against deceased assessee - nullity of proceedings against a deceased person - jurisdictional validity of proceedings against a non-existing entity - duty to bring legal heir on record before exercising powers under section 263

Order under section 263 passed against deceased assessee - nullity of proceedings against a deceased person - duty to bring legal heir on record before exercising powers under section 263 - Validity of the order passed by the Principal Commissioner of Income Tax under section 263 of the Act where the assessee had died prior to initiation and completion of the proceedings and no legal heir was brought on record. - HELD THAT: - The Tribunal found on the material on record that the assessee died on 12.09.2023, that the Principal Commissioner of Income Tax issued the show-cause notice dated 05.01.2024 and proceeded to pass the order under section 263 in the name of the deceased without bringing the legal heir on record, despite the department being informed of the death. The Tribunal held that proceedings and orders initiated and concluded in the name of a dead person are a nullity and without jurisdiction. Relying on earlier precedents of coordinate Benches and the Supreme Court emphasising that an assessment or notice issued in the name of a non-existent entity is without jurisdiction, the Tribunal concluded that the impugned exercise of power under section 263 was invalid where the authority failed to proceed against or at least bring the legal heir into the proceedings. Consequently, the impugned order under section 263 was quashed as non est. The Tribunal expressly followed prior decisions, including the Supreme Court decision referred to in the judgment, as support for the principle that proceedings against a deceased person cannot be sustained and that orders passed in the name of a non-existing entity must be set aside (see ITO v. Durlabhbhai Kanubhai Rajpara ; PCIT v. Maruti Suzuki India Ltd ). [Paras 8, 12]

Impugned order under section 263 passed in the name of the deceased assessee quashed as nullity for failure to bring the legal heir on record; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and quashed the order passed under section 263 as being non est, the order having been passed in the name of a deceased assessee without bringing the legal heir on record.

Deemed income on excess share premium under Section 56(2)(viib) - FMV determination and Rule 11UA valuation methods - substitution of book value by intrinsic value / modification of NAV - assessee's burden to substantiate FMV to the satisfaction of the Assessing Officer - use of discounted cash flow (DCF) or other accepted valuation methods for subsidiary assets

Deemed income on excess share premium under Section 56(2)(viib) - FMV determination and Rule 11UA valuation methods - substitution of book value by intrinsic value / modification of NAV - assessee's burden to substantiate FMV to the satisfaction of the Assessing Officer - use of discounted cash flow (DCF) or other accepted valuation methods for subsidiary assets - Whether the assessee was entitled to substitute the book value of its investment in a 100% foreign subsidiary by the intrinsic/market value of the subsidiary (based on a valuer's report using DCF) for determining the FMV of shares issued and thereby avoid addition under Section 56(2)(viib). - HELD THAT: - The Tribunal held that Section 56(2)(viib) read with its Explanation permits the FMV to be the value determined under the prescribed method (Rule 11UA) but also allows the assessee to substantiate a higher FMV to the satisfaction of the AO on a rational basis. The AO and the CIT(A) proceeded on a misconception that the NAV method forbids substitution of book values appearing in the balance sheet. The Explanation to Section 56(2)(viib) contemplates that NAV may be modified if supported by competent evidence. On the facts the assessee produced a valuation report (showing enhanced value of the hotel asset held by the subsidiary) and applied recognized valuation methodology (including DCF). Such revaluation of the subsidiary's asset to rework the investment value and thereby determine the holding company's FMV is permissible provided the correctness of the valuation is established to the AO's satisfaction. The Tribunal found the methodology employed permissible and contrary conclusions by AO/CIT(A) unsustainable. [Paras 10, 11, 12, 13]

Addition under Section 56(2)(viib) treating the premium as deemed income was set aside and the assessee's appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee could substitute the book value of its investment in the wholly owned foreign subsidiary by the intrinsic/market value supported by a valuation report (including DCF), and therefore the addition under Section 56(2)(viib) was set aside.

Condonation of delay - exclusion of limitation period due to COVID-19 - preferment of substantive justice over procedural technicality - opportunity of hearing

Exclusion of limitation period due to COVID-19 - condonation of delay - Period from 15.03.2020 to 28.02.2022 to be excluded while computing delay for condonation of appeal. - HELD THAT: - The Tribunal found that the First Appellate Authority did not consider that a substantial part of the apparent delay fell within the COVID period. The Hon'ble Supreme Court in the case Cognizance for Extension of Limitation has directed that the period from 15.03.2020 to 28.02.2022 shall be excluded for the purposes of limitation in judicial and quasi-judicial proceedings. Applying that principle, the Tribunal directed exclusion of the said period from computation of delay in the assessee's filing of the appeal. [Paras 7]

Exclude period 15.03.2020 to 28.02.2022 from the period of delay for computing condonation.

Condonation of delay - preferment of substantive justice over procedural technicality - opportunity of hearing - Whether the impugned order rejecting condonation and treating the appeal as non-est should be sustained or the matter remanded for fresh consideration and adjudication on merits. - HELD THAT: - The Tribunal recorded that the JCIT(A) rejected condonation of delay of 434 days without taking into account the COVID exclusion and without adjudicating the appeal on merits. The assessee's explanation (non-receipt of departmental communications directly; notices/orders received on ex-accountant's email) is on record. In view of the failure to consider the COVID exclusion and since the appeal was not decided on merits, the Tribunal set aside the impugned order and remitted the matter to the First Appellate Authority for reconsideration. The Tribunal directed the JCIT(A) to take a lenient view regarding the remaining delay after excluding the COVID period, to grant the assessee a reasonable opportunity of being heard, and to decide the appeal on merits. The assessee was directed to comply and to avoid adjournments without pressing reasons. [Paras 7]

Impugned order set aside; matter restored to JCIT(A) to reconsider condonation (after excluding COVID period) and decide the appeal on merits after affording opportunity of hearing.

Final Conclusion: Appeal allowed for statistical purposes; impugned order set aside and matter remitted to the First Appellate Authority to exclude 15.03.2020-28.02.2022 in computing delay, to consider condonation leniently, and to decide the appeal on merits after giving the assessee a reasonable opportunity to be heard.

Bar on prosecution arising from grant of immunity by Settlement Commission - registration of First Information Report does not amount to institution of prosecution - finality of appellate/assessment order and absence of fiscal liability as ground for quashing criminal proceedings - misuse/abuse of process of law where foundational fiscal demand is non-existent

Bar on prosecution arising from grant of immunity by Settlement Commission - Effect of immunity granted by the Settlement Commission on continuance of criminal prosecution against the appellant-company - HELD THAT: - The Court held that the provisions conferring immunity under the Settlement Commission scheme (pari materia in the Customs and Central Excise statutes) operate as an explicit bar to prosecution where the proceedings for the offence have been instituted subsequent to the date of receipt of the application seeking immunity. Having granted immunity under the relevant settlement order, the Appellant-Company was entitled to protection from prosecution in respect of the matters covered by that settlement. Given that immunity was claimed and granted under the CA 1962, CE Act 1944 and IPC, continuation of criminal proceedings against the Company was inconsistent with the statutory scheme and the purpose of the settlement mechanism. [Paras 18, 22]

Immunity granted by the Settlement Commission bars continued prosecution of the Appellant-Company in respect of the settled liabilities.

Registration of First Information Report does not amount to institution of prosecution - Whether mere registration of FIR constitutes institution of prosecution for the purpose of defeating immunity - HELD THAT: - The Court reiterated the settled principle that registration of an FIR initiates investigation but does not, by itself, constitute institution of prosecution. Investigation (Sections 155-176 CrPC) and court cognizance operate in separate channels; prosecution is notionally instituted upon submission of the final report/chargesheet and taking of cognizance under Section 173(2) CrPC. Reliance on precedents establishing that registration of an FIR alone cannot be treated as initiation of prosecution was applied to hold that the prior registration did not defeat the statutory bar created by the settlement. [Paras 19]

Registration of FIR alone does not amount to institution of prosecution and therefore does not negate the protective effect of the settlement.

Finality of appellate/assessment order and absence of fiscal liability as ground for quashing criminal proceedings - misuse/abuse of process of law where foundational fiscal demand is non-existent - Whether criminal proceedings against the Appellant-Company should be quashed in view of the appellate findings, remand, refund entitlement, and lack of challenged demand - HELD THAT: - The Court noted that the Commissioner of Customs (Appeals) had directed fresh assessment and observations were made that the Appellant-Company was not liable to pay CVD on MRP but as per invoice value; on remand the assessing authority acknowledged entitlement to a refund and that the relevant appellate orders were not challenged by Revenue, thereby attaining finality. Coupled with the immunity granted by the Settlement Commission and the fact that sanction against public officials alleged to have committed offences was declined, the foundational fiscal liability underpinning the criminal charge was found to be non-existent. Proceeding with criminal prosecution in such circumstances would amount to misuse or abuse of the process of law. [Paras 21, 22]

Criminal proceedings against the Appellant-Company were quashed because the fiscal basis for prosecution was absent and related assessment orders had attained finality and granted refund entitlements.

Final Conclusion: The appeal is allowed; proceedings against the Appellant-Company are quashed and the orders of the High Court and the Special Judge are set aside, on the grounds of settlement immunity, the legal distinction between FIR registration and institution of prosecution, and the absence of any subsisting fiscal liability supporting the criminal prosecution.

Summary order. Civil Appeal dismissed; pending applications, if any, stand disposed of.

Validity of notice issued to a deceased person - Requirement of notice as condition precedent to recovery of duty drawback - Assistant/Deputy Commissioner notice and recovery procedure under the Drawback Rules - Liability of legal heirs for recovery in absence of statutory machinery - Deemed non-allowance of drawback where export proceeds are not realised

Validity of notice issued to a deceased person - Requirement of notice as condition precedent to recovery of duty drawback - Assistant/Deputy Commissioner notice and recovery procedure under the Drawback Rules - Show Cause Notice issued in the name of the deceased exporter and consequential Order-in-Original and recovery notice are valid or void. - HELD THAT: - Section 75(1) and Rule 16-A require issuance of notice and production of evidence of realisation before an order for recovery of duty drawback can be made; issuance of such notice is a condition precedent to exercise of jurisdiction. The impugned Demand-cum-Show-Cause Notice dated 28.09.2018 was issued after the exporter had died and no steps were taken to bring his legal heirs or legal representatives on record before issuance of the notice. A notice issued against a dead person suffers from a fundamental jurisdictional defect and is invalid. Applying the principle that a jurisdictional notice must be addressed to the correct person, the Court held that the subsequent Order-in-Original confirming demand and the recovery notice issued pursuant thereto cannot be sustained where the foundational notice was invalid. [Paras 12, 13, 14, 15, 17]

Show Cause Notice dated 28.09.2018, the Order-in-Original confirming demand and the recovery notice issued thereon are quashed as the notice was issued to a deceased person and thus vitiated for want of jurisdiction.

Liability of legal heirs for recovery in absence of statutory machinery - Deemed non-allowance of drawback where export proceeds are not realised - Whether recovery of the duty drawback can be effected from the legal heirs of the deceased sole proprietor in the absence of a statutory machinery provision enabling continuation of proceedings against heirs. - HELD THAT: - The Court noted that the petitioner's husband was the sole proprietor who died and that no statutory machinery under the Customs Act enabling continuation of proceedings against legal heirs was shown to be available. Relying on the principle in Shabina Abraham (as applied in Amandeep Singh Sehgal) the Court observed that, absent a statutory provision permitting proceedings to be continued against legal heirs, no recovery can be effected from them merely by inheritance. Consequently, in the facts of this case, recovery could not be sustained against the deceased in respect of whom no valid notice had been issued, nor could the Department proceed against legal heirs without statutory authority. [Paras 11, 16]

In view of the absence of a machinery provision enabling proceedings against legal heirs and the death of the sole proprietor, no recovery can be sustained from the legal heirs; the recovery proceedings are therefore unsustainable.

Final Conclusion: Writ petition allowed: Show Cause Notice dated 28.09.2018, the Order-in-Original confirming the demand and penalty, and the consequent recovery notice dated 12.09.2019 are quashed; recovery proceedings initiated pursuant thereto are set aside.

Date of reckoning of import - Date of shipment/dispatch - Bill of Lading as date of shipment - Provisional release on deposit of enhanced duty - Quantification of duty by Customs - Adjudication not precluded by interim release - Objective consideration of demurrage waiver applications

Date of reckoning of import - Date of shipment/dispatch - Bill of Lading as date of shipment - Whether imports effected prior to Notification No.13/2024-25 by reference to date of shipment/dispatch (bill of lading) fall outside the prohibition effected by the Notification dated 20.05.2024. - HELD THAT: - The Court accepted the contention that the date of reckoning of import is to be determined by reference to the date of shipment/dispatch as reflected in the relevant documentation (including the Bill of Lading) as set out in the Handbook of Procedures. In the present batch, the bills of lading pre-dated Notification No.13/2024-25. The respondents' counsel conceded that the bills of lading in these matters were dated prior to 20.05.2024. Having regard to the antecedent decision in W.P.Nos.35145 of 2023 etc., the Court held that the impugned Notification would not apply to imports where shipment/dispatch occurred before 20.05.2024 as evidenced by the bills of lading.

Imports where shipment/dispatch (as evidenced by bills of lading) occurred before 20.05.2024 are not caught by Notification No.13/2024-25 for the purposes of release.

Provisional release on deposit of enhanced duty - Quantification of duty by Customs - Adjudication not precluded by interim release - Whether the petitioners are entitled to provisional release of the goods and on what conditions and timetable such release should occur. - HELD THAT: - Relying on the principle applied in the earlier batch, the Court directed provisional release of the goods subject to payment/deposit of the enhanced duty. The Customs authorities were directed to quantify the enhanced duty forthwith within one week of receipt of a copy of the order; on receipt of such quantification the petitioners were to make payment immediately; on receipt of payment in entirety the goods were to be released within three weeks. The Court clarified that the interim release does not prevent the Customs Department from continuing with adjudication and other proceedings in accordance with law.

Goods shall be provisionally released on payment of the enhanced duty quantified by Customs within the specified timelines; such provisional release does not preclude further adjudicatory proceedings.

Objective consideration of demurrage waiver applications - Whether applications for waiver of demurrage charges (as directed in the earlier related interim order) should be considered. - HELD THAT: - The Court noted the earlier interim direction in related writ petitions regarding consideration of demurrage waiver. It directed that if the petitioners file applications seeking waiver of demurrage charges, the respondents shall consider and decide those applications objectively, without prejudging the merits.

Any application by the petitioners for waiver of demurrage charges shall be considered and decided by the respondents objectively.

Final Conclusion: Writ petitions disposed by directing provisional release of the imported secondhand digital multifunction machines whose bills of lading pre-date Notification No.13/2024-25, subject to quantification and payment of enhanced duty within prescribed timelines; Customs may continue adjudication, and any demurrage waiver application shall be considered objectively; no order as to costs.

Classification of textile imports - made-up articles - interpretation of Note 7 to Section XI - common parlance test - CTH 6304 - Other made up textile articles - CTH 5407 - Woven fabrics of synthetic filament yarn - confiscation and penalty under the Customs Act

Classification of textile imports - CTH 6304 - Other made up textile articles - CTH 5407 - Woven fabrics of synthetic filament yarn - common parlance test - Imported goods declared as bedsheets are classifiable as made-up articles under CTH 6304 and not as woven fabrics under CTH 5407. - HELD THAT: - The Tribunal analysed the physical nature, size and market use of the imported pieces (each sheet about 14 ft x 7 ft, two sheets loosely stitched so they can be separated) and the test reports relied upon by the Revenue. The Mumbai Textiles Committee report was noted as inconclusive and ATIRA's report, while finding 100% polyester and woven printed fabric, did not definitively establish that the goods could not be used as home textiles; it recorded damaged filaments and did not negate the article's character as a bedsheet. The proprietor's statement corroborated that the items are sold and used as bed sheets and that loose stitching is intended to allow separation. Applying the common parlance/use test and the factual matrix, the Tribunal held that the articles retain the character of bed sheets and are therefore properly classifiable under CTH 6304 rather than CTH 5407. [Paras 9, 10, 11, 15]

Goods held classifiable under CTH 6304 as bed sheets; not classifiable under CTH 5407.

Made-up articles - interpretation of Note 7 to Section XI - common parlance test - Note 7 to Section XI applies to the goods and Note 7(b) may be invoked on the facts, supporting classification as made-up articles. - HELD THAT: - The Tribunal examined Note 7's definitions of 'made up' (including clause (b) - produced in finished state, ready for use or merely needing separation by cutting dividing threads - and clause (d) - hemmed or rolled edges). Given the usage, size and manner of presentation, and authorities cited (including the Delhi Tribunal's decision on towels and the Bench's earlier decisions on similar consignments), the Tribunal concluded that Note 7(b) is applicable since the goods are produced in a finished state ready for use or merely needing simple separation; the absence of hemmed edges did not preclude application of the made-up article exclusion. [Paras 11, 12]

Note 7(b) of Section XI is applicable to the imported items, supporting their classification as made-up articles under Chapter 63.

Confiscation and penalty under the Customs Act - Confiscation, redemption fine and penalty imposed by the Adjudicating Authority are not sustainable in view of the classification under CTH 6304; appeal allowed with consequential relief. - HELD THAT: - Because the Tribunal held that the goods are correctly classifiable as bed sheets under CTH 6304, the foundational finding of mis-declaration underlying confiscation, redemption fine and penalty could not stand. The Tribunal observed that test reports were inconclusive and common parlance/use established the character of the goods. On that basis, the Tribunal set aside the classification adopted by the Revenue and allowed the appeal, giving consequential relief as per law. [Paras 15, 16]

Impugned order of confiscation, redemption fine and penalty set aside; appeal allowed.

Final Conclusion: The appeal is allowed: the imported items are held to be made-up bed sheets classifiable under CTH 6304 (Note 7(b) to Section XI applicable), the Revenue's re-classification under CTH 5407 is rejected, and the consequential confiscation, fine and penalty are set aside; consequential relief granted as per law.

Mis-declaration and suppression of facts - extended period of limitation - penalty under Section 114A - pre-self-assessment period - onus of assessment on the Department - bona fide classification dispute - mere claim of exemption or classification not mis-declaration

Mis-declaration and suppression of facts - extended period of limitation - penalty under Section 114A - pre-self-assessment period - onus of assessment on the Department - bona fide classification dispute - Whether mis-declaration or suppression of facts was established so as to justify invocation of the extended period of limitation and imposition of penalty under Section 114A - HELD THAT: - The Tribunal found no dispute on classification; the controversy was confined to invocation of the extended period and levy of penalty. The imports occurred in the pre-self-assessment era when the statutory onus to assess and classify imported goods lay on the Department. The appellant had furnished Bills of Entry, invoices, inspection certificates and test certificates showing composition at the time of import, and DRI itself arrived at the correct classification on perusal of those documents. The departmental records, including the statement recorded by the appellant's representative, showed that similar goods were classified domestically under the same tariff heading declared in the Bills of Entry. In those circumstances there was no suppression of facts or deliberate mis-declaration aimed at tax evasion. Applying the principle that a mere claim of a particular classification or exemption in the Bill of Entry does not by itself constitute mis-declaration, the Tribunal held that the requisites for invoking the extended period and imposing penalty under Section 114A were not made out. Consequently the demand is confined to the normal limitation period and the penalty set aside.

No mis-declaration or suppression found; extended period not invokable and penalty under Section 114A set aside; demand restricted to the normal period.

Final Conclusion: The appeal succeeds in part: the Tribunal modified the impugned order by holding that there was no mis-declaration or suppression of facts, confined the demand to the normal limitation period and set aside the penalty, and disposed of the appeal with consequential reliefs as per law.

Amendment of plaint under Order I Rule 10 and Order VI Rule 17 of the Code - Moratorium under section 14 of the Insolvency and Bankruptcy Code - Enforcement of security interest during moratorium - Severability of proposed amendment - Change in nature or character of suit versus incidental reliefs - Liberal approach to amendments at pre-trial stage

Moratorium under section 14 of the Insolvency and Bankruptcy Code - Enforcement of security interest during moratorium - Severability of proposed amendment - Whether the proposed amendment to the plaint which seeks reliefs that amount to enforcement of the security interest created by the corporate debtor is barred by the moratorium under section 14(1)(c) of the IBC, and if so whether other parts of the proposed amendment are severable and may be permitted. - HELD THAT: - The court analysed the distinct prohibitions in clauses (a) and (c) of section 14(1) and concluded that clause (c) bars "any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property". The proposed amendment, insofar as it seeks to restrain dealing with, sell, transfer, encumber or enforce rights over the free sale component which constituted the security interest created by the corporate debtor, falls squarely within the prohibition of clause (c) and therefore cannot be allowed while the moratorium operates. However, the pleadings proposed by the plaintiff also include averments and reliefs which do not directly amount to enforcement of the security interest (for example, allegations of collusion and challenge to the subsequent development agreement), and those parts do not fall within clause (c). Applying the principle of severability, the court held that the part of the amendment that partakes the character of enforcement of the security interest must be rejected, while the remainder which does not seek enforcement of the secured asset may be permitted to be incorporated. [Paras 40, 41, 48, 50, 51]

Amendment seeking to enforce the security interest created by the corporate debtor is barred by section 14(1)(c) and is rejected; other parts of the proposed amendment which do not amount to enforcement of the security interest are severable and are permitted.

Amendment of plaint under Order I Rule 10 and Order VI Rule 17 of the Code - Change in nature or character of suit versus incidental reliefs - Liberal approach to amendments at pre-trial stage - Whether the proposed amendment fundamentally alters the nature and character of the suit or introduces a fresh cause of action such that it should be refused. - HELD THAT: - The court recalled the governing principle that amendments at pre-trial stage should be liberally allowed where necessary to determine the real question in controversy, unless the amendment fundamentally changes the nature of the suit or introduces a fresh cause of action barred by limitation or statute. Examining the proposed additional reliefs, the court concluded that the prayer to declare the subsequent development agreement void or not binding on the plaintiff flows from the rights asserted by the plaintiff under the Debenture Trust Deed and the mortgage claimed over the free sale component; it is a facet of the same cause of action and is in continuation of the relief already pleaded. The court distinguished the cited authority relied on by the respondents and held that the proposed challenge does not, at this stage, constitute a fundamental change in the nature of the suit. The court nonetheless clarified that it has not adjudicated the merits of the plaintiff's substantive claim on those points. [Paras 52, 53, 54, 55, 56]

The proposed amendment does not fundamentally alter the nature or character of the suit and, except insofar as it seeks enforcement of the security interest (which is barred by section 14(1)(c)), the amendment may be permitted.

Final Conclusion: Application for amendment of the plaint stands partly allowed: amendments which do not seek enforcement of the security interest created by the corporate debtor are permitted to be incorporated; those parts which would amount to enforcement of the security interest are rejected. The plaintiff to effect the permitted amendments and serve the amended pleadings within the timelines directed by the Court; costs in cause.

Commercial wisdom of the Committee of Creditors - limited judicial review under Section 31(1) of the IBC - conditions for approval of a resolution plan under Section 30(2) of the IBC - duties and obligations of the Resolution Professional in CIRP - majority decision and corporate democracy of the CoC - limited appellate grounds under Section 61(3) of the IBC

Duties and obligations of the Resolution Professional in CIRP - Whether the Resolution Professional breached his duties in conducting the CIRP and in placing the resolution plans before the CoC. - HELD THAT: - The Tribunal found that the RP discharged statutory functions of soliciting, receiving and placing resolution plans and convening CoC meetings; Form G was published multiple times and PRAs were given opportunity to submit addenda. The minutes of the 15th and 17th CoC meetings show that the CoC was apprised of increased FSI/TDR and extended timelines were given to PRAs; all PRAs submitted plans after these developments. The letter from home buyers dated 28.04.2022 was received after the cut off for voting (24.04.2022) and thus could not affect the voting process. On these facts the RP was not at fault for failing to inform PRAs or for alleged collusion, and there was no material showing that the RP omitted any mandatory step that would vitiate the process or the CoC's decision. [Paras 12, 13, 14, 15]

The RP did not fail in his duties and there was no material irregularity in the RP's conduct of the CIRP warranting interference.

Commercial wisdom of the Committee of Creditors - majority decision and corporate democracy of the CoC - Whether the CoC abused or misapplied its commercial wisdom in approving the resolution plan, including alleged oppression of minority stakeholders by a dominant creditor. - HELD THAT: - The CoC was properly constituted and its deliberations are evidenced by detailed minutes of the 17th CoC meeting showing comparative evaluation of all three PRAs, negotiations, an evaluation matrix and receipt of addenda by the deadline. The CoC approved the plan with the requisite voting share (76.35%). The Tribunal held that the IBC vests the CoC with primacy to take commercial decisions and that such collective business decisions, once taken after due deliberation and requisite majority, embody corporate democracy. The submissions invoking Miheer Mafatlal (Companies Act context) were held inapplicable to the self contained IBC scheme; the Supreme Court authorities cited establish that the CoC's commercial wisdom is largely non justiciable so long as required statutory procedures are followed. [Paras 18, 19, 20, 24, 25]

The CoC did not overstep its mandate; its approval of the resolution plan represented a valid exercise of commercial wisdom and corporate democracy.

Conditions for approval of a resolution plan under Section 30(2) of the IBC - limited judicial review under Section 31(1) of the IBC - limited appellate grounds under Section 61(3) of the IBC - Whether the Adjudicating Authority erred in approving the resolution plan and whether the Tribunal should interfere with that approval. - HELD THAT: - The Tribunal reiterated that the Adjudicating Authority's role is a limited judicial review under Section 31(1) to satisfy itself that the plan meets the conditions of Section 30(2) and applicable regulations. The impugned order explicitly records findings that the resolution plan addressed payments to operational creditors, to dissenting financial creditors, management, implementation, non contravention of law (including Section 29A), and feasibility/viability as found by the CoC. The Appellants failed to demonstrate contravention of statutory provisions or any material irregularity in the CIRP. Discontent with allocation among creditors (including lump sum settlement to unsecured creditors) or with commercial terms does not, by itself, constitute a legal ground for setting aside the plan. The Tribunal's appellate jurisdiction is confined to the grounds in Section 61(3), none of which were made out. [Paras 26, 27, 28, 29, 30]

The Adjudicating Authority rightly approved the resolution plan; there is no basis for interference and the approval is upheld.

Final Conclusion: The appeals are dismissed. The impugned order approving the resolution plan is upheld: there was no material irregularity in the RP's conduct, the CoC validly exercised its commercial wisdom and corporate democracy, and the Adjudicating Authority correctly applied the limited judicial review under the IBC.

Operational Debt - Provision of advertising and promotional rights as services - Default under Section 3(12) of the IBC - Pre-existing dispute as envisaged by Section 8(2) of the IBC - Authority to institute proceedings under institutional bye laws - Non-arbitrability of initiation of CIRP / jurisdiction to admit or dismiss under the IBC - Admission under Section 9 and declaration of moratorium under Section 14 of the IBC

Operational Debt - Provision of advertising and promotional rights as services - The Petitioner is an operational creditor and the claimed rights fee falls within the definition of operational debt. - HELD THAT: - The Tribunal examined the Team Sponsor Agreement and concluded that the licence of exclusive advertising and promotional rights, coupled with the scope of services (use of logos, archive footage, player engagement, match tickets), constitutes provision of services. The Tribunal relied on precedents holding that granting exclusive rights and licences having nexus with business operations falls within 'operational debt', and also noted that the invoices contemplated GST, implying supply of goods or services. Accordingly, the Respondent's contention that BCCI merely granted 'rights' and did not provide services was rejected. [Paras 7]

Petitioner qualifies as an operational creditor and the claimed rights fee is an operational debt.

Existence of contract or invoice under Regulation 7(2) - Continuation of commercial arrangement pending formal documentation - There existed a contractual or invoice based basis for the claim and the sponsorship arrangement continued pending formal execution. - HELD THAT: - The Tribunal held that an operational creditor may rely on either a contract or invoices under Regulation 7(2). Although the original agreement expired on 31/03/2022, the parties continued the arrangement, exchanged emails agreeing revised fees, and extended the bank guarantee. These communications and the conduct of the parties (availing sponsor rights and accepting invoices) established a subsisting commercial arrangement and entitlement to raise invoices for 2022 23. The objection based on absence of a formal written contract was accordingly rejected. [Paras 7]

The claim is supported by invoices and communications evidencing continuation of the sponsorship arrangement; lack of a freshly executed formal agreement does not defeat maintainability.

Default under Section 3(12) of the IBC - Acknowledgement of debt by correspondence and conduct - The Corporate Debtor committed a default in payment of the claimed operational debt. - HELD THAT: - Applying the wide definition of 'default' in Section 3(12), the Tribunal found that invoices became due and were not paid. The Respondent's emails (06/01/2023, 17/04/2023, 15/05/2023) acknowledged the outstanding dues, consented to encashment of the bank guarantee, and proposed repayment schedules, thereby amounting to admission of debt and establishing default. The Tribunal observed that part payment via encashment of the bank guarantee further corroborated the existence of debt and default. [Paras 7]

Default in payment as defined under Section 3(12) is established.

Pre-existing dispute as envisaged by Section 8(2) of the IBC - Mobilox principle on pre-existing dispute - There was no pre-existing dispute in relation to the invoices prior to receipt of the demand notice that would bar admission under Section 9. - HELD THAT: - The Tribunal applied the Mobilox principle that a dispute must pre exist the demand notice. The only earlier communication relied upon by the Respondent (email dated 24/05/2022) concerned a specific invoice that was subsequently paid; it did not evidence a pre-existing dispute. The emails of January, April and May 2023 showed acknowledgment and proposed repayment schedules rather than a bona fide dispute. The Respondent's reply to the demand notice did not demonstrate a dispute predating the demand as required by Section 8(2). Accordingly the defence of a pre existing dispute was rejected. [Paras 7]

No pre-existing dispute existed that would preclude initiation of CIRP under Section 9.

Authority to institute proceedings under institutional bye laws - The Petition was properly instituted by the Petitioner through authorized officers under its bye laws and delegated authority. - HELD THAT: - The Tribunal reviewed the BCCI bye laws and the Apex Council resolution and authority letter dated 27/10/2022, which delegated powers to the Honorary Secretary and further to the General Counsel / Senior Manager (Legal). Rule 7(3)(f) permits delegation. The Tribunal was satisfied that the petition was filed by persons duly authorised under the bye laws, and therefore the maintainability objection based on lack of authority was rejected. [Paras 7]

Objection to maintainability for want of proper authorization is dismissed; filing was authorised under the bye laws.

Admission under Section 9 and declaration of moratorium under Section 14 of the IBC - The Section 9 petition is admitted and moratorium under Section 14 is declared; IRP to be appointed and CIRP to proceed. - HELD THAT: - On the findings that an operational debt existed, default had occurred and no pre existing dispute barred the petition, the Tribunal held there was no reason to deny the Section 9 application. Consequently, CP (IB) No.149/2023 was admitted, moratorium was declared, and directions were given regarding prohibitions during moratorium and consequential steps for constitution of the Committee of Creditors. The Tribunal appointed an Interim Resolution Professional and directed statutory actions by him. [Paras 8, 9, 10, 12]

Section 9 petition admitted; moratorium imposed and Interim Resolution Professional appointed to conduct CIRP.

Non-arbitrability of initiation of CIRP / jurisdiction to admit or dismiss under the IBC - IA 106/2024 seeking reference to arbitration is dismissed; the Adjudicating Authority will admit or dismiss the Section 9 petition and not refer it to arbitration. - HELD THAT: - Relying on the Supreme Court's reasoning in Indus Biotech, the Tribunal held that when considering a Section 7/9 application the Adjudicating Authority must examine the material before it and decide whether there is default; permitting reference to arbitration at that stage would frustrate the statutory insolvency timeline and allow delay. Having admitted the Section 9 petition, the Tribunal found the application to refer parties to arbitration to be not maintainable and dismissed IA 106/2024. [Paras 16]

Application to refer the dispute to arbitration is dismissed.

Final Conclusion: The Tribunal held that the BCCI is an operational creditor and the claimed rights fee constitutes an operational debt; the Corporate Debtor committed default; there was no pre-existing dispute; the petition was duly authorised and therefore the Section 9 petition is admitted, moratorium under Section 14 is declared, an Interim Resolution Professional is appointed and the application to refer the matter to arbitration is dismissed.

Service of demand notice under Section 95(4)(b) - Failure to pay within fourteen days and cause of action under Section 95(4)(b)-(c) - Duty of Resolution Professional to examine and verify compliance under Section 99 - Adjudicating Authority's independent assessment under Section 100 - Maintainability of petition for initiation of insolvency resolution process against a personal guarantor

Service of demand notice under Section 95(4)(b) - Failure to pay within fourteen days and cause of action under Section 95(4)(b)-(c) - Maintainability of petition for initiation of insolvency resolution process against a personal guarantor - The petition under Section 95 for initiation of insolvency resolution process against the personal guarantor is not maintainable for want of service of the statutory demand notice and consequent absence of a cause of action. - HELD THAT: - The Tribunal found on the material placed by the Financial Creditor that the alleged second demand notice dated 16.10.2021 was not served on the personal guarantor: the postal track report records return of the consignment with endorsement and delivery particulars which falsify the creditor's claim of service. No proof of service of the earlier demand notice dated 15.12.2020 was furnished. In terms of Section 95(4)(b)-(c), a petition must be accompanied by documents showing failure to pay within fourteen days of service of demand and relevant evidence of default; absent service, no cause of action to proceed against the guarantor arises. The Tribunal therefore held the application to be without cause of action and not maintainable. [Paras 33, 34, 35, 39, 40]

Application under Section 95 rejected for non-service of the statutory demand notice and consequent lack of maintainability.

Duty of Resolution Professional to examine and verify compliance under Section 99 - Adjudicating Authority's independent assessment under Section 100 - The Resolution Professional failed to discharge the statutory duty of verification under Section 99 and his report could not be treated as a substitute for the Adjudicating Authority's independent assessment. - HELD THAT: - The Tribunal reiterated that the resolution professional's duty to examine the application within ten days is a substantive legal obligation to verify compliance with Sections 95-97, including service of the demand notice. The RP's report merely stated that the personal guarantor had not responded to notices and concluded the debt remained unpaid without verifying service; this amounted to non-application of mind. Citing the requirement that the Adjudicating Authority conduct an independent assessment within fourteen days under Section 100, the Tribunal held that it could not admit the petition based on an unreliable RP report and must ensure statutory preconditions are satisfied before admission. [Paras 18, 21, 28, 36, 37]

The RP's report was found unreliable for lack of verification; the Adjudicating Authority independently rejected the petition.

Final Conclusion: The Company Petition under Section 95 is rejected without costs: the demand notice required by Section 95(4)(b) was not served and the resolution professional failed to verify statutory compliance, rendering the petition not maintainable and warranting refusal of admission.

Sale on a going concern - capital reduction and share allotment - structuring consideration by equity and debt instruments - extinguishment of pre-transfer liabilities - release of charges and clean title - regularisation of account and asset classification - extinguishment of statutory and operational dues upon distribution under Section 53 - cessation of pre-sale criminal liability - taxation reliefs to be obtained from tax authorities - continuity of licences, consents and approvals despite insolvency/liquidation

Sale on a going concern - capital reduction and share allotment - structuring consideration by equity and debt instruments - Reliefs relating to capital structure, cancellation of existing share capital and allotment of new shares and permitting balance consideration to be structured as debt instruments were allowed. - HELD THAT: - The Tribunal recorded that the corporate debtor was sold as a going concern and granted directions that on the Transfer Date the existing equity and preference shares would stand cancelled and new equity of nominal amount would be issued to the successful bidder and its nominee. The Tribunal also allowed the bidder to structure the remaining consideration by way of optionally convertible/ non-convertible debentures or secured term loan as mutually agreed. The reliefs were granted to effectuate the acquisition on going concern basis and to enable infusion of fresh capital and appropriate structuring of consideration.

Granted

Extinguishment of pre-transfer liabilities - extinguishment of pre-transfer financial creditor claims - release of charges and clean title - regularisation of account and asset classification - Reliefs in relation to financial creditors' claims, including extinguishment of accrued interest and other pre-Transfer Date financial liabilities (subject to guarantor liability), release of charges and directions to regularise account classification were allowed. - HELD THAT: - The Tribunal granted the bidder the consequential reliefs necessary for acquisition: accrued or unpaid interest and other financial claims in respect of periods prior to the Transfer Date were directed to stand extinguished as against the corporate debtor and the bidder; the liability of any guarantor would continue, but the corporate debtor/bidder would not be liable on personal guarantees. On payment of the consideration the creditors were to release charges over assets and enable filing of charge satisfaction with the registrar, and financial creditors were directed to upgrade the account classification to enable revival of the business. These directions were given to effectuate transfer of a clean title and to facilitate the going concern acquisition.

Granted

Extinguishment of statutory and operational dues upon distribution under Section 53 - extinguishment of pre-transfer operational and statutory liabilities - Reliefs in respect of operational creditors and statutory dues up to the Transfer Date were allowed to the extent recorded by the Tribunal. - HELD THAT: - The Tribunal directed that upon distribution of proceeds in terms of Section 53 of the IBC, liabilities towards operational creditors and statutory dues up to the Transfer Date would stand settled and extinguished, including claims whether filed or not and penalties/interest for periods up to the Transfer Date. The order therefore affords the bidder protection from operational and statutory claims relating to pre-Transfer Date periods, consistent with completion of liquidation distributions.

Granted

Cessation of pre-sale criminal liability - protection from pre-transfer litigations and proceedings - Directions that liabilities for offences committed prior to issuance of the sale certificate shall cease and that the corporate debtor shall not be prosecuted in respect thereof were granted; related civil and other proceedings in respect of pre-Transfer Date liabilities were also directed to cease as against the corporate debtor and bidder. - HELD THAT: - The Tribunal ordered that from the Transfer Date the corporate debtor would not be liable for offences committed prior to issuance of the sale certificate and no action against corporate debtor's property would be taken for such offences; it extended analogous protection in relation to civil and other proceedings for liabilities arising prior to the Transfer Date so as to enable change of control and operation as a going concern. These directions were intended to remove legal impediments to the acquisition and operation of the business post-transfer.

Granted

Taxation reliefs to be obtained from tax authorities - Broad taxation related reliefs sought from the Tribunal were not granted; the bidder was directed to approach the concerned tax authorities for tax reliefs and exemptions, which shall be decided as per law. - HELD THAT: - While the application prayed for an extensive array of tax exemptions, deemed closures of assessments and waivers under various provisions of tax law, the Tribunal did not itself grant those taxation directions. Instead, the Tribunal recorded that the applicant may approach the concerned tax authorities and that those authorities shall take decisions in accordance with prevailing law, rules and regulations. Thus, the Tribunal declined to exercise its powers to grant the broad tax reliefs sought and left taxation matters to the competent revenue authorities.

Taxation reliefs left to relevant authorities; applicant to approach them

Continuity of licences, consents and approvals despite insolvency/liquidation - Directions for continuity and non-termination of existing consents, licences and approvals and for facilitation of additional licences/registrations to run the business as a going concern were granted. - HELD THAT: - The Tribunal directed that existing consents, licences, approvals, rights and entitlements in favour of the corporate debtor shall not be terminated on grounds of initiation of insolvency/liquidation, change of control or on account of unpaid dues which have been settled pursuant to the acquisition. It further directed that subsisting consents and any additional licences or registrations required to run the business be made available immediately from the Transfer Date to facilitate operation as a going concern. These directions aim to secure operational continuity post-transfer.

Granted

Final Conclusion: IA No.1813/2023 in CP (IB) No.275/7/HDB/2022 is partly allowed: the Tribunal granted specified reliefs and directions to effectuate the sale of the corporate debtor as a going concern (including capital restructuring, extinguishment of specified pre-Transfer Date liabilities and release of charges, cessation of certain pre-sale liabilities, and continuity of licences), while taxation-related reliefs were not granted by the Tribunal and the applicant was directed to approach the concerned tax authorities.

Financial service provider - exclusion from "corporate person" - maintainability of Section 10 of the IBC - Cancellation of Certificate of Registration and directions to dispose of financial assets - Principal Business Criteria (PBC)

Financial service provider - exclusion from "corporate person" - maintainability of Section 10 of the IBC - Cancellation of Certificate of Registration and directions to dispose of financial assets - Respondent is a "financial service provider" and therefore excluded from the definition of "corporate person"; the Section 10 petition is not maintainable. - HELD THAT: - The Tribunal found that the Corporate Applicant indisputably held NBFC registration and was a financial service provider at the dates on which the cause of action arose (date of lending and date of default). Although the RBI cancelled the Certificate of Registration subject to directions to dispose of financial assets and bring financial assets below 50% within three years, RBI expressly retained regulatory control and required compliance with PBC norms and submission of audited financials. The Corporate Applicant did not effect disposal of financial assets by recovery or sale; instead it wrote off the assets in the books, which the Tribunal held did not constitute compliance with RBI's directions. On that basis the Tribunal concluded that the applicant continued to be governed by RBI and its activities remained financial in character. Consequently the applicant falls within the statutory concept of a "financial service provider" and is therefore excluded from the definition of "corporate person" under Section 3(7) of the IBC; Part II remedies including initiation of CIRP under Section 10 are not available to the applicant. [Paras 16, 19, 20, 21, 22]

Petition dismissed as not maintainable because the respondent is a financial service provider excluded from corporate insolvency proceedings under Section 3(7) of the IBC.

Final Conclusion: The application under Section 10 is dismissed without costs: the Corporate Applicant is a financial service provider governed by RBI, excluded from the definition of "corporate person", and therefore not entitled to initiation of CIRP under Part II of the IBC.

Admission of petition under section 7 of the Insolvency and Bankruptcy Code - debt and default - corporate guarantee payable on demand - date of default for a guarantor is the date of demand - section 10A inapplicable to demand-payable guarantees - scope of corporate guarantee and renewal of credit facilities - guarantee in favour of consortium and individual consortium members - appointment of Interim Resolution Professional and initiation of CIRP - moratorium under section 14 of the IBC

Admission of petition under section 7 of the Insolvency and Bankruptcy Code - debt and default - The Section 7 petition filed by the Financial Creditor is admissible and is to be admitted. - HELD THAT: - The Tribunal found on the evidence and materials on record that the Corporate Debtor owed a financial debt to the Financial Creditor and had defaulted in repayment, the default exceeding the statutory minimum under section 4(1) of the IBC. The application was filed by a duly authorised person and the petition was complete in all respects. Applying the settled position that once 'debt' and 'default' are established in a Section 7 petition the adjudicating authority is bound to admit the petition, the Tribunal held that there was no reason to deny admission and ordered initiation of CIRP. [Paras 21, 23, 24]

Petition under section 7 admitted and CIRP initiated against the Corporate Debtor.

Corporate guarantee payable on demand - date of default for a guarantor is the date of demand - section 10A inapplicable to demand-payable guarantees - The petition is within limitation because for a guarantee payable on demand the date of default for the guarantor is the date of the demand; section 10A does not bar the petition. - HELD THAT: - The Tribunal recorded that the Corporate Guarantee Deed made the guarantor liable to pay 'forthwith on demand' and that the Financial Creditor issued a demand notice on 06.03.2023. Applying the principle that the guarantor's default is triggered by the demand and not by the principal borrower's earlier default, the Tribunal concluded that the petition was filed within the period of limitation and that the bar under section 10A (as urged by the Respondent) did not apply. [Paras 16, 17]

Limitation objection and section 10A defence rejected; petition not time-barred.

Scope of corporate guarantee and renewal of credit facilities - guarantee in favour of consortium and individual consortium members - The corporate guarantee covered the claimed credit facilities including renewals and operated in favour of the consortium as well as individual consortium members including the Financial Creditor. - HELD THAT: - On perusal of sanction and disbursement records, the Tribunal noted that the credit facilities were originally sanctioned earlier (reference to sanction letter of 27.11.2013) and were renewed from time to time, undermining the Respondent's contention that facilities sanctioned in 2019 could not be covered by guarantees dated 2015 and 2016. The Tribunal further relied on the language of the guarantee deed which expressly treated the Lead Bank expression as including Central Bank of India and other consortium members or any one or more of them, concluding that the guarantee operated in favour of each consortium member. [Paras 18, 19]

Objection that the guarantee did not cover later facilities or the Financial Creditor individually is rejected; guarantee covers the disputed facilities and each consortium member.

Appointment of Interim Resolution Professional and initiation of CIRP - moratorium under section 14 of the IBC - An Interim Resolution Professional is appointed and statutory moratorium is imposed upon admission of the petition. - HELD THAT: - The Financial Creditor proposed a registered insolvency professional and the Tribunal accepted the proposal, directing appointment as IRP to perform functions under the IBC. Consequential directions were issued for public announcement, cooperation by the suspended board, supply of documents to the IRP, deposit by the Financial Creditor for CIRP expenses, communication of the order to concerned authorities, and imposition of the moratorium under section 14 for the duration of CIRP as prescribed by the Code. [Paras 22, 24]

Mr. Jitendra Ramesh Palande appointed as IRP; moratorium imposed and ancillary directions issued.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the Financial Creditor against the Corporate Debtor, holding that debt and default were established, the demand-based guarantee rendered the petition within limitation (section 10A inapplicable), the guarantee covered the relevant facilities and consortium members, appointed the proposed IRP and directed initiation of CIRP with the statutory moratorium and consequential administrative directions.

Financial debt - disbursal for the consideration for time value of money - transactional nature of debt (Section 5(8) of the Code) - fabricated/forged document - admission of debt versus admission of financial debt - requirement of debt and default for admission under Section 7

Financial debt - disbursal for the consideration for time value of money - transactional nature of debt (Section 5(8) of the Code) - Adjudicating Authority erred in admitting the Section 7 application without establishing that the debt was a financial debt within the meaning of Section 5(8) of the Code. - HELD THAT: - The Tribunal held that for a claim to qualify as a financial debt it must disclose a disbursal against the consideration for the time value of money; mere admission of an amount due does not automatically convert it into a financial debt. The Financial Creditor's case rested on a letter dated 20.09.2010 as the written terms evidencing a loan and interest at 12%. That letter was impeached by the Corporate Debtor as fabricated and was not proved in original despite specific directions of the Adjudicating Authority. The material on record did not establish the essential element of disbursal for the time value of money; on the contrary, the facts recorded and the sequence of transactions supported the conclusion that inter company transfers were family assistance and not loan disbursals carrying time value consideration. Consequently, admission of a debt in the Corporate Debtor's pleadings and balance sheet did not suffice for treating the obligation as a financial debt in the absence of proof of the underlying transactional character required by Section 5(8). [Paras 24, 26, 29]

Section 7 admission was found to be erroneous because the Financial Creditor failed to prove that the liability was a financial debt involving disbursal for the time value of money.

Fabricated/forged document - admission of debt versus admission of financial debt - requirement of debt and default for admission under Section 7 - The Adjudicating Authority impermissibly relied on the Corporate Debtor's admission of the principal amount without adjudicating the challenge to the authenticity of the letter that formed the basis for interest and the characterisation of the obligation as a financial debt. - HELD THAT: - The Tribunal observed that the Corporate Debtor had expressly admitted a principal liability but had simultaneously denied that the liability constituted a financial debt, challenging the Letter dated 20.09.2010 as forged and noting that the purported signatory was not a director on the date of the letter. The Adjudicating Authority had directed production of the original letter, which was not produced, and nevertheless proceeded to admit the petition on the ground of admission of the debt. The Tribunal found this approach flawed: an admission of an amount due is not coextensive with an admission that the obligation possesses the characteristics of a financial debt required for initiation of CIRP under Section 7, particularly where the creditor's sole written evidence of the terms was impugned as fabricated and left unproved. [Paras 18, 22, 25]

Admitting the Section 7 petition solely on the Corporate Debtor's admission of the principal amount, without resolving the challenge to the foundational document and the nature of the obligation, was an error.

Requirement of debt and default for admission under Section 7 - admission of debt versus admission of financial debt - Relief by way of setting aside the impugned admission order and disposal of the contested amount in the interest of justice. - HELD THAT: - Although the Tribunal concluded that the Adjudicating Authority erred in admitting the Section 7 application, it noted that the Corporate Debtor had admitted the principal sum and had tendered a bank draft for that amount in court. To give finality and in the interests of justice, the Tribunal permitted the Financial Creditor to retain the draft tendered by the Corporate Debtor and set aside the order admitting the Section 7 application. This course both vindicated the Tribunal's finding that the requisite character of a financial debt was not proved and avoided multiplicity of proceedings by allowing the creditor to retain the undisputed principal amount. [Paras 31, 32]

Order admitting the Section 7 application set aside; the Financial Creditor is permitted to retain the tendered amount and the appeal is allowed.

Final Conclusion: The Tribunal set aside the Adjudicating Authority's admission of the Section 7 petition because the Financial Creditor failed to prove that the liability was a financial debt (no disbursal for time value of money and the foundational letter was impeached and not proved); nonetheless, in the interest of finality the undisputed principal amount tendered by the Corporate Debtor was permitted to be retained by the Financial Creditor and the appeal was allowed.

Right to liberty under Article 21 - Bail as the rule and jail as the exception - Section 45 of the Prevention of Money Laundering Act, 2002 - threshold for grant of bail - Relaxation of Section 45 rigours where custody is prolonged and trial unlikely to conclude soon - Expeditious trial requirement - Proviso to Section 45(1) - gender-based concession

Right to liberty under Article 21 - Section 45 of the Prevention of Money Laundering Act, 2002 - threshold for grant of bail - Relaxation of Section 45 rigours where custody is prolonged and trial unlikely to conclude soon - Expeditious trial requirement - Petitioner entitled to bail despite statutory threshold under Section 45 of the PMLA in view of prolonged pre-trial custody and absence of likelihood of trial conclusion in the near future. - HELD THAT: - The Court recognised the sacrosanct nature of the right to personal liberty under Article 21 and reiterated that bail is normally the rule and detention the exception. While Section 45 of the PMLA sets a stringent twin threshold for grant of bail, this Court's recent decisions permit relaxation of those rigours where an accused has been incarcerated for a considerable period and there is little prospect of trial concluding shortly. The petitioner had been in custody for about 22 months; the maximum sentence on conviction for the charged offence (money laundering) is seven years; one approver's later statement implicated the petitioner though earlier statements did not; prosecution filed multiple supplementary complaints and expects to examine a large number of witnesses causing further delay; and earlier assurances about expeditious trial have not resulted in trial commencement. Taking these factors together, the Court held that continued pre-trial incarceration would amount to punishment and that the statutory bar in Section 45 could be relaxed in the facts of this case to vindicate Article 21 and the right to an expeditious trial. [Paras 8, 9, 10, 11, 12]

Grant of bail to the petitioner despite the threshold in Section 45 of the PMLA, on the ground of prolonged custody and lack of immediate prospect of trial completion.

Bail as the rule and jail as the exception - Expeditious trial requirement - Terms and conditions on which bail is to be granted to the petitioner. - HELD THAT: - Having concluded that bail should be granted, the Court framed specific conditions to balance the liberty interest with prosecution concerns. The petitioner is to be released forthwith on furnishing bail bonds in specified amounts in connection with the ECIR, subject to prohibitions on tampering with evidence or influencing witnesses, deposit of passport with the trial court, and regular attendance and cooperation for expeditious disposal of the trial. The Court clarified that the order relates only to bail and does not bear on the merits of the case. [Paras 13, 14]

Bail ordered subject to conditions including bond, non-tampering, deposit of passport, and regular attendance; order confined to bail and without prejudice to trial merits.

Final Conclusion: Special Leave Petition allowed in part; petitioner released on bail subject to conditions specified by the Court, with the order confined to grant of bail and having no bearing on the merits of the trial.

Disclosure of information for necessary action under Section 66(2) of the Prevention of Money Laundering Act - Powers to collect evidence, summon and compel production of documents in the course of investigation - Proceeds of crime as the pivotal ingredient of the offence of money laundering - Inclusion of subsequent complaints into a pending complaint under Explanation (ii) to Section 44(1) - Limited scope of judicial interference in the manner of investigation

Disclosure of information for necessary action under Section 66(2) of the Prevention of Money Laundering Act - Powers to collect evidence, summon and compel production of documents in the course of investigation - Limited scope of judicial interference in the manner of investigation - Validity of the Enforcement Directorate sending the questionnaire (Annexure P 16) to customers and sharing the information obtained with the police under Section 66(2) and in furtherance of investigative powers under Section 50. - HELD THAT: - The Court held that Section 66(2) empowers the Director or an authority authorised by him to share information with the concerned agency where, on the basis of information or material in his possession, he is of the opinion that provisions of any other law are contravened. Section 50 and the definition of 'investigation' enable the ED to collect information, summon persons and compel production of documents for locating proceeds of crime. The questionnaire sent to customers of incomplete projects was an exercise to collect information to trace proceeds of crime and fell within the investigatory powers of the ED. The manner and framing of questions for such inquiry are matters within the exclusive domain of the Investigating Agency and courts should not interfere unless the exercise of power is totally arbitrary. The Court noted that the information collected was shared with the appropriate law enforcement agency which registered FIR No. 14, and accordingly found no transgression of statutory powers in issuing the communication. [Paras 3]

The questionnaire and the sharing of information by the ED were lawful and did not amount to transgression of the ED's statutory investigatory powers.

Proceeds of crime as the pivotal ingredient of the offence of money laundering - Inclusion of subsequent complaints into a pending complaint under Explanation (ii) to Section 44(1) - Whether the ECIR and investigation can continue when most predicate FIRs are quashed/compounded but at least one FIR remains or a fresh FIR is registered. - HELD THAT: - The Court observed that money laundering under Section 3 depends on proceeds of crime derived from scheduled offences, but registration of a predicate FIR is not a sine qua non to proceed under the PMLA. Explanation (ii) to Section 44(1) expressly contemplates that subsequent complaints in respect of further investigation may be included in the pending complaint before the Special Court. Consequently, where at least one FIR remains or a fresh FIR disclosing a scheduled offence is registered, the investigation under an existing ECIR may legitimately continue and subsequent complaints can be incorporated into the pending proceedings. Authorities and precedents which quashed ECIRs did so where the foundational scheduled offence had ceased to exist and no fresh FIR had been registered; by contrast, a subsequently registered FIR may sustain continued investigation. [Paras 3]

An existing ECIR may be continued and a subsequently registered FIR can be included in the pending complaint; the existence of at least one valid predicate complaint/fresh FIR permits ongoing investigation.

Limited scope of judicial interference in the manner of investigation - Whether the communication (Annexure P 16) coerced or compelled private individuals to lodge criminal complaints and whether the writ petition seeking quashing of that communication was maintainable. - HELD THAT: - The Court found that the questionnaire merely asked, inter alia, whether a complainant wished or planned to file a complaint and did not amount to compelling, coercing or browbeating allottees to file FIRs. The collection of such information was directed to ascertain facts relevant to proceeds of crime and was within lawful investigatory activity. The Court further noted that the petitioner, after extensive argument, disavowed pressing quashing of the ECIR; in any event, the Court found no ground to quash the communication or to interfere with the investigatory process, particularly when the FIR arising from the information is the subject matter of separate proceedings before the competent forum. [Paras 3]

The questionnaire did not amount to coercion to lodge complaints and there was no basis to quash the communication; the writ petition is without substance on this ground.

Final Conclusion: Writ petition dismissed; the Court upheld the ED's power to solicit information and share it under Section 66(2), affirmed the ED's investigatory powers under Section 50, and held that subsequent complaints/FIRs may be included in a pending ECIR so long as investigation into proceeds of crime related to scheduled offences continues.

Cenvat credit on service tax paid on mobilization advance - definition of "input service" under Rule 2(l) of Cenvat Credit Rules, 2004 - audit under Rule 5A of Service Tax Rules and scope of verification under Section 94(2)(k)/Section 114(J) - interest under Rule 14 of Cenvat Credit Rules, 2004 - penalty under Sections 77 and 78 of the Finance Act, 1994 - extended period of limitation where suppression was within knowledge of the Revenue

Cenvat credit on service tax paid on mobilization advance - definition of "input service" under Rule 2(l) of Cenvat Credit Rules, 2004 - Cenvat credit claimed on service tax paid on mobilisation advances adjusted and availed w.e.f. July 2012 is not admissible. - HELD THAT: - The Tribunal examined Rule 2(l) of the Cenvat Credit Rules, 2004 and held that services specified under commercial or industrial construction services, construction of complex services and works contract services used for construction of a building or civil structure are excluded from the definition of "input service" for the period up to 30.06.2012 and, from 01.07.2012, the service portion in execution of works contract and construction services (including services under clause (b) of section 66E) is similarly excluded. Mobilisation advances paid in 2010-11 and adjusted against contractor invoices w.e.f. 01.07.2012 therefore relate to construction/works contract services which do not qualify as input services. The Tribunal observed that consequently service tax paid on such mobilisation advances could not be taken as Cenvat credit and upheld the Commissioner's confirmation of the demand of the inadmissible credit. [Paras 5]

Claim for Cenvat credit on service tax paid on mobilisation advances is disallowed and the demand for such credit is upheld.

Interest under Rule 14 of Cenvat Credit Rules, 2004 - amendment to Rule 14 w.e.f. 01.07.2012 - "taken and utilised wrongly" - No interest under Rule 14 is payable on the disallowed credit where the credit was only taken in accounts and not utilised. - HELD THAT: - The Tribunal noted the amendment to Rule 14 with effect from 01.07.2012 which refers to Cenvat credit that has been "taken and utilised wrongly". Relying on the legislative text and judicial precedent, the Tribunal distinguished mere availment/entries in books from taking and utilising credit and accepted the appellant's contention that the closing Cenvat balance as on 01.04.2013 exceeded the disputed amount. In light of the authorities cited, where the credit was not actually utilised and was reversed, the liability to pay interest under the recovery provision does not arise. Accordingly, interest under Rule 14 was held not leviable. [Paras 5]

No interest is payable in respect of the disallowed Cenvat credit.

Penalty under Sections 77 and 78 of the Finance Act, 1994 - extended period of limitation where suppression was within knowledge of the Revenue - Penalties under Sections 77 and 78 and invocation of the extended period are not justified and are set aside. - HELD THAT: - The Tribunal recorded that the appellant was registered, filed returns, paid service tax on outputs and had cooperated with the Department and furnished documents during audit. Relying on settled principles, the Tribunal held that extended period and enhanced penalties require a positive finding of fraud, collusion, wilful misstatement or suppression of facts; where material facts were within the knowledge of the Revenue and recorded in the assessee's books, suppression cannot be established. Applying these principles and precedent, the Tribunal found no justification for invoking the extended period or imposing penalties under Sections 77 and 78. [Paras 5]

Penalties under Sections 77 and 78 and invocation of the extended limitation period are not sustainable and are discharged.

Final Conclusion: Appeal allowed in part: the demand for inadmissible Cenvat credit on mobilisation advances is upheld, but no interest under Rule 14 is payable and penalties under Sections 77 and 78 (and the extended period) are set aside.

Reimbursement of expenses not taxable as part of Custom House Agent service - taxability of commission under Business Auxiliary Service - exemption under Notification No. 13/2003-ST - application of Rule 5(2) of the Valuation Rules, 2006

Reimbursement of expenses not taxable as part of Custom House Agent service - Liability to service tax on reimbursed expenses charged by the appellant in provision of Custom House Agent (CHA) services. - HELD THAT: - The Tribunal found that amounts recovered as reimbursement of actual expenses (such as forklift and port operation charges) are distinct from the CHA service charge and, following the Supreme Court authority relied upon by the appellant, such reimbursements are not exigible to service tax as part of CHA service. The demand insofar as it relates to reimbursable expenses was therefore set aside.

Demand on reimbursable expenses in relation to CHA service set aside.

Taxability of commission under Business Auxiliary Service - exemption under Notification No. 13/2003-ST - application of Rule 5(2) of the Valuation Rules, 2006 - Liability to service tax on commission claimed as Business Auxiliary Service (BAS) and effect of Notification No.13/2003-ST for the period 01.10.2003 to 31.03.2004; and treatment of the remaining BAS demand upheld by the lower authority. - HELD THAT: - The Tribunal examined the BAS demand in two parts. First, it held that the demand of Rs.31,859/- for the period 01.10.2003 to 31.03.2004 is covered by the general exemption contained in Notification No.13/2003-ST dated 20.06.2003 and accordingly set aside that portion of the demand. Second, having rejected the appellant's contentions insofar as they related to other periods and having noted the appellate authority's finding that the appellant failed to satisfy conditions of Rule 5(2) of the Valuation Rules, 2006, the Tribunal upheld the remaining demand in respect of commission (and corresponding interest and part of the penalties as maintained by the appellate authority).

Demand on BAS commission for 01.10.2003-31.03.2004 set aside as exempt; remaining BAS demand upheld.

Final Conclusion: The impugned order is modified: demands relating to reimbursable expenses under CHA service and the BAS commission for 01.10.2003 to 31.03.2004 (covered by Notification No.13/2003 ST) are set aside, while the balance demand on commission (as maintained by the lower authorities) is upheld; appeal partly allowed.

Bundled services - extended period of limitation - suppression of facts with intent to evade - exemption of services rendered in connection with promotion of sporting events - taxability of grants in aid / subsidies - negative list and Mega Exemption Notification - taxability of letting out sports grounds - mandap keeper service versus entry fee - essential ingredients of franchisee service

Extended period of limitation - suppression of facts with intent to evade - Extended period of limitation invoked in the Show Cause Notice is not sustainable and penalties cannot be imposed for suppression with intent to evade. - HELD THAT: - The demand in the Show Cause Notice was raised on the basis of the assessee's published annual reports and ledger accounts. Where a demand is founded on books of account or published financial statements, invocation of the proviso to Section 73(1) for extended limitation on the ground of suppression with intent to evade is not sustainable. Reliance on such documentary records does not establish deliberate suppression of facts and therefore does not justify extended limitation or penalties. Consequently the extended limitation was held not invocable and no penalty or interest is exigible once the demand is set aside. [Paras 7, 10]

Invocation of extended limitation rejected; penalties and interest not imposable.

Bundled services - exemption of services rendered in connection with promotion of sporting events - negative list and Mega Exemption Notification - taxability of grants in aid / subsidies - Services rendered by the association in connection with promotion of cricket constitute bundled services connected with sporting activity and are not taxable for the periods under consideration. - HELD THAT: - The association's commercial activities (sale of advertising space, stall lettings, corporate/hospitality boxes, etc.) were carried out only in the course of hosting cricket matches and are naturally bundled with the main activity of promoting the game. Under the principles governing bundled services, elements naturally integral to the main service are treated as a single service giving the bundle its essential character. Services rendered in connection with promotion of sporting events were not taxable prior to 30.06.2012, and with effect from 01.07.2012 services provided by a recognized sports body to another are exempt under the Mega Exemption Notification. Amounts received as IPL subvention/TV/Media rights were grants in aid and not consideration for business auxiliary services. Applying these principles, the demands raised in respect of services connected with promotion of cricket were correctly dropped. [Paras 7, 8]

Services in connection with promotion of cricket treated as bundled and exempt; demands in respect of such services rightly dropped.

Mandap keeper service versus entry fee - taxability of letting out sports grounds - essential ingredients of franchisee service - Demands in respect of corporate/hospitality boxes, letting out of ground for sporting events, and alleged franchisee receipts are not taxable as the impugned categories do not apply. - HELD THAT: - Amounts collected for corporate/hospitality boxes were held to be entry fees/bookings for privileged viewing and not provision of mandap keeper service; there was no exclusive letting of 'mandaps' or role of a mandap keeper. Letting out of the ground was for playing cricket to promote the sport and not for furtherance of commercial business; such letting is not taxable as renting of immovable property for commercial activity. The receipts described as franchisee amounts did not satisfy the essential ingredients of franchisee service (no franchise agreement or representational rights conferred) and thus do not attract franchisee service classification. The adjudicating authority's decision to drop these demands was upheld. [Paras 4, 7, 8]

Demands under mandap keeper, renting of immovable property and franchisee service not sustainable and rightly dropped.

Set aside of confirmed demands - Demands confirmed by the adjudicating authority in the impugned order are set aside and the Revenue's appeal is dismissed. - HELD THAT: - Applying the conclusions on limitation, bundled services, exemption for promotion of sports and classification of specific receipts, the Tribunal concluded that the demands which had been confirmed by the adjudicating authority could not be sustained. The Tribunal therefore set aside the confirmed demands, upheld the dropping of other demands by the adjudicating authority, allowed the assessee's appeal and dismissed the Revenue's appeal. [Paras 7, 8, 9]

Confirmed demands set aside; appeals disposed accordingly.

Final Conclusion: The Tribunal allowed the appellant's appeal and set aside the confirmed service tax demands, upheld the dropping of other demands by the adjudicating authority, held extended limitation and penalties unsustainable, and dismissed the Revenue's appeal.

Refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - Availability of CENVAT credit on the basis of invoices under Rule 3 of the CENVAT Credit Rules, 2004 - Correction of returns and effect of Rule 9(11) vis-a -vis taking of credit - Limitation on adjudication beyond the scope of the show cause notice - Invoices issued on erstwhile/non-registered address not a valid ground for denial of CENVAT credit - Requirement of reasoned order

Correction of returns and effect of Rule 9(11) vis-a -vis taking of credit - Availability of CENVAT credit on the basis of invoices under Rule 3 of the CENVAT Credit Rules, 2004 - Limitation on adjudication beyond the scope of the show cause notice - Eligibility for refund of CENVAT credit availed in periods other than the disputed quarter (claim on account of general insurance premium allegedly availed subsequently). - HELD THAT: - The Tribunal examined the department's objection that certain credit (relating to general insurance premium) was not availed in the disputed quarter but in a subsequent period. It noted that taking of CENVAT credit is governed by Rule 3 of the CENVAT Credit Rules, 2004, while Rule 9(11) deals with submission of revised returns to correct mistakes or omissions and does not displace the rule on taking credit. The Tribunal further recorded that the department cannot travel beyond the grounds disclosed in the show cause notice. Having considered these points and the submissions on record, the Tribunal found no valid legal basis to deny the refund merely because the credit was reflected in a subsequent return, and that the adjudication on this ground impermissibly went beyond the scope of the SCN. [Paras 8]

The denial of refund on the ground that the credit was availed in a subsequent period was not sustained; the credit was held eligible for refund.

Invoices issued on erstwhile/non-registered address not a valid ground for denial of CENVAT credit - Refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - Requirement of reasoned order - Whether CENVAT credit may be denied because invoices bore the assessee's old address (prior to amendment of ST-2 certificate). - HELD THAT: - The Tribunal observed that the assessee's ST-2 certificate had initially shown an earlier address and was subsequently amended to the new address; there was no dispute that the input services were used in provision of taxable output services and the delay in formal amendment of address was procedural. Reliance was placed upon coordinate decisions holding that credit cannot be denied solely because invoices bear a previous/unregistered premises. The Tribunal also noted that similar grounds had been dropped in related proceedings before the Commissioner (Appeals). In light of these findings, denial of credit on the invoice-address ground was held to be improper. [Paras 9]

The rejection of refund on account of invoices showing the earlier address was not justified; the credit was held eligible for refund.

Final Conclusion: The Tribunal allowed the appeal to the extent indicated, modifying the impugned order and directing sanction of the previously rejected CENVAT credit found eligible (amounting to Rs.7,83,480) for the quarter January 2017 to March, 2017, as per law.

Cenvat credit on inputs and input services - captively used electricity - definition of factory - use of inputs across multiple units of the same manufacturer - eligibility of credit where electricity is used in manufacture of dutiable goods

Cenvat credit on inputs and input services - captively used electricity - use of inputs across multiple units of the same manufacturer - Whether transmission of surplus electricity from one manufacturing unit of the assessee to another unit of the same assessee, for use in manufacture of dutiable goods, precludes entitlement to cenvat credit on inputs and input services used for generation of that electricity - HELD THAT: - The Court recorded that both units of the respondent fall within the statutory meaning of factory and that 'input' includes goods used for generation of electricity for captive use. Where surplus electricity generated in one unit is transmitted to another unit of the same manufacturer and is used in the manufacture of dutiable final products, such transmitted electricity is to be treated as captively used. Reliance by the Tribunal on the decision in M/s. Shree Cement Ltd. (as noted in the impugned order) - holding that cenvat credit on inputs/input services used in power generation is eligible so long as the electricity is used in manufacture of dutiable products even if used outside the generation unit by the same manufacturer - was noted. Applying these principles, the Court held that no substantial question of law arises against allowing cenvat credit in the circumstances where the electricity transmitted between the units is used in manufacture of dutiable goods. [Paras 6, 8, 9]

No substantial question of law arises; transmission of surplus electricity between the assessee's units for use in manufacture of dutiable goods does not disentitle the assessee to cenvat credit on inputs and input services used for generation of that electricity.

Final Conclusion: Revenue's appeal is dismissed; the High Court found no substantial question of law in relation to entitlement to cenvat credit where surplus electricity generated in one unit and transmitted to another unit of the same manufacturer is used in the manufacture of dutiable goods.

Condonation of delay - CENVAT credit on capital goods and input services - excisability of towers and parts - procedural lapse not a bar to substantive eligibility for credit - installation of goods need not be within assessee's premises for use of input - no substantial question of law where dispute is purely factual

Condonation of delay - Delay in filing the appeal was condoned. - HELD THAT: - The court considered the affidavit filed in support of the petition and, being satisfied with the reasons furnished, exercised its discretion to condone the delay in filing the revenue's appeal despite the respondent's opposition. [Paras 2]

Delay condoned and appeal entertained.

Excisability of towers and parts - CENVAT credit on capital goods and input services - procedural lapse not a bar to substantive eligibility for credit - installation of goods need not be within assessee's premises for use of input - Towers and parts/accessories were held to be excisable goods and the assessee was entitled to avail CENVAT credit on duty paid; procedural irregularities, if any, did not warrant denial of credit; it was not necessary that the towers be installed in the assessee's own premises. - HELD THAT: - The Tribunal agreed with the adjudicating authority's finding that towers and their parts were goods on which Central Excise duty had been paid and that a provider of output services is eligible to avail credit on duty paid on capital goods, inputs and input services. The Tribunal re-examined factual findings and affirmed the Commissioner's order dropping the demand. It further held that even if there were procedural lapses, the assessee had satisfied the substantive contentions for availing credit, and that for rendering its output services the towers need not be installed within the assessee's premises. The Tribunal also found that the assessee rendered taxable services and had discharged service tax liability, negating the department's allegations. [Paras 6]

Demand set aside; CENVAT credit admissible and cannot be denied on account of procedural lapses; towers treated as excisable goods eligible for credit.

No substantial question of law where dispute is purely factual - The appeal raised no substantial question of law and was essentially a reappraisal of facts. - HELD THAT: - The High Court observed that the controversy was entirely factual, noting the Tribunal's and adjudicating authority's factual findings and the absence of any substantial question of law arising from those findings. Consequently, there was no legal basis to disturb the Tribunal's conclusion. [Paras 7, 8]

Appeal dismissed for lacking any substantial question of law; revenue's appeal rejected.

Final Conclusion: The High Court condoned the delay, affirmed the Tribunal's and Commissioner's factual findings that towers and parts are excisable goods and that the assessee was entitled to CENVAT credit (procedural lapses not being fatal), held that no substantial question of law arose, and dismissed the revenue's appeal.

Reversal of CENVAT credit proportionate to exempted output - Mandatory payment under rule 6(3) of the CENVAT Credit Rules, 2004 - Alternative mechanism under rule 6(3A) of the CENVAT Credit Rules, 2004 - Extended period of limitation - Remand for fresh adjudication

Reversal of CENVAT credit proportionate to exempted output - Mandatory payment under rule 6(3) of the CENVAT Credit Rules, 2004 - Alternative mechanism under rule 6(3A) of the CENVAT Credit Rules, 2004 - Reversal of CENVAT credit proportionate to the value of exempted goods and/or exempted services suffices to comply with rule 6(3) of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal recognised the settled legal position that where credit is reversed proportionately to that borne by the value of exempted goods and/or exempted services to the value of total goods and/or services, such reversal satisfies the requirements of the CENVAT Credit Rules, 2004. The adjudicating authority failed to apply that settled principle to the facts before it and instead treated payment under rule 6(3) as mandatory except where the alternative in rule 6(3A) is specifically adopted. Reliance upon earlier Tribunal decisions was noted by the appellant and it was observed that the Tribunal has consistently held that forcing payment in cash is not warranted where proportionate reversal has been effected. Given the omission by the adjudicating authority to examine the veracity and adequacy of the appellant's submissions about proportionate reversal, the Tribunal could not itself determine whether the reversal effected by the appellant complied with the settled law. [Paras 4, 5]

Held that proportionate reversal of CENVAT credit suffices and the adjudicating authority's contrary approach was incorrect.

Remand for fresh adjudication - Extended period of limitation - Impugned order set aside and matter remanded to the original authority for fresh decision after factual scrutiny in light of the settled law; extended period invocation left to be considered by the adjudicating authority on fresh consideration. - HELD THAT: - The impugned order was found to be inadequate because it did not examine the facts in the notice against the appellant's submissions and therefore did not determine whether the proportionate reversal claimed was appropriate. The Tribunal expressly recorded its inability to adjudicate on the correctness of the reversal in the absence of such factual scrutiny by the original authority. The adjudicating authority's reliance upon invocation of the extended period was noted but, given the remand for fresh consideration on merits in accordance with settled law, such matters are to be addressed afresh by the original authority after taking appellant's submissions and applying the legal position. [Paras 4, 6]

Impugned order set aside and matter remitted to the original authority for fresh adjudication in accordance with law.

Final Conclusion: Impugned order confirming recovery and penalty is set aside; the matter is remanded to the original authority to examine the appellant's claim of proportionate reversal and to decide the controversy afresh in accordance with the settled position of law.

Fixation of special rate of value addition - area-based exemption/refund of excise duty - computation of limitation during COVID-19 - condonation of delay - discretion to condone delay under a notification - writ jurisdiction under Article 226 - non-application of mind

Fixation of special rate of value addition - area-based exemption/refund of excise duty - computation of limitation during COVID-19 - condonation of delay - discretion to condone delay under a notification - Whether the applications dated 27.12.2022 for fixation of special rates for financial years 2011-2012 and 2012-13 were barred by limitation and whether they should be treated as filed in time. - HELD THAT: - The Court found that the right to apply for fixation of special rates arose only after the Supreme Court finally upheld the amending notifications on 22.04.2020. The Commissioner had held the applications barred by an inordinate delay of two years and eight months, but failed to exclude the period between 15.03.2020 and 28.02.2022 as directed by the Supreme Court for computation of limitation during the COVID-19 pandemic. Applying that exclusion, the actual delay reduced to 27 days beyond the statutory cut-off of 30.09 of the relevant financial year and the discretionary one-month condonation available to the Commissioner could have accommodated much of the delay; the Commissioner neither addressed the exclusion nor applied his discretion properly. Having regard to the object of the area-based exemption scheme, the admitted entitlement of the petitioner to claim refund under the notifications of 2008, and the petitioner's prior refund applications filed in 2012 and 2013, the Court held that the applications of 27.12.2022 should be treated as filed in time and remitted them to the Commissioner for fresh decision on merits. [Paras 6, 7, 8, 9, 11]

Impugned order dismissing the applications as time barred quashed; respondent No.2 directed to treat the applications of 27.12.2022 as filed in time and decide them on merits.

Writ jurisdiction under Article 226 - non-application of mind - condonation of delay - Whether the High Court should exercise writ jurisdiction under Article 226 instead of relegating the petitioner to the alternate statutory remedy of appeal. - HELD THAT: - The Court considered the availability of an alternative statutory remedy but found that respondent No.2 had not decided the matter on merits and had committed a total non-application of mind by failing to apply the Supreme Court's COVID period exclusion when computing limitation. The Court also noted that similar writ petitions had been allowed by a Division Bench and those orders were complied with. In these circumstances, relegation to the alternate remedy would perpetuate discrimination and cause injustice. Accordingly, the Court exercised extraordinary writ jurisdiction to direct treatment of the applications as timely and remand for fresh consideration on merits. [Paras 12, 13, 14]

Writ petition allowed; exercise of Article 226 directed respondent No.2 to adjudicate the applications on merits rather than sending the petitioner to the alternative statutory remedy.

Final Conclusion: The impugned order dated 02.02.2023 is quashed. The applications dated 27.12.2022 for fixation of special rates for financial years 2011-2012 and 2012-13 are to be treated as filed in time and respondent No.2 is directed to decide them afresh on merits; similar relief granted in connected petitions.

Application of retrospective amendment to Rule 6 of the CENVAT Credit Rules - Reversal of CENVAT credit attributable to inputs used in manufacture of exempted goods - Requirement of documentary evidence and certificate from Chartered Accountant/Cost Accountant under Section 73(2) of the Finance Act, 2010 - Availability of relief notwithstanding non-maintenance of separate accounts where proper reversal is demonstrated - Precedential application of earlier Division Bench decision

Application of retrospective amendment to Rule 6 of the CENVAT Credit Rules - Precedential application of earlier Division Bench decision - Correctness of applying the Amendment to Rule 6 (Finance Act, 2010) to the period January 2009 to December 2009. - HELD THAT: - The Court held that the question raised in the present appeal is identical in scope and factual matrix to that decided by the Division Bench in Commissioner of Central Excise, Salem v. Burn Standard Co. Limited (295 ELT 671) where the amendment was held to be applicable only to disputes relating to the period 10th September 2004 to 31st March 2008. Having found the issues and facts identical, and that the earlier order had attained finality, this Court applied that ratio and answered the substantial question in favour of the assessee, thereby confirming the CESTAT's order which had adopted that view. No further enquiry into the applicability of the retrospective amendment for the 2009 period was considered necessary because the Revenue did not dispute that a proper reversal of credit attributable to the exempt product had been made. [Paras 8, 9]

The CESTAT's application of the earlier ratio is confirmed and the substantial question is answered in favour of the assessee.

Requirement of documentary evidence and certificate from Chartered Accountant/Cost Accountant under Section 73(2) of the Finance Act, 2010 - Availability of relief notwithstanding non-maintenance of separate accounts where proper reversal is demonstrated - Whether the Appellate Tribunal was correct in applying the amendment automatically without an application and supporting certificate where the assessee had not maintained separate accounts. - HELD THAT: - Relying on the earlier Division Bench decision, the Court observed that in the parallel earlier proceedings the Tribunal's decision was upheld notwithstanding the assessee's failure to maintain separate accounts, because the Revenue had not disputed that proper reversal of credit attributable to the exempt product (DBM) had been effected. The Court found the factual matrix identical in the present appeal and therefore concluded that it was unnecessary to consider Section 73(2) of the Finance Act, 2010 or the formal requirement of making an application with documentary evidence and a certificate where the Revenue did not challenge the correctness of the reversal. Consequently, the CESTAT's allowance was confirmed. [Paras 8, 9]

The Tribunal's application of the amendment without insisting on the formal application/certificate requirement is sustained and the assessee's position is upheld.

Final Conclusion: The CESTAT's order dated 20.03.2012 is confirmed applying the ratio of the earlier Division Bench decision; the substantial questions are answered in favour of the assessee. Consequential orders for re-computation are to be passed within twelve weeks after hearing the petitioner.

Maintainability of review petition - scope of review under Order 47 Rule 1 CPC - review not an appeal in disguise - error apparent on the face of the record - exclusive appellate forum under Section 35L of the Central Excise Act

Exclusive appellate forum under Section 35L of the Central Excise Act - maintainability of review petition - Whether the review petition before the High Court is maintainable in view of the statutory appellate provision conferring jurisdiction to the Supreme Court. - HELD THAT: - The Court held that insofar as Section 35L of the Central Excise Act, 1944 vests the statutory right of appeal to the Supreme Court, the petitioner's statutory remedy lies before the Supreme Court. The Apex Court's order permitting the petitioner to file a review petition in the High Court did not itself direct this Court to entertain the review; it merely reserved liberty to approach the High Court. Consequently, the existence of a specific statutory appellate forum (Section 35L) militates against entertaining a review in the High Court as an alternative route of substantive appellate redress. [Paras 3]

Review before the High Court is not maintainable as a substitute for the statutory appeal to the Supreme Court under Section 35L.

Scope of review under Order 47 Rule 1 CPC - error apparent on the face of the record - review not an appeal in disguise - Whether the review petition should be entertained on merits under Order 47 Rule 1 CPC. - HELD THAT: - Applying the settled principles governing review jurisdiction, the Court reiterated that review is a limited remedy confined to correcting mistakes or errors apparent on the face of the record, discovery of new and important matter or evidence, or other sufficient reasons. The Court relied on its earlier detailed exposition (including citations of Supreme Court and High Court authorities) to emphasise that review cannot be used to reargue or substitute a fresh judgment, nor to correct an erroneous decision that requires a long-drawn process of reasoning. The grounds advanced by the petitioner sought reconsideration of legal conclusions and did not demonstrate any error apparent on the face of the record or other narrowly permissible grounds for review. Accordingly, the review jurisdiction could not be exercised to rewrite the judgment. [Paras 3, 4]

Review petition fails on merits as it does not disclose any error apparent on the face of the record or other grounds entitling relief under Order 47 Rule 1 CPC and is therefore dismissed.

Final Conclusion: The review petition is dismissed: (1) the statutory appellate remedy under Section 35L is to the Supreme Court and does not permit substitution by a High Court review; and (2) in any event the petition fails the limited tests for review under Order 47 Rule 1 CPC, there being no error apparent on the face of the record or other permissible grounds.

Valuation of goods transferred to a sister unit - revenue neutrality - adjustment of excess and short payments of duty between related units - CENVAT/Modvat credit impact on inter-unit transfers - refusal to adjudicate academic issue where no benefit accrues to the exchequer

Valuation of goods transferred to a sister unit - adjustment of excess and short payments of duty between related units - CENVAT/Modvat credit impact on inter-unit transfers - The demand for differential duty in respect of goods cleared to the appellant's sister concern where net differential was paid and credit taken by the recipient unit was unsustainable. - HELD THAT: - The Tribunal applied the principle in Bajaj Tempo Ltd. that where consignments cleared after the change in Valuation Rules were re-determined and the net differential duty was paid and taken as credit by the recipient factory, there was no justification for sustaining demands that arose from intra-unit imbalances of higher and lower payments. The Court observed that insisting on payment and refund separately, instead of permitting adjustment of excess and short payments, would be an unnecessary exercise and would disrupt the credit position at the recipient unit. The Adjudicating Authority had relied on that approach and dropped the demand, an approach which was accepted by the revenue. On the identical facts in this case, the Tribunal found the demands unsustainable and set aside the impugned order. [Paras 3, 4, 5]

Appeal allowed and the demand set aside.

Revenue neutrality - refusal to adjudicate academic issue where no benefit accrues to the exchequer - Where the net effect of the inter-unit transactions is revenue neutral because duty paid by one unit is available as credit to the sister unit, the Tribunal may decline to determine an academic question of undervaluation and uphold disposal on revenue neutrality grounds. - HELD THAT: - Relying on the Gujarat High Court's reasoning in Indeos ABS Ltd., the Tribunal noted that where the admitted facts show that duty paid at the clearing unit is available as credit to the receiving sister unit and no benefit accrues to the exchequer, determination of undervaluation would be an academic exercise. In such circumstances, not deciding the undervaluation per se does not constitute legal infirmity. The instant case presented identical circumstances and the Tribunal accepted revenue neutrality as a valid basis for not sustaining the demand. [Paras 3, 4]

The Tribunal accepted revenue neutrality as determinative and declined to sustain the demand.

Final Conclusion: Relying on precedents permitting adjustment of excess and short payments and on the principle of revenue neutrality where duty paid is available as credit to the sister unit, the Tribunal set aside the impugned order and allowed the appeal.

Manufacture - change in name, character and use - classification as boxes/cartons - Cenvat credit on endorsed invoices - SSI/cumulative duty benefit - mala fide intention not a ground to deny statutory benefit - de novo adjudication / remand for fresh adjudication

Manufacture - change in name, character and use - classification as boxes/cartons - de novo adjudication / remand for fresh adjudication - Whether the activities carried out by the appellants constituted manufacture resulting in classification as boxes/cartons and liability to excise duty - HELD THAT: - The Tribunal found that the show cause notice and the Order-in-Original proceeded to confirm duty demands on the premise that the appellants were engaged in manufacture, but neither the notice nor the adjudication properly examined or recorded findings on whether a different commodity emerged after the processes undertaken. There is no adequate adjudication on change in name, character and use or on classification; the impugned order is therefore based on assumption and presumption and is perverse. The matter of whether the processes effected a transformation amounting to manufacture and resulting classification as boxes/cartons must be re-examined by the adjudicating authority after proper consideration and observance of principles of natural justice. [Paras 4]

Matter remanded for de novo adjudication on the question of manufacture, change in character/use and classification.

Cenvat credit on endorsed invoices - Whether denial of Cenvat credit solely because invoices were endorsed was sustainable - HELD THAT: - The Tribunal observed that denial of Cenvat credit merely on the ground that invoices are endorsed is not sustainable where payment of duty, receipt of inputs and use in manufacture are established or capable of verification. In the present case these aspects are not in dispute except for endorsement on the invoices; accordingly entitlement to Cenvat credit is recognised subject to verification of documents by the adjudicating authority, taking into account precedents that endorsement alone does not warrant denial. [Paras 4]

Appellants entitled to Cenvat credit subject to documentary verification by the adjudicating authority.

SSI/cumulative duty benefit - mala fide intention not a ground to deny statutory benefit - Whether the benefit of cum-duty/SSI exemption could be denied on the ground of alleged mala fide intention - HELD THAT: - The Tribunal held that statutory benefits (such as SSI or cum-duty benefit) cannot be withheld merely because the adjudicating authority attributes mala fide intention to the assessee. Even if mala fide intention is alleged or established, the statutory provision granting the benefit cannot be ignored; the adjudicating authority ought to have granted the cum-duty benefit if otherwise available. The Tribunal relied on the principle that eligibility under statute or notification must be applied irrespective of the authority's view of the assessee's intention. [Paras 4]

Appellants are eligible for cum-duty benefit; denial on ground of mala fide intention is not sustainable.

Final Conclusion: Impugned orders set aside and appeals allowed by remanding the matters to the adjudicating authority for de novo adjudication after observing principles of natural justice; adjudicating authority to pass fresh order within two months.

Deemed export - eligibility for concessional rate under Notification No.13/98-CE - source/origin of raw materials (indigenous v. imported) - burden of proof regarding source of raw materials - benefit of doubt - remand for verification of origin of raw materials

Source/origin of raw materials (indigenous v. imported) - burden of proof regarding source of raw materials - remand for verification of origin of raw materials - eligibility for concessional rate under Notification No.13/98-CE - benefit of doubt - Whether, in the absence of evidence that imported raw material was used, the appellant could be denied benefit of Notification No.13/98-CE for DTA clearances - HELD THAT: - The Tribunal noted that the matter had earlier been remanded for verification of whether the subject goods were manufactured from indigenous or imported raw materials. The Adjudicating Authority in the de novo proceedings recorded that the noticee had procured both indigenous and imported raw materials, but this conclusion was reached without evidential basis. The show-cause notice itself alleged use of indigenous and imported raw material on assumption and no material was placed on record to establish that imported inputs were used in the subject finished goods. Given that the remand required the Adjudicating Authority to establish the source of raw material, a finding adverse to the appellant cannot rest on assumption. In these circumstances the Tribunal applied the principle that benefit of doubt must go to the assessee where the revenue fails to prove use of imported material, and therefore the appellant could not be denied the concessional treatment under Notification No.13/98-CE for the DTA clearances.

Adverse finding on source of raw material set aside for lack of evidence; in absence of proof of use of imported inputs, appellant entitled to benefit of Notification No.13/98-CE for the DTA clearances.

Final Conclusion: Impugned order confirming duty and penalty was set aside and the appeal allowed because the Adjudicating Authority decided the source of raw materials without any evidence; appellant cannot be denied concession under Notification No.13/98-CE where imported origin was not established.

Exemption notification to be strictly construed - capital goods versus finished goods for exemption under Notification No.67/95-CE - statutory procedural requirements under Central Excise Rules (Rules 4, 10, 11 & 12) are essential - doctrine of substantial compliance limited where conditions are essential - revenue neutrality does not excuse non-payment or procedural non-compliance - invocation of extended period under Section 11A for non-payment/short payment - penalty under Section 11AC / Rule 25 for contravention of statutory provisions

Capital goods versus finished goods for exemption under Notification No.67/95-CE - exemption notification to be strictly construed - Exemption under Notification No.67/95-CE is not available for moulds manufactured and cleared from the manufacturer's factory to another factory for job work; such moulds are finished goods of the manufacturer and must be cleared on payment of duty. - HELD THAT: - The Tribunal upheld the finding that the moulds in question were manufactured in the appellant's factory and constituted finished goods which, under Rule 4 and Rule 11 of the Central Excise Rules, 2002, could not be removed from the place of production without payment of duty and under cover of an invoice. Notification No.67/95-CE grants exemption for capital goods manufactured and used within the factory of production; that exemption cannot be stretched to cover manufactured goods cleared to a job-worker's factory. The authorities relied on the principle that exemption notifications must be read strictly and that ambiguity, if any, is to be resolved in favour of the revenue. The Tribunal noted precedents where exemptions were denied where goods were not used within the factory of production and found the appellant's reliance on earlier cases distinguishable on facts. [Paras 4, 5]

Claim for exemption under Notification No.67/95-CE rejected and goods held liable to duty when cleared to job-worker outside the factory of production.

Statutory procedural requirements under Central Excise Rules (Rules 4, 10, 11 & 12) are essential - doctrine of substantial compliance limited where conditions are essential - Failure to maintain required records, daily stock account and to disclose clearances in returns amounts to contravention of essential statutory procedure and cannot be excused by plea of substantial compliance. - HELD THAT: - The Tribunal accepted the appellate authority's reasoning that Rules 4, 10, 11 and 12 form the core statutory mechanism for administration of excise levy and that non-adherence deprives the department of the opportunity to verify levy and collection of duty. The doctrine of substantial compliance was examined and held inapplicable because the requirements are plain, clear and essential to achieve the object of the statutory scheme; minor or tangential non-compliance that might be forgiven is not the present case. Reliance on Supreme Court authorities and earlier decisions reinforced that procedural obligations intended to prevent diversion or fraud must be strictly complied with and cannot be cured by later verification where records were not maintained or returns not filed. [Paras 5]

Non-maintenance of records and non-disclosure in returns held to be material contraventions; substantial compliance plea rejected.

Revenue neutrality does not excuse non-payment or procedural non-compliance - invocation of extended period under Section 11A for non-payment/short payment - The plea of revenue neutrality does not absolve the appellant from duty liability, interest or penal consequences where statutory requirements are contravened and there is short/non-payment of duty; extended period provisions and penalties are maintainable. - HELD THAT: - The Tribunal endorsed the appellate authority's conclusion that revenue neutrality - the availability of Cenvat credit - cannot be used as a licence to contravene statutory requirements or to avoid payment of duty when duty is otherwise leviable. Revenue neutrality may be relevant to bona fides but does not negate the existence of liability, interest or penalty where the ingredients of suppression, wilful misstatement or contravention are made out. Authorities were cited indicating that even where credit may be available later, tax must be paid when due and failure to do so can attract interest and penalties; invocation of extended limitation under Section 11A is permissible where short payment/non-payment occurred and procedural conditions for exemption were not met. [Paras 4, 5]

Revenue neutrality plea rejected as a defence to liability; extended period and penal consequences held sustainable.

Penalty under Section 11AC / Rule 25 for contravention of statutory provisions - invocation of extended period under Section 11A for non-payment/short payment - Demand of duty, interest and imposition of penalty under the relevant provisions (Order-in-Original confirmed) upheld by the Tribunal. - HELD THAT: - On the facts, having found that moulds were cleared without payment of duty, not recorded in daily stock and not reflected in returns, the Tribunal found no infirmity in the adjudicating authorities invoking extended period for demand and imposing interest and penalty. The appellate authority's reasoning that procedural violations and failure to offer plausible explanation justified invoking penal provisions was accepted. Precedents and the concurrent findings of fact were treated as supporting upholding the demand and penalty. [Paras 1, 4, 5]

Order-in-Original demand of duty, interest and penalty confirmed; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal; the demand of central excise duty, interest and penalty was upheld on findings that the moulds were manufactured finished goods cleared without payment of duty and statutory procedural requirements were materially contravened, and that revenue neutrality does not absolve such contraventions.

Duty on line fill upon withdrawal of warehousing facility - payment by substitute unit discharges liability - proof by challans and batch reconciliation - typographical omission in departmental records not fatal where payment is substantiated - interest under section 11AB

Payment by substitute unit discharges liability - proof by challans and batch reconciliation - typographical omission in departmental records not fatal where payment is substantiated - Whether the demand of Central Excise duty confirmed against the appellant in respect of 12268 KL of HSD is sustainable where Haldia Refinery had paid duty claimed to relate to that quantity. - HELD THAT: - The Tribunal examined the record and found that the Haldia Refinery had made payments by TR-6 challans which, when reconciled with batch numbers and quantities, corresponded to the disputed 12268 KL of HSD. Although the adjudicating authority treated the computation as referring to Haldia-Barauni pipeline rather than Barauni-Kanpur pipeline, the batch numbers, tank references and quantities in the payment documentation matched the appellant's declarations. The Tribunal held that this apparent typographical or descriptive omission in the computation did not vitiate the substantiated payment; internal departmental correspondence further corroborated that duty had been paid by Haldia. In view of the verified payments supported by challans and batch reconciliation, there was no justification to sustain the confirmed demand for duty on the said quantity. [Paras 12, 13, 14]

The confirmed demand in respect of 12268 KL of HSD is unsustainable and must be set aside.

Final Conclusion: The impugned order confirming duty on 12268 KL of HSD is set aside and the appeal is allowed, the Tribunal recording that payments by Haldia Refinery, as substantiated by challans, batch reconciliation and departmental correspondence, discharge the duty liability.

Manufacture under Section 2(f) of the Central Excise Act - test of transformation / no commercial user without further process - liability of job-worker vs principal manufacturer - conditions of exemption notifications are substantive - invocation of extended period of limitation / proviso to Section 11A - remand for verification of supplier documents and re-quantification - penalty under Section 11AC and Rule 25 (and personal penalty Rule 26)

Manufacture under Section 2(f) of the Central Excise Act - test of transformation / no commercial user without further process - The processes of stuffing and soldering components on plain PCBs to produce Populated PCBs amount to manufacture under Section 2(f) of the Central Excise Act. - HELD THAT: - The Tribunal applied the settled tests extracted from the Supreme Court decisions (as invoked in the order): a process amounts to manufacture where it effects a transformation producing a commercially distinct article having a different name, character or use, or where the product has no commercial use without further processing. The facts show that plain PCBs were converted into Populated PCBs, a commercially recognised and marketable commodity distinct from the plain PCB; the appellants themselves carried out identical processes on their own account and cleared similar goods on payment of duty. On these grounds the processes undertaken on job work were held to satisfy the tests for 'manufacture' and thus constitute manufacture within Section 2(f). [Paras 5]

Processes of populating PCBs by the appellant amount to manufacture.

Liability of job-worker vs principal manufacturer - conditions of exemption notifications are substantive - The duty liability lies on the job-worker (the appellant) because the substantive conditions of the job-work exemption notifications were not complied with. - HELD THAT: - The Tribunal examined Notifications such as No.214/86-C.E. and No.83/94-C.E. and concluded that those notifications make availability of exemption conditional on specified actions by the supplier (undertaking/declaration and evidence). Adverting to Supreme Court authorities cited in the order, the Tribunal held that conditions for exemption are substantive and must be complied with; mere receipt of goods under challans or assertion of job-work status without fulfillment of those conditions does not shift liability to the supplier. The relationship between supplier and job-worker being principal-to-principal, and in absence of the stipulated undertakings/declarations, the Commissioner was justified in treating the job-worker as the manufacturer liable to pay duty. [Paras 6]

In view of non-compliance with substantive conditions of the exemption notifications, liability for duty rests on the job-worker (appellant).

Invocation of extended period of limitation / proviso to Section 11A - Extended period of limitation (proviso to Section 11A) could not be invoked for the entire demand; demands are sustainable only for the normal period in respect of the show-cause notices issued. - HELD THAT: - Although the department ultimately issued show-cause notices, the Tribunal found that the department was aware as early as the 2009 EA-2000 audit that the appellants were clearing PPCBs without payment of duty. The delay of over three years in issuing the primary show-cause notice after that audit undermines the reasoning for invoking extended limitation based on suppression. Consequently, the Tribunal held that the extended period could not be validly invoked for the earlier years and limited confirmation of demand to the normal period covered by the notices. [Paras 7]

Extended period not invoked; demands confirmed only for the normal period.

Remand for verification of supplier documents and re-quantification - The matters are remanded for re-quantification after verification of documents produced by the appellant regarding suppliers' clearances (exemptions or duty-paid disposals). - HELD THAT: - The appellants produced supplier letters and category-wise differential duty calculations asserting that many supplies were ultimately exempt or cleared on payment of duty by suppliers (EOU, SEZ, Defence, SSI, excise-registered units). The Tribunal observed that these documents, if verified, would reduce the appellant's duty liability. Because such documentary claims had not been fully examined at the adjudication stage, the Tribunal directed remand to the Commissioner for verification of the evidentiary material, re-quantification of demands accordingly and to afford the appellants an opportunity to be heard, while emphasising cooperation in collating records. [Paras 10, 11]

Appeals remanded for verification of supplier documents and re-quantification of demand.

Penalty under Section 11AC and Rule 25 (and personal penalty Rule 26) - Penalties under Section 11AC and Rule 25 are set aside; the personal penalty matter was separately addressed in one appeal. - HELD THAT: - Having limited the confirmed demands to the normal period and remanded quantification for verification, the Tribunal found it appropriate to set aside the penalties imposed under Section 11AC and Rule 25. The array of appeals also included a separate order allowing the appeal relating to personal penalty (Rule 26) on the Managing Director; thus, penal orders were not sustained in the impugned terms. [Paras 11]

Penalties under Section 11AC and Rule 25 are set aside; personal penalty matter allowed in the relevant appeal.

Final Conclusion: The Tribunal held that populating plain PCBs into Populated PCBs amounts to manufacture and, because the substantive conditions of the job-work exemption notifications were not complied with, the job-worker (appellant) is prima facie liable for duty; however, extended limitation could not be invoked and demands were sustained only for the normal period. The appeals were remanded for verification and re-quantification of duty in light of supplier documents; penalties under Section 11AC and Rule 25 were set aside and the appeal concerning personal penalty was allowed.

Inclusion of freight in assessable value - Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - stock transfer to consignment agent - assessable value on removal from factory gate - flow back doctrine

Inclusion of freight in assessable value - Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - stock transfer to consignment agent - flow back doctrine - Whether freight charges for transportation up to the consignment agent must be included in the assessable value under Rule 7 when transportation is arranged and freight paid by the buyer/consignment agent and there is no evidence of benefit or flow back to the manufacturer. - HELD THAT: - The demand was founded on Rule 7 which requires that when goods are stock transferred to a consignment agent and sold from the agent's premises, the assessable value for duty on removal from the factory should be the transaction value at the consignment agent's premises at or about the time of removal. The record before the Tribunal shows that transportation was arranged by the buyer and freight charges were collected by the consignment agent from the buyer; the appellant did not collect freight nor receive any freight reimbursement. Revenue did not prove that the freight paid by the buyer benefited the manufacturer or flowed back to it in any manner. In these circumstances, and following the Tribunal's earlier decisions in the appellant's own cases for similar periods which set aside identical demands on the ground that no flow back was shown, the impugned demand for inclusion of freight in assessable value cannot be sustained.

Demand for additional duty on account of excluded freight charges is unsustainable; impugned orders set aside and appeals allowed.

Final Conclusion: Following the Tribunal's prior decisions in the appellant's own case and on the factual finding that freight was arranged and paid by the buyer with no proof of flow back to the manufacturer, the Tribunal set aside the confirmed demands and allowed the appeals in respect of the period July 2010 to September 2011, granting consequential relief if any.

Limitation for refund under Section 11B - relevant date for refund arising from appellate order - applicability of Clause (ec) of explanation B to Section 11B - payment under protest and exclusion of limitation - non-applicability of Section 142(3) of CGST Act for pre-appointed-day, time-barred refunds

Limitation for refund under Section 11B - relevant date for refund arising from appellate order - applicability of Clause (ec) of explanation B to Section 11B - Refund claim in respect of Cenvat credit on group insurance services is time-barred as the relevant date for limitation is the appellate order. - HELD THAT: - The Tribunal construed Clause (ec) of explanation B to Section 11B to mean that where duty becomes refundable as a consequence of a judgment, decree, order or direction of an Appellate Authority/Tribunal/Court, the date of such judgment/order is the relevant date for computing the one-year limitation under Section 11B. Consequently, once the matter was finally decided in favour of the appellant by the appellate order, the one-year period under Section 11B would commence from that order. The record shows that the appellants did not seek refund or re-credit within one year of the appellate decisions which made the entitlement final; nor did they migrate the credit before the appointed day. Hence the refund claim filed on 12.07.2021 was held to be filed beyond the one-year period measured from the appellate conclusion and therefore barred by limitation. [Paras 10, 11, 12, 13]

Refund claim rejected as time-barred since the relevant date for limitation was the appellate order and the claim was not made within one year thereof.

Payment under protest and exclusion of limitation - limitation for refund under Section 11B - Payment made 'under protest' does not extend the limitation period for refund arising as a consequence of an appellate order once Clause (ec) is applicable. - HELD THAT: - Although Section 11B contains a proviso excluding the one-year limitation where payment is made under protest while matters remain pending before appellate fora, the Tribunal held that after insertion of Clause (ec) the limitation for refunds that crystallise as a consequence of an appellate order runs from that appellate order irrespective of whether payment was earlier made under protest. The court observed that in such cases the specific rule embodied in Clause (ec) governs the relevant date for claiming refund, and therefore the general exclusion for payments under protest does not permit filing beyond the one-year period measured from the appellate decision. [Paras 10, 12]

Payment under protest did not prevent the refund claim from being time-barred where Clause (ec) fixes the relevant date as the appellate order.

Non-applicability of Section 142(3) of CGST Act for pre-appointed-day, time-barred refunds - Section 142(3) of the CGST Act cannot be invoked to revive or validate a refund claim which was time-barred under pre-appointed-day law. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that reliance on Section 142(3) of the CGST Act (regarding transitional or consequential matters) is misplaced where, under the pre-appointed-day law, the refund claim was already barred by limitation. The Tribunal held that Section 142(3) only covers cases where refunds were otherwise permissible under existing law and does not operate to rescue claims that were time-barred prior to the appointed day. [Paras 12]

Section 142(3) of the CGST Act does not apply to permit a refund where the claim was time-barred under the existing pre-appointed-day law.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the view that the refund claim in respect of Cenvat credit on group insurance services was barred by the one-year limitation under Section 11B measured from the appellate order (in terms of Clause (ec) of explanation B), that payment under protest did not extend limitation in such circumstances, and that Section 142(3) of the CGST Act cannot be invoked to revive a pre-appointed-day time-barred claim.

Inter-State sale vs. stock transfer - Liability to central sales tax where movement originates from manufacturing State pursuant to a prior contract - Burden of proof discharged by production of Form F for branch transfers - Power to direct refund or transfer of tax collected by a State under Section 22(18) of the Central Sales Tax Act - Application of precedential tests in Sahney Steel, Bharat Electric and Tata Motors

Inter-State sale vs. stock transfer - Liability to central sales tax where movement originates from manufacturing State pursuant to a prior contract - Application of precedential tests in Sahney Steel, Bharat Electric and Tata Motors - Whether the supplies of Poshahar from the Faridabad plant to Patna (and other branches) were inter State sales liable to central sales tax or branch/stock transfers exemptible by production of Form F. - HELD THAT: - The Tribunal's finding that supplies from Faridabad were pursuant to a pre existing contract of sale and therefore occasioned movement of goods by reason of the contract was upheld. The Court accepted the reasoning that where goods are manufactured and dispatched from a State in fulfilment of a prior contract for delivery to another State, the transaction is in the nature of inter State sale and central sales tax is leviable at the State from which movement originates. The petitioner's claim that the transactions were branch transfers discharged by production of Form F was rejected on the facts, the Tribunal having found that supplies were made pursuant to contractual orders and not ordinary inter branch stock transfers; thus the assessments and demands raised by the Haryana authority were sustained. The Court applied the tests and precedents relied upon by the authorities below in reaching this conclusion. [Paras 8, 13, 14]

Tribunal's and assessing authority's determination that the disputed supplies were inter State sales is upheld and the demand by the State of Haryana is sustained.

Power to direct refund or transfer of tax collected by a State under Section 22(18) of the Central Sales Tax Act - Application of precedential tests in Sahney Steel, Bharat Electric and Tata Motors - Whether the petitioner may seek refund or transfer of taxes already paid to other States in view of later determination that the transaction is an inter State sale. - HELD THAT: - The Court noted the post fact insertion of Section 22(18) (as discussed in Tata Motors) which empowers the Appellate Authority to direct refund or transfer of amounts collected by a State that are not due to that State, but observed that the present assessments relate to an earlier period. Nevertheless, having regard to the interim orders, the corporate guarantee furnished and the principles in Tata Motors, the Court left it open to the petitioner to pursue a claim for refund/transfer of amounts already paid to the concerned States and directed that such claim be considered in accordance with the law and the observations in Tata Motors. The Court also clarified that respondents would be entitled to interest in accordance with the interim order if the writ petition is dismissed. [Paras 12, 16]

Petitioner permitted to claim refund/transfer of amounts paid to other States in accordance with the observations in Tata Motors; respondents entitled to interest as per the interim order.

Final Conclusion: Writ petitions dismissed; the Tribunal's conclusion treating the supplies from Faridabad as inter State sales is upheld, and the petitioner is left at liberty to pursue refund/transfer remedies in light of the principles in Tata Motors, subject to the respondents' entitlement to interest under the interim order.

Specific performance - agreement of sale coupled with possession deemed conveyance - deficit stamp duty and ten times penalty - Section 34 of the Stamp Act - instruments not duly stamped inadmissible in evidence - Section 37 - instruments impounded, how dealt with - Section 39 - deputy commissioner's power to stamp instruments impounded and discretion on penalty - option to invoke District Registrar v. option to pay before Court

Section 34 of the Stamp Act - instruments not duly stamped inadmissible in evidence - deficit stamp duty and ten times penalty - option to invoke District Registrar v. option to pay before Court - Validity of the trial court's direction to pay ten times the deficit stamp duty when the plaintiff invited the court to permit the instrument on payment under Section 34 - HELD THAT: - The appellant, having produced a certified copy of the agreement and expressly agreeing in court on 14.08.2015 to pay proper stamp duty and penalty so as to rely on the instrument, invoked the remedy under Section 34. Where a party elects to proceed under Section 34(1) the court is obliged to require payment of duty and the prescribed penalty before admitting the instrument in evidence. The trial court therefore correctly applied the statutory consequence of Section 34 and imposed the ten-times penalty on deficit stamp duty in the circumstances of the case. The appellant could not thereafter contend that the document should be sent to the District Registrar under Section 37(2)/Section 39 for discretionary assessment, because he had invited the court to exercise jurisdiction under Section 34 and so was not entitled to change course at the interlocutory stage. [Paras 8, 9, 10, 11]

Direction to pay ten times the deficit stamp duty was upheld as valid since the appellant had invoked the court's jurisdiction under Section 34 and agreed to pay duty and penalty.

Section 37 - instruments impounded, how dealt with - Section 39 - deputy commissioner's power to stamp instruments impounded and discretion on penalty - Whether the agreement ought to have been forwarded to the District Registrar under Section 37(2)/Section 39 for determination of deficit duty and penalty instead of the court deciding under Section 34 - HELD THAT: - The Court considered the statutory scheme in Chapter IV and the alternative remedies: a party may either submit to payment under Section 34 before the court or directly move the District Registrar under Section 39. Where a party elects the latter route the court or person who has impounded the document must send it to the Registrar. Conversely, where the party elects to proceed before the court, Section 34 applies and the court may require payment of duty and the statutory penalty. In the present case the appellant elected the court route; accordingly the trial court's determination under Section 34 was appropriate and the remit to the District Registrar under Section 37(2)/39 was not obligatory. [Paras 4, 5, 6, 7, 9]

No compulsion to send the instrument to the District Registrar arose because the appellant had chosen to proceed under Section 34; the trial court was correct in dealing with duty and penalty itself.

Final Conclusion: The High Court order dismissing the appellant's challenge to the trial court's direction was affirmed; the appeal is dismissed and there is no order as to costs.