TaxTMI Updates e-Newsletter
Sep 14,2024

Refund of integrated tax paid on export of services - refund under Section 54 - violation of natural justice - non-application of mind - opportunity of personal hearing - remand for fresh consideration

Refund of integrated tax paid on export of services - refund under Section 54 - Petitioner's refund application was filed within the timeframe specified under Section 54 - HELD THAT: - The Court recorded that it was undisputed that the petitioner made exports of services, paid integrated tax and filed a refund application on 13.04.2023. The order notes that this filing was within the time limit prescribed by Section 54 of the Act and accepts that the refund claim was thus timely made.

The refund application was filed within the timeframe specified under Section 54.

Violation of natural justice - non-application of mind - opportunity of personal hearing - remand for fresh consideration - Impugned order failed to consider petitioner's reply and was based on a non-application of mind, requiring remand for fresh consideration with a hearing - HELD THAT: - The Court found that the first respondent issued a show cause notice on 18.05.2023 alleging that uploaded FIRC details were non-openable. The petitioner uploaded a rectified FIRC on 19.05.2023, but the respondent thereafter issued a second notice and passed the impugned order treating as if no reply had been received. The Court held that the remarks in the order claiming non-response demonstrate a total non-application of mind and a failure to afford or take into account the petitioner's response, thereby infringing principles of natural justice. In view of this defect, the Court did not decide the merits of the refund claim but remanded the matter for reconsideration on merits after issuing an explicit 14-days notice specifying a date for personal hearing.

Matter remanded to the first respondent to consider the reply dated 19.05.2023 and, after issuing a clear 14-days notice specifying a date for personal hearing, pass appropriate orders on merits and in accordance with law.

Final Conclusion: Writ petition disposed; impugned order set aside to the extent indicated and the matter remanded to the first respondent for fresh consideration in accordance with the directions; no order as to costs.

Principles of natural justice - input tax credit - mismatch between GSTR-2A and GSTR-3B - adjournment and right to be heard - remand for fresh adjudication on deposit and opportunity to file objections

Principles of natural justice - adjournment and right to be heard - Impugned assessment order passed without consideration of adjournment requests and in breach of principles of natural justice was unsustainable. - HELD THAT: - The Court found that the petitioner had sought adjournments on multiple dates citing medical reasons and that the adjudicating authority passed the assessment order without considering those requests or affording an opportunity of hearing. The limited grievance addressed is that the order was rendered without giving the petitioner a fair chance to explain discrepancies and to place supporting material. In view of this failure to afford the petitioner an opportunity, the Court set aside the impugned order and required fresh consideration after providing a hearing opportunity. [Paras 2, 3, 6]

Impugned order set aside for breach of natural justice and directed to be reconsidered after providing the petitioner an opportunity of hearing.

Input tax credit - mismatch between GSTR-2A and GSTR-3B - remand for fresh adjudication on deposit and opportunity to file objections - Discrepancy between GSTR-2A and GSTR-3B as a ground for denial of input tax credit to be examined afresh by the authority after the petitioner deposits 25% of the disputed tax and files objections with supporting documents. - HELD THAT: - The Court recognised that the substantive controversy relates to alleged mismatch between returns (GSTR-2A and GSTR-3B) which the petitioner sought to explain. Rather than adjudicating the merits, the Court directed that the impugned assessment order be treated as a show cause notice once the petitioner deposits 25% of the disputed tax within two weeks and files objections with supporting material within four weeks. The respondent is directed to consider any objections filed and pass orders in accordance with law after affording a reasonable opportunity of hearing. Failure to comply with the timelines will result in revival of the impugned order. [Paras 3, 6]

Matter remitted to the adjudicating authority for fresh consideration of the claimed input tax credit and alleged mismatch, subject to deposit of 25% and filing of objections within stipulated timelines.

Final Conclusion: The assessment order for 2017-2018 is set aside for breach of natural justice; the petitioner must deposit 25% of the disputed tax within two weeks and file objections with supporting material within four weeks, after which the authority shall reconsider the claim and pass fresh orders after hearing; non-compliance will revive the impugned order.

Statutory appeal - pre-deposit under Section 107 - classification of 'Fish Meal' - suo motu impleading of appellate authority - disposal of appeal subject to Supreme Court decision

Statutory appeal - suo motu impleading of appellate authority - Direction to file statutory appeal before the Appellate Authority and impleading that Authority as respondent - HELD THAT: - The Court directed the petitioner to file the statutory appeal before the Appellate Authority/the Commissioner of GST & Central Excise (Appeals), Coimbatore at Madurai within 30 days and impleaded that Appellate Authority as second respondent. The direction is recorded as the mode for assailing the impugned Order-in-Original and for enabling appellate adjudication of the confirmed demands. [Paras 8]

Petitioner to file statutory appeal within 30 days; Appellate Authority suo motu impleaded to the petition

Pre-deposit under Section 107 - Requirement of pre-deposit of disputed tax for items other than 'Fish Meal' - HELD THAT: - Relying on the petitioner's concession and the Court's view, the petitioner was directed to pre-deposit 10% of the disputed tax in respect of items other than 'Fish Meal' as contemplated under Section 107 of the respective GST enactments. The timeline for such pre-deposit is fixed at 30 days from the date of the order, and the appellate proceedings are to proceed subject to this condition. [Paras 6, 9]

Petitioner to pre-deposit 10% of disputed tax for items other than 'Fish Meal' within 30 days

Classification of 'Fish Meal' - disposal of appeal subject to Supreme Court decision - Treatment of disputed demand in respect of 'Fish Meal' and its linkage to earlier Madras High Court orders and pending Supreme Court decision - HELD THAT: - The Court observed that in respect of 'Fish Meal' earlier orders in W.P.(MD)Nos.14068, 14069, 14220 and 14253 of 2023 (Rehoboth Fish Meal and Oil Plant) had permitted filing of statutory appeals without pre-deposit and considered those orders persuasive for the present petitioner. Consequently, the Writ Petition was disposed directing appeal without pre-deposit for 'Fish Meal', while noting that final adjudication remains subject to the decision of the Hon'ble Supreme Court on classification of 'Fish Meal'. [Paras 5, 7, 9]

Appeal allowed to be filed for 'Fish Meal' without pre-deposit; appellate disposal to remain subject to Supreme Court's decision on classification

Final Conclusion: Writ petition disposed: petitioner directed to file statutory appeal within 30 days; pre-deposit of 10% required for items other than 'Fish Meal'; appeal in respect of 'Fish Meal' permitted without pre-deposit in view of earlier High Court orders, and appellate disposal to proceed subject to the Supreme Court's decision on classification of 'Fish Meal'.

Reimbursement of GST by service recipient - mandamus directing refund of differential GST amount - works contract executed under VAT regime and transitional GST adjustment - calculation of tax difference between KVAT and GST for balance work - supplementary agreement for GST-inclusive revised contract value

Reimbursement of GST by service recipient - mandamus directing refund of differential GST amount - Direction to respondents to reimburse the GST amounts claimed in the representations dated 21.06.2023 (Annexures C1 to C36) and timeline for payment. - HELD THAT: - The Court accepted the petitioner's claim for relief in light of precedent from co-ordinate Benches which recognised the obligation of government departments (service recipients) to reimburse GST paid by contractors where the contract and performance fall within the GST regime. Relying on those decisions, the Court held that the petitioner's representations seeking reimbursement of GST reflected a legally enforceable claim warranting issuance of mandamus. The Court directed respondents to reimburse the GST amounts indicated in the petitioner's representations and to effect payment within six weeks from receipt of a copy of the order. The order follows the prior guidance in which departments were directed to compute tax differences between pre-GST (KVAT) and post-GST work, consider supplementary agreements if necessary, and reimburse differential tax amounts where due; here the Court applied the principle of reimbursement to the specific representations before it and granted the relief prayed for.

Petition allowed; respondents directed to reimburse the GST amounts indicated in Annexures C1 to C36 dated 21.06.2023 and to make payment within six weeks from receipt of a copy of this order.

Final Conclusion: Writ petition allowed; respondents directed to reimburse the GST amounts specified in the petitioner's representations dated 21.06.2023 (Annexures C1-C36) within six weeks of receipt of this order.

Principle of composite supply - reverse charge on import (IGST) for ocean freight - wrongly availed input tax credit - statutory right of appeal to the Commissioner (Appeals) - condition of deposit while preferring appeal

Principle of composite supply - reverse charge on import (IGST) for ocean freight - Demand of IGST under reverse charge on ocean freight and interest thereon (paragraphs 15(g) and 15(h) of the impugned order) was set aside. - HELD THAT: - The writ court found that the question of levy of IGST on the ocean freight element of a CIF import is covered by the decision of the Supreme Court in Union of India v. M/s Mohit Minerals Pvt. Ltd., which holds that levy of tax on the service aspect of a transaction already included within a composite supply that attracts IGST on import would violate the doctrine of composite supply. Applying that ratio, the court concluded that the demand reflected at paragraphs 15(g) and 15(h) cannot be sustained and therefore dropped those components of the impugned order. [Paras 4]

Demand in paragraphs 15(g) and 15(h) of the impugned order is dropped.

Wrongly availed input tax credit - statutory right of appeal to the Commissioner (Appeals) - condition of deposit while preferring appeal - Remaining demands arising from mismatch of Input Tax Credit and tax on renewal charges for factory licence were not adjudicated on merits and were left to be contested by the petitioner before the appellate authority, subject to conditions. - HELD THAT: - The court declined to decide the substantive correctness of the demands relating to alleged mismatch between ITC availed and tax paid by suppliers and the levy on renewal charges for a factory licence. Instead, the court granted the petitioner liberty to file a statutory appeal before the Commissioner of GST & Central Excise (Appeals), Coimbatore at Madurai, directing that such appeal be filed within 30 days and that the petitioner deposit 10% of the balance amount of duty confirmed in the impugned order at the time of filing. The appellate commissioner was impleaded suo motu and directed to decide the appeal on merits in accordance with law. [Paras 5, 6, 8]

Petitioner granted liberty to prefer statutory appeal against the remaining demands before the Commissioner (Appeals) within 30 days, subject to deposit of 10% of the balance duty; appellate authority to decide on merits.

Final Conclusion: Writ petition partly allowed: demand and interest in paragraphs 15(g) and 15(h) set aside; other demands left to statutory appeal before the Commissioner (Appeals) within 30 days with 10% deposit; no costs.

Cancellation of registration under Section 29 - discontinuance of business - direction to dispose of pending application - communication of disposal to applicant

Cancellation of registration under Section 29 - discontinuance of business - direction to dispose of pending application - Petition for direction to respondents to dispose of the application for cancellation of GST registration filed on 01.03.2023 and to communicate the order to the petitioner - HELD THAT: - The petitioner, a registrant under the Central Goods and Services Tax regime, filed an application under cancellation of registration under Section 29 on the ground of discontinuance of business. The Court found that the application remained pending and issued a procedural direction to the Proper Officer to dispose of the pending application within a stipulated time. The order also provided that if the application had already been disposed of, the respondents must communicate the disposal to the petitioner within the same time-frame. The direction is prospective and limited to ensuring timely disposal and communication of the decision on the cancellation application. [Paras 4]

Proper Officer directed to dispose of the cancellation application within four weeks, and if already disposed, to communicate the order to the petitioner within four weeks.

Final Conclusion: Writ petition disposed by directing the respondents to decide the petitioner's application for cancellation of GST registration (filed 01.03.2023) within four weeks, or to communicate the already passed order within four weeks.

Jurisdiction to initiate proceedings under Section 73(1) and to pass order under Section 73(9) - power to extend time limits under Section 168A - extension of limitation by executive notification - force majeure - prima facie jurisdictional challenge - stay of demand - colourable exercise of power

Jurisdiction to initiate proceedings under Section 73(1) and to pass order under Section 73(9) - power to extend time limits under Section 168A - extension of limitation by executive notification - force majeure - prima facie jurisdictional challenge - Validity of invoking notifications extending the limitation period to initiate and decide proceedings for the tax period April 2018 to March 2019 and the resulting jurisdictional challenge to the show cause notice and adjudication order. - HELD THAT: - The petitioners challenged initiation and adjudication for April 2018-March 2019 on the ground that ordinary limitation had expired and that the respondents relied on notifications said to extend time under the executive power conferred by Section 168A, which applies where actions cannot be completed due to force majeure. The Court recorded that the petition raises a jurisdictional issue and that petitioners have made out a prima facie case that the notifications and subsequent show cause and adjudication may have been colourable if no force majeure existed when proceedings were initiated. The Court did not decide the substantive question on merits but treated the matter as requiring further factual and affidavit material from the respondents before adjudication on validity of the notifications and the consequent jurisdictional effect.

Issue not finally decided on merits; remanded for fresh consideration with opportunity for respondents to file affidavit-in-opposition and for further hearing on the jurisdictional challenge.

Stay of demand - prima facie jurisdictional challenge - coordinate bench precedent - Interim relief in respect of the adjudication order dated 3rd April 2024 and the consequential demand. - HELD THAT: - Taking into account the prima facie jurisdictional challenge raised by the petitioners and a coordinate Bench's limited interim order in an identical matter, the Court found it appropriate to grant interim protection. The stay is limited and conditional, designed to preserve the petitioners' position until the matter is further considered after pleadings and affidavits are filed.

Impugned demand in the adjudication order dated 3rd April 2024 is stayed until the end of September 2024 or until further orders, whichever is earlier.

Affidavit-in-opposition - opportunity to be heard - Procedural directions for filing affidavit-in-opposition and replies. - HELD THAT: - The Court directed respondents to file affidavit-in-opposition within three weeks after the summer break and permitted the petitioners to file any reply within two weeks thereafter. The directions were issued because the Court considered that the writ petition could not be decided without affidavits and factual material from the respondents in response to the jurisdictional challenge.

Respondents to file affidavit-in-opposition within three weeks after summer break; petitioners to file reply, if any, within two weeks thereafter; matter listed for hearing in August 2024 combined monthly list.

Final Conclusion: The High Court granted an interim stay of the demand in the adjudication order dated 3rd April 2024 in respect of the tax period April 2018 to March 2019 until the end of September 2024 or until further orders, directed filing of affidavit-in-opposition and reply within fixed timelines, and retained the jurisdictional challenge concerning the validity of time-extension notifications and invocation of Section 168A for final determination after pleadings and hearing.

Cancellation of GST registration - personal hearing - direction to dispose of application within a fixed time - opportunity to furnish documents and clarifications - availability of alternative statutory remedies

Cancellation of GST registration - personal hearing - direction to dispose of application within a fixed time - opportunity to furnish documents and clarifications - Petitioner directed to appear for personal hearing and Proper Officer directed to dispose of the petitioner's application for cancellation of GST registration within a stipulated period. - HELD THAT: - The Court recorded that the Petitioner had filed an application dated 20.10.2023 seeking cancellation of GST registration and that a query was raised by the Respondent on 25.10.2023 to which the response was found unsatisfactory and the Petitioner had not personally appeared to assist disposal. In view of the above, the Court directed the Petitioner to appear before the Proper Officer on the specified date and time and to produce necessary documents and clarifications. The Proper Officer was directed to thereafter dispose of the application within four weeks. The direction balances the need to afford the Petitioner an opportunity of personal hearing and to ensure expeditious disposal of the pending application. [Paras 4]

Petitioner to appear before the Proper Officer on 04.06.2024 at 12:00 noon with documents and clarifications; Proper Officer to dispose of the application within four weeks.

Availability of alternative statutory remedies - Petitioner remains free to seek such further remedies as may be permissible in law if aggrieved by the order passed by the Proper Officer. - HELD THAT: - The Court expressly noted that, notwithstanding the directions given for personal appearance and disposal, the Petitioner may avail itself of any further remedies provided by law in case of dissatisfaction with the order passed by the Proper Officer. This preserves the Petitioner's right of challenge under the statutory scheme. [Paras 5]

Petitioner may pursue any further remedies available in law if aggrieved by the outcome of the Proper Officer's decision.

Final Conclusion: Writ petition disposed directing personal appearance on 04.06.2024 and expeditious disposal of the cancellation application by the Proper Officer within four weeks, while preserving the Petitioner's right to avail further legal remedies if aggrieved.

Appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017 - Condonation of delay in filing appeal - Appellate authority's power to admit delayed appeal beyond one month under Section 107(4) - Availability of efficacious alternative remedy - Manual filing where online portal prevents generation of appeal form

Availability of efficacious alternative remedy - Appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017 - Petitioner ought to approach the appellate authority under Section 107 rather than seek relief by writ. - HELD THAT: - The Court observed that the order passed under the said Act on 2nd November, 2023 is an appealable order and that an efficacious alternative remedy in the form of an appeal under Section 107 is available. In view of availability of that statutory remedy, the writ petition cannot be entertained at this stage and the petitioner should first avail the appellate process. [Paras 2, 3, 6]

Writ petition cannot be granted insofar as it seeks relief which is recoverable by appeal; petitioner directed to approach the appellate authority.

Condonation of delay in filing appeal - Appellate authority's power to admit delayed appeal beyond one month under Section 107(4) - Appellate authority is competent to condone delay in filing the appeal beyond the prescribed period as held by the Division Bench in S. K. Chakraborty & Sons. - HELD THAT: - The Court relied on the Division Bench decision in S. K. Chakraborty & Sons (2023 SCC Online Cal. 4759) which held that the appellate authority may admit an appeal by condoning delay beyond one month from the prescribed period under Section 107(4). Consequently, the petitioner's contention that the appellate authority cannot permit filing beyond the limitation period was rejected and the authority was directed to consider any condonation application on its merits. [Paras 7]

The contention that the appellate authority cannot admit a delayed appeal is rejected; the appellate authority may condone delay under Section 107(4).

Condonation of delay in filing appeal - Appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017 - Petitioner permitted to file an appeal within two weeks with an application for condonation of delay; appellate authority to consider and, if delay is condoned, hear the appeal on merits. - HELD THAT: - The Court granted the petitioner a limited time window to institute the statutory remedy: if an appeal is filed within two weeks accompanied by an application explaining the delay, the appellate authority shall, having regard to the Division Bench precedent, consider the application and, upon condoning the delay, proceed to decide the appeal on merits. This direction confines the remedy to the statutory appellate forum while ensuring the petitioner an opportunity to seek condonation. [Paras 9]

Petitioner may file appeal within two weeks with a condonation application; appellate authority to consider and, if appropriate, condone delay and hear appeal on merits.

Manual filing where online portal prevents generation of appeal form - Appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017 - If the online portal does not permit admission of the appeal beyond the statutory period, the petitioner is entitled to file the appeal manually. - HELD THAT: - Addressing the practical difficulty alleged by the petitioner that the online system prevents generation of Form GST APL-01 after the limitation period, the Court directed that such procedural impediment shall not bar the remedy: the petitioner is at liberty to file the appeal manually where the online process does not permit admission beyond the statutory period. [Paras 4, 10]

If online filing is blocked by the portal, petitioner may file the appeal manually.

Final Conclusion: Writ petition dismissed insofar as it seeks relief recoverable by appeal; petitioner granted two weeks to file an appeal under Section 107 with a condonation application, which the appellate authority shall consider in light of S. K. Chakraborty & Sons, and permitted to file manually if the online portal prevents submission.

Application of binding precedent - quashing of impugned administrative order - disposal in terms of a higher court's decision - liberty to proceed in accordance with law

Application of binding precedent - quashing of impugned administrative order - Impugned order dated 22.06.2017 set aside as covered by the Apex Court decision in M/s VVF Limited (supra). - HELD THAT: - The writ petition was disposed of on the basis that the controversy raised was squarely covered by the Apex Court's decision in M/s VVF Limited. Counsel for the GST Department conceded applicability of that precedent and counsel for the petitioner accepted the submission. Having regard to the parties' endorsements and the binding nature of the higher court's decision, the High Court held that the impugned order cannot stand and proceeded to set it aside and quash it. The respondents were granted liberty to take further steps strictly in accordance with law and in conformity with the principles laid down by the Apex Court in the referred decision. [Paras 4, 6]

Impugned order dated 22.06.2017 quashed; matter disposed of in terms of the Apex Court decision and respondents permitted to proceed in accordance with law.

Final Conclusion: Writ petition allowed in terms of the Apex Court authority relied upon; the impugned administrative order is quashed and respondents may act further consistent with the law as declared by the higher court.

Maintainability of writ petition when alternative statutory remedy exists - appellate authority's power to examine questions of fact and law - jurisdictional challenge to initiation of proceedings under Section 74 vis-a -vis Section 73 of the CGST Act - challenge to validity of administrative notification not arising where the substantive notice is issued under a different provision

Maintainability of writ petition when alternative statutory remedy exists - appellate authority's power to examine questions of fact and law - Whether the writ petition challenging the Order-in-Original dated 21.02.2024 should be entertained notwithstanding the availability of an appeal under the statutory scheme - HELD THAT: - The Court held that the impugned order dated 21.02.2024 is essentially a challenge on merits and that a statutory remedy of appeal is available before the Appellate Authority under the relevant provisions. Since the appellate authority is vested to examine both questions of fact and law at the first instance of appeal, the High Court declined to entertain the writ petition on the merits. The Court observed that it would not examine the impugned order's jurisdictional correctness in writ jurisdiction where the statutory appeal remedy is available and adequate to adjudicate the contested questions. [Paras 4, 6]

Writ petition dismissed insofar as it challenges the Order-in-Original dated 21.02.2024, with liberty to file an appeal before the concerned appellate authority.

Jurisdictional challenge to initiation of proceedings under Section 74 vis-a -vis Section 73 of the CGST Act - appellate authority's power to examine questions of fact and law - Whether initiation of proceedings under Section 74 instead of Section 73 raises a jurisdictional defect warranting interference by the High Court at this stage - HELD THAT: - The Court recorded that the contention regarding initiation of proceedings under Section 74 rather than Section 73 involves questions of fact and law which can be examined by the Appellate Authority on appeal. Accordingly, the High Court refrained from adjudicating this contention in writ proceedings and indicated that the appellate forum is competent to decide whether the proceedings were rightly initiated under the provision invoked. [Paras 3, 5]

High Court declined to decide the challenge to initiation under Section 74 vis-a -vis Section 73 and left the issue to be considered by the Appellate Authority.

Challenge to validity of administrative notification not arising where the substantive notice is issued under a different provision - Whether the challenge to Notification No. 09/2023-Central Tax dated 31.03.2023 can be entertained in the present petition - HELD THAT: - The Court found that the question regarding the validity of the notification dated 31.03.2023 does not arise in the present proceedings because the notice impugned in this case was not issued under Section 73 of the CGST Act. The Court distinguished earlier proceedings where that notification had been relevant and therefore did not entertain the challenge to the notification in the present petition. [Paras 3, 5]

Challenge to Notification No. 09/2023-Central Tax dated 31.03.2023 not entertained in this petition.

Final Conclusion: The writ petition is dismissed as misconceived in respect of the challenged Order-in-Original dated 21.02.2024, with liberty to the petitioner to prefer an appeal before the appropriate appellate authority; contentions regarding initiation under Section 74 instead of Section 73 and the validity of Notification No. 09/2023-Central Tax are left to be considered by the appellate forum or are not entertained in the present petition as explained above.

Summary order. Petition dismissed in terms of the Division Bench judgment in Sudershan Lal Gupta (supra).

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Application for revocation of cancellation of registration - Acceptance of Form GSTR-3B subject to compliance - Opening of GST portal by proper officer

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 OGST Rules was condoned. - HELD THAT: - The Court accepted the stand taken by the departmental counsel and, in view of the same, condoned the delay in the petitioner invoking the proviso to Rule 23 of the OGST Rules. The condonation is subject to the petitioner fulfilling the specified pre-conditions relating to payment and other formalities. The order therefore allows the petitioner to proceed with the revocation application despite the earlier delay. [Paras 3]

Delay in invoking the proviso to Rule 23 OGST Rules is condoned, subject to compliance with payment and other formalities.

Acceptance of Form GSTR-3B subject to compliance - Application for revocation of cancellation of registration - Opening of GST portal by proper officer - The petitioner's application for revocation and filing of Form GSTR-3B will be considered and the portal will be opened provided statutory dues and formalities are complied with. - HELD THAT: - The departmental counsel stated that if the delay is condoned and the petitioner complies with all requirements of paying taxes, interest, late fee, penalty and other formalities, the Form GSTR-3B filed by the petitioner will be accepted. The Court directed that, upon the petitioner depositing all dues and complying with other formalities and producing a copy of the order before the proper officer, the proper officer shall open the portal to enable filing of the GST return and consider the revocation application in accordance with law. [Paras 2, 3, 4]

Subject to payment of all taxes, interest, late fee, penalty and compliance with other formalities and production of this order, the proper officer shall accept the GSTR-3B and open the portal to enable filing and consider the revocation application as per law.

Final Conclusion: Writ petition disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that, upon the petitioner depositing all dues and complying with formalities and producing this order, the proper officer shall open the portal to accept the GSTR-3B and consider the revocation application in accordance with law.

Cancellation of GST registration - direction to dispose of pending application - closure of business as ground for cancellation

Cancellation of GST registration - direction to dispose of pending application - Petition seeking direction to respondent to decide the petitioner's application for cancellation of GST registration filed on 26.03.2024. - HELD THAT: - Petitioner, who obtained GST registration on 17.10.2020 and subsequently closed the business, filed an application for cancellation of registration on 26.03.2024. The respondent sought further information by communication dated 04.04.2024, which the petitioner replied to on 16.04.2024. The Court, exercising its supervisory jurisdiction, directed the proper officer to dispose of the pending cancellation application within four weeks. The Court expressly refrained from adjudicating the merits of the cancellation claim or commenting on contentions of the parties, leaving substantive determination and any further remedies open to the parties. [Paras 3, 4, 5, 6]

Proper officer directed to decide the petitioner's cancellation application within four weeks; merits not considered and rights reserved.

Final Conclusion: Writ petition disposed by directing the respondent to decide the petitioner's application for cancellation of GST registration within four weeks; Court did not consider the merits and preserved parties' rights.

Petition disposed as not pressed - liberty to raise all contentions at appropriate stage - request for grant of interest on amounts recovered during search - production/supply of documents seized during search on request - consideration of requests by revenue authorities in accordance with law

Petition disposed as not pressed - Disposal of the writ petition on the ground that it is not pressed by the petitioner - HELD THAT: - The petitioners' counsel expressly stated that the petition is not being pressed in view of subsequent developments. The Court recorded this position and accordingly disposed of the petition. No substantive adjudication on the merits of the claims was undertaken.

Petition disposed as not pressed.

Liberty to raise all contentions at appropriate stage - request for grant of interest on amounts recovered during search - Grant of liberty to the petitioners to raise the same issues and to seek interest on amounts recovered at the appropriate stage - HELD THAT: - Although the petition was not pressed, the Court permitted the petitioners to raise all issues previously urged in the petition before the appropriate forum when occasion arises. The Court also allowed the petitioners to request grant of interest on amounts recovered during the search, leaving the determination of such a claim to be made at the appropriate stage and decided in accordance with law.

Liberty granted to raise all contentions and to seek interest on recovered amounts at the appropriate stage.

Production/supply of documents seized during search - consideration of requests by revenue authorities in accordance with law - Direction to respondents to consider the petitioners' request for supply of seized documents in accordance with law - HELD THAT: - The petitioners sought supply of copies of documents seized during the search. The respondents' counsel stated that any such request, if made, would be considered expeditiously and in accordance with law. The Court recorded this assurance and left the matter to be addressed by the respondents pursuant to legal norms governing supply of seized material.

Respondents to consider and decide any request for supply of seized documents expeditiously and in accordance with law.

Final Conclusion: The writ petition is disposed of as not pressed; petitioners are granted liberty to raise the same contentions and to seek interest on recovered amounts at the appropriate stage, and the respondents have been directed to consider any request for supply of seized documents expeditiously and in accordance with law.

Revisionary jurisdiction under Section 263 - Erroneous and prejudicial to the interests of Revenue - Limited scrutiny and scope of assessment - Fair market rent verification - Treatment of project grants and foreign contributions - AO's enquiry sufficiency and plausible view

Revisionary jurisdiction under Section 263 - Fair market rent verification - AO's enquiry sufficiency and plausible view - Whether the Commissioner was justified in invoking Section 263 to set aside the assessment for failure of the AO to verify reasonableness of rent charged to specified persons. - HELD THAT: - The Tribunal examined the CIT's conclusion that the AO did not ascertain the fair market rent and therefore the order was 'erroneous and prejudicial to the interests of the Revenue'. It held that the assessment had been made after limited scrutiny and the AO had made the enquiries called for within that scope and accepted the return after considering the assessee's explanations and evidence. Where the AO has taken a plausible view supported by the material, the CIT cannot substitute his opinion under Section 263 merely because he would have preferred further enquiry; loss of revenue consequent to a plausible view of the AO does not, by itself, make the order erroneous and prejudicial. The Tribunal therefore found that the view taken by the AO was sustainable and the CIT was not justified in revising the order on this ground. [Paras 8, 13]

CIT's invocation of Section 263 in respect of the rent issue was unwarranted; the AO's view was plausible and the assessment cannot be reopened on that ground.

Limited scrutiny and scope of assessment - Treatment of project grants and foreign contributions - AO's enquiry sufficiency and plausible view - Whether the CIT could invoke Section 263 in respect of foreign contributions not admitted as income when that issue was not part of the limited scrutiny selection. - HELD THAT: - The Tribunal noted that the assessment was selected for limited scrutiny on two specified points and the foreign contribution issue was not part of that selection. The AO therefore had no jurisdiction to enlarge the scope of limited scrutiny to examine the treatment of foreign grants, and the CIT could not sustain a revisionary order on a matter outside the scope of the assessment proceedings. Further, where two views were possible and the AO adopted one view which was not unsustainable, the order could not be characterised as erroneous and prejudicial to revenue merely because the CIT preferred a different view. Accordingly the CIT's direction to treat the foreign contribution as income and to direct fresh assessment was not justified. [Paras 8, 13]

CIT's Section 263 order in respect of foreign contributions was unsustainable because the matter was outside the limited scrutiny scope and the AO's view was tenable.

Final Conclusion: The Tribunal allowed the appeal, holding that the CIT(Exemption) was not justified in invoking Section 263 either in respect of rent charged to specified persons or in respect of foreign contributions for A.Y. 2017-18; the AO's assessment stands and the revisionary order is set aside.

Deduction under Section 80DD - annuity or lump sum for benefit of a dependant with disability - prospective effect of statutory amendment - retrospective operation of statutory amendment - intent and object of an insurance contract/policy

Deduction under Section 80DD - annuity or lump sum for benefit of a dependant with disability - prospective effect of statutory amendment - Parliamentary amendment to Section 80DD by Finance Act, 2022 (effective 01.04.2023) addresses the concerns raised in the petition by providing for discontinuation of payment on attaining age sixty and exclusion of subsection (3) in certain cases. - HELD THAT: - The Court observed that Section 80DD, which permits deduction in respect of maintenance including payment or deposit under specified schemes for the benefit of a dependant who is a person with disability, has been amended by the Finance Act, 2022 to add that the scheme may provide for payment on the subscriber attaining the age of sixty or more and to insert a saving that subsection (3) will not apply to amounts received by the dependant before his death by virtue of that new clause. The amendment was noted as having been enacted in response to the concerns earlier ventilated before this Court and thus has assuaged those concerns to a degree. The Court recorded that the grievance underlying the earlier writ petition stood addressed by the legislative change with prospective effect and that this was the reason for disposing of a related contempt petition. [Paras 3, 4, 9]

The amendment enacted by Finance Act, 2022 (effective 01.04.2023) addresses the petitioner's concerns and the legislative change is to operate prospectively.

Retrospective operation of statutory amendment - intent and object of an insurance contract/policy - The amendment to Section 80DD cannot be given retrospective effect to alter pre-existing insurance policies taken prior to the amendment (including policies taken prior to 2014). - HELD THAT: - The Court rejected the petitioner's contention that the Finance Act, 2022 amendment should be applied retrospectively to existing policies so that subscribers who had taken policies earlier could discontinue them on attaining sixty and obtain accumulated benefits. The Court reasoned that the object of the relevant policy (Jeevan Aadhar) is to provide for the disabled dependant upon the death of the subscriber; permitting discontinuation on attaining sixty would defeat that object and prejudice the intended beneficiary. Further, an insurance contract contains agreed commercial terms which cannot be altered retroactively by judicial direction to give a statute retrospective operation. In view of these considerations and the legislative choice to make the amendment prospective, retrospective operation was not warranted. [Paras 5, 6, 7, 8, 11]

Retrospective application of the Finance Act, 2022 amendment to Section 80DD to existing/past policies is not permissible and is refused.

Final Conclusion: The writ petition is disposed of: the Court recorded that Parliament's amendment to Section 80DD (effective 01.04.2023) addresses the petitioner's concerns prospectively and declined to direct retrospective operation of that amendment to pre-existing insurance policies.

Return of cash seized by department u/s 132A - inaction of the Revenue in not even obeying and complying with the orders and directions passed by ITAT as well as PCIT - seeking direction to the Revenue to return the amount as seized together with interest for pre-assessment period as well as post-assessment period until the date of payment - seized gold were handed over but the cash was not returned - as decided by HC [2023 (9) TMI 760 - BOMBAY HIGH COURT] Even after the Petition was filed and served and the lawyer appeared for the Revenue, still the Revenue did not consider it fit to return the money. Therefore, in our case this is nothing but a clear case of high handedness on the part of the officers of the Revenue - This is a fit and proper case in which action should be initiated against all the officers concerned who were all in charge of this case at the appropriate and relevant point of time - Cash returned to pettioner and will be entitled to interest at 12% p.a. for the post-assessment period, i.e., from 25th September 2014 until payment/realization.

HELD THAT:- We are not inclined to interfere with the impugned order passed by the High Court.

Special Leave Petition is, accordingly, dismissed.

Reopening assessment under Section 147 - notice under Section 148 - reason to believe - tangible material and nexus - borrowed satisfaction - assessment processed under section 143(1) - sanction under Section 151 - gross delay of 648 days in filing this Special Leave Petition.

HELD THAT:- The reasons assigned for the delay are neither satisfactory nor sufficient in law to condone the same. Hence, the application stands dismissed.

Consequently, the Special Leave Petition also stands dismissed on the ground of delay.

Reopening of assessment - formation of belief that income has escaped assessment - show cause notice under Section 148A(b) - order under Section 148A(d) - treatment of pre-amendment Section 148 notices as Section 148A(b) - no reopening of concluded assessments - double addition

Reopening of assessment - treatment of pre-amendment Section 148 notices as Section 148A(b) - no reopening of concluded assessments - double addition - Validity of re-initiation of reassessment proceedings by notice dated 19.07.2022 (and order under Section 148A(d) of the Act of the same date) for AY 2014-15 where assessment had been concluded earlier and the Revenue relied on Ashish Agarwal to treat earlier Section 148 notice as a show-cause notice under Section 148A(b). - HELD THAT: - The Court held that the Supreme Court decision in Ashish Agarwal was directed to notices issued under the unamended Section 148 (issued between 01.04.2021 and 30.06.2021) and moulded a remedial procedure by treating those notices as show-cause notices under Section 148A(b) so that proceedings which had not attained finality could be taken forward under Section 148A(d). Ashish Agarwal was not intended to, nor did it, mandate reopening of assessments that had already been concluded; it was confined to salvaging pending proceedings at the stage of notice. Where an assessment has attained finality before Ashish Agarwal, the decision does not justify issuing fresh notices to reopen concluded assessments on the same set of reasons, as that would amount to impermissible re-opening and risk double addition. The petitioner had not challenged the original notice on grounds addressed in the High Courts but had allowed reassessment to be concluded; in that factual matrix the Revenue had no justification to re-initiate reassessment relying on Ashish Agarwal. Applying these principles, the Court found the impugned re-initiation of reassessment and the consequential notice dated 19.07.2022 unsustainable. [Paras 11, 12, 25, 26]

Impugned order dated 19.07.2022 under Section 148A(d) and the consequential notice under Section 148 of the same date quashed; reassessment re-initiation set aside.

Final Conclusion: Writ petition allowed; reassessment action under Section 148/148A dated 19.07.2022 for AY 2014-15 quashed as Ashish Agarwal does not authorize reopening of assessments already concluded and re-initiation on identical facts would be impermissible.

Summary order. Interim relief granted: the final assessment order dated 11.08.2024 passed under Section 143(3) read with Section 144C(3) and 144B, the consequential demand notice dated 11.08.2024 and the penalty proceedings are stayed; respondents waive service; the petition is tagged for hearing along with Writ Petition (L) No.30944 of 2023; petitioner to file reply affidavit within six weeks; liberty granted to the parties to apply in the event of orders or final decision by the Supreme Court on the relevant issue of law.

Reassessment under Section 148 and Section 148A - First Proviso to Section 149(1) - limitation on issuance of notice - Deeming of notices issued under unamended Section 148 to be under Section 148A as per Ashish Agarwal - Preservation of assessees' defences under substituted Sections 147-151 - Article 142 modulation of High Court orders

Reassessment under Section 148 and Section 148A - Deeming of notices issued under unamended Section 148 to be under Section 148A as per Ashish Agarwal - Article 142 modulation of High Court orders - Whether the notice dated 27 May 2022 under Section 148A(b) is a continuation or substitution of the earlier Section 148 notice dated 30 June 2021 and is saved by the Supreme Court's decision in Ashish Agarwal - HELD THAT: - The Court held that Ashish Agarwal was intended to cure and revive those Section 148 notices which had been expressly impugned and quashed by High Courts by deeming them to be show cause notices under Section 148A(b) and permitting proceedings to continue under the substituted procedure. Ashish Agarwal was therefore confined to notices that formed the subject matter of challenge before the High Courts or this Court and to proceedings at the notice stage; it did not mandate reopening or reinvention of proceedings in respect of notices that had not been judicially assailed. Since the petitioner had not challenged the original 30 June 2021 notice (nor was that notice quashed or declared invalid inter partes), there was no need to revive or substitute it; the respondents chose to commence a fresh course by issuing the 27 May 2022 notice. The Supreme Court's PAN INDIA modulation could not be read as depriving assessees of rights under the First Proviso to Section 149(1) or as empowering the Revenue to re open matters which had not been subject to judicial invalidation. Consequently, the 27 May 2022 notice cannot be treated as a continuation/substitution of the 30 June 2021 notice and is not saved by Ashish Agarwal. [Paras 32, 33, 34, 35, 36]

The 27 May 2022 notice under Section 148A(b) is not a continuation or substitution of the 30 June 2021 Section 148 notice and is not saved by Ashish Agarwal.

First Proviso to Section 149(1) - limitation on issuance of notice - Preservation of assessees' defences under substituted Sections 147-151 - Whether the reassessment action for AY 2015-16 commenced by the 27 May 2022 notice is barred by the limitation in the First Proviso to Section 149(1) - HELD THAT: - The Court examined the First Proviso to Section 149(1) which requires that for assessment years beginning on or before 1 April 2021, a notice under Section 148 cannot be issued if it could not have been issued at that time because that would have been beyond the time limit prescribed by clause (b) of sub section (1) as it stood immediately before the Finance Act, 2021. That pre amendment regime prescribed a maximum six year period from the end of the relevant assessment year. The Court found that, having rejected the contention that the 27 May 2022 notice is a continuation of the earlier notice, the fresh issuance in May 2022 falls outside the permissible period as governed by the First Proviso to Section 149(1). The Court relied on principles previously articulated in its decisions (including Manju Somani and Anindita Sengupta) that Ashish Agarwal did not intend to require reopening of completed or unchallenged proceedings and that limitation under the proviso must be respected. Applying those principles to AY 2015 16, the reassessment action commenced by the 27 May 2022 notice could not be sustained as it breached the statutory limitation. [Paras 25, 26, 27, 37, 38]

The reassessment action for AY 2015 16 initiated by the 27 May 2022 notice is barred by the First Proviso to Section 149(1) and cannot be sustained.

Final Conclusion: The writ petition is allowed: the notice under Section 148A(b) dated 27 May 2022, the order under Section 148A(d) dated 30 July 2022, the notice under Section 148 dated 30 July 2022 and all consequential proceedings are quashed because the later notice is not a continuation of the original unchallenged notice and the reassessment is barred by the First Proviso to Section 149(1) for AY 2015 16.

Power of appellate tribunal to admit and decide additional grounds - exercise of discretion to permit new pleas in appeal where facts are on record - interest on compulsory deposit of share application money treated as incidental to capital raising and eligible for set-off against public issue expenses - objective of tax proceedings to determine correct tax liability

Power of appellate tribunal to admit and decide additional grounds - exercise of discretion to permit new pleas in appeal where facts are on record - objective of tax proceedings to determine correct tax liability - Tribunal was entitled to admit and decide an additional ground not raised earlier and to examine issues for which the assessee had not been aggrieved in earlier orders, subject to the requirements of bona fides and that relevant facts are on record. - HELD THAT: - The Court applied the principle declared by the Supreme Court in National Thermal Power Co. Ltd. and earlier authority in Jute Corporation of India Ltd., that the appellate authority (including the Tribunal) is not confined strictly to the grounds arising from the order under appeal where the additional ground is one of law, goes to the root of the case, relevant facts are on record and the ground is bona fide. The object of proceedings before tax authorities is to assess correctly the tax liabilities, and therefore the Tribunal may permit and decide new pleas in appeal if satisfied that they could not have been raised earlier for good reasons and that admission is necessary to determine correct liability. In the present case the Tribunal admitted the additional ground and rejected the revenue's objection, and the Court found no error in that approach. [Paras 2, 3]

Tribunal's admission and adjudication of the additional ground is upheld in favour of the assessee.

Interest on compulsory deposit of share application money treated as incidental to capital raising and eligible for set-off against public issue expenses - Interest earned on compulsory deposits of share application/subscription money is not liable to be taxed as income and is allowable to be set off against public issue (share issue) expenses. - HELD THAT: - Relying on the Supreme Court's reasoning in Commissioner of Income Tax - IV Ahmedabad v. Shree Rama Multi Tech Ltd., the Court accepted that where share application money is mandatorily kept in bank till allotment, the accrual of interest is incidental to compliance with statutory requirement for raising share capital and not the prime purpose of deposit. The interest therefore relates to the capital structure and is adjustible against expenditure incurred in connection with the issue of shares (public issue expenses), rather than being taxable as income from other sources. In view of this authoritative pronouncement, the question raised by the revenue as to taxability and the direction to set-off the interest against share issue expenses is no longer res integra and is answered in favour of the assessee. [Paras 4, 5, 6]

Interest on compulsory deposits of share application money is eligible for set-off against public issue expenses; revenue's contention rejected.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal's admission of the additional ground and its decision-endorsing that interest on compulsory deposits of share application money is incidental to capital raising and may be set off against share issue expenses-are upheld.

Conversion of a partnership/proprietorship into a company and continuity of the undertaking - benefit under Section 80-I attaches to the undertaking and not to the owner - statutory vesting of firm's property on registration under Part IX of the Companies Act - deduction under Section 80-I for the unexpired period of the undertaking

Conversion of a partnership/proprietorship into a company and continuity of the undertaking - benefit under Section 80-I attaches to the undertaking and not to the owner - deduction under Section 80-I for the unexpired period of the undertaking - Whether deduction under Section 80-I can be denied to an assessee-company for the unexpired period merely because the business was carried on by conversion of a partnership into a private limited company - HELD THAT: - The Court applied the principle that on conversion under Part IX of the Companies Act the properties and business of the firm vest in the company by statutory operation, so that the company succeeds to the undertaking and carries on the same business. Reliance was placed on the Supreme Court's reasoning in Commissioner of Income Tax v. Chetak Enterprises that conversion under Part IX effects statutory vesting and the enterprise thereafter is owned and carried on by a company registered in India. The Court also noted appellate authority treating the tax benefit as attached to the undertaking and not to the owner, such that a successor undertaking taking over a running concern is entitled to the unexpired period's benefit. Applying these principles to the admitted facts - that the partnership was converted into the company, all assets and liabilities were taken over and the business continued without revaluation - the Court held that the appellant-company could not be denied the Section 80-I deduction for the unexpired period solely on account of such conversion. [Paras 9, 12]

Appeals allowed; appellant entitled to deduction under Section 80-I and consequent deduction for the unexpired period; Assessing Officer directed to pass appropriate orders.

Final Conclusion: The appeals are allowed and the appellant-company is held entitled to the benefit of deduction under Section 80-I for the unexpired period following conversion of the partnership into a company; the Assessing Officer shall pass consequential orders.

Addition under section 68 - accommodation entries and organized tax evasion - onus on assessee to prove identity, creditworthiness and genuineness - uncorroborated admission not a conclusive basis for addition - substantial question of law and maintainability under section 260 A

Addition under section 68 - onus on assessee to prove identity, creditworthiness and genuineness - Validity of deletion of addition of share application money treated as unexplained cash under section 68 - HELD THAT: - The Tribunal and the CIT(A) examined the transactional documents and found that the assessee had furnished documents to establish identity, creditworthiness and genuineness of the share applicants. The Assessing Officer's addition was founded primarily on the statement of the accommodation entry provider without independent or corroborative evidence showing payment of cash by the assessee to the provider. The appellate authorities relied on precedents and on a detailed examination of each shareholder transaction and concluded that the assessee discharged the primary onus; the High Court concurred that there was no basis to treat the finding as perverse or legally infirm and upheld deletion of the addition under section 68. [Paras 7, 14]

The deletion of the addition under section 68 is upheld; the assessing officer's addition is without basis.

Accommodation entries and organized tax evasion - uncorroborated admission not a conclusive basis for addition - Whether the statement of the accommodation entry provider constituted sufficient proof that the transactions were sham and a colourable device - HELD THAT: - The Court recorded that the statement of Shri Shirish Chandrakant Shah was retracted and that an admission by a third party or assessee, in absence of corroborative material, cannot be treated as conclusive. The Assessing Officer relied largely on such statements; no independent material was produced to show cash payment or diversion of funds. In these circumstances the appellate findings that the transactions could not be equated to sham accommodation entries were supported by the record and applicable principles of evidence. [Paras 11]

The statement relied upon by the Assessing Officer did not constitute sufficient corroboration to sustain the addition; the transactions were not proved to be sham on the record.

Substantial question of law and maintainability under section 260 A - Whether a substantial question of law arises for invocation of High Court jurisdiction under section 260 A - HELD THAT: - Applying the tests in the cited precedents, the Court examined whether the questions framed directly and substantially affected the parties and were open or debatable legal questions. The Court concluded that the grounds advanced amounted to disputes on facts and the correctness of factual findings by the Tribunal and CIT(A), not substantial questions of law. Therefore, the appeal under section 260 A was not maintainable as no substantial question of law arose. [Paras 8, 12, 13]

No substantial question of law arises; the Income Tax Appeal under section 260 A is not maintainable.

Final Conclusion: The High Court dismissed the Income Tax Appeal, upholding the deletion of the addition under section 68 by the authorities and holding that no substantial question of law arises to entertain the appeal under section 260 A.

Condonation for filing revised return - Power of High Court under Article 226 - Validity of CBDT Circular limiting condonation - Credit for TDS and amendment under Section 155(14) - Entitlement to refund under Section 237 - Form of claim for refund and limitation under Section 239 - Bar against direct demand where tax deducted under Section 205 - Interest on delayed refund under Section 227

Validity of CBDT Circular limiting condonation - Power of High Court under Article 226 - Condonation for filing revised return - Legality of rejecting the petitioner's application to file a revised return for AY 2010-11 by relying on CBDT Circular No.09/2015 and a six-year cut-off - HELD THAT: - The Court held that the authority erred in treating the CBDT Circular as creating a period of limitation which would preclude the petitioner from approaching the Court under Article 226. A Circular cannot fetter the constitutional jurisdiction of the High Court and cannot prescribe a bar on the exercise of extraordinary jurisdiction. It was also impermissible to enforce the Circular's time-frame in a case where relief was ultimately granted by the Court many years after the dispute arose; applying the Circular in that manner would produce inequitable results. The authority's view that the writ petition itself lay barred by an external six-year cut-off was therefore rejected. [Paras 10, 11, 20, 22, 23]

Impugned order rejecting the application on the basis of the CBDT Circular and the supposed six-year bar is quashed.

Credit for TDS and amendment under Section 155(14) - Entitlement to refund under Section 237 - Bar against direct demand where tax deducted under Section 205 - Whether the petitioner is entitled to TDS credit and assessment/review steps required to enable refund following issuance of the revised tax certificate - HELD THAT: - The Court noted the undisputed fact that tax had been deducted by the Land Acquisition Collector but the credit was not reflected in Form 26AS. Section 155(14) contemplates amendment of an assessment or intimation by the Assessing Officer where a tax certificate is produced within the statutory period; the statutory scheme also recognises the assessee's entitlement to refund where tax paid or treated as paid exceeds proper charge under Section 237. Further, Section 205 bars making a direct demand on the assessee to the extent tax has been deducted. Applying these provisions and the factual finding that a fresh certificate was issued after the Court's earlier direction, the petitioner cannot be penalised for the discrepancy in Form 26AS and is entitled to have the credit and refund processed. [Paras 14, 15, 16, 17, 21]

The petitioner is entitled to have the revised return and supporting certificate taken on record and for the Assessing Officer to amend/process assessment and consider refund in accordance with Sections 155(14), 237 and the statutory bar in Section 205.

Form of claim for refund and limitation under Section 239 - Interest on delayed refund under Section 227 - Applicability of statutory limitation in Section 239 and entitlement to interest on delayed refund in the facts of this case - HELD THAT: - The Court observed the pre-amendment limitation rules in Section 239 but held that the respondents had overlooked the fact that a fresh certificate was issued only after this Court's earlier direction. In the exercise of prerogative writ jurisdiction the respondents could not rely on the limitation to deny relief in the circumstances of this case. The Court further directed that while framing the order for refund, the respondents must apply the statutory regime relating to interest for delayed disbursal and credit under Section 227. [Paras 18, 19, 20, 25]

Statutory limitation under Section 239 cannot be invoked to deny relief in the present circumstances; respondents must process refund and apply interest rules as applicable.

Condonation for filing revised return - Power of High Court under Article 226 - Relief to be granted and directions to the respondents for submission and processing of a revised return - HELD THAT: - Concluding that the impugned order is unsustainable, the Court allowed the writ petition, quashed the order dated 23 October 2018 and directed the respondents to accept the revised return which the petitioner may submit within four weeks. The return is to be placed before the concerned Assessing Officer for processing the refund claim, and the respondents are to bear in mind the statutory provisions governing interest on delayed refund and credit while framing the refund order. [Paras 22, 23, 24, 25]

Writ petition allowed; impugned order quashed; respondents directed to accept revised return within four weeks and process refund with applicable interest.

Final Conclusion: Writ petition allowed; order dated 23 October 2018 quashed. Respondents to accept the petitioner's revised return for AY 2010-11 within four weeks, place it before the Assessing Officer for processing the refund claim, and frame the refund order while applying the statutory provisions governing amendment, refund and interest.

Requirement of opportunity before drawing adverse inference from third party information - Reopening of assessment and notice under Section 148 read with Section 147 - Reliance on bank's reply to notice under Section 133(6) and verification of Capital Gains Account deposits - Remand for fresh consideration on merits

Requirement of opportunity before drawing adverse inference from third party information - Reliance on bank's reply to notice under Section 133(6) and verification of Capital Gains Account deposits - Remand for fresh consideration on merits - The petitioners were entitled to be given notice before an adverse conclusion was recorded that the bank certificate did not evidence deposit in the Capital Gains Account Scheme, and the impugned assessment order was set aside and remitted for fresh decision. - HELD THAT: - The Court observed that the assessing officer reached an adverse conclusion in paragraph 3 of the impugned assessment order by relying on the bank's response to a notice under Section 133(6), which purportedly did not record deposits in the Capital Gains Account Scheme. The petitioners had produced a bank certificate and other documents (Pages 59-71) asserting deposit into the Capital Gains Account Scheme. The Court held that the petitioners were entitled to be informed and given an opportunity before such an adverse conclusion was recorded, since the authenticity of the bank certificate and the accuracy of the bank's reply were determinative of the claim of deduction. In view of the lack of prior notice on that specific adverse finding, the Court found it appropriate to set aside the impugned assessment order and remit the matter to the assessing officer to pass appropriate orders on merits after giving the petitioners an opportunity, and to decide the matter in accordance with law expeditiously, preferably within six months. All other contentions of the petitioners were left open for consideration in the remand proceedings. [Paras 11, 12, 13]

Impugned assessment order set aside; matter remitted to the assessing officer for fresh adjudication on merits after affording opportunity, preferably within six months.

Final Conclusion: The writ petition is disposed by setting aside the impugned assessment order and remitting the matter to the assessing officer to decide the issues on merits after giving the petitioners an opportunity; other issues are left open for consideration in the remand proceedings.

Ex-parte dismissal - principles of natural justice - sufficient cause for non-appearance - discretion of the appellate tribunal - remand for fresh consideration - costs as condition for rehearing

Ex-parte dismissal - principles of natural justice - sufficient cause for non-appearance - Whether the Tribunal erred in dismissing the appeal ex parte and whether principles of natural justice required granting another opportunity to the assessee. - HELD THAT: - The High Court assessed the conduct of the assessee and observed that while the conduct could not be approved, the Tribunal is the last fact-finding authority and a further opportunity to present the merits could be afforded. The Court did not decide the merits of the tax dispute but concluded that the ex-parte dismissal should be set aside to enable the assessee to agitate the matter before the Tribunal. The Court conditioned the grant of another opportunity on payment of costs to the Bar Association and compliance with a time limit, and directed that upon production of the receipt the Tribunal shall take up the matter and pass fresh orders on merits and in accordance with law.

Order of the Tribunal dismissing the appeal ex-parte set aside; matter remitted to the Tribunal for fresh hearing on merits subject to payment of costs and production of receipt.

Remand for fresh consideration - costs as condition for rehearing - Terms on which the remand/rehearing is to be permitted and consequences of compliance. - HELD THAT: - The Court specified conditions for rehearing: the appellant must pay the directed sum to the Bar Association, High Court at Calcutta, within three weeks of receipt of the order's server copy and submit the receipt to the Tribunal. On production of that receipt the Tribunal is required to afford one opportunity to the appellant and pass fresh orders on merits and in accordance with law. The Court thereby exercised supervisory discretion to balance procedural default with the right to be heard.

Rehearing before the Tribunal permitted subject to payment of costs and production of receipt; Tribunal to decide on merits thereafter.

Discretion of the appellate tribunal - Whether the interim stay application should be granted. - HELD THAT: - The High Court considered the application for interim relief and allowed the stay application (IA No. GA/1/2024) in conjunction with permitting the appeal to be remitted for fresh consideration on the stated conditions. No independent adjudication of the substantive tax issues was undertaken in permitting the stay.

Stay application (IA No. GA/1/2024) allowed.

Final Conclusion: The appeal is allowed by setting aside the Tribunal's ex-parte order and remitting the matter for one fresh hearing on merits before the Tribunal subject to the appellant's payment of costs to the Bar Association within the prescribed time and production of the receipt; the interim stay is also allowed.

Advertisement, Marketing and Promotion expenditure (AMP) - Bright Line Test - invalidity of the Bright Line Test for allocation of AMP - application of precedent in Sony Ericson v. CIT

Advertisement, Marketing and Promotion expenditure (AMP) - Bright Line Test - application of precedent in Sony Ericson v. CIT - Validity of the AMP computation adopted by the Tribunal based on the Bright Line Test - HELD THAT: - The Court examined the Tribunal's computation of Advertisement, Marketing and Promotion (AMP) expenditure which was carried out by applying the Bright Line Test. The Court held that the Bright Line Test, as adopted by the Tribunal for allocation of AMP, cannot be sustained in view of the legal position laid down in Sony Ericson v. CIT [2015 SCC OnLine Del 8083] that governs the correct approach to such allocations. Since the Tribunal's methodology conflicts with the precedent relied upon by this Court, the AMP computation based on the Bright Line Test was rejected.

The AMP computation founded on the Bright Line Test was held unsustainable in light of Sony Ericson v. CIT; the appeals were dismissed.

Final Conclusion: The appeals were dismissed as the Tribunal's AMP computation based on the Bright Line Test was held unsustainable in view of the Court's earlier decision in Sony Ericson v. CIT.

Principles of natural justice - opportunity of personal hearing - faceless assessment - remand for fresh hearing - order under Section 143(3) read with Section 144B of the Income Tax Act, 1961

Principles of natural justice - opportunity of personal hearing - faceless assessment - remand for fresh hearing - order under Section 143(3) read with Section 144B of the Income Tax Act, 1961 - Impugned assessment order dated 21.03.2024 for Assessment Year 2022-23 quashed for failure to afford opportunity of hearing and remitted for fresh adjudication - HELD THAT: - The Court found that the impugned order under Section 143(3) read with Section 144B was passed without affording the petitioner the opportunity of personal hearing despite his specific request, thereby engaging the principles of natural justice. Applying the earlier decision of this Court in Arati Behera , and without expressing any opinion on the merits of the assessment, the Court quashed the order and remitted the matter to the adjudicating authority with a direction to afford the petitioner an opportunity of hearing and thereafter pass an appropriate order. The Court left open the merits for fresh consideration after hearing. [Paras 6]

Order dated 21.03.2024 is quashed and the matter is remitted to the adjudicating authority to pass an appropriate order after affording opportunity of hearing to the petitioner

Final Conclusion: Writ petition disposed of; assessment order set aside and remitted for fresh adjudication after providing the petitioner a personal hearing.

Quashing of Show Cause Notice - Suppression of facts - Burden of proof for issuance of Show Cause Notice - Interference with findings of appellate tribunal

Quashing of Show Cause Notice - Suppression of facts - Burden of proof for issuance of Show Cause Notice - Show Cause Notices issued to the respondent-importer were unsustainable and were quashed as suppression on the part of the respondent was not established. - HELD THAT: - The appellate tribunal (CESTAT) concluded that the foundational allegation for issuing the Show Cause Notices was that the respondent had suppressed material facts; the appellant did not establish that suppression. The Supreme Court, on hearing the parties, found no infirmity in the tribunal's conclusion that suppression had not been proved and therefore sustained the quashing of the Show Cause Notices. The Court expressly left open any question of law that might arise for consideration in another case.

Appeals dismissed; the orders quashing the Show Cause Notices upheld.

Final Conclusion: The Supreme Court upheld the appellate tribunal's finding that suppression was not established and affirmed the quashing of the Show Cause Notices; appeals disposed of while leaving any distinct question of law open for future cases.

Date of reckoning of import - Bill of Lading as date of shipment - provisional release on deposit of enhanced duty - quantification and payment timeline for duty - continuation of adjudication despite provisional release - consideration of waiver of demurrage charges

Date of reckoning of import - Bill of Lading as date of shipment - Entitlement to release of imported secondhand specialised equipment where shipment/Bill of Lading predates Notification No.13/2024-25 dated 20.05.2024 - HELD THAT: - The Court held that the determinative date for reckoning the import, for the purposes of applicability of the subsequent prohibition Notification No.13/2024-25, is the date of shipment/dispatch as reflected in the Bill of Lading. Finding that the Bills of Lading in the present petitions were dated prior to 20.05.2024, the Court accepted that the petitioners fall within the ambit of the earlier order in W.P.Nos.35145 of 2023 etc., and are entitled to relief in the form directed below. The Court therefore concluded that the impugned Notification would not, for these petitioners, operate to deny relief where shipment occurred before the Notification. [Paras 4, 6, 7, 8]

Petitioners whose Bills of Lading are dated before 20.05.2024 are entitled to the relief directed by the Court.

Provisional release on deposit of enhanced duty - quantification and payment timeline for duty - continuation of adjudication despite provisional release - Terms and procedure for provisional release of the goods - HELD THAT: - The Court directed that the respondents consider the petitioners' plea for provisional release subject to the condition that the petitioners pay/deposit the enhanced duty amount. Customs is required to quantify the duty forthwith within one week of receipt of a copy of the order; on receipt of such quantification the petitioners shall immediately make payment, and upon receipt in entirety the goods shall be released within three weeks. The Court clarified that this provisional release does not impede the Customs Department from proceeding with further adjudication under law. [Paras 8]

Goods to be provisionally released on deposit of quantified enhanced duty within the stipulated timelines, without prejudice to further adjudication.

Consideration of waiver of demurrage charges - Consideration of waiver of demurrage charges - HELD THAT: - The Court recorded that in an earlier interim order a related Division Bench had directed that demurrage charges till date be considered for waiver. The present order directs that if the petitioners file an application seeking waiver of demurrage charges, the respondents shall consider and decide such application objectively. The Court did not decide the merits of any waiver claim but remitted that question to the respondents for fresh consideration. [Paras 8]

Applications for waiver of demurrage charges, if filed, shall be considered and decided objectively by the respondents.

Final Conclusion: Writ petitions disposed by directing provisional release of the imported machines where Bills of Lading pre-date Notification No.13/2024-25 on condition of deposit of quantified enhanced duty within specified timelines; Customs may continue adjudication and must consider any application for waiver of demurrage charges objectively.

Penalty for abetment under Section 112(a) of the Customs Act, 1962 - admissibility of a retracted statement - knowledge and abetment liability - confiscability of goods under Section 111 of the Customs Act, 1962 - appellate tribunal's discretionary reduction of penalty

Appellate tribunal's discretionary reduction of penalty - penalty for abetment under Section 112(a) of the Customs Act, 1962 - Whether the Tribunal was justified in reducing the penalty from Rs. 5 lakhs to Rs. 3 lakhs after finding the original penalty harsh. - HELD THAT: - The High Court held that the Tribunal had examined the facts and exercised its discretion in reducing the penalty. The Court found no factual or legal error warranting interference with the Tribunal's conclusion that the original penalty was harsh and that a reduced penalty was appropriate. The tribunal's proportional exercise of discretion in adjusting the quantum of penalty was therefore sustained. [Paras 8, 17]

Tribunal's exercise of discretion in reducing the penalty to Rs. 3 lakhs is justified and is upheld.

Admissibility of a retracted statement - knowledge and abetment liability - Whether the Tribunal was justified in refusing to discard the statement of B.R. Chandran on the ground that it had been retracted. - HELD THAT: - The Court noted that the statement in question was recorded on 09.11.2004 while the deponent was in custody, in the presence of revenue officers and the Superintendent of the Sub Jail, and pursuant to the Magistrate's order. The retraction was made much later after the deponent's release from custody. Given the belated nature of the retraction and absence of evidence of coercion, the Tribunal reasonably treated the original statement as reliable and admissible. The High Court found no perversity in this approach and declined to interfere with the Tribunal's finding that the statement could be relied upon. [Paras 12, 13, 14]

The Tribunal was justified in treating the original statement as admissible despite a later retraction; the retraction was too belated to displace the original statement.

Confiscability of goods under Section 111 of the Customs Act, 1962 - knowledge and abetment liability - Whether a nexus was established between the broker (appellant) and the goods imported by the importer so as to sustain penalty. - HELD THAT: - The Tribunal found on the material that the appellant had purchased DEPB scrips and TRAs and supplied them to the importer, and that those documents were fake. The Tribunal's findings describe a modus operandi whereby the appellant supplied documents that enabled duty-free clearance. The High Court observed that these factual findings demonstrate the requisite nexus between the appellant's acts and the imported goods, and there was no material warranting interference with those findings. [Paras 15, 16]

A sufficient nexus between the appellant's supply of fake documents and the importer's duty-free clearance of goods was established; the penalty is sustainable on that basis.

Knowledge and abetment liability - penalty for abetment under Section 112(a) of the Customs Act, 1962 - Whether absence of an explicit finding that the appellant acted 'fraudulently' precluded imposition of penalty. - HELD THAT: - The Tribunal found that the appellant knew the DEPB scrips and TRAs were fake and that by supplying them he abetted the importer's offence rendering the goods liable for confiscation under Section 111. The High Court accepted that knowledge of the fake nature of the documents and abetment of the importer's offence sufficed to attract penalty under Section 112(a), even without use of the specific adjective 'fraudulent'. There was no error in sustaining the penalty on the basis of knowledge and abetment. [Paras 16, 17]

An explicit finding of 'fraudulent' conduct is unnecessary where knowledge of falsity and abetment of the importer's offence are established; penalty under Section 112(a) is maintainable.

Final Conclusion: The High Court dismissed the appeal and upheld the Tribunal's factual findings and discretionary reduction of penalty, concluding that the retracted statement was admissible, the requisite nexus and knowledge were proved, and the penalty under Section 112(a) was sustainable.

Customs valuation - transaction value - NIDB data not determinative of declared value - application of Customs Valuation Rule-5 - acceptance of declared invoice value - assessment under protest and Section 17(5) procedure - classification under CTH 8503 versus CTH 8708 - parts suitable for use solely or principally with machines of heading 8501/8502 - principle use test for tariff classification

Customs valuation - transaction value - NIDB data not determinative of declared value - application of Customs Valuation Rule-5 - acceptance of declared invoice value - Enhancement of assessable value was set aside and the transaction value declared by the importer was accepted. - HELD THAT: - The Tribunal held that the assessing authority's enhancement, based primarily on selected entries from NIDB, was contrary to law because NIDB shows assessed values and does not reliably indicate the declared transaction value. The assessing officer failed to examine the factors required under Rule 5 of the Customs Valuation Rules (such as country of origin, quantity, quality and whether goods were produced by the same person) and adopted a pick and choose approach without establishing contemporaneity or parity of the comparators. There was no evidence that the declared transaction value was not the price actually paid, nor any showing of related party transactions or additional payments; the reply of the importer was not considered or refuted. Placing sole reliance on NIDB without carrying out the enquiries mandated by Section 14 and the Valuation Rules vitiated the enhancement, and the Commissioner(Appeals) was upheld in restoring the declared values.

Enhancement of value set aside; assessable value to be the transaction value declared by the respondent.

Classification under CTH 8503 versus CTH 8708 - parts suitable for use solely or principally with machines of heading 8501/8502 - principle use test for tariff classification - acceptance of declared classification - The goods described as 'controller' were held classifiable under CTH 8503 0090 and not under CTH 8708. - HELD THAT: - The Tribunal observed that the controller's principal function is to start, stop, select direction and regulate the speed of an electric motor and that it cannot perform those functions independently of a motor. The controller was therefore a part suitable for use with electric motors (Chapter 85.03). There was no evidence that the imported controllers were solely or principally for e rickshaw use, the explanatory notes exclude electronic controllers from CTH 8708, and no declaration was made that the goods were parts of motor vehicles. Applying the principle use test and the Section/Chapter notes, the classification under CTH 8503 0090 as claimed by the respondent was held to be correct.

Classification under CTH 8503 0090 upheld; classification under CTH 8708 rejected.

Final Conclusion: The Tribunal dismissed the Revenue's appeals, upheld the Commissioner(Appeals) orders accepting the transaction values declared by the respondent and the classification of the imported controllers under CTH 8503 0090.

Functus officio - inherent jurisdiction of subordinate criminal court - power to recall or restore a dismissed complaint - High Court's inherent power under Section 482 Cr.P.C. vis-a -vis subordinate courts - recall/review/restore dismissed complaint impermissible in absence of statutory provision - Section 362 Cr.P.C. limited to correction of clerical or arithmetic errors

Power to recall or restore a dismissed complaint - inherent jurisdiction of subordinate criminal court - functus officio - Whether the learned Special Judge had jurisdiction to restore a complaint dismissed for non-prosecution and thereafter take cognizance and summon the accused. - HELD THAT: - The Court held that the question is governed by settled Supreme Court authority in A.S. Gauraya and Bindeshwari Prasad Singh, which establish that subordinate criminal courts do not possess inherent powers to review, recall or revive an order dismissing a complaint for non-appearance of the complainant. Once the Magistrate (or subordinate Judge) dismisses a complaint on that ground, he becomes functus officio and has no jurisdiction to revive the same matter by recalling the earlier order. The Code of Criminal Procedure contains no provision enabling a subordinate criminal court to exercise such inherent jurisdiction; the remedy for a dissatisfied complainant lies in approaching a superior forum by revision or other appropriate remedy. Reliance placed on decisions permitting revival by subordinate courts is inconsistent with and superseded by the Supreme Court precedents. Applying these principles, the impugned restoration order was without jurisdiction and all proceedings consequent thereto are null and void. [Paras 15, 16, 19]

The order restoring the complaint dated 13.08.2019 was without jurisdiction and is set aside; consequential order dated 16.04.2022 and all proceedings emanating therefrom are set aside.

Final Conclusion: The Special Judge's order dated 13.08.2019 restoring the Complaint is quashed as having been passed without jurisdiction; the subsequent order dated 16.04.2022 taking cognizance and summoning the accused and all consequential proceedings are set aside. The respondent remains free to seek restoration by invoking appropriate remedies in accordance with law.

Recall of judgment - distinction between review and recall - power to recall is limited to specific grounds - appealable order - maintainability of recall application in place of appeal - grounds for recall: inherent lack of jurisdiction, fraud, mistake, necessary party not served - inherent jurisdiction of the Tribunal

Appealable order - maintainability of recall application in place of appeal - Whether the recall application filed before the NCLT was maintainable in lieu of an appeal against the order dated 20th December, 2023 and whether the impugned order of 5th April, 2024 is vitiated on that ground. - HELD THAT: - The Tribunal found that the order dated 20th December, 2023 was an appealable order and no appeal was filed against it. Filing a recall application in place of an appeal was not permissible. The appellant's explanation that she alone (an 80 year old petitioner) was unable to file documents on medical grounds, while co-petitioners did not explain the omission, did not justify treating the remedy as a recall. The impugned order of 5th April, 2024, dismissing the restoration/recall application, contained no illegality on this basis. [Paras 5, 10]

Recall application was not maintainable as a substitute for an appeal against the order dated 20th December, 2023; impugned order dated 5th April, 2024 is not vitiated on this ground.

Power to recall is limited to specific grounds - grounds for recall: inherent lack of jurisdiction, fraud, mistake, necessary party not served - distinction between review and recall - Whether the facts of the case satisfied recognised grounds for recall of judgment and thereby justified restoration of the company petition. - HELD THAT: - The Tribunal applied the established principles on recall as articulated in Budhia Swain and subsequent NCLAT authority cited by the parties, which restrict recall to limited circumstances such as patent lack of jurisdiction, fraud or collusion, mistake prejudicing a party, or judgment rendered in ignorance of a necessary party's absence. The Bench held that the order dated 20th December, 2023 did not fall within these recognised grounds. There was no finding of fraud, patent lack of jurisdiction, mistake of the court prejudicing the appellant, or that a necessary party was not before the forum; therefore the recall was not maintainable on merits under the settled tests for recalling a judgment. [Paras 8, 9]

The case did not satisfy the limited grounds for recall of judgment; recall/ restoration was rightly refused.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the NCLT's refusal to restore the company petition because the earlier order was appealable and no appeal was filed, and because the facts did not meet the narrowly defined grounds permitting recall of a judgment.

Mandatory character of timelines in Schedule I Rule 12 (IBBI Regulations, 2016) - extension of limitation during COVID-19 - Suo Motu order of this Court and Regulation 47A (IBBI Regulations) - inherent powers of the Adjudicating Authority / NCLT to extend timelines (Rule 11, NCLT Rules read with Section 35 IBC) - discretion of liquidator to reduce reserve price under Rule 4A, Schedule I (IBBI Regulations, 2016) - prospective application of Regulation 31A (Stakeholders' Consultation Committee) - effect of Income Tax attachment on liquidation sale and interplay with Sections 222/281 IT Act and Rule 48 Part III, Schedule 2

Extension of limitation during COVID-19 - Suo Motu order of this Court and Regulation 47A (IBBI Regulations) - inherent powers of the Adjudicating Authority / NCLT to extend timelines (Rule 11, NCLT Rules read with Section 35 IBC) - Whether the Auction Purchaser was entitled to extension of time to deposit balance sale consideration on account of the COVID-19 lockdown and whether the Adjudicating Authority could grant such extension. - HELD THAT: - The Court held that the order dated 23 March 2020 in the Suo Motu Writ Petition must be given a liberal interpretation in the pandemic context and, read with Regulation 47A (IBBI Regulations, 2016), the benefit of exclusion of lockdown periods extends to tasks in a liquidation process. The Auction Purchaser was entitled to take shelter of those orders and regulations. Further, the Adjudicating Authority lawfully exercised its powers-both under Section 35 IBC (liquidator's actions being subject to directions of the Adjudicating Authority) and its inherent powers under Rule 11 of the NCLT Rules-to grant extension of time on sufficient cause shown in extraordinary pandemic circumstances. Given that the Auction Purchaser had approached the Adjudicating Authority for relief and that the Adjudicating Authority had allowed the application, the grant of extension was valid in the factual matrix of this case. [Paras 32, 35]

Extension of time granted by the Adjudicating Authority was valid; the Auction Purchaser was entitled to benefit of the COVID-19 orders and Regulation 47A and the Adjudicating Authority could extend timelines in the circumstances.

Mandatory character of timelines in Schedule I Rule 12 (IBBI Regulations, 2016) - Whether Rule 12 of Schedule I (requiring payment of balance sale consideration within 90 days and providing for cancellation on default) is mandatory or directory. - HELD THAT: - The Court analysed textual and contextual features of Schedule I and relevant precedents. It observed that where a rule prescribes a manner of acquiring a right and also prescribes a specific consequence for non-compliance, the provision must be treated as mandatory. Rule 12 uses the word "shall" and contains an express consequence (cancellation of sale if payment is not received within 90 days). Accordingly, Rule 12 was held to be mandatory in character to the extent that non-payment within the stipulated outer limit attracts the statutory consequence prescribed therein. [Paras 35]

Rule 12 of Schedule I is mandatory in character and contemplates cancellation of the sale if payment is not made within 90 days, absent valid extension/relief under law.

Discretion of liquidator to reduce reserve price under Rule 4A, Schedule I (IBBI Regulations, 2016) - Whether the Liquidator validly reduced the reserve price by 25% for the second auction under Rule 4A, Schedule I. - HELD THAT: - Schedule I Rule 4A expressly permits the liquidator to reduce the reserve price by up to 25% where an auction fails at the reserve price. The record showed that the first auction drew no bids and the liquidator, acting under Rule 4A, reduced the reserve price for the subsequent auction. The Court found no fault in the exercise of that discretion, and observed that the appellant could have introduced potential bidders to obtain a higher offer but did not do so. [Paras 33]

Reduction of the reserve price by 25% under Rule 4A for a subsequent auction was within the liquidator's authority and was valid.

Prospective application of Regulation 31A (Stakeholders' Consultation Committee) - Whether the Liquidator was obliged to constitute a Stakeholders' Consultation Committee under Regulation 31A for this liquidation process in 2019. - HELD THAT: - Regulation 31A was inserted by notification dated 25 July 2019, and an Explanation (by notification dated 28 April 2022) clarified that the requirement to constitute the Stakeholders' Consultation Committee applies only to liquidation processes commencing on or after the regulation's commencement. The liquidation in this case had commenced earlier; the Court therefore held the Regulation's committee requirement did not apply retrospectively. The Court also noted that even if the committee had been in place, its advice is not binding on the liquidator and the appellant had not nominated representatives when invited. [Paras 34]

Regulation 31A's requirement to constitute a Stakeholders' Consultation Committee did not apply to this liquidation process and the objection on this ground failed.

Effect of Income Tax attachment on liquidation sale and interplay with Sections 222/281 IT Act and Rule 48 Part III, Schedule 2 - completion of sale (Rule 13) and consequences of delay under Rule 12 - Whether the Income Tax attachment rendered completion of the sale impossible and whether the auction/sale deed should be set aside on that ground. - HELD THAT: - The Court examined the correspondence and orders: the Income Tax Department had filed a claim with the liquidator; the liquidator had moved the Adjudicating Authority and an order lifting the attachment (subject to escrow) was passed on 10 February 2020 and communicated. The Court distinguished Rule 12 (mandatory timeline with consequence of cancellation) from Rule 13 (procedure on payment), holding they are not interlinked so as to make Rule 13 immune from discretionary relief. The Court found the Auction Purchaser knew of the attachment and had avenues (including prior permission under Section 281 second proviso) and that the liquidator had taken steps to secure relief. Given the Auction Purchaser's conduct (delaying payment despite available remedies and later completing development and obtaining possession), and considering serious prejudice that would follow from setting aside the confirmed sale, the Court declined to annul the sale. Instead, balancing equities, it directed an additional monetary adjustment. [Paras 36]

Income Tax attachment did not render completion impossible; sale deed will not be set aside. In view of equities, the Court directed the Auction Purchaser to pay an additional sum as compensation instead of cancellation.

Final Conclusion: Appeals partly allowed. The Adjudicating Authority validly granted extension of time in view of COVID-19 orders and Regulation 47A; Rule 12 of Schedule I is mandatory in character but the circumstances justified the Adjudicating Authority's relief; the reduction of reserve price under Rule 4A and non-application of Regulation 31A to this liquidation were valid; the Income Tax attachment did not vitiate the sale. In exercise of equitable jurisdiction the Court directed the Auction Purchaser to pay an additional sum (half the difference between average liquidation value and auction reserve) with interest within eight weeks; parties to bear their own costs.

Summary order. Civil Appeal dismissed; impugned order of the National Company Law Appellate Tribunal dated 9 July 2024 in Company Appeal (AT) (CH) (Insolvency) No. 337 of 2022 affirmed; pending applications disposed of.

Termination of CIRP - admission of Section 7 application - appeal under Section 62 of the Insolvency and Bankruptcy Code 2016 - determination of CIRP expenses by the NCLT - bank guarantee to secure CIRP expenses - preservation of operational creditors' rights

Termination of CIRP - admission of Section 7 application - appeal under Section 62 of the Insolvency and Bankruptcy Code 2016 - Appeal allowed and CIRP terminated by setting aside the orders admitting the Section 7 petition. - HELD THAT: - The Court recorded that the parties had reached an amicable settlement in relation to the claims against the Corporate Debtor and that payments/drafts had been handed over to the Resolution Professional and counsels for claimants as verified. Having regard to that settlement and the materials on record, the Court allowed the appeal, set aside the impugned NCLAT order and affirmed relief that the corporate insolvency resolution process in respect of the Corporate Debtor stands terminated. The termination is predicated on the settlement and the handing over of instruments to satisfy the asserted claims, subject to the other directions in the order.

The appeal succeeds; the impugned NCLAT order is set aside and the CIRP in respect of the Corporate Debtor is terminated.

Determination of CIRP expenses by the NCLT - bank guarantee to secure CIRP expenses - Quantum of CIRP expenses remanded to the NCLT for determination; interim security by way of bank guarantee directed. - HELD THAT: - The Court left open the question of the quantum of CIRP expenses accrued till termination and directed that the NCLT shall determine that quantum within six weeks in accordance with law. Pending that determination, the appellant was directed to furnish a bank guarantee in the name of the Resolution Professional within two weeks for the amount claimed as CIRP expenses by the Resolution Professional; the bank guarantee shall be dealt with in accordance with the NCLT's determination. Thus the issue of CIRP expense quantification is remanded for fresh adjudication, while provisional security has been mandated to secure those expenses.

The quantum of CIRP expenses is remanded to the NCLT for determination within six weeks; the appellant to furnish a bank guarantee within two weeks which shall be dealt with as per that determination.

Preservation of operational creditors' rights - Operational and other creditors' rights to pursue claims preserved. - HELD THAT: - The Court made clear that operational creditors and other creditors retain their legal remedies in respect of any claims notwithstanding the termination of the CIRP pursuant to the settlement. Acceptance of drafts by the Resolution Professional or counsel was recorded to be without prejudice to the rights of claimants to approach the appropriate forum in accordance with law.

Operational creditors and other creditors remain free to pursue such legal remedies as are available to them in law with respect to their claims.

Final Conclusion: By consent and on the facts of settlement recorded, the appeal is allowed, the NCLAT order is set aside and the CIRP in respect of the Corporate Debtor is terminated; the NCLT is to determine the quantum of CIRP expenses within six weeks and the appellant shall furnish the directed bank guarantee within two weeks; rights of creditors to pursue claims remain preserved.

Power to recall - inherent jurisdiction - recall vs review - limitation - Article 137 of the Limitation Act - Article 21 of the Limitation Act - Section 7 of the Insolvency and Bankruptcy Code - date of default

Power to recall - inherent jurisdiction - recall vs review - Whether this Tribunal could entertain the application for recall of its order dated 02.04.2024 - HELD THAT: - The Tribunal held that it possesses inherent power to recall its judgments under Rule 11 of the NCLAT Rules, having regard to settled Supreme Court authority and this Tribunal's own five member decision in Union Bank of India v. Dinkar T. Venkatasubramanian (which has attained finality). The Tribunal emphasised the distinction between review and recall: review is to cure apparent error and is not conferred, whereas recall is an inherent power available to correct specific procedural defects (for example, where a necessary party was not before the Tribunal or where fraud was played on the Court). Although the Supreme Court had granted liberty to the appellant to file a review limited to limitation, and strictly speaking limitation is not a conventional ground for recall, the Tribunal, in the peculiar circumstances of the case and in the interest of justice, entertained the recall application to examine the limitation point on merits. [Paras 12, 13]

The Tribunal may entertain an application for recall in appropriate cases under its inherent jurisdiction, and it chose to examine the limitation issue notwithstanding that liberty granted by the Supreme Court was framed as permission to seek review.

Limitation - Article 137 of the Limitation Act - Article 21 of the Limitation Act - Section 7 of the Insolvency and Bankruptcy Code - date of default - Whether the Company Petition filed under Section 7 was barred by limitation - HELD THAT: - The Tribunal examined the pleadings and the Adjudicating Authority's findings. The Adjudicating Authority had framed and decided the limitation question, recording that the petition pleads the date of default as 15.03.2016 in Form 1 and, applying the Supreme Court's decisions (notably B.K. Educational Services and subsequent affirmations), held that Article 137 of the Limitation Act governs Section 7 petitions and the period is three years from the date of default. The Tribunal reviewed the authorities and the facts: the loan was disbursed on 01.01.2014, the date of default pleaded and relied upon was 15.03.2016, and the petition was filed in 2018. Given the settled Supreme Court ratio that the right to sue accrues on the date of default and Article 137 applies to Section 7 proceedings, the contention that Article 21 governed or that the petition was time barred under Article 21 was rejected as misconceived. The Tribunal found no error in the Adjudicating Authority's conclusion that the petition was within limitation. [Paras 16, 21, 22]

The Section 7 petition was not barred by limitation; the Adjudicating Authority correctly applied Article 137 and the recall application on limitation grounds is without merit.

Final Conclusion: The Tribunal, while acknowledging its inherent power to recall judgments, found no merit in the appellant's contention that the Section 7 petition was time barred; the Adjudicating Authority correctly held the petition to be within limitation under Article 137 of the Limitation Act, and the recall application is dismissed.

Grant of bail under Section 45 PMLA guided by the twin conditions - triple test for grant of bail (appearance, tampering, reoffending) - relevance and evidentiary weight of statements recorded under Section 50 PMLA at bail stage - requirement of knowledge under Section 3 PMLA (mens rea) - proceeds of crime and linkage to predicate offence - Article 21 right to personal liberty and principle that bail is the rule and jail the exception

Grant of bail under Section 45 PMLA guided by the twin conditions - triple test for grant of bail (appearance, tampering, reoffending) - Article 21 right to personal liberty and principle that bail is the rule and jail the exception - delay and likely prolonged incarceration as a factor in bail - Admission of the petitioner to regular bail in ECIR/HIU-II/14/2022 registered by the Directorate of Enforcement - HELD THAT: - The Court examined whether the petitioner satisfied the twin conditions under Section 45 PMLA and the conventional triple test applicable for grant of bail. Having considered the prosecutorial material, earlier grant of bail in related proceedings, the admitted weakness of the predicate prosecution against the petitioner in the CBI matter, the petitioner's cooperation in investigation, his roots in society and absence of flight risk, and the prospect of prolonged incarceration given the voluminous record and numerous witnesses, the Court found that the twin conditions and the triple test were satisfied in the petitioner's case. The Court further held that conditions could be imposed to obviate risks of tampering or absconding and that Article 21 considerations militated in favour of release where there is a realistic prospect of long pre-trial detention. On this basis the petitioner was admitted to bail subject to enumerated conditions. [Paras 83, 84, 85, 86, 87]

Petitioner admitted to bail on terms and conditions prescribed by the Court.

Relevance and evidentiary weight of statements recorded under Section 50 PMLA at bail stage - prima facie material versus detailed credibility assessment at bail stage - Whether statements recorded under Section 50 PMLA can be relied upon for deciding bail - HELD THAT: - The Court recognised precedent that statements recorded under Section 50 PMLA and statements under Section 161 Cr.P.C. may furnish material for consideration at the stage of remand or bail. However, it emphasised that at the bail stage the court confines itself to whether there exists material that gives reasonable grounds to believe in the commission of the offence; detailed testing of credibility and weight of those statements is a matter for trial. In the present case, although the ED relied on multiple Section 50 statements and corroborative material, the overall assessment of all factors led the Court to conclude that the existence of such material did not preclude bail in the petitioner's circumstances. [Paras 31, 59, 61, 62]

Section 50 statements are admissible material for bail consideration but their credibility is to be tested at trial; they did not, on the totality, justify continued custody in this case.

Requirement of knowledge under Section 3 PMLA (mens rea) - proceeds of crime and linkage to predicate offence - Whether the material on record established the requisite knowledge that the funds handled by the petitioner were proceeds of crime - HELD THAT: - The Court noted that Section 3 PMLA requires knowledge constituting the requisite mental element for money laundering. It observed that the petitioner occupied a peripheral tier in the alleged conspiracy and that the prosecution's case relied heavily on cascading Hawala statements and transaction trails which required proof at trial to establish that the sums handled by the petitioner were proceeds of the predicate offence and that such fact was within his knowledge. The Court found that, given the petitioner's asserted freelance work, the limited direct linkage on record between the alleged Rs.45 crore and the petitioner, and the possibility of innocent explanations for amounts found in his account, a strong prima facie finding of requisite knowledge was not established so as to preclude bail. [Paras 51, 52, 53, 55, 76]

Material on record did not demonstrate a prima facie mens rea/knowledge on the petitioner sufficient to deny bail on that basis.

Final Conclusion: On the totality of materials and applying the twin conditions under Section 45 PMLA together with the ordinary triple test for bail, the High Court admitted the petitioner to regular bail subject to conditions, holding that the prosecution material and statements under Section 50 PMLA, while admissible for consideration, did not warrant continued detention in the petitioner's circumstances and that issues of credibility and proof remain for trial.

Entitlement to refund of service tax paid on ocean freight - reverse charge mechanism on steamer agents - time limit for refund under Section 11B(1) of the Central Excise Act, 1944 - application of Section 142(3) of the CGST Act, 2017 to transitional refund claims - effect of Supreme Court dismissal of revenue's appeals on the relevant date for limitation - unjust enrichment - cash refund under transitional provisions

Entitlement to refund of service tax paid on ocean freight - maintainability of service tax on ocean freight - Appellant entitled to refund of service tax paid on ocean freight for the period in dispute. - HELD THAT: - The Tribunal accepted that the levy of service tax on ocean freight was held not maintainable by higher courts and that the Supreme Court dismissed the revenue's appeal on 01.09.2023 confirming that such levy is not maintainable. On this foundation the Tribunal concluded that the amount voluntarily paid by the Appellant as steamer agent for the period specified is refundable. The Tribunal applied the reasoning of the Bombay High Court and held that the Appellant's claim falls within principles allowing restitution where tax was not lawfully leviable, and that unjust enrichment was not a bar in the facts of the case. [Paras 4, 5]

Refund claim is allowable and the appeal is allowed on merits; the Appellant is entitled to refund of service tax paid on ocean freight during the period of dispute.

Time limit for refund under Section 11B(1) of the Central Excise Act, 1944 - effect of Supreme Court dismissal of revenue's appeals on the relevant date for limitation - Refund claim is not time-barred in view of the Supreme Court's dismissal of the revenue's appeal on 01.09.2023, which fixed the relevant date for limitation. - HELD THAT: - The Tribunal rejected the revenue's reliance on the filing date of the Gujarat High Court decision (06.09.2019) as the relevant date for computing the one-year limitation under Section 11B. It observed that because the revenue did not accept the Gujarat High Court decision and prosecuted the matter to the Supreme Court, the operative relevant date for computing limitation crystallised upon dismissal of the revenue's appeal by the Supreme Court on 01.09.2023. As the Appellant had filed the refund application well within one year from that date, the Tribunal found the rejection on time-bar grounds unsustainable. [Paras 4]

Rejection of refund claim as time-barred was not sustainable; the claim fell within the limitation period computed from 01.09.2023.

Application of Section 142(3) of the CGST Act, 2017 to transitional refund claims - cash refund under transitional provisions - Section 142(3) of the CGST Act, 2017 applies and operates to require disposal of pre-GST refund claims and directs that any amount accruing be paid in cash, except as limited by subsection (2) of Section 11B of the Central Excise Act, 1944. - HELD THAT: - The Tribunal examined Section 142(3) and agreed with the Bombay High Court decision that this provision covers refund claims for amounts paid under the earlier law and mandates payment in cash of any amount eventually accruing, subject only to the carve-out in sub section (2) of Section 11B. Given this statutory mandate, the Tribunal held that the revenue could not defeat the Appellant's refund by relying on other provisions of the Central Excise Act (except Section 11B(2) as expressly preserved) and that the Appellant's voluntary deposit or CENVAT-credit characterization did not preclude cash refund under Section 142(3). The Tribunal therefore held that the claim is maintainable under the transitional provision and directed refund with consequential reliefs. [Paras 4]

Section 142(3) applies to the Appellant's refund claim and supports grant of cash refund; the rejection based on other provisions was unsustainable.

Final Conclusion: The impugned order rejecting the refund is set aside. The Appellant is entitled to refund of the service tax paid on ocean freight for the period 22.01.2017 to 22.04.2017; the refund claim is not time-barred in view of the Supreme Court dismissal dated 01.09.2023 and is maintainable under Section 142(3) of the CGST Act, 2017. Appeal allowed with consequential reliefs.

Condonation of delay - low tax effect doctrine - administrative disposal pursuant to revenue circular - preservation of question of law

Condonation of delay - Condonation of delay in filing the appeal was allowed. - HELD THAT: - The Court recorded and allowed the application for condonation of delay, thereby permitting the appeal to be heard on its merits for the limited purpose of disposal in accordance with the respondents' concession regarding low tax effect. The allowance of delay is recorded as part of the operative order disposing of the appeal. [Paras 1]

Delay condoned.

Low tax effect doctrine - administrative disposal pursuant to revenue circular - preservation of question of law - Civil appeal disposed of by dismissal on the ground of low tax effect as covered by the Circular dated 06.08.2024 issued by the Revenue Division, Judicial Cell (CBIC), while keeping the question of law open. - HELD THAT: - The appellant (Revenue) expressly stated that the appeal should be dismissed on the basis that the matter falls within the category of cases covered by the Board's Circular dated 06.08.2024 concerning low tax effect, and the Court, taking note of that statement, disposed of the civil appeal accordingly. Although the appeal was dismissed on that administrative ground, the Court explicitly preserved and kept open the substantive question of law raised in the appeal, leaving it undecided. [Paras 2, 3]

Appeal disposed of as covered by the Board's Circular dated 06.08.2024 on low tax effect; question of law kept open.

Final Conclusion: The Supreme Court allowed condonation of delay and disposed of the civil appeal by dismissal on the administrative ground of low tax effect pursuant to the CBIC Circular dated 06.08.2024, while expressly keeping the substantive question of law open; pending applications, if any, are disposed of.

Declared services - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - service tax under Section 66E(e) of the Finance Act, 1994 - compensation / ex-gratia payments as not consideration for services - negative list treatment for manufacture/production related activities

Service tax under Section 66E(e) of the Finance Act, 1994 - compensation / ex-gratia payments as not consideration for services - declared services - Whether the ex-gratia amounts received by the contract manufacturer from the principal (M/s Parle) for under utilisation of manufacturing capacity attract service tax as a declared service under Section 66E(e) of the Finance Act, 1994. - HELD THAT: - The Tribunal examined the contractual relationship wherein the appellant manufactured biscuits for and on behalf of the principal and cleared goods on payment of excise duty on MRP declared by the principal. Ex gratia payments arise only when the principal does not utilize the appellant's capacity as agreed and are computed to compensate the appellant for loss or injury due to under utilisation. Invocation of Section 66E(e) requires an obligation to refrain from an act, or to tolerate an act or situation, or to do an act; such concurrence to assume an obligation is absent here. The ex gratia payments are compensatory in character, payable for unintended eventualities or damages and are not consideration for assuming or tolerating any act or situation by the appellant. Consistent precedent concerning similarly placed contract manufacturers for the same principal holds that such receipts are not taxable as declared services, and the present facts are identical to those authorities relied upon by the appellant. Applying that reasoning, the impugned demand of service tax could not be sustained.

Ex gratia amounts are compensatory and do not constitute a declared service under Section 66E(e); the impugned service tax demand is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the ex gratia payments received by the contract manufacturer for under utilisation of capacity are compensatory in nature and do not attract service tax as a declared service under Section 66E(e) of the Finance Act, 1994; the impugned order is set aside.

Service Tax cannot be demanded twice - reverse charge mechanism - partial reverse charge / joint charge - unjust enrichment - classification of service cannot be altered at recipient's end - once tax liability discharged, further demand extinguished

Service Tax cannot be demanded twice - partial reverse charge / joint charge - once tax liability discharged, further demand extinguished - unjust enrichment - Whether demand of service tax from the recipient on 75% of the taxable value is sustainable when the service provider has admittedly paid service tax on 100% of the value - HELD THAT: - Both the Original Authority and the Tribunal noted that the service provider had discharged service tax on the entire value of the manpower supply service. The Tribunal applied the settled principle that a service (transaction) can be taxed only once and that double recovery would result in unjust enrichment of the Government. In the factual matrix where the provider had paid service tax on 100% of the value, the recipient could not be called upon to pay the tax again on 75% merely because the statutory liability under the partial reverse charge mechanism attaches to the recipient. The Tribunal relied upon consistent precedents and administrative clarifications establishing that once the treasury has been effected by payment of tax on the transaction, further demands on the same service are unsustainable and classification cannot be re-cast at the recipient's end to justify double collection. Applying that legal principle to the admitted facts, the demand against the appellant was held liable to be set aside and associated penalties could not be sustained. [Paras 4, 5]

Demand for service tax on 75% from the appellant set aside as service tax on the same transaction and value had already been discharged by the service provider; appeal allowed and impugned order quashed.

Final Conclusion: The Tribunal set aside the impugned demand and penalty, holding that once service tax on the same activity and value has been discharged (here by the service provider on 100% value), the service recipient cannot be called upon to pay again; appeal allowed.

Construction of Complex Service - Commercial or Industrial Construction Service - service tax liability - terms of contract - remand for fresh adjudication - principle of natural justice

Service tax liability - terms of contract - Construction of Complex Service - Commercial or Industrial Construction Service - Whether the impugned demands for service tax, penalties and related consequences could be sustained without a fresh examination of the contract terms and subsequent judicial decisions relied upon by the appellants - HELD THAT: - The Tribunal found that the adjudicating authority and Commissioner (Appeals) failed to examine the terms of the contract in each case and did not consider later judgments relied upon by the appellants. Because the question of levy under the construction-related service categories depends on the contractual terms and involves a mixed question of fact and law, the Tribunal held that the matter could not be finally resolved on the existing record. The Tribunal observed that several vital submissions made before it had not been raised or considered below and that the levy must be assessed in light of the specific conditions of each contract and relevant judicial precedents. Consequently, the Tribunal concluded that the impugned orders could not stand without fresh adjudication permitting the appellants an opportunity to make submissions and be heard. [Paras 4, 5]

Impugned orders set aside and appeals remanded to the adjudicating authority for fresh adjudication after considering the terms of each contract and the judgments relied upon by the appellants; all issues left open and appellants to be afforded opportunity of hearing.

Final Conclusion: The Tribunal set aside the adjudication orders and allowed the appeals by remanding the matters to the adjudicating authority for fresh consideration in light of contractual terms and the judicial decisions relied upon by the appellants, leaving all issues open and directing opportunity for submissions and personal hearing.

Valuation of taxable services - Section 67 valuation of taxable services - Rule 3 manner of determination of value - Inclusion of non-monetary consideration in gross value - Notional valuation of free accommodation - Binding precedents / res integra

Valuation of taxable services - Section 67 valuation of taxable services - Rule 3 manner of determination of value - Inclusion of non-monetary consideration in gross value - Notional valuation of free accommodation - Binding precedents / res integra - Accommodation provided by the service recipient to security personnel is not includible in the gross value of security service for service tax in the absence of any monetary consideration or evidence of HRA paid to the service provider - HELD THAT: - The Tribunal applied the valuation framework under Section 67 read with Rule 3, noting that service tax is chargeable on the value of the service provided which, under the statutory explanation, requires an amount payable for the taxable service. In the absence of any evidence that the service provider received monetary payment (such as HRA) from the service recipient, the accommodation cannot be treated as consideration and there is no basis for a notional addition under Rule 3. The Tribunal followed and applied earlier decisions of coordinate benches and the Principal Bench which held that non-monetary benefits like free accommodation provided by the service recipient to CISF/security personnel are not includible in taxable value where reimbursement or monetary consideration is not shown. Since the legal position was held to be no longer res integra and covered by binding precedents in favour of the appellant, the impugned adjudication confirming demand on this ground was set aside.

Impugned order set aside and appeal allowed; free accommodation not includible in gross value for the period in dispute.

Final Conclusion: The Tribunal, relying on settled precedent and the statutory valuation scheme, held that free accommodation provided by the service recipient to security personnel does not form part of the taxable gross value in the absence of monetary consideration; the impugned order is set aside and the appeal is allowed for the period April, 2015 to June 2017.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation as condition precedent for penalty under sub rule (1) - Liability under sub rule (2) for issuing excise duty invoices without delivery - Personal penalty on directors for corporate CENVAT credit avails - Admissibility of CENVAT credit as relevant to imposition of penalty

Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation as condition precedent for penalty under sub rule (1) - Whether penalty under sub rule (1) of Rule 26 can be imposed on the appellant in absence of any proposal or confirmation of confiscation of goods. - HELD THAT: - The Tribunal examined sub rule (1) which penalises any person who deals with excisable goods which he knows or has reason to believe are liable to confiscation. The operating order shows no proposal or confirmation of confiscation of the goods in question. On a plain reading, sub rule (1) requires that the goods be liable to confiscation; absent any such proposal or finding, the statutory condition for invoking sub rule (1) is not satisfied. Consequently, penalty under sub rule (1) could not be sustained against the appellant. [Paras 4]

Penalty under sub rule (1) of Rule 26 cannot be imposed in the absence of proposal/confirmation of confiscation of goods.

Liability under sub rule (2) for issuing excise duty invoices without delivery - Whether penalty under sub rule (2) of Rule 26 applies to the appellant for invoices on which the company claimed CENVAT credit. - HELD THAT: - Sub rule (2) penalises a person who issues an excise duty invoice without delivery of the goods or abets the making of such documents that enable taking ineligible benefit like CENVAT credit. The Tribunal found that the impugned invoices were issued by the supplier and not by the appellant. There is no finding that the appellant issued or abetted issuance of such invoices. On these facts, sub rule (2) is not attracted to the appellant. [Paras 4]

Penalty under sub rule (2) of Rule 26 is not attracted as the appellant did not issue or abet issuance of the invoices relied upon by the company.

Personal penalty on directors for corporate CENVAT credit avails - Admissibility of CENVAT credit as relevant to imposition of penalty - Whether, notwithstanding the departmental demand against the company, personal penalty on the director could be sustained in the facts of the case. - HELD THAT: - The Tribunal noted that the penalty imposed on the appellant flowed from confirmation of the demand against the company. It observed that the substantive question as to admissibility of the CENVAT credit involves interpretation of the CENVAT Credit Rules and that a number of authorities cited by the appellant indicate prima facie merit in the company's case on admissibility of the inputs. While the Tribunal did not decide the merits of the company's liability, the combination of (i) absence of confiscation, (ii) non attribution to the appellant of invoice issuance, and (iii) the prima facie strength of the company's defence led to the conclusion that the department had not made out a case to impose personal penalty on the director under Rule 26. [Paras 4]

Personal penalty on the director is unsustainable and is set aside.

Final Conclusion: The Tribunal set aside the penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 and allowed the appeal, the court holding that neither sub rule (1) nor sub rule (2) applied on the facts and that the department had not made out a case for personal penalty.

Excise duty liability during forced closure - compounded levy scheme - failure to avail special procedure - closure beyond assessee's control - power to condone under the notification - charging provision versus procedural notification

Excise duty liability during forced closure - closure beyond assessee's control - failure to avail special procedure - power to condone under the notification - Demand of excise duty for the months when the factory was closed due to non-receipt of consent order from the Pollution Control Board is unsustainable. - HELD THAT: - The Tribunal found that the factory remained closed for two months (March-2015 and April-2015) not by choice of the appellant but pursuant to directions/conditions arising from non-receipt of the revised consent order from the Gujarat Pollution Control Board, and therefore the cessation of production was beyond the control of the appellant. Applying the reasoning in Sarthi Rubber Industries (P.) Ltd., the Tribunal treated such forced closure as 'ceasing to work' rather than a 'failure' to avail the special procedure under the compounded levy scheme. The Tribunal noted that procedural provisions of a notification cannot override the substantive charging provision and that where production legitimately did not occur, duty cannot be fixed merely by invoking the consequences of para 2(3) of the notification. The Tribunal further observed that the authorities possessed the discretion under the notification (para 7) to condone failure and apply the special procedure, and that such discretion ought to have been considered; absent a recorded reason denying relief, the demand could not be sustained. On these grounds the confirmed demand was set aside.

Impugned demand for excise duty for March-2015 and April-2015 set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the demand for excise duty for the period during which the factory was involuntarily closed (March-2015 and April-2015), holding that forced closure beyond the assessee's control does not attract the consequence of 'failure' under the compounded levy scheme and that the authorities should have considered condonation under the notification.

Exported goods exemption from central excise duty despite procedural lapse - CENVAT credit impact on excise duty rate - SSI exemption applicability to exported goods - limitation and extended period for issuance of show cause notice - rebate under Rule 18 of Central Excise Rules, 2002

Exported goods exemption from central excise duty despite procedural lapse - rebate under Rule 18 of Central Excise Rules, 2002 - No excise duty can be demanded on goods once it is established that they were exported even if there was procedural non-compliance such as non-filing of bond or letter of undertaking. - HELD THAT: - The Tribunal found the exports to be established by undisputed documentary evidence - export invoices endorsed by Central Excise officers for stuffing supervision, bill of lading, export promotion copies of shipping bills and Bank Realisation Certificate - and held that once export is established no duty can be demanded on exported goods. The court noted that where duty had been paid it would be refundable as rebate under Rule 18 of the Central Excise Rules, 2002, and where goods were cleared without payment of duty, no demand can be sustained if export is proved. The Tribunal also relied on earlier decisions, including an earlier order in the appellant's own case, to the same effect. [Paras 4]

Demand for duty on the exported goods is not sustainable; impugned demand set aside on merits.

CENVAT credit impact on excise duty rate - SSI exemption applicability to exported goods - Availing CENVAT credit alters the effective excise rate (4% without CENVAT credit; 16% with CENVAT credit) but the appellant's exports fell within the SSI exemption threshold and thus were not liable for duty to that extent. - HELD THAT: - The Tribunal noted the legal position that Notification No. 10/2002 prescribed different tariff rates depending on availment of CENVAT credit. It further observed that the appellant exported 100% of production and that, on the material before the Tribunal, the value of clearances fell within the SSI exemption limit as per Notification No. 8/2002-CE; accordingly, to the extent covered by the SSI exemption the appellant was not liable to pay duty. The reasoning was applied to the present facts, with the Tribunal accepting the appellant's contention on exemption applicability. [Paras 2, 4]

Appellant entitled to SSI exemption for the export clearances within the prescribed threshold; no duty payable to that extent.

Limitation and extended period for issuance of show cause notice - The show cause notice issued on 18.05.2007 for the period 01.06.2002 to 28.02.2003 is time-barred and invocation of the larger period of limitation was not sustainable in the absence of any suppression or mala fide intention. - HELD THAT: - The Tribunal recorded that the appellant had disclosed export clearances in Central Excise returns and furnished export documentation to the department, and there was no material to show suppression or malafide intent. In these circumstances the extended period for issuing a show cause notice could not be invoked. Consequently, the demand was held to be hit by limitation and not maintainable on that ground as well. [Paras 4]

Show cause notice and consequent demand are time-barred; impugned order unsustainable on limitation grounds.

Final Conclusion: The appeal is allowed; the impugned order demanding excise duty on the exported goods for the period 01.06.2002 to 28.02.2003 is set aside on merits (exports established and SSI exemption applicability) and on limitation.

Manufacture - excisable goods - levy of excise duty - goods (marketability) - new product with distinct name, character and use - burning of coal as fuel - by-product/ash not raw material - notifications cannot create levy

Manufacture - excisable goods - burning of coal as fuel - by-product/ash not raw material - Whether fly ash generated from burning coal for generation of power amounts to manufacture and is liable to excise duty. - HELD THAT: - The Tribunal held that fly ash produced inevitably from burning coal as fuel for generation of electricity does not satisfy the conditions of 'manufacture' required for levy of excise duty. Relying on the view of the Hon'ble Supreme Court in Union of India v. Ahmedabad Electricity Company Ltd., the court accepted that coal is used as a fuel and not as a raw material for producing fly ash; there is no skilful manipulation or transformation of raw material into a new product with a distinct name, character and use. The Tribunal further noted that this principle applies to the period post 01.03.2011 as well, and that the Madras High Court's similar conclusion insofar as post-01.03.2011 liability was concerned has been upheld by the Supreme Court. Consequently, merely issuing Notification No.2/2011-CE dated 01.03.2011 cannot convert an item into excisable goods where the essential element of manufacture is absent. Applying these authorities, the Tribunal concluded that fly ash does not become excisable by virtue of its incidental emergence from combustion of coal for power generation.

Fly ash generated from burning coal for power generation is not manufacture and is not liable to excise duty; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and holding that fly ash produced from burning coal for generation of electricity is not a manufactured excisable good and therefore not liable to excise duty, including for the period post 01.03.2011.

Taxability of State Advisory Price - price of sugarcane for purchase tax - voluntary payment versus contractual or statutory obligation - advance payments not part of price absent agreement - State advice lacking statutory basis

Taxability of State Advisory Price - advance payments not part of price absent agreement - voluntary payment versus contractual or statutory obligation - Whether the State Advisory Price (SAP) voluntarily paid by the petitioner to cane growers for the periods 1995 - 96 and 1996 - 97 forms part of the purchase price/turnover taxable under the Tamil Nadu General Sales Tax Act, 1959. - HELD THAT: - The Court examined the statutory and factual matrix and applying the principle that, in the absence of a contractual or statutory obligation, sums paid in advance on State advice cannot be treated as part of the price of sugarcane. Reliance was placed on the reasoning in the decisions of the Supreme Court and this Court which held that the total price for cane for purchase-tax purposes is the aggregate fixed under the Control Order unless a higher price is proved to have been agreed between grower and purchaser. The Court observed that fixation of SAP in Tamil Nadu during the relevant years lacked statutory compulsion and depended on tripartite negotiation; there was no evidence that the petitioner had agreed with growers to pay a higher contractual price or that the advances were irrecoverable. The petitioner had voluntarily paid SAP (albeit under pressure) to maintain goodwill, and such payments are not mandated by statute for the relevant years. The Court further noted that a statutory obligation to pay SAP was introduced only by the Tamil Nadu Sugarcane (Regulation of Purchase Price) Act, 2018, and that thereafter SAP is taxable as mandated by statute, but that change is not retrospective to the periods in dispute. [Paras 10, 11, 18, 19]

The payments of SAP for 1995-96 and 1996-97 do not form part of the purchase price/turnover taxable under the Act because they were not made pursuant to any contract or statute and thus are not includible for purchase-tax computation.

State advice lacking statutory basis - taxability of State Advisory Price - Whether the impugned orders of the Sales Tax Appellate Tribunal restoring assessment in respect of SAP for the said periods should be upheld. - HELD THAT: - Having concluded that SAP payments were voluntary and not part of the statutory price, the Court found no basis to sustain the assessments restored by the Tribunal. The Tribunal's reliance on State minutes and restoration of assessment was contrary to the settled principle that advances paid on State advice without contractual or statutory foundation cannot be treated as price. The Court therefore set aside the impugned orders. [Paras 19, 20]

Impugned Tribunal orders restoring the assessment in respect of SAP for 1995-96 and 1996-97 are set aside and the writ petitions are allowed.

Final Conclusion: Writ petitions allowed; the Sales Tax Appellate Tribunal's orders restoring assessments for 1995-96 and 1996-97 insofar as they treated the voluntarily paid State Advisory Price as part of taxable purchase price are set aside; no costs.

Time limit for arbitral award - Termination of arbitral mandate - Extension of period by court under Section 29A(4) read with Section 29A(5) - Sufficient cause for extension - Mandate continues pending extension application - Substitution and continuity of arbitrators on extension

Extension of period by court under Section 29A(4) read with Section 29A(5) - Time limit for arbitral award - Maintainability of an application for extension of time under Section 29A(5) after the expiry of the twelve month period or the further six month consent extension. - HELD THAT: - The Court construed Section 29A(4) and (5) to permit the court to extend the period for making an arbitral award either prior to or after the expiry of the period specified in subsection (1) or the extended period under subsection (3). The phrase "either prior to or after the expiry of the period so specified" is unambiguous and expressly empowers the court to entertain extension applications filed after the mandated period. Reading Section 29A(4) narrowly to bar all post expiry applications would amount to judicial legislation and produce undesirable, impracticable consequences, contrary to the legislative objective of expediting arbitration. Accordingly, an application under Section 29A(5) is maintainable even if filed after the expiry of the twelve month or the extended six month period, subject to the court's exercise of discretion guided by the statutory test of "sufficient cause." [Paras 6, 7, 19]

Application for extension under Section 29A(5) is maintainable after expiry of the prescribed period, to be decided by the court on 'sufficient cause'.

Termination of arbitral mandate - Mandate continues pending extension application - True legal effect of the word 'terminate' in Section 29A(4) and whether termination is absolute so as to preclude continuation on a subsequent extension application. - HELD THAT: - The word "terminate" in Section 29A(4) must be read in context and not in isolation. Termination by efflux of time renders the arbitral tribunal functus officio in a conditional sense but is qualified by the succeeding limb of the provision which permits the court to extend the period "either prior to or after the expiry of the period so specified." Thus "termination" is not absolute; where an application under Section 29A(5) is pending, the second proviso to Section 29A(4) preserves the mandate so that proceedings may continue until disposal of the application. A contextual construction avoids the anomalous outcome of indefinite suspension or wasteful re litigation and co heres with the legislative scheme. [Paras 7, 10, 11, 12]

Termination under Section 29A(4) is conditional and does not operate as an absolute bar to continuation where an extension application is filed or pending.

Sufficient cause for extension - Substitution and continuity of arbitrators on extension - Scope of judicial discretion and safeguards when granting an extension under Section 29A(5), including consequences for delay and the effect of substitution provisions. - HELD THAT: - The court's power to extend time under Section 29A(5) is discretionary and confined to cases of "sufficient cause," thereby guarding against abuse. The statute enables the court to impose terms and conditions, reduce arbitrator fees where delay is attributable to the tribunal, and to substitute one or all arbitrators under Section 29A(6) with the reconstituted tribunal deemed in continuation of the earlier tribunal under Section 29A(7). Further, Section 29A(8) permits costs and Section 29A(9) mandates expeditious disposal (endeavour within sixty days). These provisions operate as safeguards to ensure extensions are not granted mechanically and to promote efficiency and finality in the arbitral process. [Paras 15, 16, 17]

Court may grant post expiry extensions only for sufficient cause and may impose conditions (including fee reduction, substitution of arbitrators, and costs) while disposing of such applications expeditiously.

Final Conclusion: The Supreme Court holds that applications for extension of the time period for passing an arbitral award under Section 29A(4) read with Section 29A(5) are maintainable even after expiry of the twelve month period or the six month consent extension; 'termination' in Section 29A(4) is conditional and the court's grant of extension remains subject to the statutory requirement of 'sufficient cause' and the safeguards provided by Sections 29A(6)-(9).

Title and possession - burden of proof for property inclusion - entitlement to compensation for compulsory acquisition - possession does not confer compensation without claim or pleadings - finality of judgment

Burden of proof for property inclusion - title and possession - Whether the site allotted to Defendant No.20 formed part of Sy. No. 305/2. - HELD THAT: - The Court found that the Appellant/Plaintiff did not dispute Defendant No.20's specific plea that the site allotted to him was part of Sy. No. 305/3 and not Sy. No. 305/2, and neither the courts below had recorded a finding that Defendant No.20's site and construction were within Sy. No. 305/2. On this basis, the Appellant/Plaintiff failed to establish that the site allotted to Defendant No.20 was part of Sy. No. 305/2. Consequently, the High Court correctly set aside the Trial Court's finding insofar as it related to the land allotted to Defendant No.20. [Paras 14]

The appellant failed to prove that Defendant No.20's site formed part of Sy. No. 305/2; the High Court's setting aside of the Trial Court's finding on this point is upheld.

Entitlement to compensation for compulsory acquisition - possession does not confer compensation without claim or pleadings - finality of judgment - Whether private defendants occupying sites on the suit property are entitled to receive 30% of the compensation payable in respect of those sites despite the Appellant/Plaintiff being declared the lawful owner. - HELD THAT: - The Court observed that the High Court had affirmed the Appellant/Plaintiff's title and that that judgment had attained finality. There was no pleaded claim, no evidence, and no submission by the private defendants either before the Trial Court or the High Court asserting entitlement to compensation for the acquired land. In the absence of any claim, pleading or material to establish their entitlement, the grant by the High Court of 30% of the compensation in respect of the ten sites was unsustainable. The correct consequence is that the Appellant/Plaintiff, as the final owner, is entitled to the full amount payable for the acquisition; the private defendants remain free to pursue any remedy available to them under law for compensation. [Paras 11, 18, 20]

The High Court's direction awarding 30% of compensation to the private defendants is set aside; the Appellant/Plaintiff is entitled to the full compensation subject to any separate remedy the private defendants may lawfully pursue.

Final Conclusion: The appeal concerning Defendant No.20's site is dismissed as the appellant failed to show it formed part of Sy. No. 305/2; the appeal challenging the High Court's award of 30% of acquisition compensation to private defendants is allowed and that portion of the High Court's judgment is set aside, with liberty to the private defendants to seek any remedy available under law.

Prerogative writs under Article 226 - doctrine of clean hands - discretionary relief - banking ombudsman jurisdiction - rejection of complaint under clause 13(1)(a) of the Banking Ombudsman Scheme, 2006 - non-adherence to the fair practices code - breach of sanction terms (exclusive dealing and routing of turnover) - award of costs for abuse of process

Prerogative writs under Article 226 - doctrine of clean hands - discretionary relief - breach of sanction terms (exclusive dealing and routing of turnover) - Writ petition under Article 226 dismissed on discretionary grounds because the petitioner had not come with clean hands and was in breach of the sanction letter. - HELD THAT: - The Court held that grant of prerogative writs is discretionary and may be refused where the petitioner has not come to Court with clean hands. The record showed terms in the sanction letter requiring exclusive dealings and routing of turnover through the bank, and account statements indicated diversion of sale proceeds to another bank shortly after sanction. Those facts established wanton breach of the sanction terms and abuse of the process of court. In view of this misconduct, the petitioner was not entitled to the reliefs claimed and the petition was dismissed. [Paras 2, 6, 7, 9]

Writ petition dismissed for petitioner's unclean hands and breach of the sanction letter; petitioner not entitled to relief.

Banking ombudsman jurisdiction - rejection of complaint under clause 13(1)(a) of the Banking Ombudsman Scheme, 2006 - non-adherence to the fair practices code - Although the Banking Ombudsman had jurisdiction to entertain complaints under clause 8(2)(d) and (f), the Court declined to grant relief to the petitioner in view of the petitioner's misconduct. - HELD THAT: - The Court observed that the grounds relied upon (non-adherence to fair practices code and non-observance of RBI directions) would ordinarily fall within the Ombudsman's jurisdiction. However, the factual findings that the petitioner had routed funds to another bank and breached the sanction terms meant that interference with the Ombudsman's order was not warranted. The Court therefore did not set aside the Ombudsman's closure in the petitioner's favour because the petitioner was not entitled to equitable relief. [Paras 5, 7]

Ombudsman's rejection under clause 13(1)(a) is not interfered with given the petitioner's breach and misconduct.

Award of costs for abuse of process - Exemplary costs awarded against the petitioner for having abused the process of the Court. - HELD THAT: - Having found that the petitioner misled the Court and was in breach of the sanction terms, the Court exercised its discretion to impose costs as a consequence of the misuse of judicial time and process. A token but substantial cost was directed to be deposited with the Registrar General within a stipulated period, with interest payable on default. [Paras 8, 9]

Petitioner ordered to pay costs of Rs.50,000 to the Registrar General within one month; interest at 6% per annum on default.

Final Conclusion: The writ petition is dismissed on discretionary grounds for the petitioner's unclean hands and breach of the sanction letter; the Court declined substantive relief against the Banking Ombudsman's closure and directed payment of costs to the Registrar General with interest on default.

Redraw seniority list in accordance with K. Meghachandra Singh - finality of a seniority list - binding effect of earlier coordinate bench decision (Yash Rattan) - prospective application of overruling decision - seniority of direct recruits vis-a -vis promotees and Inter Commissionerate Transferees - revised seniority subject to outcome of reference to larger bench (Hariharan)

Redraw seniority list in accordance with K. Meghachandra Singh - finality of a seniority list - Learned Tribunal was justified in directing the Union of India to re-draw the seniority list of Inspectors in terms of K. Meghachandra Singh, and the modified seniority list dated 07.10.2022 could be set aside. - HELD THAT: - The Court accepted the co-ordinate bench finding in Yash Rattan that the seniority list dated 15.03.2018 had not attained finality when the Supreme Court delivered its judgment in K. Meghachandra Singh. Because the 15.03.2018 list remained subject to challenge before the Tribunal and representations were pending, the principles enunciated in K. Meghachandra Singh were applicable to the redrawing of seniority. Consequently, the Tribunal correctly quashed the seniority list to the extent it placed the petitioners above certain private respondents and directed the Union to re-draw the seniority list in accordance with K. Meghachandra Singh. The Court further observed that even if the petitioners joined service before the K. Meghachandra decision, that fact did not negate the co-ordinate bench's finding that the earlier list lacked finality and therefore required re-drawing. [Paras 15, 16]

Tribunal's direction to re-draw the seniority list per K. Meghachandra Singh is upheld and the modified seniority list dated 07.10.2022 was properly set aside to the extent indicated.

Binding effect of earlier coordinate bench decision (Yash Rattan) - prospective application of overruling decision - revised seniority subject to outcome of reference to larger bench (Hariharan) - Petitioners' plea to treat Yash Rattan as per incuriam or to claim crystallised seniority prior to K. Meghachandra Singh was rejected; Yash Rattan has attained finality and the redrawing remains subject to the larger bench reference. - HELD THAT: - The Court found no merit in the petitioners' contention that Yash Rattan was wrongly decided or inapplicable to their case. Yash Rattan held that the 15.03.2018 seniority list was not final and required re-drawing in light of K. Meghachandra Singh; that decision was unsuccessfully challenged before the Supreme Court and therefore has attained finality. The petitioners' delay in challenging that finding and the prior dismissals of Special Leave Petitions were noted. The Court also recorded the Tribunal's clarification that any revised seniority list would remain subject to the outcome of the reference to a larger bench in Hariharan, and affirmed that position. [Paras 14, 16, 18]

Prayer to treat Yash Rattan as per incuriam or to protect petitioners' alleged crystallised seniority was rejected; Yash Rattan is binding and the Tribunal's directions stand subject to the Hariharan reference.

Final Conclusion: Writ petitions and pending applications are dismissed; the Tribunal's order directing re-drawing of the Inspector seniority list in accordance with K. Meghachandra Singh is upheld, and the revised seniority list will remain subject to the outcome of the larger bench reference in Hariharan.

Accord and satisfaction - separability doctrine of arbitration agreement - arbitrability of disputes as to quantum - scope of judicial scrutiny under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Section 11(6-A) - examination limited to existence of an arbitration agreement - competence competence

Accord and satisfaction - separability doctrine of arbitration agreement - arbitrability of disputes as to quantum - Whether execution of a discharge voucher as a purported full and final settlement bars invocation of the arbitration clause - HELD THAT: - The Court held that a contract may be discharged by accord and satisfaction but whether such discharge has occurred is a mixed question of law and fact. The arbitration agreement is separable from the underlying contract and, by virtue of the presumption of separability, survives discharge of the substantive contract unless the parties expressly agree otherwise. Accordingly, merely executing a discharge voucher does not ipso facto preclude reference to arbitration; where the validity of the discharge is disputed (for example, on grounds of fraud, coercion or undue influence), that dispute itself falls within the arbitration agreement and is for the arbitral tribunal to decide. The Court applied these principles to the facts, observed that liability had been admitted by the insurer while quantum was disputed, and concluded that the dispute prima facie falls within the arbitration clause. [Paras 50, 53, 55, 135, 136]

The discharge voucher does not automatically bar arbitration; the dispute as to whether accord and satisfaction occurred is arbitrable and the arbitration agreement survives.

Scope of judicial scrutiny under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Section 11(6-A) - examination limited to existence of an arbitration agreement - competence competence - What is the scope and standard of judicial scrutiny of a Section 11(6) application where a defendant pleads accord and satisfaction - HELD THAT: - The Court reviewed precedent and legislative amendments and held that post the insertion (and continued presence) of Section 11(6-A) the referral court's enquiry when deciding an application under Section 11(6) is confined to the prima facie existence of an arbitration agreement. Questions concerning validity of a purported settlement (accord and satisfaction), limitation or other mixed questions of law and fact ordinarily fall within the arbitral tribunal's Kompetenz Kompetenz and should be left to it. The Court rejected tests requiring referral courts to undertake mini trials (e.g. detailed appraisal under the 'eye of the needle' or elaborate prima facie evidence scrutiny) and emphasised minimal judicial interference, save in exceptional cases where an arbitration agreement is manifestly non existent or the claim is ex facie dead or non arbitrable. On the facts, the Court found the dispute not barred from reference and that the question of accord and satisfaction should be decided by the arbitrator. [Paras 76, 92, 114, 116, 135]

Referral courts must, as a rule, limit their Section 11(6) enquiry to the prima facie existence of an arbitration agreement; disputes on accord and satisfaction are for the arbitral tribunal except in rare cases of manifest non arbitrability.

Section 11(6-A) - examination limited to existence of an arbitration agreement - competence competence - judicial non interference in arbitral process - What is the effect of the decision in In Re: Interplay Between Arbitration Agreements ... and the Indian Stamp Act on the scope of the referral court's powers under Section 11 - HELD THAT: - Relying on the seven Judge decision in In Re: Interplay, the Court held that the legislative and judicial trend is to minimise pre reference interference by confining the referral court's role to a prima facie examination of the existence of an arbitration agreement. Detailed issues-such as the validity/enforceability of agreements, stamping objections, or mixed factual and legal questions-require full consideration by the arbitral tribunal and subsequent judicial review remains available post award. The Court emphasised arbitral autonomy and the negative aspect of competence competence, holding that appointment of an arbitrator gives effect to the parties' agreement to arbitrate while preserving the ability to raise defences before the tribunal and before courts on enforcement/setting aside. [Paras 94, 109, 115, 116, 135]

In Re: Interplay confirms that at the Section 11 stage the referral court's enquiry is limited to prima facie existence of an arbitration agreement and should not decide contested questions reserved for the arbitral tribunal.

Final Conclusion: The appointment of Justice K.A. Puj as arbitrator is affirmed and the stay on arbitration proceedings is vacated. The dispute (quantum) prima facie falls within the arbitration clause; issues including the alleged accord and satisfaction remain open to be raised and adjudicated before the learned Arbitrator.