TaxTMI Updates e-Newsletter
Sep 26,2024

Service of process - interim relief - cooperation with investigation - non-issuance of notice / absence of requirement to appear - making interim order absolute

Service of process - non-issuance of notice / absence of requirement to appear - interim relief - making interim order absolute - Continuation and confirmation of interim relief granted earlier in view of absence of service of process and non-requirement to appear for investigation - HELD THAT: - The Court recorded that there was nothing on file to demonstrate that the process issued by the Chief Judicial Magistrate on 8 April 2024 had been served on the appellant. The respondent-State's affidavits further showed that no notice had been issued in the roughly four months following the interim order of this Court dated 29 April 2024 calling the appellant to appear for investigation, and the appellant's presence had not been required during that period. Given the absence of service and the fact that the appellant was not required to cooperate in person for about four months, the Court concluded that the interim protection previously granted should continue. On these findings the Court made the interim order of 29 April 2024 absolute on the same terms and conditions. [Paras 3, 4]

Interim order dated 29 April 2024 made absolute on the same terms; appeal allowed

Final Conclusion: In view of the non-service of process and the respondent-State's failure to require the appellant's presence for investigation for about four months after the interim order, the Supreme Court confirmed and made absolute the interim relief granted on 29 April 2024 and allowed the appeal.

Personal hearing - principles of natural justice - procedure for personal hearing under Section 75(4) of the U.P. GST Act - quash of adjudication for failure to afford hearing - duty of the assessing officer to fix date, time and place for hearing

Personal hearing - principles of natural justice - procedure for personal hearing under Section 75(4) of the U.P. GST Act - Impugned adjudication order dated 17.08.2022 was passed without granting the personal hearing requested by the petitioner and therefore violated principles of natural justice. - HELD THAT: - The Court examined the material and preceding coordinate-bench authorities interpreting Section 75 read with sub-Section (4) and accepted that an opportunity of personal hearing must be afforded where a request in writing for hearing is made or an adverse decision is contemplated. The petitioner had specifically sought personal hearing after receiving the show cause notice for June, 2021, and the assessing authority proceeded to pass the adjudication order without fixing any date, time or place for such hearing. The State's contention that earlier portal entries amounted to hearing opportunity was found not to address the petitioner's specific post show cause notice request. Having regard to settled principles that pre decisional hearing is an element of natural justice in such proceedings, the failure to grant the requested personal hearing vitiated the impugned order which was therefore set aside. [Paras 10]

Impugned order dated 17.08.2022 quashed for non compliance with requirement of personal hearing under Section 75(4) and principles of natural justice.

Duty of the assessing officer to fix date, time and place for hearing - quash of adjudication for failure to afford hearing - Matter remitted to the assessing officer for fresh adjudication after affording personal hearing, with specified time directions. - HELD THAT: - Since the petitioner had already filed a substantive reply to the show cause notice, the Court directed that the assessing officer shall, within two weeks of production of the certified copy of the order, fix the date, time and place for personal hearing and afford a proper opportunity to the petitioner. Thereafter the assessing officer was directed to pass an appropriate order in accordance with law within a further period of four weeks. The Court therefore remanded the matter for fresh consideration limited to completion of the hearing and re adjudication in conformity with statutory procedure and natural justice. [Paras 11]

Proceedings remitted for fresh adjudication: assessing officer to fix hearing within two weeks and pass orders within a further four weeks.

Final Conclusion: Writ petition allowed; adjudication order dated 17.08.2022 set aside for failure to afford personal hearing; matter remitted to the assessing officer to afford personal hearing within two weeks and pass appropriate order within a further four weeks.

Release of detained goods under Section 129(1)(a) of the CGST Act read with IGST Act - calculation of tax and penalty under Section 129 - valuation based on invoice/eway bill - quashing of order passed under Section 129

Release of detained goods under Section 129(1)(a) of the CGST Act read with IGST Act - valuation based on invoice/eway bill - calculation of tax and penalty under Section 129 - Goods detained by authorities were to be released under Section 129(1)(a) of the CGST Act read with IGST Act and valuation for levy to be the invoice value - HELD THAT: - The petition contested the authorities' exercise under Section 129(1)(b) instead of release under Section 129(1)(a). The petitioner claimed ownership of the goods and reliance on invoice/eway bill valuation such that enhancement of valuation and computation of penalty could not be made by invoking the alternative provision. The Court, having considered the record and earlier decisions of this Court cited by the petitioner, concluded there was no reason to take a different view and accepted that the goods must be released under Section 129(1)(a) read with the IGST Act and that the exercise of calculation must proceed on the basis of valuation specified in the invoice. Consequently the impugned order made under Section 129 on September 12, 2024 was quashed and set aside, with a direction to the authorities to carry out the exercise in terms of Section 129(1)(a) read with the IGST Act within three weeks and on invoice valuation.

Order dated September 12, 2024 quashed; authorities directed to release goods and compute under Section 129(1)(a) read with IGST Act using invoice valuation within three weeks

Final Conclusion: Writ petition allowed to the extent that the impugned order dated September 12, 2024 is quashed and the respondent authorities are directed to release the goods and carry out the exercise under Section 129(1)(a) of the CGST Act read with the IGST Act on the basis of invoice valuation within three weeks; other prayers remain open for pursuit before the appropriate forum.

Time-bar - communication of order - limitation under Section 107 of the CGST Act, 2017 - non-service of notice / personal hearing - remand for de novo consideration - reasoned order - opportunity of personal hearing with advance notice - duty of appellate authority to verify authority on GST portal

Time-bar - communication of order - limitation under Section 107 of the CGST Act, 2017 - Whether the appeal before the Appellate Authority was barred by limitation - HELD THAT: - The Appellate Authority dismissed the appeal solely on the ground that the petitioner had not proved the date of communication of the order-in-original dated 26th December 2023 and therefore the appeal was filed beyond three months. The High Court found on the material placed before it (email from the Superintendent, Adjudication, CGST & CEX, Mumbai dated 29th December 2023, at Page 134 of the petition) that the order was communicated on 29th December 2023. The petition records filing of the online appeal on 28th March 2024, which, on the Court's finding as to the date of communication, falls within the three-month period prescribed under Section 107 of the CGST Act, 2017. The Appellate Authority had not required the petitioner to prove the date of receipt before treating the appeal as time-barred. [Paras 2, 3]

Appellate Authority's conclusion that the appeal was barred by limitation was set aside as the Court found the date of communication to be 29th December 2023 and the appeal was within time.

Non-service of notice / personal hearing - remand for de novo consideration - reasoned order - opportunity of personal hearing with advance notice - duty of appellate authority to verify authority on GST portal - Whether the matter should be remitted for fresh consideration and what procedural directions should govern the re-hearing - HELD THAT: - The petitioner raised a grievance of non-service of personal hearing notices through physical service, post or email to authorised persons registered on the GST portal. Having regard to a similar earlier order in Writ Petition No.11298 of 2024 in which the Court set aside an Appellate Authority's order and remanded the matter for de novo consideration (observing that the Appellate Authority must, if in doubt, verify the authorised signatory on the GST portal and afford opportunity to cure or explain), the High Court in the present petition exercised its discretion to set aside the impugned order-in-appeal and remand the appeal for fresh hearing. The Court directed that the Appellate Authority hearing the appeal shall give the appellant a personal hearing with notice communicated at least five working days in advance, pass a reasoned order addressing all submissions, provide a list of and copies of any orders or judgments to be relied upon (including unreported ones) with the notice to enable the appellant to deal with them, and conclude the appeal by 30th November 2024. All rights and contentions of the parties were kept open and no observations were made on the merits. [Paras 5, 7, 8, 9]

Order-in-appeal set aside and matter remanded for de novo consideration with directions on personal hearing, advance notice, reasoned order, disclosure of relied authorities, and a timeline for disposal.

Final Conclusion: The High Court set aside the Appellate Authority's order dismissing the appeal as time-barred, found the communication date to be 29th December 2023 making the appeal timely, and remanded the matter for de novo consideration with specified procedural directions (advance notice of personal hearing, requirement of a reasoned order addressing submissions, provision of relied authorities and copies, and disposal by 30th November 2024), while leaving substantive rights and contentions open.

Power of Government to extend time limit in special circumstances - recommendation of the Goods and Services Tax Council - force majeure - delegated legislation / secondary legislation must conform to parent Act - jurisdictional effect of statutory time-bar under Section 73(10)

Recommendation of the Goods and Services Tax Council - force majeure - Power of Government to extend time limit in special circumstances - Validity of Notification No.56/2023-CT issued under Section 168A of the Central Goods and Services Tax Act, 2017 - HELD THAT: - Section 168A permits the Government to extend statutory time-limits only "on the recommendations of the Council" and where actions cannot be completed due to "force majeure." The Court held that the existence of a recommendation is a sine qua non for exercise of the power under Section 168A; the fact that some recommendations of the GST Council may be non-binding on substance does not permit the Government to act in the absence of any recommendation where the parent Act requires one. Notification No.56/2023-CT was issued without any prior recommendation of the GST Council and yet stated it was made "on the recommendation of the Council." Because the GST Council was not asked to and did not consider the question of force majeure in relation to the extension in issue, the requisite condition of force majeure tied to a Council recommendation was not satisfied. The Notification therefore constituted a colourable exercise of delegated legislative power and was ultra vires Section 168A. [Paras 39, 40, 46, 47, 49]

Notification No.56/2023-CT dated 28.12.2023 is ultra vires Section 168A of the Central Act and is set aside and quashed.

Jurisdictional effect of statutory time-bar under Section 73(10) - Power of Government to extend time limit in special circumstances - Validity of Orders-in-Original passed under Section 73(9) for FY 2018-19 and FY 2019-20 in light of absence of a valid extension under Section 168A - HELD THAT: - Section 73(10) fixes the time within which orders under Section 73(9) must be issued. Because Notification No.56/2023-CT was held to be ultra vires and the State had not issued a pari materia notification covering the relevant periods on or after 01.04.2024 (for FY 2018-19) and on or after 01.07.2024 (for FY 2019-20), the Orders-in-Original impugned in the writ petitions were passed beyond the statutory period and were therefore without jurisdiction. The Court set aside and quashed the individual impugned Orders-in-Original listed in the Appendix for the respective petitioners. [Paras 50, 51, 52]

The impugned Orders-in-Original passed under Section 73(9) for the listed matters are beyond the period prescribed by Section 73(10) and are set aside and quashed.

Power of Government to extend time limit in special circumstances - Challenge to Notification No.9/2023-CT and the State Notification dated 06.09.2024 - HELD THAT: - The Court observed that several impugned Orders-in-Original under challenge concern periods covered by Notification No.56/2023-CT; consequently the challenge to Notification No.9/2023-CT and to the State notification dated 06.09.2024 (replica of No.9/2023-CT) was found to be not relevant to the orders before the Court and was not considered on merits. The Court therefore did not adjudicate the validity of Notification No.9/2023-CT or the State notification dated 06.09.2024. [Paras 38]

Challenge to Notification No.9/2023-CT and the State Notification dated 06.09.2024 was not considered as irrelevant to the impugned Orders-in-Original before the Court.

Final Conclusion: Notification No.56/2023-CT issued under Section 168A of the Central Act is ultra vires and is quashed; accordingly, the Orders-in-Original passed under Section 73(9) for the specified matters in respect of Financial Year 2018-19 and Financial Year 2019-20, which were issued after the statutory period fixed by Section 73(10) and in the absence of a valid extension under Section 168A, are without jurisdiction and are set aside. The Court's decision does not preclude the Union or State Governments from taking steps lawfully available under Section 168A(2) including issuance of retrospective notifications in conformity with law.

Condonation of delay - limitation period for filing appeal - power to condone delay beyond thirty days under Section 107(4) of the CGST Act, 2017 - remand for fresh adjudication on merits

Limitation period for filing appeal - condonation of delay - Validity of the appellate order rejecting the appeal as filed beyond the period of limitation - HELD THAT: - The Court recorded that the appeal to the first appellate authority was not filed within the prescribed three month period and that the appellate authority rejected the appeal on the ground that it lacked power to condone delay beyond thirty days under Section 107(4) of the CGST Act, 2017. The petitioner filed a supplementary affidavit explaining the delay on grounds of financial hardship and serious illness of the petitioner's Managing Director, supported by a medical certificate. Applying the reasoning in the Division Bench decision relied upon by the petitioner, the Court found that although the Act may not empower the appellate authority to condone delay beyond thirty days, the facts demonstrated that the delay was not occasioned by the petitioner's fault but by circumstances beyond his control. In view of these circumstances and in the interest of justice the Court concluded that the impugned order rejecting the appeal on limitation grounds could not stand and therefore set aside that order.

Impugned order rejecting the appeal as time-barred set aside.

Remand for fresh adjudication on merits - condonation of delay - Extent and manner of further proceedings following setting aside of the impugned order - HELD THAT: - Having set aside the order, the Court remitted the matter to the first appellate authority for adjudication on merits. The appellate authority was directed to consider and adjudicate the appeal on its merits after giving notice and opportunity of hearing to all concerned. The Court further directed that the appellate authority shall not raise any objection on limitation when proceeding to decide the appeal on merits, thereby requiring fresh consideration of the substantive issues in the appeal without being foreclosed by the previous limitation objection.

Matter remanded to the first appellate authority to decide the appeal on merits after notice and hearing, without raising limitation objection.

Final Conclusion: The impugned appellate order dated 08.12.2023 rejecting the appeal as time barred is set aside and the matter is remitted to the first appellate authority for fresh adjudication on merits after notice and hearing, the appellate authority being directed not to raise any limitation objection.

Validity of show cause notice issued to dissolved firm - joint and several liability of partners on dissolution - liability of legal heirs for share of deceased partner - quashing of impugned order and notices - liberty to proceed against parties in accordance with law

Validity of show cause notice issued to dissolved firm - joint and several liability of partners on dissolution - Show cause notices and the impugned order issued to a firm which had been dissolved by reason of the death of a partner are not valid as framed. - HELD THAT: - The Court found that the partnership firm had ceased to exist following the death of one partner and that the fact of death was disclosed to the department during search and seizure. In view of the statutory scheme under Section 94 of the Uttar Pradesh Goods and Service Tax Act, 2017, liabilities and assessment upon dissolution are to be proceeded against the partners who were liable at the time of discontinuation, jointly and severally. Consequently, issuing show cause notices and the impugned order to the firm as if it continued in existence was legally unsustainable. The petitioner was, however, permitted to participate in departmental proceedings and to place on record payments already made by or on behalf of the erstwhile firm.

Impugned order dated 28.04.2024 and notices dated 16.12.2023/19.12.2023 and 23.04.2024 quashed and set aside, with liberty to the department to proceed against the petitioner and the legal heirs of the deceased partner in accordance with law.

Final Conclusion: Writ petition allowed: the notices and impugned order issued to the dissolved firm were quashed, subject to the department's liberty to pursue the petitioner and the deceased partner's legal heirs in accordance with the statutory provision governing partners' joint and several liability on dissolution.

Release of detained goods under Section 129(1)(a) of the CGST Act read with the IGST Act - calculation of tax and penalty under Section 129(1)(b) of the CGST Act read with the IGST Act - enhancement of valuation not permissible under Section 129(1)(a)

Release of detained goods under Section 129(1)(a) of the CGST Act read with the IGST Act - calculation of tax and penalty under Section 129(1)(b) of the CGST Act read with the IGST Act - enhancement of valuation not permissible under Section 129(1)(a) - Whether the detained goods and vehicle must be released by applying the provisions of Section 129(1)(a) of the CGST Act read with the IGST Act rather than by computation under Section 129(1)(b). - HELD THAT: - The Court examined the record and found the facts and legal question to be squarely covered by its earlier decision in M/s Halder Enterprises (supra) and a subsequent decision in S/S S.K. Trading Co (supra), which hold that enhancement of valuation cannot be effected under Section 129(1)(a) and that release under subsection (1)(a) must be on the basis of the invoice/e-way bill. Having regard to those precedents and the similarity of facts, the Court concluded that the authorities erred in applying Section 129(1)(b) to calculate tax/penalty. The order dated July 29, 2024, which applied Section 129(1)(b), was therefore quashed and set aside. The authorities were directed to undertake the exercise afresh in accordance with Section 129(1)(a) of the CGST Act read with the IGST Act within three weeks. The petitioner did not press other reliefs, which may be pursued before the appropriate forum.

Order dated July 29, 2024 applying Section 129(1)(b) set aside; authorities directed to release the goods and vehicle and carry out the exercise under Section 129(1)(a) of the CGST Act read with the IGST Act within three weeks.

Final Conclusion: Writ petition allowed; impugned order dated July 29, 2024 quashed and set aside, and authorities directed to release the goods and vehicle and re-determine release under Section 129(1)(a) of the CGST Act read with the IGST Act within three weeks.

Extinguishment of pre-resolution claims upon approval of a resolution plan - binding effect of an approved resolution plan on creditors and statutory authorities - moratorium under Section 14 of the Insolvency and Bankruptcy Code - keeping proceedings in abeyance during moratorium

Extinguishment of pre-resolution claims upon approval of a resolution plan - binding effect of an approved resolution plan on creditors and statutory authorities - moratorium under Section 14 of the Insolvency and Bankruptcy Code - keeping proceedings in abeyance during moratorium - Whether the impugned audit order dated 29.04.2024 and subsequent intimations and proceedings in respect of financial years 2018-19 and 2019-20 could be continued after approval of a resolution plan by the NCLT. - HELD THAT: - The Court applied the principle laid down in Ghanashyam Mishra and Sons (as accepted by this Court in Associate De cor Limited) that once a resolution plan is duly approved by the adjudicating authority under Section 31 of the IBC, claims not incorporated in the resolution plan stand frozen and extinguished, and no person is entitled to initiate or continue proceedings in respect of such pre-approval claims. The judgment observed that the petitioner had informed the tax authority of the insolvency proceedings and the NCLT's approval of the resolution plan, yet the respondents proceeded with audit observations, intimations and the impugned order. In view of the binding effect of the approved resolution plan and the moratorium principle requiring abeyance of proceedings relating to pre-resolution claims, the continuation of the tax proceedings and issuance of the impugned order and intimations in relation to FY 2018-19 and FY 2019-20 was without jurisdiction or authority of law and therefore liable to be quashed.

Impugned order dated 29.04.2024, the intimation dated 25.05.2024 and all further proceedings arising therefrom in relation to FY 2018-19 and FY 2019-20 are quashed; writ petition allowed.

Final Conclusion: The writ petition is allowed and the impugned order, the subsequent intimation and all further proceedings pursuant thereto in respect of the financial years 2018-19 and 2019-20 are quashed as being barred by the approved resolution plan and the moratorium under the IBC.

Seizure under preventive provisions of the CGST regime - provisional attachment of bank accounts under tax recovery provisions - show cause proceedings and pre-show cause intimation in tax adjudication - return of seized documents where evidentiary purpose has ceased - right to notice and reasonable opportunity of hearing before adjudication

Seizure under preventive provisions of the CGST regime - return of seized documents where evidentiary purpose has ceased - Seized original documents seized on 09.01.2024 to be returned to the petitioner though the seizure order itself is not interfered with. - HELD THAT: - The Court found that the documents and records seized on 09.01.2024 had formed the basis for issuance of the pre-show cause intimation and the subsequent show cause notice. Once the respondents have relied upon those records to issue the statutory notices, the evidentiary purpose of retaining the originals has, in the Court's view, been exhausted. Having regard to the petitioner's need to use the documents for carrying on its real estate business and the fact that adjudicatory steps have proceeded based on the seized material, the Court directed that all seized documents, records, papers and deeds be returned forthwith, while expressly noting that the seizure order need not be set aside. [Paras 7]

Respondents directed to immediately return all seized documents, records and papers to the petitioner although the seizure order is not interfered with.

Provisional attachment of bank accounts under tax recovery provisions - right to notice and reasonable opportunity of hearing before adjudication - Provisional attachment orders dated 28.05.2024 in respect of the petitioner's bank accounts are quashed, subject to respondents' liberty to proceed thereafter in accordance with law. - HELD THAT: - In view of the petitioner's contention that a portion of the alleged demand had already been discharged and having regard to the interim order previously passed by the Court staying the attachment, the Court considered it just to set aside the provisional bank attachment orders. The Court preserved the respondents' statutory rights to proceed further after taking appropriate decisions in pursuance of the show cause notice, thereby balancing the petitioner's commercial exigencies against the respondents' recovery rights. [Paras 8]

Provisional bank attachment orders at Annexures-L1, L2 and L3 dated 28.05.2024 are quashed, with liberty to respondents to act thereafter in accordance with law.

Show cause proceedings and pre-show cause intimation in tax adjudication - right to notice and reasonable opportunity of hearing before adjudication - Show cause notice dated 02.08.2024 is not quashed; petitioner directed to file reply and respondents directed to provide reasonable opportunity and proceed in accordance with law. - HELD THAT: - The Court did not annul the show cause notice. Instead it directed the petitioner to submit a reply within three weeks and mandated that the respondents notify the petitioner of the date of appearance, furnish sufficient and reasonable opportunity of hearing and then decide the matter in accordance with law. The order emphasises procedural fairness in adjudication and preserves the respondents' ability to consider the reply and pass appropriate orders. [Paras 9]

Petitioner to file reply to the show cause notice within three weeks; respondents to notify, afford reasonable opportunity of hearing and proceed to decide in accordance with law.

Final Conclusion: The petition is partly allowed: seized documents are to be returned to the petitioner forthwith; the provisional attachments of bank accounts dated 28.05.2024 are quashed (subject to respondents' rights); the show cause notice of 02.08.2024 remains on record and the petitioner is directed to reply within three weeks, after which the respondents shall hear the petitioner and decide in accordance with law.

Violation of principles of natural justice - revisional jurisdiction under Section 108 of the KGST Act, 2017 - quashing of order for lack of notice and opportunity - liberty to initiate fresh proceedings after due notice and hearing

Violation of principles of natural justice - quashing of order for lack of notice and opportunity - Impugned order dated 21.05.2024 was quashed because respondent No. 3 passed the order without notifying the petitioner or affording an opportunity of hearing. - HELD THAT: - The Court found it undisputed that respondent No. 3 did not notify the petitioner nor provide any opportunity to be heard before purportedly invoking revisional jurisdiction under Section 108 of the KGST Act. In view of that omission, the impugned order was held to be illegal and violative of the principles of natural justice. Exercising judicial review, the Court set aside the impugned order while reserving the parties' substantive contentions for determination in appropriate proceedings. [Paras 7, 8]

Impugned order dated 21.05.2024 is quashed for failure to afford notice and opportunity to the petitioner.

Revisional jurisdiction under Section 108 of the KGST Act, 2017 - liberty to initiate fresh proceedings after due notice and hearing - Respondent No. 3 is permitted to take fresh steps in accordance with law after duly notifying and hearing the petitioner; questions on jurisdiction, maintainability and legality of invoking Section 108 are left open. - HELD THAT: - Rather than determining the merits of whether respondent No. 3 properly invoked Section 108 or the related questions of jurisdiction and maintainability, the Court reserved those substantive issues. The petitioner was granted relief by quashing the impugned order, and respondent No. 3 was granted liberty to proceed afresh, subject to giving the petitioner sufficient notice and opportunity and without prejudice to all defences and exceptions available to the petitioner. The Court expressly refrained from expressing any opinion on the contested legal questions concerning the scope or exercise of revisional power. [Paras 8]

Liberty reserved to respondent No. 3 to take necessary steps in accordance with law after due notice and hearing; substantive questions on invoking Section 108 kept open.

Final Conclusion: Writ petition allowed; impugned revisional order dated 21.05.2024 quashed for breach of natural justice, with liberty to the revisional authority to revisit the matter after giving the petitioner adequate notice and opportunity; all other contentions including jurisdiction and maintainability left open.

Detention and seizure and penalty under Section 129 of the CGST/SGST Acts - Applicability of Rule 55 of the CGST Rules, 2017 - Tax invoice requirement for supply of goods - Penalty under Section 122 of the CGST/SGST Acts - Refund or adjustment of amounts recovered pending re adjudication

Detention and seizure and penalty under Section 129 of the CGST/SGST Acts - Applicability of Rule 55 of the CGST Rules, 2017 - Tax invoice requirement for supply of goods - Validity of proceedings and orders imposing penalty under Section 129 in respect of transportation of industrial gas (Acetylene) where goods were covered by delivery notes and an e way bill - HELD THAT: - The court found that the transported goods were covered by three delivery notes and an E Way bill which recorded the correct value and the tax payable. While Rule 55 of the CGST Rules, 2017 was considered, the court held that Rule 55(a) does not cover supply of Acetylene gas and therefore the special dispensation under Rule 55 was not applicable. Consequently, the goods ought to have been covered by a tax invoice. There is no finding in the impugned order (Ext.P17) indicating an attempt to evade tax. For these reasons and having regard to the earlier decision in W.P.(C) No.26645/2021, the proceedings and orders passed under Section 129 were quashed.

Ext.P17 and Ext.P19 are quashed; the detention/seizure proceedings concluded under Section 129 are held to be unsustainable because Rule 55(a) does not apply and the goods should have been covered by a tax invoice.

Penalty under Section 122 of the CGST/SGST Acts - Refund or adjustment of amounts recovered pending re adjudication - Whether the matter should be re adjudicated as one under Section 122 and the consequences of amounts already recovered - HELD THAT: - Having quashed the Section 129 orders and having held that the shipment should have been invoiced, the court directed that the competent authority consider and treat the case under the provisions of Section 122 of the CGST/SGST Acts and impose such penalty as may be appropriate under that provision. This directs fresh consideration and adjudication under Section 122 rather than affirming the earlier Section 129 penalty. The court further directed that any amount recovered pursuant to Ext.P17 shall either be refunded or adjusted against future tax liability by crediting the petitioner's electronic cash ledger.

The matter is remitted to the competent authority to be considered and adjudicated under Section 122; amounts recovered under the quashed order shall be refunded or adjusted in the petitioner's electronic cash register.

Final Conclusion: Writ petition allowed; impugned orders under Section 129 quashed. Case remitted for fresh consideration under Section 122 with direction to refund or adjust any amounts recovered pending re adjudication.

Power to extend limitation under Section 168A of the CGST Act, 2017 - requirement of recommendation of the GST Council for issuance of extension notifications - force majeure - ultra vires - interim protection against coercive action - adoption of Central notifications by State GST authorities

Interim protection against coercive action - impugned assessment order dated 30.04.2024 - Grant of interim protection restraining coercive action based on the impugned assessment order - HELD THAT: - The Court, having considered the petitioner's challenge to Notification No.56/2023 and the representations of the parties, recorded a prima facie view that the impugned notification may not be in consonance with the statutory scheme in Section 168A and that consequential actions founded on that notification could therefore be vulnerable. In view of this prima facie appraisal and to preserve the status quo pending further contestation, the Court considered it appropriate to grant interim relief. The respondents were directed to place on record their stand and supporting materials so that the legality of the notification and related assessments can be examined on merits. [Paras 13, 14, 15]

Until the next date, no coercive action shall be taken on the basis of the impugned assessment order dated 30.04.2024.

Power to extend limitation under Section 168A of the CGST Act, 2017 - requirement of recommendation of the GST Council for issuance of extension notifications - ultra vires - Prima facie legality of Notification No.56/2023 dated 28.12.2023 under Section 168A and whether it was issued without the mandatory GST Council recommendation - HELD THAT: - The Court examined the petitioner's contention that Notification No.56/2023 was issued without the mandatory recommendation of the GST Council and therefore is ultra vires the CGST Act. The respondents conceded that no GST Council recommendation was recorded for that notification but relied on a recommendation of the GST Implementation Committee and on steps being taken for subsequent ratification. The Court found prima facie that the notification appears not to be in consonance with Section 168A and that the applicability of force majeure-which is asserted as the statutory basis for the power exercised-requires further scrutiny against the Minutes of the 49th GST Council meeting and the material relied upon by the authorities. The Court did not decide the question on merits but required the respondents to file affidavits and supporting material for fresh consideration. [Paras 4, 5, 6, 13, 14]

Validity of Notification No.56/2023 is not finally adjudicated; respondents directed to file affidavits and materials for consideration and the question is remanded for fresh examination.

Adoption of Central notifications by State GST authorities - pari materia applicability of State GST provisions - Applicability of the Central notification to Assam GST and whether State authorities can adopt the extension in absence of a corresponding State notification - HELD THAT: - The petitioner challenged the application of Notification No.56/2023 to proceedings under the Assam GST Act, 2017, relying on the limited scope of Section 11(4) of the AGST Act for adopting Central notifications. The State respondents contended that Assam authorities follow Central GST notifications and have applied the impugned notification. The Court observed that this contention raises a legitimate issue as to whether the State can rely on the Central notification-particularly if that notification is found to be ultra vires the Central Act-and that the matter requires examination together with the material to be filed by respondents. [Paras 8, 11, 12, 14]

Question of the applicability of Notification No.56/2023 to Assam GST proceedings is remanded for consideration upon production of the respondents' affidavits and materials.

Final Conclusion: Notice issued; prima facie view that Notification No.56/2023 may be inconsistent with Section 168A and that the asserted force majeure basis and applicability to Assam GST warrant further examination; respondents directed to file affidavits by 13.09.2024; interim protection granted restraining coercive action based on the impugned assessment order dated 30.04.2024 until the next date.

Violation of principles of natural justice for non-service and non-hearing - service of notice to authorised representative and scope of authorisation - duty of department to serve notices at updated address - remand for fresh adjudication subject to interim deposit - pre-attachment remedy and de-freezing of bank account upon compliance

Violation of principles of natural justice for non-service and non-hearing - service of notice to authorised representative and scope of authorisation - Order-in-Original dated 23.09.2022 was passed without affording the petitioner an opportunity to reply or a personal hearing and without effective service on the petitioner in relation to GST matters. - HELD THAT: - The Court found that although the petitioner had previously authorised an auditor as authorised representative for Service Tax matters, no authorisation for GST matters had been given after migration to the GST regime. The show cause notice and subsequent proceedings were served on the auditor, who did not bring them to the petitioner's notice. The first respondent proceeded to confirm the proposals and passed the impugned Order-in-Original without awaiting any reply from the petitioner or affording a personal hearing. These facts amounted to a breach of the principles of natural justice, rendering the impugned order unsustainable and necessitating its setting aside and remand for fresh consideration. [Paras 8]

Impugned Order-in-Original set aside and matter remanded for fresh consideration.

Duty of department to serve notices at updated address - Service of the impugned order to the petitioner's old address despite the petitioner having intimated change of business premises made the department's service ineffective. - HELD THAT: - The record showed that after migration to GST the petitioner had changed its business address and had intimated the change both to the department and via the GST portal, and the department had issued an amended registration certificate on the portal. Despite this, the impugned order was sent to the old address and was returned with the endorsement 'No such person'. The Court held that the department ought to have served the order at the updated address and that the petitioner's unawareness of the proceedings arose from the department's failure in service. [Paras 8]

Service was defective and constituted a ground for setting aside the impugned order and remanding the matter.

Remand for fresh adjudication subject to interim deposit - pre-attachment remedy and de-freezing of bank account upon compliance - The appropriate relief is to remit the matter to the first respondent for fresh adjudication after the petitioner makes an interim deposit of 7.5% of the disputed tax and files a reply; the bank attachment is to be lifted on production of proof of such payment and certified copy of the order. - HELD THAT: - Balancing the departmental interest and the petitioner's right to be heard, the Court exercised its remedial discretion to set aside the impugned order and remand the matter for fresh consideration. The Court directed that the petitioner deposit 7.5% of the disputed tax within four weeks of receipt of certified copy, thereafter file a reply within two weeks, upon which the department shall grant a 14-day personal hearing and decide afresh in accordance with law. The Court further directed that on production to the bank of a certified copy of the order and proof of the payment, the bank shall take necessary steps to de-freeze the petitioner's account forthwith. [Paras 9]

Matter remanded subject to deposit of 7.5% and compliance; bank directed to de-freeze account on production of proof and certified copy.

Final Conclusion: Writ petitions allowed: Order-in-Original dated 23.09.2022 set aside and matter remitted to the first respondent for fresh adjudication on deposit of 7.5% of the disputed tax and after affording opportunity to file reply and a personal hearing; bank attachment to be lifted on production of certified copy of the order and proof of payment. No costs.

Royalty is not a tax - no tax-on-tax principle - show cause notice under finance and tax recovery provisions - personal hearing and opportunity of hearing - remedy before the adjudicating authority

Royalty is not a tax - no tax-on-tax principle - Whether royalty qualifies as a tax for the purpose of imposing service tax on royalty receipts - HELD THAT: - The court applied the binding conclusion of the Hon'ble Supreme Court in Mineral Area Development Authority v. Steel Authority of India (conclusions in para 342) that "royalty is not a tax" and that royalty is a contractual consideration arising from mining lease obligations. The High Court held that the petitioner's contention that service tax could not be levied because royalty is itself a tax (and that tax cannot be levied upon a tax) cannot be sustained in light of the Supreme Court's determination. The petitioner did not dispute the legal proposition as laid down by the Supreme Court. [Paras 5, 6, 342]

The contention that royalty is a tax is rejected; the legal position in the Supreme Court judgment controls.

Show cause notice under finance and tax recovery provisions - personal hearing and opportunity of hearing - remedy before the adjudicating authority - Whether the show cause notice should be quashed and what procedural course the petitioner must follow - HELD THAT: - The court declined to quash the existing show cause notice dated 20.10.2021 and observed that the appropriate remedy for the petitioner is to pursue his objections before the authority which issued the show cause notice. Noting that the subsequent notice dated 23.02.2024 had lost efficacy because the date specified had expired, the court directed the petitioner to appear before the authority on 28/08/2024. The authority was directed to afford the petitioner a proper opportunity of hearing and thereafter decide the matter in accordance with law. [Paras 2, 7, 8]

The petition is disposed of without quashing the show cause notice; petitioner to appear before the authority on 28/08/2024 and the authority to decide the case after giving proper hearing.

Final Conclusion: The petition is disposed of in view of the Hon'ble Supreme Court's conclusion that "royalty is not a tax"; no quashing of the show cause notice is granted, and the petitioner is directed to appear before the adjudicating authority on 28/08/2024, after which the authority shall decide the matter in accordance with law following a proper hearing.

Validity of appeal filed u/s 260A - Bogus LTCG - whether any substantial question of law has arisen for consideration? - Substantial question of law - appellate jurisdiction u/s 260A - binding nature of coordinate bench decisions - admission of fresh evidence in appellate proceedings - reliance on regulatory adjudication in income-tax assessment - application of precedent to tax assessments arising from share trading -

The appeal is dismissed for want of any substantial question of law by HC [2024 (6) TMI 1068 - CALCUTTA HIGH COURT] the Tribunal's order affirming the CIT(A) stands, and the stay application is also dismissed.

HELD THAT:- The Special Leave Petition is dismissed.

Remand for fresh consideration - Vivad se Vishwas - Settlement Scheme - Condonation of delay - Judicial review of appellate remand

Remand for fresh consideration - Judicial review of appellate remand - Validity of the remand order confirmed by the High Court and whether the Supreme Court should interfere - HELD THAT: - The Supreme Court declined to interfere with the impugned judgment of the High Court which had confirmed the remand order passed by the Income Tax Appellate Tribunal dated 29.04.2022. The Court therefore left the remand intact and did not disturb the course of further proceedings pursuant to that remand. [Paras 3]

The order of remand confirmed by the High Court is not interfered with and stands upheld.

Vivad se Vishwas - Settlement Scheme - Whether the petitioner may avail the Vivad se Vishwas settlement scheme for other assessment years - HELD THAT: - The Court recorded that the petitioner has availed the Vivad se Vishwas - Settlement Scheme for Assessment Year 2013-2014. The petitioner was granted leave to make applications to avail the same remedy for Assessment Years 2009-2010 and 2014-2015. Upon filing of such applications, the authorities are to follow the procedure contemplated under law and dispose of the applications expeditiously. [Paras 4, 5]

Petitioner permitted to apply for settlement under the scheme for AY 2009-2010 and AY 2014-2015; applications to be processed and disposed of in accordance with law expeditiously.

Final Conclusion: Delay is condoned; the Special Leave Petitions are disposed of by upholding the remand order as confirmed by the High Court, and the petitioner is permitted to apply afresh under the Vivad se Vishwas scheme for the specified assessment years with directions for expeditious disposal.

Deductibility under Section 37(1) - incurred wholly and exclusively for the purposes of the business - crystallization of liability - property of the firm under Section 14 of the Partnership Act - ownership requirement for claiming business expenditure - timing of deduction linked to arbitral award/events after balance sheet

Deductibility under Section 37(1) - incurred wholly and exclusively for the purposes of the business - ownership requirement for claiming business expenditure - Claim for compensation paid could not be allowed as a deduction under Section 37(1) where the assessee had no ownership or any right, title or interest in the properties which were the subject matter of the agreements. - HELD THAT: - The Court examined Section 37(1) and the factual matrix and held that deductibility requires the expenditure to be laid out or expended wholly and exclusively for the purposes of the business. The assessee admittedly was not the owner, had not contracted with the purchaser in respect of the properties and there was no material to show that the properties were part of the firm's stock. Reliance on entries in the books and earlier acceptance of related transactions did not establish that the properties belonged to the firm. In these circumstances the expenditure claimed as 'compensation' did not qualify as business expenditure allowable under Section 37(1). The Tribunal's contrary conclusion that registration was not a prerequisite and that the assessee had acquired rights was held to be erroneous. [Paras 16, 26, 27, 31]

Deduction under Section 37(1) disallowed as the payment was not an expenditure incurred by the firm for the purposes of its business given absence of ownership or rights in the properties.

Crystallization of liability - timing of deduction linked to arbitral award/events after balance sheet - Liability for compensation was not established to have crystallized for the assessment year 2005-06 and therefore the deduction could not be claimed in that year. - HELD THAT: - The Court noted the chronology of arbitral proceedings and the compromise award dates and observed that there was no material to demonstrate that the liability had been crystallized or provided for in AY 2005-06. Although the Tribunal treated post-balance-sheet events as confirming balance-sheet liabilities, the High Court found no factual basis in the record to accept that the assessee had a certain liability in the relevant year. Consequently, the claim for deduction in AY 2005-06 was unsustainable. [Paras 14, 29, 30, 31]

Deduction for compensation cannot be claimed in AY 2005-06 as the liability was not shown to have crystallized in that year.

Property of the firm under Section 14 of the Partnership Act - ownership requirement for claiming business expenditure - The plea that Section 14 of the Partnership Act renders the properties as property of the firm was rejected on the facts. - HELD THAT: - Section 14 provides that property acquired with money belonging to the firm is deemed to have been acquired for the firm unless contrary intention appears. The Court found no clause in the agreements indicating that Dayanand Pai acted on behalf of the firm or that the properties were brought into the firm's stock. There was no material demonstrating acquisition for the firm; hence Section 14 could not be invoked to treat the properties as firm property. The Tribunal's reliance on accounting entries and past practice was insufficient to displace the factual finding that the properties did not belong to the assessee firm. [Paras 19, 21, 26, 27]

Section 14 could not be applied to treat the subject properties as properties of the firm; the contention that the properties belonged to the firm was rejected.

Final Conclusion: The appeal is allowed; the Tribunal's order dated 12.5.2017 is set aside and the claim for deduction of the compensation in AY 2005-2006 is rejected.

Deduction under section 10B - assumption of jurisdiction under section 153C - use of seized material in regular assessment without invoking section 153C - abatement of pending assessment on receipt of seized material - special procedure under sections 153A-153D overrides regular assessment provisions - requirement to record satisfaction before taking action under section 153C

Deduction under section 10B - Whether the assessee was correctly held entitled to deduction under section 10B for AY 2008-2009. - HELD THAT: - The Tribunal relied on a coordinate Bench judgment of this Court in deciding the claim for deduction under section 10B in favour of the assessee. The Revenue failed to demonstrate any error in the Tribunal's application of that precedent to the facts of the case. Having regard to the Tribunal's conformity with the Court's earlier decision, the substantial question of law framed on this point is answered against the Revenue and in favour of the assessee. [Paras 10]

Deduction under section 10B allowed in favour of the assessee; substantial question answered against the Revenue.

Assumption of jurisdiction under section 153C - use of seized material in regular assessment without invoking section 153C - abatement of pending assessment on receipt of seized material - special procedure under sections 153A-153D overrides regular assessment provisions - requirement to record satisfaction before taking action under section 153C - Whether the Assessing Officer could take cognizance of materials seized from a third party and make additions in pending proceedings under section 143(3) without invoking section 153C. - HELD THAT: - The Tribunal found, and this Court concurs, that the AO relied on materials seized from Manoj Kumar Jain (a third party) while framing the assessment under section 143(3) without invoking section 153C. The legislative scheme (Sections 153A, 153B, 153C) prescribes a special procedure for assessments arising from search/requisition, including handing over seized material and the receiving AO recording satisfaction before assuming jurisdiction under section 153C. The second proviso to section 153A causes pending assessment proceedings to abate upon receipt of seized materials, and the AO was required to proceed under section 153C/153A rather than continue regular assessment. The Tribunal's detailed reasoning (quoting its findings) established that the AO did not record the requisite satisfaction nor follow the prescribed procedure; accordingly the protective and substantive additions made on the basis of the seized material were contrary to the statutory procedure and were to be deleted. [Paras 11, 12, 15, 16]

AO's reliance on seized third-party material in proceedings under section 143(3) without invoking section 153C was impermissible; additions based on such material deleted and substantial question answered in favour of the assessee.

Final Conclusion: The appeal by the Revenue is dismissed. The Tribunal's allowance of the assessee's claim under section 10B is upheld, and the Tribunal's conclusion that the Assessing Officer should have invoked section 153C (with the consequent abatement of regular proceedings and compliance with the special procedure) is affirmed; additions made on the basis of third party seized material are deleted.

Mandatory refund under Section 240 of the Income Tax Act - payment of interest on delayed refunds - set off of refunds against tax remaining payable - non-functionality of TRACES portal not to defeat statutory rights

Mandatory refund under Section 240 of the Income Tax Act - non-functionality of TRACES portal not to defeat statutory rights - Respondents are bound to refund amounts found due by the ITAT without the assessee having to make a separate claim and inability of the TRACES portal cannot be a ground to withhold such refund. - HELD THAT: - The Court noted that Section 240 mandates that where a refund becomes due as a result of an order passed in appeal, the Assessing Officer shall refund the amount to the assessee without the assessee having to make any claim. The ITAT's orders in favour of the petitioner had attained finality and resulted in refunds becoming due. The TRACES portal is an online facilitation tool for TDS/TCS administration and its current non-functionality or lack of a specific adjustment feature cannot be permitted to override or defeat the statutory right to refund conferred by the Act. If the portal does not operate in accordance with the Act and Rules, it must be modified; it cannot create hurdles for payment of statutory refunds. The Court therefore directed that the respondents complete the exercise of refund or adjustment within the stipulated period. [Paras 7, 8, 9]

Refund due pursuant to the ITAT order to be processed by the respondents without dependence on TRACES functionality and the exercise completed within 30 days of production of certified copy of the order.

Payment of interest on delayed refunds - set off of refunds against tax remaining payable - Where a refund is due as a result of an appellate order, the Assessing Officer may either pay the refund or set it off against tax remaining payable, and interest on delayed refund is payable as provided by the Act. - HELD THAT: - The Court reviewed Chapter XIX provisions and observed that Section 243 (and related provisions) provide for payment of interest on delayed refunds, and Section 245 permits set off of refunds against sums remaining payable after providing written intimation. The statutory scheme contemplates either payment of refund or set off by the competent authority; the petitioner expressed readiness for either option. Consequently, respondents must exercise the statutory discretion to refund or adjust the amount, and interest consequences flow from the statutory provisions where delay occurs. [Paras 7, 8]

Respondents to either refund the amount found due or set it off against tax payable in accordance with the Act, and interest on delayed refund to be dealt with as per the statutory provisions.

Final Conclusion: Writ petitions disposed directing the Income Tax authorities to complete, within 30 days of production of certified copy, the exercise of refunding or adjusting the amounts found due by the ITAT for FY 2010-11 and FY 2011-12, and to deal with interest and set off in accordance with the Income Tax Act.

Maintainability of writ petition despite alternative statutory remedy - exercise of writ jurisdiction under Article 226 - exceptions to exhaustion of statutory remedies - jurisdictional excess and violation of principles of natural justice - onus on assessee to explain unexplained receipt

Maintainability of writ petition despite alternative statutory remedy - exercise of writ jurisdiction under Article 226 - exceptions to exhaustion of statutory remedies - jurisdictional excess and violation of principles of natural justice - Whether the writ petition under Article 226 is entertainable against the assessment orders passed pursuant to the Commissioner's revision under Section 263, without first availing the statutory appellate remedy. - HELD THAT: - The Court noted that the assessment orders impugned were passed pursuant to the Commissioner's revisional order under Section 263 and that the revisional order had become final. While acknowledging the settled principle that availability of an alternative remedy does not operate as an absolute bar to writ relief, the Court applied the established exceptions (e.g., where the order is wholly without jurisdiction, violates natural justice, involves vires challenge, or raises a pure question of law). The petitioner relied on the photocopies of promissory notes and alleged those to be bogus, and contended that the addition was made without jurisdiction and without a valid DIN. The Court found, however, that the challenge to the assessment raised disputed questions of fact - including whether the promissory notes were the petitioner's receipts and whether they were bogus - and that the petitioner had failed to furnish requested particulars or to discharge the onus to explain the receipts. The act of bringing to tax a receipt which the assessee fails to explain was held not to be without jurisdiction. The petitioner did not establish any of the exceptional circumstances that would justify bypassing the efficacious statutory remedy of appeal, and therefore the writ jurisdiction ought not to be exercised in the facts of the case. [Paras 11, 12, 13]

The writ petition is not entertainable and is dismissed; liberty granted to approach the appellate authority under Section 246A of the Income Tax Act.

Final Conclusion: Writ petition dismissed as not entertainable against assessment orders made pursuant to a final revisional order under Section 263; petitioner permitted to pursue the statutory appeal under Section 246A.

Imposition of late fee under Section 234E - Processing of TDS statements under Section 200A - Non retrospective application of Section 200A(1)(c) - Prohibition on levying 234E at the time of processing TDS prior to insertion of 200A(1)(c)

Imposition of late fee under Section 234E - Processing of TDS statements under Section 200A - Non retrospective application of Section 200A(1)(c) - Late fee under Section 234E could not be imposed while processing TDS statements under Section 200A for the assessment years 2012-2013 and 2013-2014. - HELD THAT: - Relying on the reasoning in the earlier decision of this Court, the court noted that Section 200A(1)(c) - which enables computation of the fee in accordance with Section 234E at the time of processing TDS statements - was inserted with effect from 01.06.2015 to remedy the absence of a mechanism to determine the fee while processing. For the assessment years in question Section 200A(1)(c) did not exist; consequently, when the department processed the petitioner's TDS statements under Section 200A for those years there was no statutory power to impose the late fee under Section 234E at that stage. The respondents' reliance on applying Section 200A(1)(c) retrospectively was rejected and the impugned imposition of fee while processing the returns for the specified years was held to be unsustainable. [Paras 4]

The impugned imposition of late fee under Section 234E while processing TDS statements under Section 200A for AY 2012-2013 and AY 2013-2014 is not maintainable.

Prohibition on levying 234E at the time of processing TDS prior to insertion of 200A(1)(c) - Setting aside demand intimation - The Demand Intimation Letters dated 28.03.2019 taxing the late fee for the said assessment years are set aside. - HELD THAT: - Applying the conclusion that no fee could lawfully be imposed at the processing stage for the assessment years before insertion of Section 200A(1)(c), the court held that the impugned demand intimations that imposed the late fee under Section 234E in the present case must be quashed. The Writ Petition was disposed by setting aside the demand intimations dated 28.03.2019. [Paras 5]

Impugned Demand Intimation Letters dated 28.03.2019 are set aside and the Writ Petition is disposed of.

Final Conclusion: The court held that Section 200A(1)(c), enabling computation of fee under Section 234E at the time of processing TDS statements, was inserted with effect from 01.06.2015; therefore, for AY 2012-2013 and AY 2013-2014 the department had no power to levy the late fee while processing under Section 200A, and the demand intimations dated 28.03.2019 were set aside.

Principal-agent relationship - attraction of section 44AB for tax audit - penalty under section 271B - commission as turnover - kacha arahtia principle (turnover excludes sales effected on behalf of principals)

Principal-agent relationship - commission as turnover - attraction of section 44AB for tax audit - kacha arahtia principle (turnover excludes sales effected on behalf of principals) - penalty under section 271B - Whether the assessee's receipts should be treated as turnover for the purpose of attracting section 44AB and whether penalty under section 271B is sustainable. - HELD THAT: - The Tribunal examined the contractual and factual matrix of the assessee's operation of a Mother Dairy milk booth under the DGR self-employment scheme and found that the assessee received a uniform fixed margin/commission and deposited gross sales proceeds into a bank account hypothecated in favour of Mother Dairy. Mother Dairy bore certain operating expenses and the DGR scheme itself describes the arrangement as commission-based. On these facts the Tribunal held that the sales proceeds belonged to Mother Dairy and the assessee's taxable receipt was only the gross commission of the assessee. Applying the kacha arahtia principle as reflected in CBDT Circular No. 452 (F. No. 201/3/85-IT(A-II) dated 17-3-1986) - that turnover does not include sales effected on behalf of principals and only gross commission is to be considered for section 44AB - the Tribunal concluded that the gross commission was well below the threshold prescribed by section 44AB. In view of this conclusion, the penalty levied under section 271B for failure to get tax audit was not attracted. The Tribunal also noted consistent decisions of co-ordinate benches in similar fact situations and the absence of contrary treatment in earlier years. [Paras 12, 13, 14, 15, 16]

Provisions of section 44AB do not apply as the assessee's receipts are commission and not turnover; penalty under section 271B is quashed.

Final Conclusion: Appeal allowed; penalty imposed under section 271B set aside and the Assessing Officer directed to delete the penalty.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue (Explanation 2) - failure to make inquiries or verification - verification of unsecured loans and application of Section 68 - effect of pendency before appellate authority on exercise of section 263

Revisionary jurisdiction under section 263 - failure to make inquiries or verification - verification of unsecured loans and application of Section 68 - Whether the Principal Commissioner was justified in invoking section 263 on the ground that the assessment order was erroneous and prejudicial to the revenue for lack of verification of unsecured loans - HELD THAT: - The Tribunal found that the Assessing Officer had disallowed only 10% of the unsecured loans and had not carried out the verification or inquiries necessary to satisfy the primary onus relating to the identity, genuineness and creditworthiness of unsecured loan creditors. The assessee could not produce convergent evidence showing adequate verification by the AO, and the AO's addition at 10% was held to lack application of mind. Applying Explanation 2 to section 263, an order is deemed erroneous and prejudicial where, inter alia, the order is passed without making inquiries or verification which should have been made. On these facts the Principal Commissioner was correct in holding the assessment order to be erroneous and prejudicial and in setting it aside for fresh verification and reassessment. [Paras 7]

Principal Commissioner rightly invoked section 263 and the revisional order setting aside the assessment for proper verification of unsecured loans is upheld.

Revisionary jurisdiction under section 263 - effect of pendency before appellate authority on exercise of section 263 - Whether pendency of the issue before the Commissioner (Appeals) precluded the Principal Commissioner from exercising revisionary powers under section 263 - HELD THAT: - The Tribunal noted that the assessee had challenged only the 10% addition before the appellate authority and that the revisional proceedings before the Principal Commissioner related to the unverified balance of unsecured loans which the AO had not properly inquired into. The fact that some aspect of the assessment was pending on appeal did not, on these facts, oust the Principal Commissioner's jurisdiction to examine whether the assessment order was erroneous and prejudicial for lack of verification under Explanation 2 to section 263. [Paras 7]

Pendency of an appeal against part of the assessment did not preclude exercise of revisionary jurisdiction under section 263 in respect of the unverified unsecured loans; the PCIT's action was valid.

Final Conclusion: The Tribunal dismisses the assessee's appeal and upholds the PCIT's order under section 263 setting aside the assessment for fresh verification and reassessment of the unsecured loans, concluding that the AO's order was erroneous and prejudicial to the revenue for lack of requisite inquiries and verification.

Limited scrutiny and its narrow scope - assessing officer exceeding scope of limited scrutiny - determination of fair market value under section 55A - deduction under section 54B vis-a -vis computation of capital gains under section 45 - requirement of prior permission of higher authorities before expanding scope - binding nature of CBDT instructions on scrutiny scope

Limited scrutiny and its narrow scope - assessing officer exceeding scope of limited scrutiny - binding nature of CBDT instructions on scrutiny scope - Whether the assessing officer exceeded the scope of limited scrutiny by re-determining fair market value and making an addition not covered by the limited scrutiny reasons. - HELD THAT: - The Tribunal noted that the return was selected for limited scrutiny specifically to verify (i) large investment in property and (ii) large deduction claimed under section 54B and related sections. During assessment the AO referred the disputed cost/FMV to the departmental Valuation Officer and, invoking section 55A, adopted a substantially lower FMV and made an addition under capital gains. The Tribunal held that such re-determination of FMV and enhancement of capital gain fell outside the narrow scope of the limited scrutiny reasons. The assessing officer did not obtain prior permission from higher authorities before expanding the scope, contrary to CBDT Instruction No.20/2015 and Instruction No.5/2016, which prescribe that limited scrutiny has a confined ambit and that officers must follow prescribed procedures before travelling beyond that ambit. Reliance was placed on precedents applying the same principle, and the Tribunal concluded that the AO's action violated board instructions and exceeded jurisdiction assigned under limited scrutiny. [Paras 12, 13, 14, 15]

Addition made by the assessing officer by re-determining FMV and enhancing capital gain is deleted as the AO exceeded the scope of limited scrutiny; the appeal is allowed.

Final Conclusion: The assessment order is set aside insofar as the addition made by re-determination of FMV and consequent capital gain is concerned: the AO exceeded the limited-scrutiny mandate in breach of CBDT instructions and without required prior permission, and the addition is deleted; the appeal is allowed.

Initiation of proceedings under section 153C of the Income Tax Act - nexus between seized documents and the assessee - satisfaction note - incriminating material - assessment under section 143(3) r.w. section 153C - jurisdictional usurpation

Initiation of proceedings under section 153C of the Income Tax Act - nexus between seized documents and the assessee - satisfaction note - incriminating material - jurisdictional usurpation - Validity of issuing notice and completing assessments under section 153C read with section 143(3) on the basis of documents seized from a different entity - HELD THAT: - The Tribunal found that the satisfaction note failed to establish that the seized documents pertained specifically and conclusively to the assessee. The satisfaction note related the same seized material to multiple group entities, did not identify the assessee by name in the documents relied upon, and rested on an undated/collective cost estimate which could not be mechanically applied across seven distinct assessment years. The document dated 28/04/2017 was only an estimated costing and there was no evidence that actual prices or profits of the assessee fell within the assumed range for all years; nor was any year-specific connection shown. Because the foundational requirement for invoking section 153C - namely, the presence of incriminating material relating to that assessee which would influence the assessment for the particular year - was not satisfied, the initiation of proceedings and completion of assessment under section 153C was held to be a usurpation of jurisdiction and unsustainable. The Tribunal therefore allowed the grounds challenging jurisdiction and quashed the assessments made under section 143(3) r.w. section 153C for the years in question. [Paras 12]

Grounds assailing initiation under section 153C and related assessments are allowed; the assessments are unsustainable for lack of requisite nexus and are quashed.

Final Conclusion: The appeals are allowed. The assessments completed under section 143(3) read with section 153C are set aside for the assessment years 2012-13 to 2018-19 on the ground that the satisfaction note and seized material did not establish a specific nexus with the assessee or constitute incriminating documents for the respective years.

Addition under section 69A (unexplained money) - reliance on non-response to notice u/s 133(6) - adequacy of documentary evidence (bills, account confirmations and notarised affidavits) - acceptance of agricultural receipts as part of declared income - veracity of loans and repayments proved by confirmations and ID proofs

Addition under section 69A (unexplained money) - reliance on non-response to notice u/s 133(6) - adequacy of documentary evidence (bills) - acceptance of agricultural receipts as part of declared income - Deletion of addition of Rs. 2,40,000 treated as unexplained receipts from sale of agricultural produce - HELD THAT: - The AO rejected bills submitted by the assessee for Rs. 6,00,000 of agricultural sale solely because the purchaser did not respond to the AO's notice u/s 133(6) and consequently treated part of the receipts as unexplained money. The Tribunal examined the bills and a government 'Dealer Search' screenshot showing the purchaser's registration (TIN) and found the bills to contain all requisite particulars (bill number, date, parties, item, quantity, rate, value, cash payment entry and signatures). The Tribunal held that rejection of such documentary evidence merely because the third party did not respond to a summons is not justified. Further, the AO had already accepted the assessee's gross agricultural receipts and net agricultural income for the year, and it was inconsistent to disallow a specific agricultural receipt that formed part of those accepted overall receipts. Applying these conclusions, the addition of Rs. 2,40,000 as unexplained money was held unsustainable and deleted. [Paras 5, 6]

Addition of Rs. 2,40,000 deleted.

Addition under section 69A (unexplained money) - adequacy of documentary evidence (account confirmations, notarised affidavits, ID proofs) - Deletion of addition of Rs. 2,00,000 treated as unexplained recovery of loans - HELD THAT: - The assessee had furnished a tabular statement of loans given and recovered and subsequently produced account confirmations, notarised affidavits of the parties, Aadhaar ID copies and a death certificate for one debtor. The AO proceeded to make the addition and passed the assessment before the last date fixed for response, and the CIT(A) did not take the additional evidence on record. On examination, the Tribunal found that the confirmations and notarised affidavits corroborated the particulars originally furnished and that identity proofs were on record. The documentary evidence was therefore sufficient to establish the genuineness of the alleged loan recoveries and repayments. Accordingly, the addition of Rs. 2,00,000 as unexplained money was unsustainable and deleted. [Paras 5, 6]

Addition of Rs. 2,00,000 deleted.

Final Conclusion: The Tribunal allowed the appeal, deleted the total addition of Rs. 4,40,000 (being Rs. 2,40,000 and Rs. 2,00,000) made by the AO for Assessment-Year 2017-18 and the assessee succeeds.

Penalty under section 271B - Discretionary nature of penalty under section 271B - Audit requirement under section 44AB - Commission agent - gross receipts versus commission income - Impossibility to maintain books as reasonable cause

Penalty under section 271B - Discretionary nature of penalty under section 271B - Audit requirement under section 44AB - Commission agent - gross receipts versus commission income - Impossibility to maintain books as reasonable cause - Validity of levy of penalty under section 271B for failure to get accounts audited where assessee acted as a commission agent and gross receipts reflected principal's sales. - HELD THAT: - The Tribunal found on the record that the assessee was an agent of Mother Dairy who received a commission on sales; the large gross receipts reflected the principal's sales and not the assessee's own gross income. The assessee did not maintain books of account and, given the nature of his day-to-day retailing of milk pockets and remittance of collections to Mother Dairy, it was not reasonably practicable for him to maintain audited books in the manner contemplated by section 44AB. Levy of penalty under section 271B is a discretionary exercise of the Assessing Officer; having regard to the factual finding that the assessee's true income was commission (and not the gross sales figure), and that maintaining audited books was impracticable, the discretionary power to levy penalty ought not to have been exercised. For these reasons the Tribunal directed deletion of the penalty. [Paras 7, 8]

Penalty levied under section 271B deleted.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271B for Asst. Year 2017-18 is deleted, the Tribunal finding that the assessee was a commission agent whose true income was commission and that the discretionary levy of penalty was not warranted.

Registration under section 12AB - Recognition under section 80G - Provisional registration and provisional approval - Genuineness of charitable activities - Time limit for application for permanent approval under the first proviso to section 80G(5) - Requirement of registration under relevant State enactment - Remand for fresh consideration

Registration under section 12AB - Genuineness of charitable activities - Requirement of registration under relevant State enactment - Provisional registration and provisional approval - Order rejecting application for registration under section 12AB set aside and matter remanded for fresh decision - HELD THAT: - The Tribunal found that the grounds on which the ld. CIT(E) rejected the assessee's Form No.10AB (not being registered under the Rajasthan Public Trust Act and alleged non verifiability of activities) were curable. The assessee had represented that it is recognised under the Rajasthan Gaushala Act, 1960 and had applied for registration under the Rajasthan Public Trust Act; documentary material in respect of government grants, utilisation and asset records was available and could be furnished. In the interest of justice and because the deficiencies noted were capable of being remedied, the Tribunal exercised its supervisory power to set aside the rejection and remit the matter to the ld. CIT(E) to afford the assessee an opportunity to produce the relevant documents (including state law registration evidence), to verify genuineness of activities and to decide the 12AB application afresh. The Tribunal also noted that the question of cancellation of provisional registration requires fresh consideration in the light of the fresh adjudication on the permanent registration application.

Order dated 22.03.2024 rejecting registration under section 12AB set aside; matter remitted to ld. CIT(E) to decide afresh after allowing the assessee to cure deficiencies and produce documents.

Recognition under section 80G - Time limit for application for permanent approval under the first proviso to section 80G(5) - Provisional registration and provisional approval - Remand for fresh consideration - Order rejecting recognition under section 80G set aside and remitted for fresh decision - HELD THAT: - The Tribunal observed that the ld. CIT(E)'s rejection of the 80G application was founded on the absence of registration under section 12AB and on a contention that the application was time barred. Given that the 12AB matter has been set aside for fresh adjudication, and in view of the recent administrative relaxation concerning time for filing permanent approval applications, the Tribunal considered it appropriate that the 80G application be re examined by the ld. CIT(E) after the fresh decision on registration. Consequently, the rejection of 80G approval was set aside and the matter remitted so that eligibility for approval and any question of provisional approval/cancellation may be decided afresh in a coherent proceeding.

Order dated 22.03.2024 rejecting approval under section 80G set aside; matter remitted to ld. CIT(E) to decide the 80G application afresh after reconsideration of registration and timeliness issues.

Final Conclusion: Both appeals are disposed of by setting aside the orders dated 22.03.2024 and remitting the applications for registration under section 12AB and recognition under section 80G to the ld. CIT(E) for fresh decision after affording the assessee an opportunity to cure the noted deficiencies; appeals allowed for statistical purposes.

Comparability analysis in transfer pricing - functional dissimilarity - estoppel in transfer pricing documentation - remand for de novo consideration of comparables - verification of related party transactions from public records - notional interest on receivables as international transaction - LIBOR plus 200 basis points for computation of notional interest

Comparability analysis in transfer pricing - functional dissimilarity - Exclusion of Infosys BPO Limited, Eclerx Services Limited and Crossdomain Solutions Pvt. Ltd. from the comparable set for determination of ALP. - HELD THAT: - The Tribunal examined prior findings in the assessee's own earlier assessment years and coordinate-bench decisions which had excluded these entities on grounds of functional dissimilarity. No change in facts or circumstances for the year under appeal was pleaded or proved. Respectfully following the view taken by co-ordinate Benches in earlier years, the Tribunal held that these three entities are not suitable comparables and directed the Assessing Officer to exclude them from the comparable list for computation of the profit level indicator. [Paras 6, 7, 8, 9]

Infosys BPO Limited, Eclerx Services Limited and Crossdomain Solutions Pvt. Ltd. are excluded from the comparable set.

Estoppel in transfer pricing documentation - remand for de novo consideration of comparables - Claim relating to comparability of MPS Limited admitted and remitted for fresh consideration by the Assessing Officer. - HELD THAT: - Although the objection to MPS Limited was raised before the Tribunal for the first time, the Tribunal held that the assessee is not estopped from contending that MPS Limited was wrongly treated as a comparable, relying on the Quark Systems (P) Ltd. Special Bench principle. The Tribunal observed that the assessee has made out a prima facie case and therefore admitted the fresh claim, without expressing any view on merit, and remitted the matter to the Assessing Officer for de novo adjudication after affording the assessee an opportunity of being heard. [Paras 10, 12]

The claim regarding MPS Limited is admitted; the matter is remitted to the Assessing Officer for fresh consideration and de novo adjudication.

Verification of related party transactions from public records - comparability analysis in transfer pricing - Inclusion of ACE BPO Services Private Limited as a comparable to be examined afresh. - HELD THAT: - ACE BPO Services Private Limited had earlier been rejected by the revenue authorities for lack of sufficient financial information to verify related party transactions. The Tribunal noted that the annual report is now publicly available and that, if functionally comparable, the entity cannot be rejected solely for earlier non-availability of information. The Tribunal directed the Assessing Officer to verify related party transactions from available data, permit the assessee to demonstrate such transactions, and consider ACE BPO as a comparable if established to be functionally similar. [Paras 13]

Directed remand to the Assessing Officer to verify RPTs from available data and consider ACE BPO Services Pvt. Ltd. as a comparable if satisfied.

Comparability analysis in transfer pricing - remand for de novo consideration of comparables - Inclusion of Informed Technologies Limited to be re-examined by the Assessing Officer. - HELD THAT: - The revenue authority had rejected Informed Technologies Limited on functional-difference and high non-current investment grounds. Relying on a coordinate-bench decision that treated the company as providing ITeS and directed reconsideration of comparability by looking at operating revenue, the Tribunal directed the Assessing Officer to verify afresh and consider Informed Technologies Limited as a good comparable after giving the assessee an opportunity of being heard. [Paras 14]

Matter remitted to the Assessing Officer for fresh verification and consideration of Informed Technologies Limited as a comparable.

Notional interest on receivables as international transaction - LIBOR plus 200 basis points for computation of notional interest - Computation of notional interest on outstanding receivables determined at LIBOR plus 200 basis points. - HELD THAT: - After considering rival submissions and authority of the Bombay High Court in PCIT vs. Tecnimont (P.) Ltd., the Tribunal held that interest on delayed recovery of receivables from associated enterprises should be computed at LIBOR rates. Applying that principle, the Tribunal directed that LIBOR plus 200 basis points be adopted for determination of notional interest for the year under appeal and allowed the assessee's ground in part. [Paras 15, 16]

Directed the Assessing Officer to compute notional interest on outstanding receivables at LIBOR+200 basis points; ground allowed in part.

Final Conclusion: The appeal is partly allowed: three specified comparables are excluded; claims regarding MPS Limited, ACE BPO Services Pvt. Ltd. and Informed Technologies Ltd. are admitted/remitted for fresh examination by the Assessing Officer after affording opportunity to the assessee; notional interest on receivables is to be computed at LIBOR plus 200 basis points.

Bail on ground of prolonged pre-trial detention - delay in framing of charge after filing of charge-sheet - release on bail subject to conditions including deposit of passport and furnishing correct address - liberty to State to apply for cancellation of bail on breach of conditions

Bail on ground of prolonged pre-trial detention - delay in framing of charge after filing of charge-sheet - Whether the appellants should be released on bail in view of prolonged pre-trial incarceration and inordinate delay in framing of charge despite filing of the charge-sheet. - HELD THAT: - The Court noted that the appellants had undergone sixteen months of incarceration and that the charge-sheet was filed in August 2023, yet the Trial Court had not framed charges. Without adjudicating the merits of the underlying offences, the Court held that continued detention under these circumstances justified grant of bail. The Court exercised its discretionary jurisdiction to admit the appellants to bail on the terms that the Trial Court may impose or deem fit, observing the need for the appellants to cooperate so that the trial concludes expeditiously.

Appeals allowed; appellants directed to be released on bail in connection with the specified complaint, subject to such conditions as the Trial Court may impose, including deposit of passports and furnishing correct addresses and contact numbers on affidavit, and obligation to cooperate in expeditious conclusion of trial.

Release on bail subject to conditions including deposit of passport and furnishing correct address - liberty to State to apply for cancellation of bail on breach of conditions - Terms on which bail is to be granted and the State's remedy in case of breach of conditions. - HELD THAT: - The Court specified that the Trial Court may impose such terms and conditions as it deems fit; it expressly included the condition that the appellants deposit their passports and file affidavits giving correct addresses and contact numbers. The Court further clarified that the respondent-State retains the liberty to move for cancellation of bail if any imposed condition is violated.

Bail is subject to conditions to be fixed by the Trial Court (including passport deposit and address/contact affidavits); State permitted to seek cancellation of bail on breach of conditions.

Final Conclusion: The appeals were allowed and the appellants granted bail due to prolonged pre-trial detention and delay in framing of charge after filing of the charge-sheet; bail is subject to conditions to be imposed by the Trial Court, and the State may move to cancel bail if conditions are breached.

Revocation of Customs Broker License - forfeiture of security deposit - Custom Broker Licensing Regulations - requirement of physical verification of exporter - authorization/receipt of job through intermediaries - integrity of seals as evidence - penalty and criminal proceedings require proof of mens rea

Revocation of Customs Broker License - forfeiture of security deposit - Custom Broker Licensing Regulations - integrity of seals as evidence - Whether the Tribunal was justified in setting aside the Commissioner's order revoking the respondent's Customs Broker License and ordering forfeiture of the security deposit. - HELD THAT: - The Court examined the Tribunal's factual and legal conclusions and found that the show cause notice alleged commencement of clearance work on the basis of received KYC/authorization documents without physical meeting with the exporter but contained no specific allegation of malpractice or misfeasance. The Tribunal accepted the factual finding that the excise/agent seals on the container were intact at the time of examination, a fact admitted by the Department and recorded in the adjudication order. The Court noted that the CBLR does not mandate physical verification of the exporter or factory premises as a precondition for operating as a customs broker and that there was no material demonstrating substantive wrongdoing by the respondent. Having regard to these considerations, the Court held that the Tribunal's view was a plausible one and could not be faulted. [Paras 5, 6, 7, 9, 10]

Tribunal's setting aside of the revocation and forfeiture was upheld and the revenue's appeal dismissed.

Authorization/receipt of job through intermediaries - requirement of physical verification of exporter - penalty and criminal proceedings require proof of mens rea - Whether the absence of a job clearance from the exporter and the fact that authorization was obtained through intermediaries justified revocation of the license or imposition of penalty/criminal consequences. - HELD THAT: - The Court observed that the Tribunal found no legal requirement in the CBLR for the broker to physically interact with the exporter and that receiving authorizations via intermediaries, without more, did not establish culpable conduct. The Court further noted that related penalty proceedings against the partner were set aside by the Tribunal on the ground that imposition of penalty requires establishment of a substantive role or mens rea, and collateral criminal proceedings did not result in adverse findings-indeed, prosecutorial recommendations were absent and verifications disclosed nothing adverse. These concurrent outcomes reinforced the conclusion that the disciplinary and penal measures could not be sustained on the record before the authorities. [Paras 5, 7, 8, 9]

Absence of direct authorization from the exporter and use of intermediaries did not, on the material before the authorities, justify revocation, penalty or prosecution; related penal and criminal findings in favour of the respondent supported dismissal of the revenue's appeal.

Final Conclusion: The revenue's appeal is dismissed; the Tribunal's order setting aside revocation of the Customs Broker License and related forfeiture/penalty was sustained as a plausible view on the facts and law.

Independent adjudication by appellate tribunal - quashing of administrative order - application of Notification No.64/1988 - levy of customs duty and penalty - no expression on merits

Independent adjudication by appellate tribunal - application of Notification No.64/1988 - Direction that the Tribunal shall decide the appeal filed by the revenue against the Principal Commissioner of Customs' order independently on its own merits - HELD THAT: - The Court noted that proceedings under the Customs Act arising from alleged violations of the terms and conditions of Notification No.64/1988 had resulted in levy of customs duty and penalty and that the revenue had preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal. While recognising that the Tribunal may, for administrative convenience, club similar appeals, the Court held that each appeal requires examination on its own facts. In view of the petitioner's apprehension that its matter might be indiscriminately clubbed with others, and since independent consideration would not prejudice the revenue, the Court directed the Tribunal to decide Appeal No.20295/2020 independently on its merits and to extend due opportunity of hearing to the petitioner.

The Customs, Excise and Service Tax Appellate Tribunal is directed to dispose of Appeal No.20295/2020 independently on its own merits.

Quashing of administrative order - levy of customs duty and penalty - no expression on merits - Disposition of the writ petition challenging the order dated 23.01.2015 and incidental treatment of subsequent Customs proceedings - HELD THAT: - The petition sought quashing of the order dated 23.01.2015 of the Director General of Health Services. During pendency, customs proceedings culminated in an order imposing duty and penalty, which is under appeal before the Tribunal. The Court disposed of the writ petition while expressly refraining from expressing any view on the merits of the underlying controversy, thereby leaving substantive adjudication to the appellate process before the Tribunal.

Writ petition disposed; no opinion expressed on merits of the case.

Final Conclusion: Writ petition disposed. The Tribunal is directed to decide the revenue's appeal (Appeal No.20295/2020) against the customs order independently on merits, with the High Court expressly refraining from expressing any view on the substantive merits.

Carnet scheme / Carnet de Passage - misdeclaration in export/import declarations - benefit for goods exported for repair under Notification No.94/1996 - confiscation under Section 111(m) of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 and redemption fine under Section 125 - redetermination of transaction value under Rule 12 of the Customs Valuation Rules, 2007

Carnet scheme / Carnet de Passage - misdeclaration in export/import declarations - confiscation under Section 111(m) of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 and redemption fine under Section 125 - benefit for goods exported for repair under Notification No.94/1996 - Whether the vehicle was liable to confiscation and penalty for misuse of the Carnet and misdeclaration, and whether the redemption fine and penalty should be sustained. - HELD THAT: - The Tribunal accepted that the appellant had exported the vehicle under a Carnet after declaring it was for touring but admitted that no touring occurred and the vehicle was taken to Dubai for repairs. On reimport the appellant filed only a letter for endorsement and did not disclose the repairs, which the Tribunal treated as a misdeclaration. The Commissioner confirmed duty on the repairs. However, the Commissioner also extended the benefit of Notification No.94/1996 (which applies to goods exported for repair) and the Tribunal held that having allowed that benefit it would be a travesty of justice to confiscate the vehicle or sustain penalty and redemption fine. Applying these conclusions, the Tribunal found no reason to uphold confiscation under Section 111(m) or the penalty under Section 112(a) or the redemption fine under Section 125, and accordingly set aside the redemption fine and penalty while confirming the liability to pay duty on repairs.

Misdeclaration established and duty on repairs confirmed; but confiscation, penalty under Section 112(a) and redemption fine under Section 125 are set aside in view of grant of benefit under Notification No.94/1996.

Benefit for goods exported for repair under Notification No.94/1996 - scope of exemption-whether only basic customs duty is payable - remand for fresh consideration of legal question - Whether, in respect of the repairs, the appellant is liable to pay only basic customs duty under Notification No.94/1996 or whether other duties (CVD, SAD etc.) are payable. - HELD THAT: - The Tribunal noted that the contention that only basic customs duty is payable under Notification No.94/1996 was raised for the first time before the Tribunal and is a pure question of law. Although the Revenue objected to the ground being taken at the appellate stage, the Tribunal was inclined to entertain the legal question. Rather than decide the point itself, the Tribunal remitted the limited issue to the Commissioner for fresh consideration on merits after affording the appellant a reasonable opportunity of hearing to present their case.

Issue remanded to the Commissioner to decide, on merits and after hearing, whether liability is limited to basic customs duty under Notification No.94/1996.

Final Conclusion: The appeal is allowed in part: duty on repairs is confirmed but confiscation, redemption fine and penalty are set aside; the sole legal question whether only basic customs duty is payable under Notification No.94/1996 is remanded to the Commissioner for fresh consideration after hearing the appellant.

Classification of textile articles as "made up" under Section XI Note 7 - Customs Tariff Heading 6304 versus 5407 - Common parlance / usage test for classification - Test report evidentiary weight in tariff classification

Customs Tariff Heading 6304 versus 5407 - Common parlance / usage test for classification - Imported consignments described and sold as bed sheets are classifiable under CTH 6304 and not as polyester woven fabrics under CTH 5407. - HELD THAT: - The Tribunal found that the overall nature, size and market usage of the imported items (sheets each measuring approximately 14 x 7) indicate they are intended and capable of being sold as bed sheets. Representative samples and the proprietor's admission supported that the sheets, though loosely stitched and not hemmed at all edges, are presented and usable in the market as bed sheets. The test reports relied upon by the Revenue were held inconclusive: while acknowledging 100% polyester content, they did not definitively establish that the goods were not made-up articles. Applying the common parlance/usage test and prior decisions of this Bench addressing similar loosely stitched bed/cover products, the Tribunal concluded the proper classification is under Chapter 63 (CTH 6304) rather than Chapter 54 (CTH 5407). [Paras 10, 15]

Goods classified under CTH 6304 as bed sheets; Revenue's re-classification under CTH 5407 rejected.

Classification of textile articles as "made up" under Section XI Note 7 - Dividing thread / produced in finished state ready for use - Note 7(b) of Section XI (definition of "made up" as produced in finished state, ready for use) applies to the imported goods despite absence of complete hemming or permanent stitching. - HELD THAT: - The Tribunal examined Section XI Note 7 and held that, where usage and presentation render the article ready for use (or merely requiring separation by cutting/dividing threads), Note 7(b) applies. Reliance on Note 7(d) by the Revenue (which focuses on hemming or rolled edges) was not determinative where the product's size, appearance and market use establish it as a made up article. The Tribunal also relied on precedents recognizing that articles separable by dividing threads or presented in a form ready for use fall within Chapter 63 even when hems or permanent edge work are absent. Consequently, the absence of end hemming did not preclude classification as a made up bed sheet under Note 7(b). [Paras 11, 12]

Note 7(b) applies and the goods qualify as "made up" articles for classification under Chapter 63.

Final Conclusion: The Revenue's appeal is dismissed. The imported consignments are held to be made up bed sheets classifiable under CTH 6304; re classification under CTH 5407 and attendant measures (confiscation, redemption fine and penalty) are not sustained. Cross objection disposed accordingly.

Rejection of transaction value - customs valuation under Rule 4 - admissibility of electronic evidence (e mail) and compliance with Section 138C - reliance on statement recorded under Section 108 - redemption fine under Section 125 - penalty under Section 114A

Rejection of transaction value - customs valuation under Rule 4 - admissibility of electronic evidence (e mail) and compliance with Section 138C - reliance on statement recorded under Section 108 - Whether the declared transaction value could be rejected and value enhanced on the basis of the e mail and the statement of the importer's partner - HELD THAT: - The Tribunal found that the e mail evidence was downloaded by the appellant from his own e mail account and handed over to departmental officers; there is no assertion in the appellant's reply to the SCN that the documents were seized or retrieved by the Department or that the downloads were made under threat. Consequently, compliance with Section 138C for retrieval from a third party computer was not required and the e mail printouts were admissible. The statement recorded from the appellant's active partner under Section 108 was not the sole basis for action: it materially corroborated the e mail, admitted the agreed price at GBP 4.55 per case and described part payments, while the appellant failed to offer any plausible explanation for payments in excess of the declared invoice value. On this combined documentary and testimonial material the adjudicating authority rightly rejected the declared transaction value and enhanced value under Rule 4 of the Customs Valuation Rules; there is no ground to interfere with the enhancement or confirmation of differential duty. [Paras 7, 8, 9]

Rejection of declared transaction value and enhancement of value is upheld.

Redemption fine under Section 125 - penalty under Section 114A - Whether the redemption fine and penalty as imposed were sustainable or required reduction - HELD THAT: - Having upheld the enhancement of value and the differential duty, the Tribunal examined the quantum of the redemption fine and penalty. Noting the disproportion between the differential duty and the amounts imposed by the adjudicating authority, the Tribunal exercised its discretion to moderate the punitive consequences. Taking a lenient view, the Tribunal reduced both the redemption fine and the penalty to reasonable sums to avoid excessive punishment while leaving the substantive finding of undervaluation intact. [Paras 10, 11]

Redemption fine and penalty are reduced to appropriate amounts.

Final Conclusion: The Tribunal upholds the rejection of the declared transaction value and the enhancement of value (with confirmation of the differential duty) but, as a matter of discretion, reduces the redemption fine and the penalty to the amounts specified by the Tribunal; the appeal is partly allowed to that extent.

Judicial review of commercial wisdom of CoC - alternative efficacious remedy before Adjudicating Authority (NCLT) - primacy of Committee of Creditors' commercial wisdom - fiduciary duties of Committee of Creditors - IBBI guidelines for Committee of Creditors - Adjudicating Authority's supervisory role under Section 60 of the IBC - scope of writ jurisdiction under Article 226

Alternative efficacious remedy before Adjudicating Authority (NCLT) - scope of writ jurisdiction under Article 226 - Whether the High Court should entertain the writ petition when an alternative efficacious remedy exists before the Adjudicating Authority (NCLT). - HELD THAT: - The Court declined to issue notice and refused to exercise writ jurisdiction because the petitioner has an alternative and efficacious remedy by way of filing objections before the NCLT. The judgment explains that the Adjudicating Authority is the appropriate forum to regulate the conduct of the CoC and adjudicate disputes arising from the CIRP, and therefore challenges to the CoC's decision are to be agitated before the NCLT. The Court therefore will not usurp the jurisdiction of the Adjudicating Authority by entertaining the petition in writ jurisdiction. [Paras 11, 12]

Writ petition dismissed for want of jurisdiction with liberty to approach the NCLT.

Judicial review of commercial wisdom of CoC - primacy of Committee of Creditors' commercial wisdom - fiduciary duties of Committee of Creditors - IBBI guidelines for Committee of Creditors - Adjudicating Authority's supervisory role under Section 60 of the IBC - Whether the High Court may adjudicate the merits of the CoC's commercial decision rejecting the petitioner's resolution plan. - HELD THAT: - The Court observed that the commercial wisdom of the CoC enjoys primacy and that the Adjudicating Authority (NCLT) has the power to supervise CIRP proceedings and review whether the CoC discharged its fiduciary duties under the IBC. The judgment refers to the IBBI guidelines dated 06.08.2024 as elucidating duties of CoC members (objectivity, integrity, disclosure of conflicts) but holds that scrutiny of the CoC's commercial decision should be undertaken by the NCLT. Consequently, the High Court refused to undertake merits review or entertain the petitioner's renewed offer, leaving it open for the NCLT to consider objections and, if appropriate, permit further procedures such as open court bidding. [Paras 13, 14, 15]

High Court will not adjudicate the merits of CoC's commercial decision; such matters are to be decided by the NCLT.

Final Conclusion: The writ petition is dismissed; the petitioner is granted liberty to raise its objections before the NCLT, which alone shall decide the matter on merits in accordance with law.

Proceeds of crime - provisional attachment - reason to believe - burden under Section 8(1) and Section 24 of the PMLA - presumption in inter-connected transactions - attachment as an interim protective measure - benami characterization not determinative under PMLA proceedings - admissibility of oral evidence to demonstrate sham or fictitious transactions

Provisional attachment - proceeds of crime - reason to believe - burden under Section 8(1) and Section 24 of the PMLA - admissibility of oral evidence to demonstrate sham or fictitious transactions - Whether the provisional attachment of the land standing in the name of late Ravindra Pratap Singh (contested by Ms. Chanda Singh) was correctly confirmed - HELD THAT: - The Tribunal accepted the factual finding that the predicate investigations and the CBI final report showed disproportionate assets of the principal accused and a money trail implicating relatives. The noticee (Ms. Chanda Singh) failed to furnish reliable documentary proof of legitimate sources for the acquisition: belated ITRs, absence of corroborative evidence for alleged family income, and inconsistency in explanations left the statutory burden under the PMLA undischarged. The Adjudicating Authority's reliance on statements (including sellers' statements and other investigative material) and its application of the statutory presumptions in inter connected transactions were held to be permissible at the attachment stage; oral and circumstantial material may be used to show sham or fictitious dealings. The Tribunal also noted an internal discrepancy in the impugned order on the valuation but held that the evidence supports treating the transaction as tainted and that the attachment regime is interim and protective. [Paras 35, 36, 39, 40, 41]

Appeal dismissed; confirmation of provisional attachment maintained.

Provisional attachment - proceeds of crime - reason to believe - burden under Section 8(1) and Section 24 of the PMLA - benami characterization not determinative under PMLA proceedings - Whether the provisional attachment of two pieces of land in the name of Smt. Santoshi Devi was correctly confirmed - HELD THAT: - The Tribunal found that the CBI/ED material established disproportionate assets of the principal accused and that the appellant did not produce reliable documentary evidence to substantiate the claimed sources (sale of jewellery, cash loan from mother, 'streedhan' and agricultural/dairy income). ITRs filed after searches, inconsistencies between statements recorded by different authorities, and failure to corroborate cash transactions left the statutory burden on the noticee undischarged. The Adjudicating Authority permissibly relied on investigative findings, statements and the statutory presumptions; the question whether the property is benami was held not to be a prerequisite to attachment under PMLA, since attachment is governed by the PMLA scheme. [Paras 84, 85, 86, 87, 88]

Appeal dismissed; confirmation of provisional attachment maintained.

Provisional attachment - proceeds of crime - presumption in inter-connected transactions - reason to believe - attachment as an interim protective measure - Whether the provisional attachment of immovable and movable properties and bank balances attributed to M/s Sonanchal Buildcon Pvt. Ltd. and M/s Angesh Trading Co. Pvt. Ltd. was correctly confirmed - HELD THAT: - The Tribunal endorsed the investigative findings of a scheme of accommodation entries and layering: large cash receipts shown as share application money, admissions and statements by persons involved (including authorised representatives and directors), absence of genuine share allotments, and implausible accounting (shares allotted only after FIR, inflated premiums). These facts established strong reasons to believe the companies were used to launder proceeds of the scheduled offences. The appellants failed to rebut the statutory presumptions or to explain the source of funds; the burden under the PMLA remained on them and was not discharged. The Tribunal emphasized that attachment under the PMLA is interim to preserve property pending final adjudication and that the material on record sufficed for confirmation of attachment. [Paras 122, 123, 124, 125, 126]

Appeal dismissed; confirmation of provisional attachment maintained.

Final Conclusion: All four appeals are dismissed. The Tribunal upheld the Adjudicating Authority's confirmation of provisional attachments against the appellants, finding that the investigative material, statements and statutory presumptions under the PMLA furnished sufficient grounds to maintain the interim attachments; the appellants failed to discharge the burden of proof to show legitimate sources for the attached properties.

Courier agency service - door-to-door transportation - time-sensitive documents - classification of freight cargo versus courier service - charging section to be construed strictly - exemption for transport of export goods - onus on department to prove receipts taxable - remand for de novo examination - sub-contractor liability to discharge tax independently

Courier agency service - door-to-door transportation - time-sensitive documents - classification of freight cargo versus courier service - Whether the consignments in the two sample transactions fall within the definition of courier agency service or are freight cargo not taxable as courier agency service. - HELD THAT: - The Tribunal examined shipping and invoicing documents relating to the two cited consignments (GIHED and Infinity Logistics) and found them to be large consolidated freight consignments delivered through airlines and HAWBs aggregating multiple exhibitors' consignments, described as "exhibition cargo" or "freight cargo". The Tribunal applied the ingredients of the statutory definition of "courier agency" as interpreted by the Gujarat High Court, namely door-to-door transportation, transport of time-sensitive documents/goods/articles, utilisation of a person who carries or accompanies such items, and observed that (i) the consignments were not door-to-door courier deliveries, (ii) the goods were large cargo not of the sort an individual would handle, and (iii) the movement involved carriage by airlines under airway bills rather than personal carriage by an accompanying individual. The Tribunal held that courier agency service is essentially an alternate to postal/parcel service covering small, door-to-door, often time-sensitive consignments and that massive consolidated air freight cannot be treated as courier agency service. The Tribunal rejected the view that mere invoicing patterns could, without documentary support, bring such cargo within the charging provision by implication, and emphasised that charging provisions must be construed strictly. [Paras 9, 11, 12]

The two sample consignments (GIHED and Infinity Logistics) are freight cargo and not covered by the service of courier agency; accordingly they are not taxable as courier agency service on the facts and documents examined.

Remand for de novo examination - onus on department to prove receipts taxable - exemption for transport of export goods - sub-contractor liability to discharge tax independently - Disposition of the remaining demand raised for the period 2006-07 to 2010-11 and related questions of limitation, interest and penalty. - HELD THAT: - The Tribunal noted that apart from the two consignments specifically examined, there was no documentary record on file enabling scrutiny of the nature of other transactions or the invoicing particulars vis-a -vis ledger and ST-3 returns. Given the absence of material, the Tribunal refrained from adjudicating the larger demand, the applicability of extended limitation, and the imposition of penalties and interest. The Tribunal directed remand to the original authority for fresh examination of the appellants' documents and explanations in the light of the observations on the nature of courier service versus freight, permitting the appellant to produce documents and take fresh grounds during de novo proceedings. The Tribunal expressly refrained from passing further orders on limitation and other aspects to be examined afresh. [Paras 13]

The matter (except the two consignments decided above) is remanded to the original authority for fresh adjudication; no final order is made on limitation, interest or penalties pending de novo examination.

Final Conclusion: On the documentary record before it the Tribunal held the two sample consignments to be freight cargo (not courier agency service) and therefore not taxable as courier agency; for the balance of the demand (period 2006-07 to 2010-11) the case is remanded to the original authority for fresh examination and adjudication, with liberty to the appellant to produce documents and raise grounds, and no final orders on limitation, interest or penalties were recorded.

Statutory levy - sovereign/public authority functions under Article 243W - taxability of fees and charges collected in discharge of statutory functions - consideration linked to service for valuation of taxable service - pure agent / reimbursable amounts not forming part of taxable value - service tax exemption under Notification for functions in Twelfth Schedule

Statutory levy - sovereign/public authority functions under Article 243W - taxability of fees and charges collected in discharge of statutory functions - Whether Infrastructure Upgradation Fund, Transfer Fees and miscellaneous charges collected by GIDC are exigible to service tax for the impugned period - HELD THAT: - The Tribunal accepted that GIDC performed statutory functions under Article 243W and that charges such as the Infrastructure Upgradation Fund, Transfer Fees and miscellaneous fees were collected in execution of statutory duties to develop and maintain industrial estates. Applying the Board's Circular of 18.12.2006 and the reasoning in precedent concerning industrial development corporations, the Tribunal held that such compulsory statutory levies, collected pursuant to the State enactment and used for discharge of statutory obligations, do not constitute taxable services. The Tribunal expressly concluded that these charges are statutory levies and are not subject to service tax for the periods in dispute, including the period before 01.07.2012, rejecting the departmental contention that pre-notification receipts were taxable. [Paras 6, 7]

Infrastructure Upgradation Fund, Transfer Fees and the miscellaneous charges are statutory levies collected in discharge of state functions and are not exigible to service tax for the impugned period.

Consideration linked to service for valuation of taxable service - pure agent / reimbursable amounts not forming part of taxable value - Whether the share of the Infrastructure Upgradation Fund remitted to Industrial Associations (the 40%/Rs.2 per sq. mtr. portion) is liable to service tax as consideration for services provided by GIDC - HELD THAT: - The Tribunal examined the nexus between the amount collected and any service provided by GIDC and applied the principle that only consideration received 'for such service provided' can form part of taxable value. The Tribunal found that the portion collected to be passed on to Industrial Associations was held and remitted as a liability and did not represent consideration for any service rendered by GIDC. Consequently, that share did not qualify as taxable consideration and could not be subjected to service tax. [Paras 7]

The share of the Infrastructure Upgradation Fund collected for and remitted to Industrial Associations does not constitute consideration for services by GIDC and is not taxable.

Final Conclusion: Impugned demand, interest and penalties premised on taxability of Infrastructure Upgradation Fund, Transfer Fees, miscellaneous charges and the pass-through share to Industrial Associations are set aside; appeals allowed on the basis that these receipts are statutory levies or amounts not constituting consideration for services and thus not exigible to service tax for the periods in dispute.

Exemption under Mega Exemption Notification No. 25/2012-ST - availability of exemption for Works Contract Services provided to Government or local authorities - temporal condition for exemption (contract entered prior to 1.03.2015) and its omission by notification - extended period of limitation - suppression - penalty for failure to file ST-3/for alleged suppression - works contract services (W.C.S.) taxable liability

Exemption under Mega Exemption Notification No. 25/2012-ST - availability of exemption for Works Contract Services provided to Government or local authorities - temporal condition for exemption (contract entered prior to 1.03.2015) and its omission by notification - Benefit of entry 12A(a) of Notification No. 25/2012-ST is available notwithstanding that the contract was entered after 1.03.2015 where the temporal condition was omitted by amendment. - HELD THAT: - The Tribunal examined the relevant entry of the mega exemption notification and the amendment effected by Notification No. 6/2015 dated 01.03.2015 which omitted the sub entry that had required contracts to be entered prior to 01.03.2015 with effect from 01.04.2015. Consequent to that omission, the condition that exemption would be available only for contracts entered before 01.03.2015 ceased to exist. The services in dispute were rendered to government/local authorities (PWD) and the appellant's contract dated 19.08.2015 therefore falls within the exemption as the temporal restriction was no longer operative. The adjudicating and appellate authorities erred in continuing to rely upon the pre amendment temporal condition while confirming the demand. [Paras 9, 11]

Demand confirmed on the ground that the contract was post 1.03.2015 is set aside and exemption under the notification is held to apply to the services in question.

Extended period of limitation - suppression - penalty for failure to file ST-3/for alleged suppression - Extended period of limitation was wrongly invoked as there was no suppression; consequentially the penalty imposed is set aside. - HELD THAT: - The show cause notice invoked the extended period on the premise of suppression due to non filing of ST 3 returns. The appellant, both in reply to the notice and before the Tribunal, explained that non filing was because the services were exempt under Notification No. 25/2012 ST. Having accepted that the exemption applies, the Tribunal found no act of suppression or evasion of service tax. In these circumstances the invocation of the extended period is unsustainable and the penalties premised on suppression are also liable to be set aside. [Paras 10, 11]

Extended period invocation and penalties based on alleged suppression are quashed; the show cause notice is time barred.

Final Conclusion: The impugned order is set aside; the confirmed demand and penalties relating to the disputed services are quashed and the appeal is allowed.

Condonation of delay - interference with Appellate Tribunal's order - dismissal of civil appeal for lack of merit

Condonation of delay - interference with Appellate Tribunal's order - Whether the Civil Appeal warrants interference with the order of the Customs, Excise and Service Tax Appellate Tribunal and whether delay in filing is to be condoned. - HELD THAT: - The Court heard the parties and perused the material on record. The Court exercised its discretion to condone the delay in filing. On examination of the impugned judgment and order of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad, the Court found no ground to interfere with that Tribunal's conclusion. The appellate jurisdiction was accordingly not exercised to disturb the Tribunal's decision.

Delay condoned; no interference with the Tribunal's order; appeal dismissed.

Final Conclusion: The Civil Appeal is dismissed; delay in filing is condoned but there is no merit to interfere with the impugned order of the Customs, Excise and Service Tax Appellate Tribunal.

Refund of seized cash held in trust - interest on refund - pre-deposit and refund under Section 35FF/129EE - unjust enrichment and trustee's duty to account for interest - entitlement to interest at rate actually earned on fixed deposit

Pre-deposit and refund under Section 35FF/129EE - refund of seized cash held in trust - Applicability of Circular No. 984/08/2014 (prescribing 6% interest) to refund of cash seized during investigation - HELD THAT: - The Court held that Circular No. 984/08/2014, issued in the context of amended appeal pre-deposit provisions and refunds under Section 35FF of the Central Excise Act and Section 129EE of the Customs Act, is not applicable to cash seized during investigation which was not a pre-deposit for filing an appeal. Respondents themselves admitted this is not a case of refund of an amount deposited under Section 35FF. The cash seized on 29th August 2011 cannot be treated as a pre-deposit; accordingly the reliance on the Circular to justify granting interest at 6% was erroneous and is rejected. [Paras 16]

Circular No. 984 of 2014 is not applicable to the refund of the cash seized in this case and cannot justify the grant of interest at 6%.

Interest on refund - entitlement to interest at rate actually earned on fixed deposit - unjust enrichment and trustee's duty to account for interest - Whether petitioner is entitled to interest at 18% per annum or alternatively to the interest actually earned on fixed deposits arising from the seized cash - HELD THAT: - The Court found no statutory basis was shown for awarding interest at 18% per annum and therefore rejected that claim. However, the Court analysed the character of the seized cash as being held in trust by the authorities until final determination; since the authorities had placed the cash in fixed deposits and earned interest at rates exceeding 6%, retaining the excess interest would amount to unjust enrichment. The Bank's statement showed the fixed deposits earned higher rates over time and Respondents admitted deposits were made. The Court noted discrepancies in the bank's interest statements which were not explained by Respondents, and accepted petitioner's undisputed computations (subject to the identified discrepancies) as establishing entitlement to the interest actually earned in excess of 6%. The Court therefore allowed petitioner's alternative claim to the excess interest earned and directed refund accordingly. [Paras 17, 18, 19, 20, 21]

Petitioner is not entitled to interest at 18% but is entitled to the interest actually earned on the fixed deposits in excess of the 6% benchmark; respondent must refund the excess interest as computed by the Court.

Remedies and directions for refund - accountability for non-renewal of fixed deposits - Reliefs, timelines and incidental directions including foreclosure of subsequent fixed deposit and inquiry into non-renewal after 10 years - HELD THAT: - The Court quashed the impugned Order-in-Original to the extent it granted interest at 6% as the sole entitlement. The Court directed refund of the excess interest (as per the petitioner's undisputed working) within four weeks and provided that if payment is not made within that period respondents will pay interest at 6% per annum thereafter. The Court directed respondents to foreclose the fixed deposit made on 14th August 2024 and return the amount with interest to the petitioner within four weeks, failing which interest at 6% per annum would accrue. The Court further directed the concerned Commissioner to initiate an inquiry to fix accountability for non-renewal of fixed deposits after expiry of 10 years and to take appropriate action against negligent officials. [Paras 22, 23, 24, 25]

Impugned O-I-O dated 5th July 2024 is quashed to the extent of the interest decision; respondents directed to refund the excess interest and to foreclose and return the later fixed deposit, and to initiate an inquiry into non-renewal of fixed deposits.

Final Conclusion: The Court quashed the impugned order to the extent it awarded interest at 6% exclusively; it declined to grant 18% but held petitioners entitled to the interest actually earned in excess of 6% on the fixed deposits made from the seized cash, directed repayment (with contingent 6% interest if delayed), ordered foreclosure and return of a later fixed deposit, and directed an inquiry to fix accountability for non-renewal of fixed deposits after ten years.

Valuation under section 4 of the Central Excise Act and Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - period of limitation and extended limitation under section 11A of the Central Excise Act - self-assessment and duty of revenue officers to scrutinize returns - application of Valuation Rules (including Rules 4, 7, 9, 10 and 11) to assessments - binding effect of earlier tribunal order on subsequent follow-up demands

Valuation under section 4 of the Central Excise Act and Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - application of Valuation Rules (including Rules 4, 7, 9, 10 and 11) - binding effect of earlier tribunal order on subsequent follow-up demands - Validity of the demand for the period August 2015 to August 2016 founded on valuation adjustments in follow up to an earlier period where this Tribunal had set aside the earlier appellate order. - HELD THAT: - The Assistant Commissioner and Commissioner (Appeals) had followed their earlier Commissioner (Appeals) order which had already been set aside by this Tribunal in final order No. 51135 of 2022 dated 02.12.2022. That earlier order contained detailed findings (paras 39 a-k) on limitation, scrutiny of self assessment returns, the invocation and applicability of various Valuation Rules and the sufficiency of evidence regarding relatedness of parties. Because the impugned demand for August 2015-August 2016 was confirmed by the authorities by following the same order that this Tribunal had set aside, the present appeal must be allowed and the demand set aside. The Tribunal treated the earlier adjudicatory conclusions as determinative of the present follow up demand and accordingly reversed the impugned order which merely followed the set aside reasoning of the Commissioner (Appeals). [Paras 5]

Appeal allowed; impugned demand set aside for the period August 2015 to August 2016.

Period of limitation and extended limitation under section 11A of the Central Excise Act - self-assessment and duty of revenue officers to scrutinize returns - Effect of Revenue's limited Supreme Court appeal against paras 39(f) and (g) of this Tribunal's earlier final order on the finality of the merits in the present matter. - HELD THAT: - Revenue's appeal to the Supreme Court was limited to observations in paras 39(f) and (g) of this Tribunal's earlier order, which concern the question of extended period of limitation and the consequences of officers' failure to scrutinize returns. The Supreme Court issued notice limited to those observations. Since those paragraphs address only the extended limitation issue and not the substantive merits of valuation, the Tribunal concluded that the merits of the valuation dispute have attained finality. Consequently, the limited nature of Revenue's appeal does not prevent the Tribunal from allowing the present appeal and setting aside the demand that was founded on the set aside earlier appellate order. [Paras 6, 7]

Limited Supreme Court notice on paras 39(f)-(g) does not affect finality of the Tribunal's other merits findings; appeal allowed on merits.

Final Conclusion: The appeal is allowed and the impugned order confirming the demand for August 2015 to August 2016 is set aside; the Tribunal's earlier merits conclusions stand unaffected by the Revenue's limited appeal to the Supreme Court on the extended limitation observations.

Customs duty payable on clearance to Domestic Tariff Area (DTA) of imported inputs by an Export Oriented Unit (EOU) - Prohibition on utilisation of cenvat credit for payment of Customs duty - Invalidity of proceedings instituted under the Central Excise Act for recovery of Customs duty - Distinction between recovery under Section 28 of the Customs Act and Section 11A of the Central Excise Act

Customs duty payable on clearance to Domestic Tariff Area (DTA) of imported inputs by an Export Oriented Unit (EOU) - Distinction between recovery under Section 28 of the Customs Act and Section 11A of the Central Excise Act - Demand of duty in respect of imported inputs cleared to DTA from an EOU can only be for Customs duty and cannot be validly raised under Section 11A of the Central Excise Act. - HELD THAT: - The EOU had imported inputs under exemption Notification 52/2003-Cus which required use within the EOU and provided that clearance to DTA attracts Customs duty. The Tribunal held that where imported inputs are cleared to DTA, the amount exigible is Customs duty and any recovery must proceed under the Customs Act (not the Central Excise Act). The show cause notice in the present case was issued under Section 11A(5) of the Central Excise Act seeking recovery of amounts relating to imported inputs, which is not the proper statutory remedy for recovery of Customs duty. Consequently, proceedings initiated under Section 11A(5) for recovery of Customs duty are void ab initio. [Paras 6, 7]

Proceedings under Section 11A(5) of the Central Excise Act seeking recovery of Customs duty in respect of imported inputs cleared to DTA are invalid; only Customs Act remedies (Section 28) are available.

Prohibition on utilisation of cenvat credit for payment of Customs duty - Invalidity of denial of cenvat utilisation where the demand is itself misconceived - Customs duty cannot be discharged by utilising cenvat credit; however, where the demand itself is for Customs duty but the proceedings were wrongly instituted under the Central Excise Act, those proceedings cannot be sustained. - HELD THAT: - The Tribunal recognised that the Cenvat Credit Rules do not permit utilisation of cenvat credit for payment of Customs duty, and therefore, ordinarily payment of duty on clearance of imported inputs to DTA must be by cash (PLA/GAR-7). In the present case, however, the impugned proceedings treated the liability as Central Excise duty under Section 11A and sought to deny utilisation of cenvat; because the correct demand should have been for Customs duty and proceedings under the Central Excise Act are not the proper mechanism, the contested proceedings cannot be sustained despite the rule against cenvat utilisation for Customs duty. [Paras 6, 7]

Although cenvat credit cannot be used to discharge Customs duty, the proceedings that sought recovery under the Central Excise Act (and disallowed cenvat utilisation on that basis) are void and unsustainable.

Final Conclusion: The show cause proceedings instituted under Section 11A(5) of the Central Excise Act seeking recovery in respect of imported inputs cleared to DTA are void; the impugned order is set aside and the appeal is allowed. Remedies for recovery of Customs duty, if any, lie under the Customs Act.

Entertainment of appeal subject to furnishing bank guarantee or adequate security under Section 33(5) of the HVAT Act - power of High Court under Article 226 to relieve against statutory preconditions in cases of hardship or arbitrariness - absence of power in appellate authority to waive statutory preconditions - remedial writ jurisdiction as alternative where statutory requirement results in extreme hardship

Entertainment of appeal subject to furnishing bank guarantee or adequate security under Section 33(5) of the HVAT Act - power of High Court under Article 226 to relieve against statutory preconditions in cases of hardship or arbitrariness - High Court's competence to direct that appeals be heard without insisting upon the precondition of furnishing bank guarantee or adequate security under Section 33(5) of the HVAT Act. - HELD THAT: - The Court held that although Section 33(5) requires that an appeal shall not be entertained unless the appellant furnishes a bank guarantee or adequate security to the satisfaction of the assessing authority, the High Court under Article 226 is not precluded from directing that appeals be heard without insisting upon that precondition where the facts show that the appellants cannot furnish such security and would be left remediless. The Court relied on the principle that where a statutory precondition results in extreme hardship or arbitrariness, writ jurisdiction can be invoked to grant relief and thus directed the appellate authority to hear the appeals on merits without insisting on the precondition. [Paras 23, 25]

Directed the Joint Excise and Taxation Commissioner (Appeals), Faridabad, to hear the appeals without insisting upon the pre-condition in Section 33(5) of the HVAT Act and decide them on merits.

Absence of power in appellate authority to waive statutory preconditions - entertainment of appeal subject to furnishing bank guarantee or adequate security under Section 33(5) of the HVAT Act - Whether the appellate authority possesses power to waive the condition of pre-deposit or security under Section 33(5) of the HVAT Act. - HELD THAT: - The Court found that the appellate authority does not have the power to waive the statutory precondition contained in Section 33(5). While the provision permits the appellate authority to ensure that security or bank guarantee is furnished before entertaining an appeal, it does not confer a discretion to dispense with that requirement. That absence of power at the appellate level, however, does not bar the High Court from exercising writ jurisdiction to grant relief in appropriate cases. [Paras 23, 26]

Held that the appellate authority lacks power to waive the precondition under Section 33(5), although the High Court may, in exercise of its writ jurisdiction, direct hearing of appeals without insisting on that precondition.

Remedial writ jurisdiction as alternative where statutory requirement results in extreme hardship - Remand of the petitions to the appellate authority for fresh adjudication on merits in light of the High Court's directions. - HELD THAT: - Having found that petitioners were unable to furnish the security demanded and that leaving them remediless would be impermissible, the Court did not adjudicate assessment merits but exercised discretion under Article 226 to direct that the appeals be heard on merits without the statutory precondition. Consequently, the matters were remanded to the Joint Excise and Taxation Commissioner (Appeals), Faridabad for expeditious disposal on merits. [Paras 25, 26]

Matters remanded to the Joint Excise and Taxation Commissioner (Appeals), Faridabad to decide the appeals expeditiously, preferably within three months.

Final Conclusion: Writ petitions allowed: appellate authority held to lack power to waive the security requirement under Section 33(5) HVAT Act, but the High Court in exercise of its writ jurisdiction directed the appeals to be heard on merits without insisting upon the statutory precondition and remanded the matters to the Joint Excise and Taxation Commissioner (Appeals), Faridabad for expeditious disposal.

Recall of order - modification of disposal order - natural justice - right to be heard - interim protection pending filing of petition - relegation to High Court and independence of High Court adjudication - abuse of process and finality of judgments

Recall of order - natural justice - right to be heard - Whether the directions in the order dated 04.07.2023 in relation to ECIR No. ECIR/HIU-1/06/2023 are sustainable where the Enforcement Directorate was not put on notice or heard before the disposal order - HELD THAT: - The Court held that an adverse order passed without affording a party an opportunity of hearing is susceptible to recall under the Court's inherent powers. The Enforcement Directorate was impleaded by the final order of 04.07.2023 but was not put on notice nor afforded an opportunity to be heard; consequently the directions in that order insofar as they pertain to ECIR No. ECIR/HIU-1/06/2023 cannot be sustained. The record shows that the interlocutory application for amendment/bringing on record (I.A. No. 122413 of 2023) was not reflected or ordered, and the ECIR and related FIR were not made the subject matter of challenge in the writ petition. In these circumstances, the order is recalled insofar as it affects the Enforcement Directorate and ECIR No. ECIR/HIU-1/06/2023, and the Allahabad High Court is left free to consider the challenge on merits uninfluenced by the earlier order. [Paras 14, 15]

Order dated 04.07.2023 is recalled insofar as it pertains to ECIR No. ECIR/HIU-1/06/2023; the High Court of Allahabad may decide the challenge on merits and in accordance with law, uninfluenced by the earlier order.

Modification of disposal order - interim protection pending filing of petition - relegation to High Court and independence of High Court adjudication - Whether the interlocutory directions in the order dated 04.07.2023 should be modified insofar as they continued stay/protection 'till final disposal of the respective petitions' when the Court had directed the petitioners to approach the High Courts - HELD THAT: - The Court found that certain directions in the order dated 04.07.2023 resulted from oversight and risk being misconstrued as observations on merits that might influence High Courts. When a litigant is relegated to a High Court, that Court must be free to adjudicate interim applications and the main challenge on its own merits. Consequently, the Court substituted the words 'till final disposal of the respective petitions...' in paragraph 8 of the earlier order with the words 'till the filing of the respective petitions'. The effect is that the High Courts where proceedings have been instituted are at liberty to entertain interim relief applications and decide the matters on their merits and in accordance with law, uninfluenced by any observations in the 04.07.2023 order. [Paras 16, 17, 18]

Order dated 04.07.2023 is modified by replacing 'till final disposal of the respective petitions...' with 'till the filing of the respective petitions', thereby permitting the High Courts to consider interim relief and the main petitions on merits uninfluenced by the Supreme Court's earlier observations.

Final Conclusion: The miscellaneous/interlocutory applications are disposed of: the order dated 04.07.2023 is recalled insofar as it affects ECIR No. ECIR/HIU-1/06/2023 for lack of hearing to the Enforcement Directorate, and the earlier order is modified to limit interim protection to 'till the filing of the respective petitions', leaving the High Courts free to decide interim and main applications on merits and in accordance with law; a corrigendum to the 04.07.2023 order shall be uploaded reflecting these modifications.