TaxTMI Updates e-Newsletter
Sep 28,2019

Confiscation under section 130 of the CGST Act/GGST Act - release on payment under section 129 of the CGST Act/GGST Act - requirement to record reasons / non speaking order - application of mind by quasi judicial authority - transporter's documentary compliance relating to e way bills

Confiscation under section 130 of the CGST Act/GGST Act - transporter's documentary compliance relating to e way bills - application of mind by quasi judicial authority - Validity of the order of confiscation of goods and conveyance passed under section 130 - HELD THAT: - The Court found that no detention order under section 129 was passed and the authorities directly proceeded under section 130. The impugned order of confiscation does not record any reasons for confiscating the goods and conveyance; explanations submitted by the petitioner and by Anjani Synthetics Limited are not referred to in the order. The authority's notice and subsequent order indicate materially inconsistent and irrelevant grounds in the affidavit in reply (reference to 14 unsigned invoices) which do not pertain to the consignments actually confiscated. In these circumstances the confiscation order is a non speaking order made without application of mind. The Court relied on the settled principle that quasi judicial authorities must record cogent reasons when making decisions that prejudicially affect parties, and that a mere format left blank or perfunctory recital does not satisfy that duty. Consequently the order is vitiated for want of reasons and failure to apply mind to the explanations and material before the authority. [Paras 12, 13, 14, 15, 16]

The confiscation order dated 28.5.2019 under section 130 is quashed as a non speaking order passed without application of mind.

Release on payment under section 129 of the CGST Act/GGST Act - requirement to record reasons / non speaking order - Whether the matter should be remanded to the authority for fresh decision or whether quashing with immediate release is appropriate - HELD THAT: - Although ordinarily a non speaking order may be set aside and the matter remitted for fresh consideration, the Court examined the affidavit in reply filed by the authority. That affidavit relied on grounds which, on the material before the Court, could not sustain confiscation of the particular consignments (the alleged 14 unsigned invoices did not relate to the three consignments confiscated). Given that the affidavit itself lacked proper application of mind and the factual basis for confiscation was shown to be unsupportable, the Court concluded remand would serve no useful purpose. Therefore, instead of remitting, the Court directed immediate relief to the petitioner. [Paras 14, 15, 17]

No remand; impugned order is quashed and the conveyance and goods are to be released forthwith.

Final Conclusion: The petition is allowed. The order of confiscation passed under section 130 of the CGST Act/GGST Act dated 28.5.2019 is quashed for being non speaking and passed without application of mind; the respondents are directed to forthwith release the truck No. GJ 27 X 3752 and the goods contained therein.

Best judgment assessment - withdrawal of assessment on filing of return within 30 days under Section 62(2) - liability to pay interest for late payment - strict construction of exemption/benefit in a taxing statute - no judicial extension of statutory period to avail withdrawal of best judgment assessment

Best judgment assessment - withdrawal of assessment on filing of return within 30 days under Section 62(2) - liability to pay interest for late payment - Validity of the best judgment assessment and availability of statutory remedy under Section 62(2) where returns were belatedly filed and petitioner contends inability to pay tax within the 30 day period. - HELD THAT: - The court held that the proper officer was entitled to complete assessment on best judgment basis because the assessee failed to furnish returns within the time prescribed under the SGST Act. Section 62(2) affords the assessee a statutory remedy: if a valid return is furnished within 30 days of service of the best judgment assessment, the assessment is deemed withdrawn though interest for late payment continues to subsist. That statutory prescription must be strictly construed in favour of the revenue and operates as the exclusive time frame to secure withdrawal of a best judgment assessment. The court declined to extend the 30 day period on grounds of the assessee's financial inability to pay the admitted tax, observing that judicial extension of the period would improperly enlarge a benefit in a taxing statute. [Paras 4, 5, 7]

Assessment on best judgment was validly completed; the statutory mechanism under Section 62(2) to withdraw such assessment by filing a return within 30 days applies, but the court will not grant an extension of that period for inability to pay; writ petition is dismissed.

Final Conclusion: The petition challenging the best judgment assessment is dismissed; the assessee's remedy is to file a valid return within the statutory 30 day period (subject to payment of interest for late payment), and no extension of that period is warranted by the court.

Prohibition order under rule 139(4) - search under sub-section (2) of section 67 - powers under section 67(2) - provisional attachment - attachment under section 83 - stay of impugned order

Prohibition order under rule 139(4) - search under sub-section (2) of section 67 - powers under section 67(2) - provisional attachment - attachment under section 83 - Validity of the prohibition order dated 30.7.2019 and the provisional attachment of the petitioner's three bank accounts. - HELD THAT: - On perusal of the order dated 30.7.2019, the properties in respect of which the prohibition order was issued were not found at the premises subjected to search under sub-section (2) of section 67. The Court concluded that, in those circumstances, the attachment of such property and the prohibition order exceed the powers conferred on the Officer by sub-section (2) of section 67 of the GGST Act, 2017. In consequence, and having heard the parties, the Court granted interim relief by staying the order passed under rule 139(4) and the provisional attachment of the three bank accounts effected under section 83, pending further consideration of the rule returnable on 10.10.2019.

The order dated 30.7.2019 under rule 139(4) and the provisional attachment of the three bank accounts under section 83 are stayed.

Final Conclusion: Rule issued and made returnable on 10.10.2019; meanwhile the prohibition order dated 30.7.2019 and the attachment of the three bank accounts are stayed.

Statutory right to make copies of documents seized under sub section (5) of section 67 of the Central Goods and Services Tax Act, 2017 - exception where provision of copies would prejudicially affect the investigation

Statutory right to make copies of documents seized under sub section (5) of section 67 of the Central Goods and Services Tax Act, 2017 - exception where provision of copies would prejudicially affect the investigation - Direction to furnish copies of relevant documents seized by authorities in accordance with the statutory entitlement under sub section (5) of section 67 of the CGST Act. - HELD THAT: - The court considered the petitioner's request for copies of data and documents allegedly in the custody of the respondents and noted the statutory entitlement conferred by sub section (5) of section 67 of the Central Goods and Services Tax Act, 2017, subject to the proviso that the proper officer may withhold copies if furnishing them would prejudicially affect the investigation. Having regard to the petitioner's repeated requests and the impending statutory deadline for filing tax returns, the court directed the respondents to furnish copies of the relevant documents to the petitioner as envisaged by the statute. The order reflects the court's exercise of discretion to require compliance with the statutory right to obtain copies unless the respondents satisfy the court (or proper officer) that disclosure would prejudice the investigation; no factual finding withholding copies on that ground was recorded in the order.

Respondents directed to furnish copies of the relevant seized documents to the petitioner in terms of sub section (5) of section 67 of the CGST Act by the date specified in the order.

Final Conclusion: Notice issued returnable on 3rd October 2019; respondents directed to supply copies of the relevant documents to the petitioner by 28th September 2019 in accordance with the statutory entitlement under sub section (5) of section 67 of the CGST Act.

Summary order. Notice issued returnable on 27th September, 2019; direct service permitted.

Confiscation of conveyance - fine in lieu of confiscation under section 130 of the Central Goods and Services Tax Act, 2017 - release of vehicle on payment as deposit - right to challenge administrative order while deposit is retained

Fine in lieu of confiscation under section 130 of the Central Goods and Services Tax Act, 2017 - release of vehicle on payment as deposit - Ad-interim release of the petitioner's vehicle upon payment of the proposed fine specified in the notice issued under section 130 of the CGST Act. - HELD THAT: - The court, after hearing rival submissions on the scope of section 130 of the CGST Act and its provisos, issued notice returnable and granted ad-interim relief directing release of the petitioner's truck upon payment of the fine proposed in the notice dated 15.7.2019 under section 130. The release order is interim and without prejudice to the final adjudication of the petition or the proceedings under section 130; it implements the statutory alternative of payment in lieu of confiscation as an interim measure while the challenge proceeds. [Paras 3, 4]

The second respondent is directed to release the vehicle on the petitioner paying the fine as proposed in the notice dated 15.7.2019 (Rs. 1,05,254/-) as an interim measure.

Payment as deposit subject to final outcome - right to challenge administrative order while deposit is retained - Treatment of the payment as a deposit and attendant conditions including filing of an undertaking and obligation to pay any differential amount if an adverse order is ultimately passed. - HELD THAT: - The court directed that the amount paid for release shall be treated as a deposit pending final outcome of the petition and the section 130 proceedings, without prejudice to the petitioner's right to challenge any adverse order before the competent authority. The petitioner is required to file an undertaking that, if an adverse order is ultimately passed under section 130, he will pay any differential amount, subject to his right to challenge such order. Direct service was permitted. [Paras 5]

The payment shall be treated as a deposit subject to the final outcome of the petition and proceedings under section 130; the petitioner must file an undertaking to pay any differential amount if an adverse order is passed, while retaining the right to challenge the same.

Final Conclusion: Notice issued returnable on 10th October, 2019; meanwhile the vehicle is to be released on payment of the fine proposed in the impugned notice, the amount to be held as a deposit subject to final adjudication and the petitioner's undertaking to pay any differential if an adverse order is ultimately passed.

Allowability of employer's leave encashment deduction under section 43B(f) - operational effect of a stay of a High Court judgment on reliance by parties - disallowance under section 43B consequent to accrual basis claim - admission for consideration of questions on tax deduction at source and section 40(a)(ia)

Allowability of employer's leave encashment deduction under section 43B(f) - disallowance under section 43B consequent to accrual basis claim - operational effect of a stay of a High Court judgment on reliance by parties - Validity of the Tribunal's and Assessing Officer's disallowance of leave encashment claimed on accrual basis for the assessment years 2009-10 and 2010-11 under section 43B(f). - HELD THAT: - The Court held that the claim of leave encashment on accrual basis is contrary to the clear language of section 43B(f), which permits deduction only in the previous year in which such sum is actually paid (subject to the proviso). The Calcutta High Court decision relied upon by the assessee has been stayed by the Supreme Court and therefore cannot be relied upon or enforced. The Tribunal correctly applied section 43B(f) to uphold the disallowance; the appellant's subsequent contention that the payments were made in later assessment years and that the Tribunal failed to consider that point was not raised before the Tribunal and, in any event, would require the assessee to claim deduction in the years of actual payment. Consequently, no substantial question of law arises from the plea based on section 43B(f).

Disallowance of leave encashment claimed on accrual basis was upheld; no question of law arises in relation to section 43B(f).

Admission for consideration of questions on tax deduction at source and section 40(a)(ia) - tax deduction at source obligation in respect of interest payments - Whether the common questions framed regarding disallowance under section 40(a)(ia) for non deduction of TDS under section 194A in relation to interest payable to Prasar Bharti are to be considered by the Court. - HELD THAT: - The Court admitted the common questions of law (relating to applicability of section 40(a)(ia) on account of non deduction of TDS under section 194A and the contention that only provisions, not payments, were made) for consideration and listed the appeals for hearing. No final adjudication on these questions is recorded in the order.

Common questions relating to section 40(a)(ia) and TDS under section 194A are admitted for consideration and the matters are listed for further hearing.

Final Conclusion: The Tribunal's disallowance of leave encashment claimed on accrual basis for AYs 2009-10 and 2010-11 was upheld as being contrary to section 43B(f) and no substantial question of law arises therefrom; the separate common questions on non deduction of TDS under section 194A/40(a)(ia) were admitted for consideration and the appeals listed for further hearing.

Eligibility for exemption under Section 54 of the Income-Tax Act - re-investment in residential property outside India - prospective application of amendment inserting "in India" into Section 54 - reliance on High Court precedent

Eligibility for exemption under Section 54 of the Income-Tax Act - re-investment in residential property outside India - reliance on High Court precedent - Assessee was entitled to claim exemption under Section 54 for long-term capital gain arising on sale of residential property in India where the gain was reinvested in the purchase of a residential property in London in the relevant year. - HELD THAT: - The Authority for Advance Rulings had held that the respondent, a Non-Resident Indian, was eligible for the benefit of Section 54 as the long-term capital gain arising on sale of his residential property in India was reinvested in the same year in a residential flat in London. The Authority placed reliance on the decision of the Gujarat High Court in Leena JugalKishor Shah, which had not been impugned before the Supreme Court. The Finance Act (No.2) 2014 amendment inserting the words "in India" into Section 54 was noted to be prospective in operation, taking effect from 01.04.2015 and applying to assessment year 2015-16 and subsequent assessment years; consequently that amendment did not apply to the transaction completed in assessment year 2012-13. This Court, having considered the matter and earlier relevant decision in The Commissioner of Income-Tax International Taxation-2 Vs. Anurag Pandit, declined to interfere with the AAR's conclusion and upheld the AAR order.

AAR's order holding that the respondent was entitled to exemption under Section 54 for reinvestment in the London residential property (transaction relating to assessment year 2012-13) is upheld.

Final Conclusion: Writ petition dismissed; the AAR order granting Section 54 exemption for reinvestment in the London residential property (relating to assessment year 2012-13) is sustained and the post-2015 amendment limiting the benefit to acquisitions "in India" was held to be prospective and inapplicable to the case.

Unexplained credits under Section 68 - admissibility of statements recorded during survey and right to cross-examination - initial burden under Section 68 and shifting of onus on the Revenue - entry providers / paper companies as a means to introduce unaccounted money - dumb document and evidentiary value of loose undated slips - retraction of statement given under coercion and its evidentiary weight - finality by reference to earlier Tribunal decision

Unexplained credits under Section 68 - admissibility of statements recorded during survey and right to cross-examination - entry providers / paper companies as a means to introduce unaccounted money - initial burden under Section 68 and shifting of onus on the Revenue - Deletion of addition of Rs. 4,00,00,000 made as alleged bogus share premium introduced through Ankush Finstock Pvt. Ltd. - HELD THAT: - The Tribunal examined whether the addition under Section 68 was sustainable in light of material placed before the authorities and the manner in which the departmental case was built. The assessing officer and CIT(A) relied principally on statements of the director of Ankush Finstock Ltd (an alleged entry provider) to conclude that cash had been routed back as share application money. The Tribunal found that those statements were not permitted to be cross-examined despite repeated requests and, standing alone, have no evidentiary value. The assessee had produced share applications, board resolutions, share transfer forms and bank evidences to discharge the initial burden under Section 68; once that initial burden was shown, it was for the Revenue to bring cogent material to prove the transaction was bogus. The authorities below did not properly consider the documents placed on record nor conduct effective verification; reliance on an untested statement rendered the addition a nullity. Consequently the addition was deleted. [Paras 12]

Addition of Rs. 4,00,00,000 on account of alleged bogus premium deleted.

Dumb document and evidentiary value of loose undated slips - retraction of statement given under coercion and its evidentiary weight - admissibility of statements recorded during survey and right to cross-examination - Deletion of addition of Rs. 18,05,87,658 treated as unaccounted cash payment for purchase of land for project Ratnakar IV. - HELD THAT: - The Revenue relied on a seized loose undated note (a 'dumb document') and a statement allegedly by the director admitting group discrepancies to infer large cash payments for land. The Tribunal held that the loose paper lacked title, date, signature or connecting evidence and no independent verification was undertaken (for example, enquiries of vendors). Further, the director's disclosure was retracted by affidavit alleging coercion and statements made during survey lack independent evidentiary value unless properly tested. Given absence of corroborative enquiry and reliance on an inadmissible or unverified document, the addition was unsustainable and liable to be set aside; reopening or remanding for fresh vendor cross-examination was declined as impermissible relief at this stage in view of inaction by departments below. [Paras 18, 19]

Addition of Rs. 18,05,87,658 treated as unaccounted investment in land deleted.

Finality by reference to earlier Tribunal decision - Deletion of addition of Rs. 17,85,79,435 as alleged on-money receipts for flats of Ratnakar II/III/IV projects. - HELD THAT: - The Revenue conceded that the identical issue had been examined and finally decided by the same Bench of the Tribunal in an earlier ITA (ITA No.1502/Ahd/2017) pursuant to directions of the High Court and that the matter has attained finality (SLP dismissed). The Tribunal therefore followed the earlier decision and deleted the addition. [Paras 21]

Addition of Rs. 17,85,79,435 on account of alleged on-money receipts deleted.

Final Conclusion: For Assessment Year 2010-11 the Tribunal partly allowed the appeal: the additions of Rs. 4,00,00,000 (alleged bogus premium), Rs. 18,05,87,658 (alleged unaccounted land investment) and Rs. 17,85,79,435 (alleged on-money receipts) were deleted for the reasons stated above; the first ground on maintainability was not pressed.

Revisionary power under section 263 - Explanation 2 to section 263 - failure to make inquiries - prejudicial to the interests of Revenue - use or application of trust funds for benefit of trustees - section 13 - assessment under section 143(3) r.w.s.153A - presumptive taxation under section 44AD - income from house property - annual letting value and section 24 deductions - unexplained income / section 69A and tax at special rate under section 115BBE - reliance on post-search statements and survey material

Revisionary power under section 263 - Explanation 2 to section 263 - failure to make inquiries - Whether invoking section 263 by the Principal CIT in relation to admissions against the NRI quota made the assessment order erroneous and prejudicial to revenue - HELD THAT: - Tribunal examined documentary record placed before the Assessing Officer (FIRCs, affidavits, MCI norms), the show cause notice issued by the AO, replies filed by the assessee and statements recorded u/s 131. The Tribunal found that foreign receipts were accounted in the books and there was no material of unaccounted receipt or tax evasion; no regulatory adverse action by MCI or RBI was shown. On these facts the Tribunal held that the AO had applied his mind and no omission attracting Explanation 2 of section 263 was made out, and therefore no revision u/s 263 was called for.

Order u/s 263 in respect of NRI quota admissions quashed; no action under section 263 called for.

Revisionary power under section 263 - use or application of trust funds for benefit of trustees - section 13 - Whether payments/reimbursements by the trust in respect of vehicles purchased in trustees' names rendered the assessment order erroneous and prejudicial to revenue under section 263 - HELD THAT: - Revenue relied on bank entries, apparent reimbursements and existence of multiple vehicles. Tribunal reviewed asset treatment in trust books, depreciation claim, loan ledger, appointment letter and confirmations (albeit unsigned). Tribunal found pcit's factual imputations (e.g., two cars with same registration) unsustainable, no unaccounted income or tax evasion shown, and absence of any evidence that trustees received taxable benefit. On facts the AO had examined the matter and no error prejudicial to revenue was established.

Directions u/s 263 regarding vehicle payments/reimbursements set aside; no revision called for.

Revisionary power under section 263 - reliance on post-search statements and survey material - Whether the Assessing Officer's acceptance of salaries paid to medical teachers (including alleged 'ghost teachers') rendered the assessment order erroneous and prejudicial to revenue - HELD THAT: - Tribunal considered AO's questionnaire, the assessee's detailed replies, affidavits, biometric attendance, Form 16/TDS evidence, bank records and statements recorded by the Investigation Wing and Punjab Medical Council findings. The Tribunal held that the AO had confronted the issue, obtained and considered evidence and that partial quotations of statements by PCIT did not show AO failed to make enquiries. No prima facie evidence of unreconciled siphoning or receipt back to trust was established; Explanation 2 to section 263 was therefore not attracted.

PCIT's directions on teachers' salaries annulled; no action u/s 263 called for.

Revisionary power under section 263 - use or application of trust funds for benefit of trustees - section 13 - Whether alleged other benefits to trustees (use of trust employees at residences) made the AO's assessment erroneous and prejudicial to revenue - HELD THAT: - Tribunal reviewed statements of domestic staff, affidavits and the assessee's replies showing which payments were personal and which were made by the trust. On concurrent examination, Tribunal found no material to show that AO failed to inquire or that Explanation 2 applied; payments were either not by the trust or were for trust purposes. Hence no erroneous order prejudicial to revenue was established.

PCIT's directions on 'other benefits' to trustees set aside; no revision u/s 263 sustained.

Revisionary power under section 263 - presumptive taxation under section 44AD - Whether the AO's acceptance of contractual/construction receipts and presumptive profit declared under section 44AD (Tarsem Garg) made the assessment order erroneous and prejudicial to revenue - HELD THAT: - Tribunal noted AO had issued specific queries and the assessee had replied explaining execution of contract, bank receipts and withdrawals, and applicability of section 44AD. The PCIT's objections (absence of sundry debtor details, first time receipts, alleged lack of material evidence) were examined; Tribunal found AO had made inquiries and applied mind and PCIT did not demonstrate any revenue leakage or erroneous finding. Explanation 2 was not attracted.

Direction u/s 263 to reclassify/rehash construction receipts set aside; no revision required.

Revisionary power under section 263 - use or application of trust funds for benefit of trustees - section 13 - Whether rent payments by the trust to trustees (including Santosh Hostel and other rented properties) rendered the assessment erroneous and prejudicial to revenue - HELD THAT: - Tribunal reviewed rental agreements, assessee's enquiries, AO's questionnaire replies, evidence of use (office/guest house/urban slum centre), Form 16 perquisites to occupants, bank records and hostel receipts. For Santosh Hostel Tribunal examined bank deposits, P&L prepared from bank entries, loan/security documents and concluded (i) reference to DVO not mandatory absent material of overcapitalisation, (ii) hostel receipts/offering to tax undermined PCIT's suspicion, and (iii) where rent was shown and taxed and perquisites adjusted, no prejudice to revenue was made out. Tribunal held AO had made inquiries and Explanation 2 did not apply.

PCIT's revision directing assessment on rent/hostel issues set aside; no action u/s 263 warranted.

Revisionary power under section 263 - bogus expenditure and accommodation entries - Whether payments to mess contractors and certain other contractors were shown to be bogus so as to render the AO's assessment erroneous and prejudicial to revenue - HELD THAT: - Revenue relied on bank inquiries, non traceability of some contractors' addresses and statements suggesting cheque withdrawals. Tribunal considered contractors' statements, invoices, affidavits, bank statements and the AO's show cause process. It held selective extraction of statements was impermissible; AO had raised questions and had material before him; no cogent material was produced by PCIT to prove siphoning or receipt back. Therefore Explanation 2 and revision u/s 263 were not attracted.

PCIT's directions to disallow identified mess/contractor expenses set aside; no revision u/s 263 called for.

Revisionary power under section 263 - use or application of trust funds for benefit of trustees - section 13 - Whether pledging of trust FDRs as third party guarantees (benefit to trustee Inderpal Garg) rendered assessment erroneous and prejudicial to revenue - HELD THAT: - Tribunal examined bank enquiries, repayment timeline, receipt by trust of interest on FDRs and found (i) FDR interest was shown and taxed by the trust, (ii) loan against pledge was repaid and OD closed, and (iii) no loss to trust nor benefit to trustee was demonstrated. On these facts, Section 13 contravention, as alleged by PCIT, was not made out and AO had considered the matter; Explanation 2 therefore did not apply.

PCIT's attempt to deny exemption on account of FDR pledge set aside; no revision u/s 263 sustained.

Revisionary power under section 263 - income from other sources vs. income from undisclosed sources (section 69A) - Whether consultancy/professional receipts (payments from Nexgen, Ajnara and others) were accommodation entries requiring reassessment as unexplained income under section 69A/115BBE and whether AO's assessment was erroneous and prejudicial to revenue - HELD THAT: - Tribunal recorded that AO had queried the receipts, assessed service tax paid, TDS particulars and that the assessee offered amounts to tax at maximum marginal rate; supporting confirmations and client correspondence were on record. Tribunal found no material produced by PCIT showing the payors were non existent or that the receipts were fictitious; the AO had made enquiries and considered service tax/TDS evidence. In these circumstances PCIT failed to show lack of inquiry or revenue prejudice under Explanation 2.

PCIT's directions to reclassify/assess consultancy receipts as unexplained income disallowed; no revision under section 263.

Revisionary power under section 263 - income from house property - annual letting value and section 24 deductions - Whether rental income shown by individual trustees (including lump sum rent, alleged non commercial use and claimed loss under section 24) rendered the AO's order erroneous and prejudicial to revenue - HELD THAT: - Tribunal observed AO had raised detailed queries, examined rent deeds, receipts/bank credits, tenant statements (including Trishala), and deductions under section 24 (interest and standard deduction). Tribunal found PCIT's objections (lack of electricity usage, lump sum receipts, alleged non commercial use) did not establish AO failed to inquire or that revenue was prejudiced; even if ALV taxed, allowable deductions produce the reported loss and no leakage to revenue was shown. Accordingly Explanation 2 not attracted.

PCIT's revision on rental income and related set offs quashed; no action u/s 263 sustained.

Revisionary power under section 263 - unexplained income / section 69A and tax at special rate under section 115BBE - Whether declared capital gain/receipt on sale/booking of property (Rs.50,00,000) ought to be treated as unexplained income and whether AO's acceptance without further inquiry made the order erroneous and prejudicial to revenue - HELD THAT: - AO had issued queries and assessee produced agreement, sale documents and explanations; the assessee paid tax at maximum marginal rate and returned the amount. Tribunal found PCIT did not demonstrate any lacuna in AO's inquiries or any revenue loss; the mere possibility of alternative view did not make AO's order erroneous under section 263 or attract Explanation 2.

PCIT's direction to reclassify sale proceeds as unexplained income set aside; no revision u/s 263.

Final Conclusion: On the facts and evidence across the multiple appeals, the Tribunal held that the Principal CIT's exercise of revisionary jurisdiction u/s 263 (including reliance on Explanation 2) was not justified in respect of the challenged grounds - the Assessing Officer had made the requisite inquiries, examined evidence and applied his mind; no material showing error prejudicial to revenue was demonstrated. The PCIT's directions on the several factual/contentions (NRI quota, vehicle payments, salaries and alleged ghost teachers, other benefits to trustees, construction payments, rents, interest, hostel/mess allegations, contractor payments, FDR pledge and various receipts) were quashed and no action under section 263 was called for.

Revisionary jurisdiction under section 263 of the Income Tax Act - Principles of natural justice (audi alteram partem) in exercise of revisional powers - Validity of revisional order and nullity for failure to supply material and afford effective opportunity - Foreclosure of inquiry by issuing conclusory revisional directions and remand as an empty formality

Revisionary jurisdiction under section 263 of the Income Tax Act - Principles of natural justice (audi alteram partem) - Nullity of order for breach of natural justice - Remand versus quashing where revisional officer reaches conclusive adverse finding without opportunity - Whether the revisional order passed under section 263 setting aside the assessment order was sustainable in law in view of alleged violation of principles of natural justice and conclusory adverse findings - HELD THAT: - The Tribunal found that the Revisional Commissioner issued a solitary, vague show-cause notice and, after receiving an interim reply requesting relevant background material, passed a conclusory revisional order within a short span without furnishing the information or affording any further effective opportunity. Section 263 mandates that the assessee be given a real and effective opportunity to meet the grounds on which revision is sought; a notional or symbolic opportunity does not suffice. The Revisional Commissioner relied on information from an Investigation Wing (received during search of third parties) which was not furnished to the assessee, made final adverse findings that the assessee connived with brokers to launder undisclosed income, and directed the Assessing Officer to reopen the assessment in terms that foreclosed independent consideration by the AO. Such conduct amounted to dispensing with the sacrosanct right of hearing and amounted to a fundamental breach of audi alteram partem. The Tribunal applied settled principles that a revisional order passed on grounds not put to the assessee or without adequate opportunity is null and void; where the revisional authority has drawn conclusive adverse findings and remanded the matter thereby rendering the remand an empty formality, the revisional order cannot be sustained. The Tribunal therefore limited its review to the legality of the process and did not express any view on the merits of the capital-gains claim. [Paras 6]

The revisional order under section 263 was vitiated by failure to afford an effective opportunity and by conclusory adverse findings that precluded independent inquiry; the revisional order is quashed.

Final Conclusion: The appeal is allowed; the revisional order under section 263 dated 21.03.2018 is set aside and quashed for breach of principles of natural justice and for having rendered the remand an empty formality; no expression is made on the merits of the assessment.

Jurisdiction under section 263 - erroneous and prejudicial to the interests of the Revenue - long term capital gains - genuineness of transactions - application of mind by the Assessing Officer - prima facie material and verification - treatment as unexplained cash credit under section 68

Jurisdiction under section 263 - erroneous and prejudicial to the interests of the Revenue - application of mind by the Assessing Officer - long term capital gains - genuineness of transactions - Whether the Principal Commissioner correctly exercised revisionary jurisdiction under section 263 in quashing the assessment and directing addition of claimed LTCG as unexplained cash credit. - HELD THAT: - The Tribunal held that the twin conditions for exercise of revisionary power under section 263 - that the assessment order is both erroneous and prejudicial to the interests of the Revenue - were not satisfied. The Assessing Officer had conducted scrutiny, issued notices (including under section 142/133(6)), received and considered documentary evidence (purchase documents, contract notes, bank statements, demat records and replies) and accepted the assessee's LTCG after application of mind. The PCIT relied on reports and general modus operandi of penny stock manipulations (SIT/SEBI material) and suspicion of price rigging, but did not point to any material on record specific to the assessee to show that the AO's conclusion was unsustainable in law. In these circumstances mere suspicion or the existence of a general scheme did not justify revisional interference where the AO had taken a possible view after enquiry. The Tribunal therefore found that the PCIT's order substituted suspicion for a recorded finding of error and was not a sustainable exercise of section 263 jurisdiction. [Paras 8, 9]

PCIT's exercise of revisionary jurisdiction under section 263 was not justified; the AO's assessment accepting the LTCG was restored and the PCIT's order quashing the assessment was reversed.

Final Conclusion: The appeals are allowed: the Tribunal restores the assessment framed by the Assessing Officer for AY 2014-15, holding that the Principal Commissioner erred in invoking section 263 on the basis of suspicion and general material without demonstrating that the AO's order was both erroneous and prejudicial to the Revenue.

Mandatory electronic filing of Form No.10 - accumulation under section 11(2) - prospective applicability of amendment to Rule 17 - eligibility for accumulation where Form No.10 and return filed within due date

Mandatory electronic filing of Form No.10 - amendment to Rule 17 w.e.f. 01.04.2016 - accumulation under section 11(2) - Whether the assessee was required to e-file Form No.10 for Assessment Year 2014-15 and whether manual filing within the due date entitled the assessee to claim accumulation under section 11(2). - HELD THAT: - The Tribunal examined Rule 17 as substituted by the IT (First Amendment) Rules, 2016 and held that the requirement to mandatorily e-file Form No.10 came into effect w.e.f. 01.04.2016 and therefore applies from Assessment Year 2016-17 onwards. For Assessment Year 2014-15, prior to the amendment, the mandatory electronic filing requirement did not apply. The CIT(A) had also found as a factual matter that the assessee filed the requisite Forms and the return of income within the due date for filing the return (30.09.2014). Given that the e-filing mandate was not in force for AY 2014-15 and that the assessee had filed the forms and return within the due date, the assessee was eligible to claim accumulation under section 11(2). The Tribunal found no error in the CIT(A)'s reasoning and declined to interfere with the factual and legal conclusion. [Paras 3, 4]

The requirement to e-file Form No.10 was not mandatory for AY 2014-15; manual filing within the due date entitled the assessee to claim accumulation under section 11(2), and the CIT(A)'s order was upheld.

Final Conclusion: Revenue's appeal for Assessment Year 2014-15 is dismissed; the Tribunal upholds the CIT(A)'s finding that the e-filing mandate for Form No.10 is prospective from AY 2016-17 and that the assessee, having filed the form and return within the due date for AY 2014-15, is entitled to accumulation under section 11(2).

Condonation of delay - eligibility for exemption under section 11 - registration under section 12AA - remand for fresh adjudication

Condonation of delay - Whether the delay in filing the appeal before the CIT(A) stands condoned. - HELD THAT: - Although the CIT(A) formally rejected the assessee's application for condonation of delay, he proceeded to decide the substantive controversy on merit. The Tribunal inferred that by deciding the appeal on merits despite the formal rejection, the CIT(A) must be taken to have effectively condoned the delay. Therefore the appeal was entertained and decided on merits by the appellate authority. [Paras 5]

Delay in filing the appeal before the CIT(A) is to be treated as condoned since the CIT(A) proceeded to decide the appeal on merits.

Eligibility for exemption under section 11 - registration under section 12AA - remand for fresh adjudication - Whether the claim for exemption under section 11 should be decided in view of cancellation of registration under section 12AA having been set aside. - HELD THAT: - The Assessing Officer denied exemption under section 11 solely on the ground that the assessee's registration under section 12AA had been cancelled. The Tribunal's earlier order setting aside the cancellation under section 12AA, which has been upheld by the High Court, means the foundational basis for the AO's denial was removed. The Tribunal therefore held that the question of the assessee's entitlement to exemption under section 11 was not examined on merits by the authorities below and must be reconsidered. The matter is restored to the file of the AO for fresh adjudication on the assessee's eligibility for exemption under section 11, after giving the assessee adequate opportunity of being heard. No opinion is expressed on the merits of the exemption claim. [Paras 6]

Matter remanded to the Assessing Officer to decide on the assessee's eligibility for exemption under section 11 in accordance with law, after affording opportunity of hearing; no express finding on allowability of exemption is made by the Tribunal.

Final Conclusion: The appeal is allowed to the extent that (i) the delay before the CIT(A) is treated as condoned and (ii) the question of entitlement to exemption under section 11 is remitted to the Assessing Officer for fresh decision in view of the setting aside of cancellation of registration under section 12AA, the Tribunal making no comment on the merits of the exemption claim.

Revisionary jurisdiction under section 263 - reopening assessment under section 147 - bogus/accommodation entries - estimation of profit element on non genuine purchases - requirement of AO's independent inquiry before making additions - distinguishing precedents on facts

Revisionary jurisdiction under section 263 - estimation of profit element on non genuine purchases - requirement of AO's independent inquiry before making additions - distinguishing precedents on facts - Validity of the Principal Commissioner's exercise of power under section 263 to set aside assessments where the Assessing Officer, after reopening under section 147 and conducting inquiries, made additions by estimating profit on purchases alleged to be non genuine. - HELD THAT: - The Tribunal held that the Assessing Officer had not overlooked material on record: upon information from Sales Tax authorities the assessment was reopened under section 147; the assessee was called upon to produce evidence and, dissatisfied, the Assessing Officer issued notices under section 133(6) to verify suppliers. Given these inquiries, the Assessing Officer's view to estimate and add the profit element on non genuine purchases (applying a gross profit rate) was a possible view supported by judicial precedents, including the decision of the Jurisdictional High Court in Mohommad Haji Adam & Co., where full disallowance was held not obligatory if sales are not doubted. The Principal Commissioner relied on decisions such as N.K. Proteins and N.K. Industries, but those authorities turned on specific incriminating facts (e.g., material recovered on search) which are factually distinguishable from the present case where the basis was information from outside sources and subsequent enquiries by the Assessing Officer. As the Assessing Officer's approach represented a tenable view and there was no convincing demonstration of failure to make inquiries or to consider material, the assessment could not be characterised as erroneous and prejudicial to the revenue warranting exercise of revisional jurisdiction under section 263. [Paras 8]

The revisionary order under section 263 was quashed and the assessment order upheld as not being erroneous and prejudicial to the interests of Revenue.

Final Conclusion: Appeals allowed; the Tribunal set aside the Principal Commissioner's orders under section 263 and upheld the Assessing Officer's view that estimating and adding the profit element on alleged bogus purchases was a possible view in the facts of these assessment years.

Statutory receipt - sales tax refund - income to be assessed in the hands of the right person - double taxation / double addition - conversion of firm into company

Sales tax refund - statutory receipt - income to be assessed in the hands of the right person - double taxation / double addition - Sales tax refund received in the assessment year is taxable in the hands of the assessee firm and the addition made by the AO and sustained by the CIT(A) is justified. - HELD THAT: - The Tribunal found that the assessee firm continued to exist and carried on business during the assessment year and had filed return for that year. The contractual work, on which sales tax was deducted by the deductee, had been awarded to the firm; accordingly the sales tax refund arising from that contractual work was a statutory receipt of the firm and had to be assessed in its hands. The allegation that the same amount was shown as income of the successor Private Limited Company did not justify excluding it from the firm's income for that year, since income must be taxed in the hands of the person liable therefor and assessed against the right person. The Tribunal relied on settled law that income is to be assessed in the hands of the person entitled or liable to tax even if tax has been paid by another [Ch. Atchaiah's case ]. On these grounds there was no reason to interfere with the orders of the authorities below which treated the refund as the firm's income. [Paras 3, 4]

Appeal dismissed; addition in respect of the sales tax refund upheld and taxed in the hands of the assessee firm for A.Y. 2011-2012.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the addition of the sales tax refund to the income of the assessee firm for A.Y. 2011-2012, holding that the refund is a statutory receipt taxable in the hands of the firm which carried out the contractual work.

Statement recorded under section 132(4) of the Income Tax Act - admissibility and evidentiary value of confessional statements - requirement of corroborative incriminating material for additions - retraction of statement and onus of proof - scope of 'during the course of search'

Statement recorded under section 132(4) of the Income Tax Act - scope of 'during the course of search' - Whether the statement of the partner dated 02.02.2014 could be treated as a statement under section 132(4) of the Act so as to be admissible evidence against M/s Ultimate Builders - HELD THAT: - The Tribunal examined the temporal and factual matrix of the search in the assessee's case and the Signature Group. The authorised officer who conducted the search at the assessee's premises initiated and concluded the search on 29.01.2014 to 31.01.2014 as reflected in the panchanama. The challenged statement of Mr. Vipin Chouhan was recorded on 02.02.2014 before a different officer and after the search in the assessee's premises had concluded. The statement on 02.02.2014 disclosed surrenders for multiple group concerns and was not recorded at the assessee's premises while that search remained pending. The Tribunal held that the statutory phrase "during the course of the search" must be read in relation to the authorised officer and the particular search being conducted; consequently the 02.02.2014 statement could not be treated as a section 132(4) statement for M/s Ultimate Builders where the search had already closed on 31.01.2014. The Tribunal therefore found that the statement relied upon by the Assessing Officer did not satisfy the conditions of section 132(4) insofar as the assessee is concerned. [Paras 16, 17, 18, 19, 20]

The statement dated 02.02.2014 cannot be construed as a statement under section 132(4) of the Act for M/s Ultimate Builders.

Requirement of corroborative incriminating material for additions - admissibility and evidentiary value of confessional statements - retraction of statement and onus of proof - Whether the addition of undisclosed income of Rs. 2,25,00,000/- could be sustained solely on the basis of the partner's statement without correlation to incriminating seized material - HELD THAT: - The Tribunal reviewed the assessment and appellate records and found that the Assessing Officer's addition rested exclusively on the alleged confession of the partner, with no effective reference or nexus established between any seized documents and the assessee's own books or transactions. The Tribunal applied precedent and its own coordinate-bench decision holding that while statements recorded under section 132(4) have strong evidentiary value, additions in block/search cases cannot be sustained solely on such statements in the absence of corroborative incriminating material linking the disclosure to the assessee's affairs. The Tribunal also noted that the partner's statement did not specifically refer to papers or assets of the assessee and that earlier statements recorded at the assessee's premises (29-31.01.2014) contained no surrender. In these circumstances, and having found that the 02.02.2014 statement was not a section 132(4) statement for the assessee, the Tribunal concluded the addition lacked requisite corroboration and was therefore unsustainable. [Paras 23, 24, 25, 26, 27]

The addition of Rs. 2,25,00,000/- made solely on the basis of the impugned statement without correlation to incriminating seized material is deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2014-15, holding that the partner's statement dated 02.02.2014 was not a statement under section 132(4) in respect of M/s Ultimate Builders and that the addition of Rs. 2,25,00,000/- could not be sustained in the absence of corroborative incriminating material; the addition is deleted and the appeal is allowed.

Condonation of delay - Remand for fresh consideration - Burden of production of primary evidence - Assessment framed on available material where documents are not produced - Additions upheld for absence of supporting records

Condonation of delay - Short delay in filing the appeal was condoned. - HELD THAT: - The assessee's appeal to the Tribunal was delayed by five days. The delay was explained as due to obtaining an e-challan copy for payment of Tribunal fees. The Tribunal found the short delay to be bona fide and, after hearing rival submissions, exercised its discretion to condone the delay. [Paras 2]

Delay of five days in filing the appeal was condoned.

Burden of production of primary evidence - Assessment framed on available material where documents are not produced - Additions upheld for absence of supporting records - Additions made by the Assessing Officer were sustained because the assessee failed to produce any primary documents or vouchers before the AO, the CIT(A) or the Tribunal. - HELD THAT: - The Assessing Officer, on materials available, made additions disallowing claimed items and treating certain deposits as unaccounted income, and restricted claimed material and labour expenses. The assessee did not produce any documentary evidence at any stage of proceedings before the AO, the Commissioner (Appeals) or the Tribunal. The Tribunal held that in the absence of primary material to create doubt about the AO's conclusions, it could not remit the matter for fresh examination or accept the assessee's unsupported contentions. Reliance placed on case law by the assessee could not be examined because no documents were filed to show applicability of those authorities to the facts of the case. [Paras 3, 5]

The additions made by the Assessing Officer were sustained and the appeal was dismissed for lack of supporting evidence.

Remand for fresh consideration - Burden of production of primary evidence - The request to remit the case back to the Assessing Officer for fresh consideration was refused. - HELD THAT: - Although the assessee sought remand to enable the AO to examine primary materials, the Tribunal observed that the assessee had not placed any documents before the AO, the CIT(A) or the Tribunal. In these circumstances the Tribunal found remand unjustified because there was no material before it to indicate that fresh consideration would change the outcome. Consequently, the plea for remand was rejected. [Paras 5]

Prayer for remand to the Assessing Officer was declined.

Final Conclusion: The Tribunal condoned the five-day delay but, finding no primary material produced by the assessee, declined to remit the matter to the Assessing Officer and dismissed the appeal, thereby upholding the additions made in relation to Assessment Year 2011-12.

Applicability of section 68 to non-cash/book-entry transactions - unexplained cash credit - journal/book entries versus actual cash receipt - precedential application of Jatia Investment Co. (Calcutta High Court) - allowing new factual stand on appeal without verification under Rule 46A

Applicability of section 68 to non-cash/book-entry transactions - unexplained cash credit - journal/book entries versus actual cash receipt - precedential application of Jatia Investment Co. (Calcutta High Court) - Section 68 does not apply to entries that do not involve actual cash and where there is no credit to the cash account; such book-entry transactions cannot be treated as unexplained cash credit. - HELD THAT: - The Tribunal examined conflicting authorities and held that where no cash passed and there was no real credit to the cash book, the entry cannot be treated as an unexplained cash credit under section 68. The decision of the Hon'ble Calcutta High Court in Jatia Investment Co. was held to be directly on point: when shares are issued by way of journal entries against discharge of debts and no money is received through banking channels, there is no 'sum credited in the books' in the sense required for section 68. Cases relied on by the Revenue involved different facts (cheques or actual credits) or adopt a contrary view and therefore do not detract from the applicability of Jatia on the present facts. Respectfully following the jurisdictional High Court, the Tribunal concluded that section 68 has no application to transactions that do not involve cash and where there is no credit to the cash account. [Paras 7]

Section 68 is not attracted where the transactions are mere book entries and there is no actual cash receipt or credit to the cash account.

Allowing new factual stand on appeal without verification under Rule 46A - journal/book entries versus actual cash receipt - precedential application of Jatia Investment Co. (Calcutta High Court) - The factual claim that the share allotments involved no cash (and were against shares of other companies) was raised for the first time on appeal; the matter is remitted to the Assessing Officer for verification in accordance with Rule 46A. - HELD THAT: - Although the appellate authority recorded findings that no money was received through banking channels and that shares were issued against shares of other companies, the Assessing Officer's assessment order did not contain such a finding and no witnesses appeared to the AO when summoned under section 131. The Tribunal found that the CIT(A) allowed relief by accepting a new factual stand and additional documents produced first at the appellate stage without affording the AO an opportunity to verify the claim, thereby giving rise to a breach of Rule 46A. In view of the legal principle that section 68 is inapplicable only when no cash/credit to cash account is shown, the Tribunal restored the matter to the AO for limited verification of the assessee's contention and for decision in light of the jurisdictional High Court's ratio in Jatia Investment Co. [Paras 8]

Issue remanded to the Assessing Officer for verification of the assessee's claim that the share transactions did not involve cash and that there was no credit to the cash account; AO to decide afresh in light of the Jatia ratio.

Final Conclusion: The Tribunal held as a matter of law that section 68 does not apply to transactions which do not involve actual cash and where there is no credit to the cash account, but restored the matter to the Assessing Officer for limited verification of the factual claim (first raised on appeal) that the shares were issued by book entries against shares of other companies; the appeal is treated as allowed for statistical purposes.

Capital receipt - revenue receipt - purpose test - subsidy treated as non-interest-bearing term loan with post lock-in adjustment - subsidy linked to capital investment

Capital receipt - revenue receipt - subsidy treated as non-interest-bearing term loan with post lock-in adjustment - Technology Upgradation Fund subsidy received by the assessee is a capital receipt and not taxable as revenue. - HELD THAT: - The subsidy under the Technology Upgradation Fund programme was released pursuant to an agreement which treated the capital subsidy as a non-interest-bearing term loan, with the repayment schedule worked out excluding the subsidy and the subsidy to be adjusted against the term loan after a three-year lock-in on a pro-rata basis. Applying the purpose test and having regard to the scheme's object of technology upgradation and the contractual treatment of the subsidy as linked to capital investment, the Court concurred with the Tribunal that the amount flows in the capital stream and is not taxable as revenue. [Paras 2, 6]

Subsidy under Technology Upgradation Fund is a capital receipt and not taxable.

Capital receipt - purpose test - subsidy linked to capital investment - Focus Market Scheme subsidy is a capital receipt and not taxable. - HELD THAT: - The Focus Market Scheme subsidy was granted to enhance export potential rather than to meet routine business expenditure; the Tribunal applied the principle in Ponni Sugars and related authorities and held the amount to be a capital receipt. The Court found no infirmity in that approach and agreed that the subsidy's purpose and nexus to capital objectives place it in the capital stream. [Paras 8]

Subsidy under the Focus Market Scheme is a capital receipt and not taxable.

Capital receipt - subsidy linked to capital investment - purpose test - Electricity Duty Subsidy under the Rajasthan Investment Promotion Scheme is a capital receipt and not taxable. - HELD THAT: - The electricity subsidy was granted in larger public interest and was linked to capital investment under the Rajasthan Investment Promotion Scheme. Applying the same rationale as in Ponni Sugars and Sahney Steel, and consistent with this Court's earlier Division Bench ruling such subsidies are capital in nature, the Tribunal's characterization of the subsidy as a capital receipt was upheld. [Paras 9]

Electricity Duty Subsidy under the Rajasthan Investment Promotion Scheme is a capital receipt and not taxable.

Final Conclusion: The appeal is dismissed; the amounts claimed as capital receipts (Technology Upgradation Fund subsidy, Focus Market Scheme subsidy, and Electricity Duty Subsidy) were held to be capital in nature and not taxable, and no question of law arises.

Cessation of liability under Section 41(1) of the Income Tax Act - treatment of unclaimed sundry creditors as income - onus of proof on the assessee to rebut creditor confirmations - remand for fresh assessment and verification

Cessation of liability under Section 41(1) of the Income Tax Act - onus of proof on the assessee to rebut creditor confirmations - treatment of unclaimed sundry creditors as income - remand for fresh assessment and verification - Whether the trade liabilities shown as sundry creditors had ceased so as to attract assessment under Section 41(1) and whether the additions made by the Assessing Authority were sustainable - HELD THAT: - The Court found that the Assessing Authority had made inquiries and obtained adverse confirmations from certain creditors, and that the assessee had failed to furnish documentary evidence or produce the creditors to rebut that material during assessment and on first appeal. The Tribunal had allowed the Revenue's appeal by restoring the additions but, instead of finally deciding the factual question, the High Court considered that the matter warranted further fact finding. In view of the absence of satisfactory documentary proof before the authorities and the Tribunal, the Court held that the proper course was to remit the matter to the Assessing Authority for fresh adjudication to ascertain whether the alleged trade liability genuinely continued or had ceased in law so as to attract Section 41(1). The Court therefore set aside the orders of the authorities below and directed fresh assessment after giving the assessee opportunity to adduce relevant evidence. [Paras 10, 11, 12, 13]

The matter is remanded to the Assessing Authority for fresh assessment and verification whether the sundry creditor liabilities had ceased in law; orders of the authorities below are set aside and a fresh assessment for Assessment Year 2001-2002 is directed.

Final Conclusion: Appeal disposed by setting aside the orders of the authorities below and remitting the matter to the Assessing Authority for fresh assessment for Assessment Year 2001-2002 after giving the assessee a reasonable opportunity to adduce evidence; fresh assessment to be completed within one year.

Provisional release of export goods - execution of bond and furnishing of security to cover redemption fine and penalty - misdeclaration, misclassification and overvaluation of export consignments - intelligence based interception and detention pending adjudication - Customs Board Circulars on provisional release requiring bond and security

Provisional release of export goods - execution of bond and furnishing of security to cover redemption fine and penalty - misdeclaration, misclassification and overvaluation of export consignments - intelligence based interception and detention pending adjudication - Validity and reasonableness of conditions-specifically, requirement to furnish a bank guarantee in addition to a bond-as imposed for provisional release of the detained export consignments - HELD THAT: - The Court examined the Circulars which contemplate that export goods suspected of misdeclaration/value/description may be provisionally released on execution of a bond equivalent to the value of the goods along with furnishing appropriate security to cover redemption fine and penalty. The Revenue's case that the consignments were intercepted on specific intelligence and allegations of misclassification, overvaluation and an attempt to claim a higher IGST refund were noted, and the Court declined to express any view on the merits of those allegations pending adjudication. Given the stated allegations and the enabling Circulars, the Court found that the competent authority had power to impose conditions including security. Applying the above, the Court held that the requirement to furnish a bank guarantee for the stated sum was not arbitrary or unreasonable as a condition for provisional release; it is a measure to safeguard the Revenue pending final adjudication. The Court also observed that if the petitioner ultimately succeeds, the security can be released, and permitted an alternative form of security by way of immovable property to the equivalent value, to be considered by the customs authority. [Paras 10, 11, 12, 13, 15]

The conditions imposed for provisional release, including the requirement of a bank guarantee in addition to a bond, are not onerous or arbitrary and do not warrant interference; alternatively, the petitioner may furnish immovable property security of equivalent value subject to satisfaction of the first respondent.

Final Conclusion: Writ petition dismissed; impugned order of provisional release subject to bond and bank guarantee upheld as lawful and reasonable, with liberty to the petitioner to offer immovable property security in lieu of the bank guarantee for consideration by the customs authority.

Suspension and cancellation of Importer-exporter Code Number - requirement of a speaking order / reasons for punitive administrative action - notice and reasonable opportunity of hearing (audi alteram partem) - administrative reliance on confidential investigative reports requires disclosure of supporting particulars - counter-affidavit or subsequent pleadings cannot supply reasons missing from an impugned order

Suspension and cancellation of Importer-exporter Code Number - requirement of a speaking order / reasons for punitive administrative action - notice and reasonable opportunity of hearing (audi alteram partem) - Validity of the impugned order suspending the IEC in absence of specific reasons and findings - HELD THAT: - The Court examined Section 8 of the Foreign Trade (Development and Regulation) Act, 1992 and its requirement that suspension or cancellation of an IEC be preceded by a written notice stating the grounds and by affording a reasonable opportunity of representation and hearing. Although a show cause notice and subsequent hearings occurred, the impugned order dated 08.08.2019 merely recorded general references to internal communications and a report of investigative agencies without stating specific reasons or findings explaining why the IEC deserved suspension. Such general or conclusory observations do not satisfy the statutory and constitutional requirement for a reasoned order when punitive administrative action is taken. The Court therefore held that the order is non-speaking and unsustainable on that ground, without expressing any view on the truth or otherwise of the underlying allegations. [Paras 11, 12, 14]

Impugned suspension order set aside and matter remitted for fresh speaking decision on merits.

Administrative reliance on confidential investigative reports requires disclosure of supporting particulars - counter-affidavit or subsequent pleadings cannot supply reasons missing from an impugned order - Whether the respondents could rely on the counter-affidavit and confidential communications as substitute reasons for the impugned order - HELD THAT: - The Court observed that reasons for an administrative order must appear in the order itself; they cannot be supplied or cured by averments in a counter-affidavit or other supportive pleadings. Reliance on internal or confidential communications and a report of an investigative agency, without articulating the particulars that formed the basis for suspension, cannot validate a non-speaking order. Thus the averments in the respondents' counter-affidavit cannot be treated as the reasons for the impugned suspension. [Paras 12, 13]

Averments in the counter-affidavit cannot substitute for reasons absent from the impugned order; they do not cure the defect.

Final Conclusion: Writ petition allowed; impugned order of suspension set aside. Matter remitted to the authority to pass a fresh, speaking order on merits and in accordance with law within four weeks from receipt of this order.

Maintainability of writ against show cause notice - jurisdiction of adjudicating authority to issue show cause notice - challenge to origin determination under ASEAN India Free Trade Agreement - objections and replies before the Adjudicating Authority - limited scope of writ jurisdiction in respect of pre adjudicatory notices

Maintainability of writ against show cause notice - limited scope of writ jurisdiction in respect of pre adjudicatory notices - Writ petitions challenging the show cause notices are not maintainable and cannot be entertained at this stage. - HELD THAT: - The Court held that a writ against a show cause notice is impermissible unless the notice is shown on its face to be issued by a non competent authority or to be illegal. The petitions merely challenge the show cause notices issued under the Customs Act, 1962, without establishing that the issuing officer lacked competency or jurisdiction. In the absence of such a clear jurisdictional defect apparent on the face of the notices, the proper course is to raise objections before the Adjudicating Authority rather than seek writ relief. The Court therefore declined to entertain the writ petitions at this stage. [Paras 5, 8]

Writ petitions dismissed as not maintainable; petitioners must raise objections before the Adjudicating Authority.

Jurisdiction of adjudicating authority to issue show cause notice - Allegation that the investigation was conducted by an improper authority does not, by itself, oust the jurisdiction of the officer who issued the show cause notices if that officer is competent to do so. - HELD THAT: - The Court observed that even assuming the petitioners' contention that the investigation was conducted by a different authority is factually and legally correct, such a contention does not render the show cause notices void if the officer who issued them is admittedly competent and has jurisdiction to issue them. Challenges to the investigatory process and related contentions are matters to be taken up and urged before the Adjudicating Authority in the objections to the notice. [Paras 6]

Jurisdiction of the issuing officer upheld for purposes of maintainability; procedural or investigatory complaints must be raised before the Adjudicating Authority.

Challenge to origin determination under ASEAN India Free Trade Agreement - objections and replies before the Adjudicating Authority - Contention of an international origin dispute between two countries under the ASEAN India FTA cannot be adjudicated by writ at this stage and must be raised before the Adjudicating Authority. - HELD THAT: - The Court noted that the petitioners admitted that the show cause notices do not record any admission of a dispute between the countries regarding origin determination. Consequently, the alleged bilateral or treaty based dispute over origin was not a ground on the face of the notices to sustain writ jurisdiction. The correct remedy is to raise the contention by way of reply and objections before the Adjudicating Authority, which can consider the entitlement and any FTA related procedures in the adjudication process. [Paras 4, 7]

Claim of an outstanding origin determination dispute under ASEAN India FTA is not a basis for writ relief; petitioners to raise it before the Adjudicating Authority.

Final Conclusion: The writ petitions challenging the show cause notices issued under the Customs Act, 1962, are dismissed as not maintainable; petitioners are granted liberty to raise all objections, including challenges to investigatory steps and any ASEAN India FTA origin contentions, before the Adjudicating Authority within four weeks from receipt of this order.

Interest on delayed refund - voluntary payment - payment under coercion or undue influence - equity cannot furnish interest unless statute so provides - interest permissible from date fixed by appellate order

Voluntary payment - payment under coercion or undue influence - The amounts deposited by the petitioner during investigation were voluntary and not paid under coercion or compulsion. - HELD THAT: - The Court observed that the total amount was deposited on three distinct dates and that no evidence was produced to show continuance of coercion or undue influence from the first to the last deposit. The CESTAT had recorded that the deposits were voluntary, and the High Court accepted that finding, noting that if coercion had existed there was no reason for repeated separate payments. Consequently the deposits made prior to issuance of the show cause notice were held to be voluntary, and the petitioner could not claim interest on the ground of involuntary payment. [Paras 7, 9, 11]

Deposits of Rs. 28,76,578/- made on 11.03.1998, 12.05.1998 and 13.05.1998 were voluntary and not made under coercion.

Interest on delayed refund - equity cannot furnish interest unless statute so provides - interest permissible from date fixed by appellate order - Whether the petitioner was entitled to interest from the dates of deposit (March/May 1998) or for a later period fixed by the CESTAT order; and the quantum and period of interest to be paid. - HELD THAT: - Applying established precedent that interest on delayed refund cannot be awarded on equitable grounds in the absence of statutory provision, the Court rejected the petitioner's claim for interest from the dates of deposit in 1998. The CESTAT's order dated 20.11.2003 stipulated that interest would be payable if the respondents did not refund the amount within three months; the Court treated the expiration of that three-month period as the commencement date for interest liability. Noting the actual date of refund, the High Court held that the petitioner was entitled to interest at a reasonable rate for the intervening period and directed payment at 6% per annum for the period specified by the Court (from the expiry of the three-month period fixed by the CESTAT order to the date of actual payment). [Paras 7, 10, 12]

No interest is payable from the dates of deposit in 1998; interest is payable from the expiry of the three-month period indicated in the CESTAT order until actual payment, at 6% p.a., for the period directed by the Court.

Final Conclusion: Writ petition dismissed insofar as claim for interest from March/May 1998 is concerned; respondents directed to pay interest on the refunded principal at 6% per annum for the period running from the expiry of the three-month period specified in the CESTAT order to the date of actual payment, and the petition is disposed of.

Transaction value - related-party pricing - special price list (ICIN) - commercial considerations versus relationship influence - speaking order requirement - remand for fresh consideration - Customs Valuation Rules

Special price list (ICIN) - commercial considerations versus relationship influence - transaction value - Whether the adjudicating authorities sufficiently justified rejection of declared ICIN invoice values on the ground that discounts in excess of 45% were unacceptable and whether the relationship between supplier and importer influenced pricing. - HELD THAT: - The Tribunal examined the record and found that the Order-in-Original and the subsequent orders accepted many of the appellants' factual contentions - including that ICIN prices in over 90% cases were higher than previously accepted transaction values and that discounts appeared driven by commercial considerations. Despite these findings, the original authority reached a contrary conclusion that declared values below 55% of the global price list should be rejected without stating any reasoning or adducing evidence showing that the supplier-importer relationship affected pricing. The Tribunal held that the original authority did not demonstrate how it arrived at the rejection of declared values, nor did it engage with case law and documentary material relied upon by the appellant, and therefore the impugned conclusions lack the requisite explanation and evidentiary basis. [Paras 14, 15, 16]

Findings of the original authority and the appellate authority rejecting the declared ICIN values for lack of adherence to a 45% discount cap are not supported by adequate reasoning or evidence and cannot stand.

Speaking order requirement - remand for fresh consideration - What relief should follow from the absence of reasoned findings by the lower authorities. - HELD THAT: - Having found that neither the original authority nor the lower appellate authority provided a speaking, reasoned order explaining why declared ICIN values were to be rejected or how the supplier-importer relationship influenced prices, the Tribunal concluded that the proper course is to set aside the impugned orders and remit the matter. The remand is for the original authority to reconsider the valuation question afresh, taking into account all submissions, documentary material and the body of case law relied upon by the appellant, and to pass a reasoned order. The Tribunal specified procedural directions for prosecution of the remand: the appellant to file submissions with case law within eight weeks of receipt of the order, and the original authority to pass a speaking and reasoned order within a further eight weeks thereafter. [Paras 17, 18]

Impugned orders set aside; matter remanded to the original authority for fresh consideration and a speaking, reasoned order in accordance with the Tribunal's directions.

Final Conclusion: The appeal is allowed in part: impugned orders are set aside for being non-speaking and unsupported; the matter is remitted to the original authority for fresh reconsideration of the declared ICIN values, with the appellant to file submissions and authorities within eight weeks and the original authority to pass a reasoned order within a further eight weeks.

Waiver of right to be given a show-cause notice - time limit for adjudication under Section 110(2) of the Customs Act - consequence of failure to adjudicate within statutory period - provisional release of seized goods - confiscation and penalty for mis-declaration under the Customs Act

Waiver of right to be given a show-cause notice - time limit for adjudication under Section 110(2) of the Customs Act - consequence of failure to adjudicate within statutory period - provisional release of seized goods - Effect of waiver of SCN where adjudication is not completed within the period prescribed by Section 110(2). - HELD THAT: - The Tribunal held that even where the person from whom goods were seized validly waived the right to be given a SCN, the authorities remained bound to complete adjudication within the statutory period specified by Section 110(2) (initial six months and any lawful six-month extension). If no adjudication order is passed within that period, the waiver cannot be treated as binding thereafter and the consequence envisaged by Section 110(2) follows - namely unconditional release of the goods. The Tribunal applied and followed the reasoning of the Hon'ble Delhi High Court in Shivshakti Trading Company (as quoted), and rejected the Revenue's submission that provisional release of the goods made the Delhi High Court decision inapplicable. The fact that the goods had been provisionally released did not cure the failure to adjudicate within the prescribed period or permit indefinite detention/continuation of proceedings contrary to the statutory time-limit principle.

Adjudication delayed beyond the statutory period rendered the waiver ineffective; the impugned order of confiscation/penalty was set aside.

Final Conclusion: Following the reasoning in Shivshakti Trading Company, the Tribunal set aside the adjudication order (confiscation/penalty) because adjudication was not completed within the time prescribed by Section 110(2) despite waiver of SCN; the appeal was allowed.

Right to cross-examination under Section 9D of the Central Excise Act - pari materia right to cross-examination under the Customs Act - principles of natural justice - remand for de-novo adjudication after allowing cross-examination

Right to cross-examination under Section 9D of the Central Excise Act - principles of natural justice - Adjudication founded on witness statements without permitting cross-examination violates the statutory right and principles of natural justice. - HELD THAT: - The Tribunal held that where the adjudicating authority has relied upon statements of witnesses in issuing a common show-cause notice, denial of the opportunity to cross-examine those witnesses undermines fair adjudication. The statutory provision in Section 9D of the Central Excise Act and the corresponding pari materia provision in the Customs Act require that the affected parties be afforded the opportunity to test the evidence by cross-examination. The High Court had remitted one connected matter on the ground that cross-examination was not permitted; given that the same statements were relied upon across the consolidated matters, the Tribunal found it would be unjust to proceed piecemeal and to decide appeals while the issue of cross-examination remains unresolved. The Tribunal therefore concluded that permitting cross-examination is a primary requirement for fair adjudication and that reliance on untested statements is impermissible.

Findings based on witness statements recorded without permitting cross-examination are set aside as contrary to statutory right and principles of natural justice.

Remand for de-novo adjudication after allowing cross-examination - pari materia right to cross-examination under the Customs Act - Whether the matters should be remanded for fresh adjudication after permitting cross-examination of witnesses. - HELD THAT: - The Tribunal observed that the common show-cause notice and the impugned orders materially relied upon witness statements whose cross-examination had not been allowed by the adjudicating authority. Noting the High Court's direction in a related petition and the interconnectedness of the evidence across the various appeals, the Tribunal determined that the only just course is to set aside the impugned order(s) and remit the matters to the adjudicating authority for de-novo adjudication. The remand requires the adjudicating authority to permit and facilitate the cross-examination of the witnesses as requested by the appellants and thereafter decide the matters afresh in conformity with statutory procedure and principles of natural justice.

Impugned order set aside; matter remanded to adjudicating authority for de-novo adjudication after allowing cross-examination of witnesses.

Final Conclusion: Impugned order set aside and the matters remitted to the adjudicating authority for fresh adjudication after permitting cross-examination of the witnesses relied upon, in order to ensure compliance with Section 9D of the Central Excise Act, the corresponding provision in the Customs Act, and the principles of natural justice.

Condonation of delay under Section 421 of the Companies Act, 2013 - conversion of private company into limited liability partnership under Section 56 of the Limited Liability Partnership Act, 2008 - rectification of filed statutory forms and waiver of penalties - acceptance of statutory annual returns and statements dependent on prior filing of initial agreement form - obligation of registry on transition to computerized system to notify affected filers - bonafides and absence of willful negligence in statutory compliance

Condonation of delay under Section 421 of the Companies Act, 2013 - Maintainability of the appeal by reason of delay and the claim for condonation of delay. - HELD THAT: - The Appellate Tribunal held that the appeal was time-barred. The impugned order of the Tribunal was pronounced in the presence of the Registrar of Companies' counsel on 6th September, 2018 and the certified copy was made available on 15th October, 2018. The appellant filed the appeal on 4th January, 2019 but did not assign any grounds or demonstrate any sufficient cause to justify condonation of delay beyond the prescribed period. The appellant, being a party to the original proceedings, could and should have sought the certified copy or sought extension earlier; no lawful excuse or reasonable cause was shown in the condonation application. In the absence of any material to satisfy the statutory test for condonation, the appeal was held not maintainable on limitation grounds. [Paras 4]

Appeal is dismissed as hopelessly time barred for want of any sufficient cause to condone the delay.

Conversion of private company into limited liability partnership under Section 56 of the Limited Liability Partnership Act, 2008 - rectification of filed statutory forms and waiver of penalties - acceptance of statutory annual returns and statements dependent on prior filing of initial agreement form - obligation of registry on transition to computerized system to notify affected filers - bonafides and absence of willful negligence in statutory compliance - Whether the Registrar of Companies was justified in imposing penalties and in refusing to accept rectified Form-3 filed by the respondents who had earlier been accepted as LLPs and had their subsequent Forms 8 and 11 accepted till 2015-16. - HELD THAT: - On the merits, the Appellate Tribunal observed that the respondents complied with the then-prevailing procedure for conversion in 2012 and that their Form-3 had been submitted and accepted in that framework. Subsequent acceptance of Forms 8 and 11 from 2012 to 2016 without objection indicated that the initial filing had been treated as effective. The introduction of the computerized system from 2013, and the failure to capture pre-2013 filings in that database, could not be allowed to prejudice filers who had acted in accordance with the earlier regime. The Registrar ought to have notified affected entities and permitted rectification without imposing penalties; imposing a heavy penalty on entities who had otherwise complied was unjustified. The Tribunal found no willful negligence on the part of the respondents and granted them liberty to rectify omissions in Form-3 within one month with a direction that the Registrar accept the same without fee or additional fee. The Appellate Tribunal found no legal infirmity in that conclusion, viewing it as consonant with justice and the spirit of the law. [Paras 3, 5]

Tribunal's order allowing rectification of Form-3 without payment of penalty and directing acceptance of the rectified form is upheld on the merits.

Final Conclusion: The appeal is dismissed both on grounds of limitation for failure to demonstrate sufficient cause for condonation of delay and, alternatively, on merits the Tribunal's order permitting rectification of Form 3 without imposition of penalty and directing its acceptance is upheld; no order as to costs.

Constitutionality of Section 135 of the Companies Act, 2013 - Corporate Social Responsibility - interpretation of "net profit" under Section 198 - reasonable classification and equality (Article 14) - retrospective operation of administrative circulars - quashing of show cause notice as premature

Constitutionality of Section 135 of the Companies Act, 2013 - reasonable classification and equality (Article 14) - Section 135 of the Companies Act, 2013 is not unconstitutional or violative of Article 14. - HELD THAT: - The Court found that Parliament was empowered to enact Section 135 under Entries 43 and 44 of List I and that companies constitute a distinct class for regulatory treatment. The classification - applying CSR obligations to companies meeting specified net worth, turnover or profit thresholds - was held to have a rational nexus with the legislative object and to satisfy equality tests. Differences between companies and other forms of business (such as proprietorships, partnerships or trusts) and attendant differences in legal personality and liability justified the classification. Accordingly, the challenge under Article 14 fails. [Paras 11, 15, 16, 21]

Section 135 is constitutionally valid and not violative of Article 14.

Interpretation of "net profit" under Section 198 - Corporate Social Responsibility - Disputes or errors in calculating "average net profit" under Section 135 read with Section 198 do not render Section 135 void; calculation errors are amenable to correction in appropriate proceedings. - HELD THAT: - The Court observed that the term "average net profit" is addressed by Section 198 and that precise financial computation depends on facts. If the authority errs in computation, the remedy lies in challenge or correction in the appropriate forum; such potential errors do not warrant striking down the statutory provision itself. The Court refused to adjudicate detailed accounting disputes at the writ stage, noting they may be raised in separate proceedings. [Paras 3, 9, 13, 21]

Calculation disputes do not invalidate Section 135; errors in computation can be corrected separately.

Retrospective operation of administrative circulars - Circular No.21/2014 and related clarifications are not operative with retrospective effect and are legally valid insofar as they explain computation of profits. - HELD THAT: - Relying on the respondents' averments and the Frequently Asked Questions, the Court held that the impugned circular and clarifications were intended to harmonise interpretation of sub-sections (1) and (5) of Section 135 and to clarify computation for average net profit. The circular does not impose CSR liability retrospectively; prior years are used only for computing the average net profit, while the statutory liability commences from 1 April 2014. Therefore the circular and the clarification do not attract quashing. [Paras 17, 18, 19, 21]

The circular and clarifications are valid and not retrospective in operation.

Quashing of show cause notice as premature - The challenge to the show cause notice issued under Section 134(3) is premature and the show cause notice is not quashed at this stage. - HELD THAT: - The Court declined to quash the show cause notice since the respondents possessed jurisdiction to issue it and it had not been finally adjudicated. The petitioner was granted liberty to file replies and the authority was directed to adjudicate the notice in accordance with law. The Court emphasised that a possibly erroneous issuance of a notice does not justify striking down the underlying provision and premature interference is inappropriate. [Paras 20, 21]

The show cause notice is not quashed; it is premature to interfere and must be adjudicated in due course.

Validity of Rules 2 and 3(2) of the CSR Rules - Rules 2 and 3(2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are not violative of the Constitution or the Companies Act. - HELD THAT: - Having upheld the vires of Section 135 and accepted that the statutory scheme contemplates computation of net profit as explained, the Court found no ground to strike down the CSR Rules relied upon by the petitioner. The Rules' definitions and procedural provisions were held to align with the Act and do not offend constitutional or statutory provisions as argued. [Paras 10, 21]

Rules 2 and 3(2) of the CSR Rules are valid and not liable to be quashed.

Validity of administrative clarification (Query No.4 of Circular No.1/2016) - The clarification embodied in Query No.4 of Circular No.1/2016 is consistent with the Act and need not be quashed. - HELD THAT: - The Court accepted the respondents' explanation that the Query indicates that computation for Section 135 follows Section 198 and reflects the intent behind the Rules and Act. As such, the clarification harmonises statutory provisions and does not warrant annulment. [Paras 17, 19]

The administrative clarification is legally valid and is not set aside.

Final Conclusion: The writ petition is dismissed. Section 135 of the Companies Act, 2013, the challenged CSR Rules and the impugned circulars and clarifications are upheld as valid; the challenge to the show cause notice is premature and is not quashed, and the petitioner may contest computation or the notice through appropriate proceedings.

Scheme of arrangement - sanctioning of scheme - tax authorities' right of recovery - transferee's undertaking to pay tax liabilities - condition precedent - implementation pending appellate determination

Scheme of arrangement - sanctioning of scheme - tax authorities' right of recovery - transferee's undertaking to pay tax liabilities - Whether the Tribunal could make payment of disputed tax liabilities by the Transferor a precondition to sanctioning the scheme where the demands were under challenge and the Transferee had undertaken to pay any liabilities finally determined. - HELD THAT: - The Tribunal correctly noted the settled principle that sanctioning a scheme does not oust the tax authorities' right to initiate recovery proceedings and that such rights must remain intact. Where the liability is disputed and subject to adjudication, and the Transferee has undertaken in the scheme and by affidavit to satisfy any tax liabilities as finally determined by the competent fora, the scheme cannot be withheld or refused on the sole ground that disputed demands be paid immediately. The record showed pending appeals before ITAT and an express clause in the approved scheme (clause 12.7) together with affidavits by the Transferee undertaking to satisfy any amounts found due. In these circumstances the impugned condition directing the Transferor to pay the entire asserted dues as a precondition for implementation could not be sustained. The Tribunal therefore modified condition 10(b) to make the Transferee liable to pay the outstanding demands as per the stated demand position or such amount as may be determined by ITAT, and clarified that compliance with the specified outstanding demand shall not be a condition precedent to implementation of the scheme but shall await determination by ITAT, subject to any interim directions of that forum. [Paras 6, 7, 8]

Condition 10(b) of the Tribunal's sanction was modified so that the Transferee shall be liable to pay tax demands as per the outstanding demand position or as determined by ITAT, and compliance with the specified demand is not a condition precedent to implementation of the approved scheme; the appeals are allowed.

Final Conclusion: The appeals are allowed; the Tribunal's condition directing payment of the disputed tax dues as a precondition to sanctioning the scheme is set aside and recast so that the Transferee will satisfy tax liabilities as per the stated demand position or as finally determined by ITAT, and implementation of the approved scheme may proceed pending determination, subject to any interim directions of the appellate authority; no order as to costs.

Limitation for initiation of corporate insolvency resolution process - right to apply under the Insolvency and Bankruptcy Code accrues on commencement of the Code - limitation for enforcement of payment secured by mortgage - possession under SARFAESI Act and its effect on management control - concurrent audit and deployment of security guards do not amount to takeover of management

Limitation for initiation of corporate insolvency resolution process - right to apply under the Insolvency and Bankruptcy Code accrues on commencement of the Code - Whether the application under Section 7 of the I&B Code was barred by limitation. - HELD THAT: - The Tribunal held that the right to file an application under Section 7 accrued only when the I&B Code came into force on 1st December, 2016. For computing limitation for applications under Section 7, Article 137 of Part II of the Limitation Act, 1963 (three years) applies and the period runs from the date the right to apply accrues. Applying that principle, the application filed under Section 7 was not time-barred. [Paras 31]

Application under Section 7 is not barred by limitation.

Limitation for enforcement of payment secured by mortgage - Whether the claims of the consortium banks for recovery (enforcement of payment secured by mortgage) were barred by limitation. - HELD THAT: - The Tribunal referred to Articles 61 and 62 of Part V of the Limitation Act, 1963 and noted that enforcement of payment of money secured by a mortgage is governed by a twelve-year limitation period. Given the banks had taken action under Section 13(4) of the SARFAESI Act and proceedings before the DRT were pending since 2015-16, the Tribunal concluded that the banks' claims were not barred by limitation and the corporate debtor could not contend that the debt was not payable in law on limitation grounds. [Paras 32, 33]

Claims for enforcement of payment secured by mortgage are not barred by limitation.

Possession under SARFAESI Act and its effect on management control - concurrent audit and deployment of security guards do not amount to takeover of management - Whether the State Bank of India had taken over the management of the corporate debtor so as to absolve the promoters of responsibility for default. - HELD THAT: - The Tribunal examined the material showing appointment of concurrent auditors and deployment of security guards and observed that although possession of certain units was taken and monitoring measures instituted, there was no specific order effecting a takeover of management under Section 13(4)(b) of the SARFAESI Act. The management remained with the promoters, who even opposed the bank's measures. In absence of an order conferring rights such as transfer, lease or sale under Section 13(4)(b), the Bank had not assumed actual management control; therefore, promoters could not be absolved of liability for defaults. [Paras 23, 24, 26, 28, 34]

Measures such as appointment of concurrent auditors and deployment of security guards did not amount to takeover of management; management remained with the promoters.

Final Conclusion: The impugned order admitting the Section 7 application was upheld: the Section 7 petition was not barred by limitation, the banks' claims for enforcement of payment secured by mortgage were not time-barred, and the acts of appointing concurrent auditors and security guards did not amount to a takeover of the corporate debtor's management; the appeal is dismissed.

Existence of dispute - pre-existing dispute - distinction between disputes raised before and after issuance of demand notice - demand notice under Section 8(1) of the I&B Code - admission of application under Section 9 of the I&B Code - remand for fresh consideration - requirement to prove dispute prior to Section 8 notice - limitation and laches

Existence of dispute - pre-existing dispute - requirement to prove dispute prior to Section 8 notice - demand notice under Section 8(1) of the I&B Code - admission of application under Section 9 of the I&B Code - Whether the Adjudicating Authority correctly rejected the Section 9 application on the ground of existence of a pre-existing dispute. - HELD THAT: - The appellant filed the Section 9 application and placed on record Form 5 and a demand notice dated 8th August, 2017. The respondent's reply to the demand notice was dated 8th September, 2017 and the respondent failed to produce any correspondence demonstrating that the alleged defects or disputes were communicated before issuance of the Section 8(1) demand notice. The Tribunal applied the settled principle that a dispute raised after the issuance of the demand notice cannot be treated as a pre-existing dispute for the purpose of denying admission under Section 9. The Adjudicating Authority was found to have overlooked this requirement and additionally noted matters of limitation and laches without proper discussion of the contractual chronology surrounding the Master Service Agreement and related correspondence. In view of these deficiencies, the Tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority for fresh consideration, directing admission of the application under Section 9 after notice to the corporate debtor and permitting the corporate debtor to settle the claim before admission if it so chooses.

Impugned order rejecting the Section 9 application on the ground of a pre-existing dispute is set aside; matter remitted to the Adjudicating Authority to admit the application after notice, with liberty to the corporate debtor to settle the claim.

Final Conclusion: The appeal is allowed; the impugned order dated 20th December, 2018 is set aside and the matter is remitted to the National Company Law Tribunal, Bengaluru Bench for admission of the Section 9 application after notice to the corporate debtor, who is permitted to settle the claim prior to admission if it elects to do so.

Admission of application under Section 9 of the Insolvency and Bankruptcy Code - Default in payment of operational debt - Corporate Insolvency Resolution Process (CIRP) commencement - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional and his duties - Public announcement and claims submission by creditors - Duty of directors and persons associated with management to cooperate with IRP

Admission of application under Section 9 of the Insolvency and Bankruptcy Code - Default in payment of operational debt - Corporate Insolvency Resolution Process (CIRP) commencement - Application filed by the Operational Creditor under Section 9 was admitted and CIRP ordered on finding of default. - HELD THAT: - The Tribunal found that the Operational Creditor and Corporate Debtor entered into an MoU providing for monthly rent and interest on delayed payment, and that the Corporate Debtor defaulted from April 2018. Dishonour of cheques issued by the Corporate Debtor and non-return of rented equipment were recorded. Notice under Section 8 was served and no reply or dispute was raised. The Operational Creditor filed the requisite affidavit under Section 9(3)(b) & (c) and produced the bank certificate. On these findings the Authority was satisfied that the Corporate Debtor committed default and that the Section 9 application complied with statutory requirements; accordingly the application was admitted and CIRP was ordered to commence. [Paras 5, 6, 7, 8, 9]

Application admitted and commencement of CIRP ordered.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Scope of moratorium - Moratorium declared with specified prohibitions from the date of the order till completion of CIRP. - HELD THAT: - The Tribunal declared the moratorium and specified that, during its operation, initiation or continuation of suits or other proceedings against the corporate debtor, transfer/encumbrance/alienation of assets by the corporate debtor, enforcement of security interests and recovery of property by owners/lessors occupied by the corporate debtor are prohibited. It also recorded that supply of essential goods or services shall not be terminated, suspended or interrupted during the moratorium to the extent provided by the Code and notifications. [Paras 10, 11]

Moratorium declared with the prohibitions and exceptions set out in the order.

Appointment of Interim Resolution Professional and his duties - Public announcement and claims submission by creditors - Duty of directors and persons associated with management to cooperate with IRP - An Interim Resolution Professional was appointed and directed to take charge, make public announcement, call for claims and perform statutory duties; directors and management were directed to cooperate. - HELD THAT: - The Tribunal appointed the IRP proposed by the Operational Creditor, recorded there were no disciplinary proceedings against him as per Form-2, and directed immediate taking of charge. The IRP was directed to make the public announcement as prescribed and to call for submission of claims by creditors. The IRP was ordered to comply with the provisions of the Code (including sections referenced in the order) and the directors, promoters and persons associated with management were directed to extend assistance to enable the IRP to discharge his functions. [Paras 12, 13, 14]

IRP appointed and directed to undertake public announcement, claims process and statutory duties; directors/management directed to cooperate.

Final Conclusion: The Section 9 application was admitted on finding of default; CIRP was ordered and moratorium declared; an IRP was appointed and directed to make the statutory public announcement, call for claims and take charge, with the corporate debtor's directors and management required to cooperate.

Admission of company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default - declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional - public announcement of Corporate Insolvency Resolution Process - continuation of supply of essential goods or services during moratorium

Admission of company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default - Operational Creditor established existence of operational debt and default and the Company Petition under Section 9 is to be admitted. - HELD THAT: - The Tribunal examined the invoices, proof of supply, proof of service of the Section 8 notice and the bank statement showing no payment for the relevant period. The Corporate Debtor did not file any reply to the demand notice and did not dispute the claim at hearings. On the material placed before the Bench, the Operational Creditor furnished sufficient evidence to demonstrate that an operational debt was due and that default had occurred, satisfying the requirements for admission under Section 9 of the Code. Consequently, the petition is admitted. [Paras 5, 8]

Company Petition under Section 9 admitted for initiation of Corporate Insolvency Resolution Process.

Declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - continuation of supply of essential goods or services during moratorium - Moratorium is to be declared upon admission, with specified prohibitions and protections including non-termination of essential supplies. - HELD THAT: - Upon admission of the petition and commencement of the insolvency resolution process, the Tribunal declared the moratorium and set out the prohibitions on institution or continuation of suits, transfer or encumbrance of assets by the corporate debtor, enforcement of security interests and recovery of property by owners or lessors. The order expressly protected the continuation of supply of essential goods or services to the corporate debtor during the moratorium and noted statutory exceptions as provided in the Code. The moratorium is to remain in effect until completion of the CIRP, approval of a resolution plan or an order for liquidation as applicable. [Paras 6]

Moratorium declared with the enumerated prohibitions and protections, effective from the date of the order until completion of the CIRP or as otherwise provided by the Code.

Appointment of Interim Resolution Professional - public announcement of Corporate Insolvency Resolution Process - Interim Resolution Professional proposed by the Operational Creditor is appointed and public announcement of the CIRP is to be made immediately. - HELD THAT: - The Bench, relying on the consent letter in Form-2 submitted by the Operational Creditor, appointed the proposed professional as Interim Resolution Professional to carry out functions under the Code, noting that fees will be in compliance with IBBI regulations. The order also directed that the public announcement of the Corporate Insolvency Resolution Process be made immediately as specified under the Code and directed registry to communicate the order to the parties and the IRP. [Paras 6, 7]

Proposed Interim Resolution Professional appointed and public announcement of the CIRP ordered; registry directed to communicate the order.

Final Conclusion: The Tribunal admitted the Section 9 petition on proof of operational debt and default, declared the statutory moratorium with protections for essential supplies, appointed the proposed Interim Resolution Professional, ordered immediate public announcement of the CIRP and directed communication of the order to the parties and IRP.

Taxability of cleaning of railway wagons and coaches - cleaning of commercial or industrial buildings and premises - Cleaning Service - remittal for bifurcation of demand - mandatory filing limit prescribed by circular dated 22/08/2019

Taxability of cleaning of railway wagons and coaches - Cleaning Service - cleaning of commercial or industrial buildings and premises - Tribunal's classification of cleaning of railway wagons as outside the scope of service tax and of cleaning of railway buildings/premises as taxable under Cleaning Service was left undisturbed. - HELD THAT: - The Tribunal concluded, following its precedents, that railway coaches and wagons constitute rolling stock and are not objects or premises falling within the definition of cleaning services liable to service tax, whereas cleaning of railway buildings and premises falls within the category of cleaning of commercial or industrial buildings and is taxable. The Tribunal directed the adjudicating authority to bifurcate the amounts determined and to confirm the demand only in respect of cleaning of railway premises. The High Court, examining the order, did not overrule these conclusions and proceeded on the basis that the Tribunal's reasoning on distinction between wagons/coaches and railway premises governed the liability.

Tribunal's determination that cleaning of wagons/coaches is not taxable but cleaning of railway buildings/premises is taxable, with direction to bifurcate demand, is sustained.

Remittal for bifurcation of demand - mandatory filing limit prescribed by circular dated 22/08/2019 - Whether the appeal before the High Court should be entertained and the ultimate disposal given the Tribunal's remittal and the amount involved under the circular dated 22/08/2019. - HELD THAT: - The High Court noted that the Tribunal remitted the matter to the original authority for bifurcation of the demand and that the overall demand involved fell within the scope of the mandatory limit set out in the circular dated 22/08/2019. Having regard to the total amount and the Tribunal's direction for bifurcation, the Court concluded that the matter came within the said circular and found no ground to interfere with the Tribunal's order.

Appeal dismissed; High Court declined to interfere with the Tribunal's remittal and directions in light of the mandatory filing limit under the circular.

Final Conclusion: The High Court dismissed the appeal, leaving intact the Tribunal's conclusion that cleaning of railway wagons/coaches is not taxable while cleaning of railway buildings/premises is taxable, and sustaining the Tribunal's direction to bifurcate the demand; the High Court found the matter to fall within the mandatory limit prescribed by the circular dated 22/08/2019 and did not interfere.

Jurisdiction of show cause notice - authority to adjudicate service tax show cause notice - role of Audit Commissionerate under Circular No. 985/09/2014-CX - application of Central Excise adjudicatory powers to service tax - adjudication on merits after remand

Jurisdiction of show cause notice - authority to adjudicate service tax show cause notice - application of Central Excise adjudicatory powers to service tax - The show cause notice dated 19th April, 2016 was not issued without jurisdiction by the Principal Commissioner, Service Tax Audit Commissionerate, Kolkata, and the adjudicating authority named in the notice was competent under the applicable scheme. - HELD THAT: - The Court examined the statutory scheme under the Finance Act, 1994 as amended and the vesting of adjudicatory powers by reference to provisions made applicable from the Central Excise law. It considered Circular No. 985/09/2014-CX (paras. 5.1-5.3) which contemplates that the Audit Commissionerate may issue show cause notices following the Monitoring Committee Meeting and that final decisions to issue such notices rest with the Audit Commissioner, while adjudication is to be undertaken by the Executive Commissioner or officers of the Executive Commissionerate within prescribed limits. Applying that scheme, the Court held that issuance of the show cause notice by the Principal Commissioner, Service Tax Audit Commissionerate, Kolkata and the specification in the notice of the Commissioner, Service Tax-II Commissionerate, as the adjudicating authority did not render the notice jurisdictionally invalid. The objection to jurisdiction was therefore rejected and the matter required determination on merits.

Objection that the show cause notice was without jurisdiction is rejected; the notice is not invalid for want of jurisdiction.

Role of Audit Commissionerate under Circular No. 985/09/2014-CX - adjudication on merits after remand - Whether the adjudication already undertaken on 17th March, 2017 should stand or be set aside for fresh adjudication on merits. - HELD THAT: - Although the Court found the show cause notice itself to be intra vires, the record showed that in the absence of any interim protection the Audit Commissionerate proceeded to adjudicate the matter on 17th March, 2017 while the writ appeal was pending. To ensure complete justice and to afford the appellants an opportunity to be heard on the merits, the Court directed that the adjudication dated 17th March, 2017 be set aside. The Service Tax Audit Commissionerate, Kolkata was directed to make fresh adjudication on the same show cause notice, hearing the appellants and passing a reasoned order which shall be published and communicated within three months of communication of this order.

Adjudication dated 17th March, 2017 set aside; matter remanded for fresh adjudication on merits with opportunity of hearing and a reasoned order to be passed within three months.

Final Conclusion: The writ appeal was modified to the extent that the show cause notice was held to be valid as issued, but the subsequent adjudication of 17th March, 2017 was set aside and the matter remanded to the Service Tax Audit Commissionerate, Kolkata for fresh adjudication on merits with an opportunity to be heard and a reasoned order to be rendered within three months; the appeals are disposed accordingly.

Penalty for failure to pay service tax for reasons of fraud, collusion or suppression (Section 78) - discretion to remit or delete penalty under Section 80 - requirement of deliberate deception / intent to evade as condition precedent to Section 78 - statutory mitigation where tax and interest paid within thirty days of show cause notice - pari materia application of decisions under central excise penalty provision (Section 11AC)

Penalty for failure to pay service tax for reasons of fraud, collusion or suppression (Section 78) - discretion to remit or delete penalty under Section 80 - requirement of deliberate deception / intent to evade as condition precedent to Section 78 - statutory mitigation where tax and interest paid within thirty days of show cause notice - Whether imposition of penalty under Section 78 of the Finance Act, 1994 was justified on the facts of the present case and whether penalty should be deleted under Section 80. - HELD THAT: - The Tribunal found that the facts were not disputed and that the tax demand itself was not contested. The record indicated the Department was made aware of the service tax collection and subsequent remittance as early as 2009 and that a substantial payment had been appropriated in the adjudication. The statute contemplates mitigation where tax and interest are paid within the statutory temporal cushion after issuance of the show cause notice and Section 78 is not an automatic consequence of non-payment; it requires proof of deliberate deception or intent to evade, a principle reinforced by the Apex Court's interpretation of the pari materia excise penalty provision. The adjudicating order contained only bald allegations of suppression and non-filing of returns; mere non-filing of ST-3 and the stated omissions, in the absence of material establishing deliberate deception, were held to be insufficient to attract Section 78. In these circumstances, and having regard to this Bench's own precedent in the appellant's subsequent period, the Tribunal exercised the discretionary power under Section 80 to delete the penalty levied under Section 78. [Paras 6, 7, 8, 9]

Penalty under Section 78 deleted by exercise of discretion under Section 80; impugned order set aside and appeal allowed.

Final Conclusion: On the admitted facts and absence of material establishing deliberate deception or intent to evade, the Tribunal deleted the penalty under Section 78 by exercising discretion under Section 80 and allowed the appeal.

Applicability of Circular No.108/02/2009 excluding construction for personal use from residential complex service - Validity of levy of service tax on composite contracts prior to 1.6.2007 - Refundability of service tax paid under mistake of law despite limitation under section 11B

Applicability of Circular No.108/02/2009 excluding construction for personal use from residential complex service - Refund for service tax collected from purchasers under construction agreements - The Circular dated 29.1.2009 applies where a purchaser enters into an agreement with a builder for construction and receives the residential property for personal use, and the service tax paid by such purchasers was paid under a mistake of law. - HELD THAT: - The record shows each appellant entered into a separate agreement with the builder for construction of flats and received possession prior to 12.4.2007, facts not disputed by the department. Paragraph 3 of Circular No.108/02/2009 clarifies that where the purchaser contracts with the builder for construction and takes the property for personal use, the exclusion in the definition of 'residential complex' applies and such activity is not subject to service tax. Applying the circular to the undisputed facts, the Tribunal found that the service tax collected from the appellants was paid under a mistake of law and the circular therefore supports entitlement to refund. [Paras 5]

Refund claims are sustainable on the ground that the circular excludes construction for personal use from residential complex service and the tax was paid under mistake of law.

Validity of levy of service tax on composite contracts prior to 1.6.2007 - Effect of Larsen & Toubro on composite contract levies - Levy of service tax on composite contracts in respect of construction of residential complexes prior to 1.6.2007 is unconstitutional and supports refund of the service tax collected from the appellants. - HELD THAT: - The Tribunal accepted the appellants' reliance on the Apex Court's decision in Commissioner of Central Excise, Kerala Vs. Larsen & Toubro Ltd., which held that levy of service tax on composite contracts prior to 1.6.2007 is unconstitutional. Since the service tax was collected from the appellants before that date, the levy cannot be sustained and operates in favor of granting refund. [Paras 5]

Service tax levied on the appellants' composite construction contracts prior to 1.6.2007 cannot be sustained and supports grant of refund.

Refundability of service tax paid under mistake of law despite limitation under section 11B - Limitation under section 11B and mistake of law - Limitation under section 11B does not bar refund of service tax erroneously paid under a mistake of law in the circumstances of these cases. - HELD THAT: - While section 11B prescribes a statutory period for filing refund claims, the Tribunal considered authorities addressing refunds of tax paid under mistake of law and accepted the view that limitation under section 11B is not a bar where payment was made erroneously. The Tribunal relied upon judicial decisions to the effect that erroneous payment of service tax must be refunded to the applicant and that the statutory limitation does not defeat such claims where mistake of law is established. Applying those principles to the appellants' undisputed facts and the accompanying precedents, the Tribunal held the limitation defence to be untenable. [Paras 5]

The refund claims are not time-barred by section 11B where the service tax was paid under a mistake of law; limitation does not defeat the appellants' entitlement to refund.

Final Conclusion: Impugned orders rejecting the refund claims are set aside; the appeals are allowed and the appellants are entitled to refund of the service tax paid, with consequential relief as applicable.

Valuation of taxable services - consideration - non-monetary consideration - export of services - input service - CENVAT credit - reverse charge - point of taxation - interest on late payment of service tax - remand for fresh consideration

Valuation of taxable services - consideration - non-monetary consideration - Inclusion of advertisement expenditure incurred by franchisees in the taxable value of franchisor's services - HELD THAT: - The Tribunal held that the Principal Commissioner misread Clause 5 of the franchise agreement by conflating expenditure for advertising the franchisee's specific 'Restaurant' with consideration paid to the franchisor for its services. The agreement distinguishes between the franchisee's Restaurant (capital 'R') and the McDonald's System; the obligation to spend not less than 5% of gross sales is for advertising the franchisee's Restaurant and accrues to the franchisee's benefit. Absent any amount charged by the franchisor or deposit into a franchisor-controlled advertising fund, no extra consideration flowed to the franchisor. Reliance on Rule 5(1) of the 2006 Rules was also misplaced because the Tribunal has held that such rules cannot expand the scope of Section 67 to include amounts that are not consideration 'for such service'. Accordingly the finding that advertisement expenses formed part of the franchisor's taxable value was erroneous and is set aside.

Demand in respect of inclusion of franchisee advertisement expenses in the taxable value is set aside.

Input service - CENVAT credit - reverse charge - Validity of denial of CENVAT credit on import of franchisee service and its utilisation for management consultancy service - HELD THAT: - The Tribunal found the Principal Commissioner's conclusion - that the imported franchisee service was not an input service for the management consultancy provided by the appellant - unsustainable. The imported franchisee service and the management consultancy rendered to the parent were held to be inextricably linked; the imported service qualified as an input service within the illustrative definition under the CENVAT Credit Rules applicable for the period in dispute. There is no requirement of one-to-one correlation for utilization where the service otherwise qualifies as an input service. The Principal Commissioner's denial of credit and the consequent short-payment finding cannot be sustained.

Demand based on alleged wrong utilisation of CENVAT credit is set aside.

Export of services - convertible foreign exchange - remand for fresh consideration - Whether management consultancy services were correctly treated as export of services by the appellant (i.e., whether payment was received in convertible foreign exchange) - HELD THAT: - Rule 3(2) of the Export of Service Rules requires payment for export of a taxable service to be received in convertible foreign exchange. The Tribunal observed that the Principal Commissioner relied on RBI guidelines prescribing realisation within one year but did not examine whether remittances were in fact received after that period. As there is no temporal limit in Rule 3(2) itself, the Tribunal remitted the matter to the Principal Commissioner for fresh consideration and recording of findings on whether convertible foreign exchange receipts were ultimately realised, and to pass a reasoned order in light of those findings.

Issue remitted to the Principal Commissioner for fresh, reasoned decision on receipt of export consideration in convertible foreign exchange.

Interest on late payment of service tax - point of taxation - reverse charge - Claim for interest on alleged late payment of service tax in respect of franchisee fees remitted to the overseas parent - HELD THAT: - The Tribunal held that the Principal Commissioner erred in equating forward-charge (local franchisee receipts) and reverse-charge (payments to overseas associated enterprise) regimes. For the relevant period the tax point was linked to receipt/booking in accounts, and the appellant's practice of yearly accrual and booking in the books coincided with payment/entry dates. Applying the applicable point-of-taxation principle, there was no demonstrable delay warranting interest. The Principal Commissioner also accepted there was no loss to the exchequer but nonetheless inferred deliberate delay without documentary basis; that finding was unwarranted.

Demand of interest on late payment in respect of overseas franchisee fees is set aside.

Final Conclusion: The appeal is allowed in part: demands confirmed in respect of issues (i) inclusion of franchisee advertisement expenses and (ii) wrong utilisation of CENVAT credit, and (iv) interest on late payment are set aside. The question whether management consultancy services qualified as exports (receipt of payment in convertible foreign exchange) is remitted to the Principal Commissioner for fresh, reasoned adjudication.

Taxability of corporate guarantee without consideration - Consideration as essential element of taxable service - Burden of proof to establish indirect consideration or benefit - Classification of upfront fee as interest or fee - Interest on loan excluded from taxable value by revenue circular

Taxability of corporate guarantee without consideration - Consideration as essential element of taxable service - Burden of proof to establish indirect consideration or benefit - Appellant-assessee not liable to pay service tax on corporate guarantees given to banks/financial institutions on behalf of holding companies/associates where no consideration was received. - HELD THAT: - The tribunal recorded that it is an admitted fact the appellant-assessee did not receive any consideration either from the financial institutions or from their associates for providing the corporate guarantees. The department's demand rested on assumptions and presumptions that associates obtained loans at lower rates and that the differential interest constituted consideration, but no evidence was produced to substantiate such indirect benefit. In the absence of proof of consideration or demonstrable benefit flowing to the guarantor, the activity cannot be treated as a taxable service under Banking and Financial Institutions. Applying the principle that consideration is an essential element of a taxable service and that the revenue bears the burden to establish such consideration, the tribunal held that no service tax was payable in respect of the guarantees, and consequently any penalties premised on the demand could not be sustained. [Paras 3, 4]

Impugned orders confirming demand of service tax on corporate guarantees set aside; no service tax or penalty payable.

Classification of upfront fee as interest or fee - Interest on loan excluded from taxable value by revenue circular - Offshore Upfront Fee charged on foreign currency buyer credit facility is an element of interest and not a separate taxable fee; hence not includible in taxable value for service tax. - HELD THAT: - The tribunal examined the nature of the Offshore Upfront Fee and the material produced by the respondent, including a bank communication indicating that the upfront charge was in substance interest on the buyer credit transaction as per RBI guidelines. Given that interest on loans is excluded from taxable value under the revenue circular relied upon, the tribunal concluded that the charge is interest rather than a distinct service fee. Thus the demand for service tax on that amount was correctly dropped by the adjudicating authority and the revenue's appeal failed for lack of merit. [Paras 7]

Revenue's appeal dismissed; no service tax payable on the Offshore Upfront Fee.

Final Conclusion: The appeals by the appellant-assessee are allowed insofar as service tax demands and penalties on corporate guarantees are set aside; the revenue's appeal is dismissed insofar as the Offshore Upfront Fee is held to be interest not subject to service tax.

Penalty under Section 11-AC - payment of duty prior to issuance of show cause notice - bona fide mistake defence - revenue-neutrality of assessment - concurrent finding of fact - entertainability of a substantial question of law - extended period of limitation

Penalty under Section 11-AC - revenue-neutrality of assessment - bona fide mistake defence - entertainability of a substantial question of law - Challenge to imposition of penalty under Section 11-AC on the ground that the tax demand was unsustainable and that payment would be revenue neutral was not entertained by the High Court. - HELD THAT: - The contention that no duty could be demanded (and hence no penalty imposed) because the goods were cleared under an alternate procedure or that the duty payment would be revenue neutral was raised for the first time before the High Court. There were no supporting facts on record to decide that legal submission; the Court declined to decide the matter in vacuo and held that the point did not give rise to any substantial question of law warranting interference with the Tribunal's order. [Paras 8]

Point not entertained; argument raised for the first time before the High Court and does not raise a substantial question of law.

Penalty under Section 11-AC - payment of duty prior to issuance of show cause notice - concurrent finding of fact - Whether payment of the duty (with interest) before issuance of the show cause notice absolved the appellant from penalty was not accepted and was not treated as a substantial question of law. - HELD THAT: - All authorities made concurrent factual findings that the appellant deliberately suppressed the value of free supplies and was aware that such value had to be included in assessable value; these findings were based on evidence (statements of employees and suppliers). In light of the concurrent finding of deliberate suppression and the precedent relied upon by the Tribunal, the submission that pre notice payment of duty precluded penalty was correctly rejected and does not amount to a substantial question of law for interference. [Paras 9]

Point not entertained; concurrent factual findings sustain imposition of penalty and no substantial question of law is made out.

Final Conclusion: Appeal dismissed; the High Court declined to entertain the fresh legal contentions raised before it and upheld the Tribunal's conclusion that penalty under Section 11 AC was sustainable on the basis of concurrent factual findings.

Manufacture - excisable goods - classification under Heading 7308 - processing operations: cutting, drilling, punching, bending, straightening - binding effect of Tribunal decisions and their acceptance by higher authorities - recovery under Section 11(A) of the Central Excise Act

Manufacture - processing operations: cutting, drilling, punching, bending, straightening - classification under Heading 7308 - binding effect of Tribunal decisions and their acceptance by higher authorities - recovery under Section 11(A) of the Central Excise Act - Processing of MS angles, channels and plates by cutting, drilling and related operations does not amount to manufacture and the demand and penalty confirmed by Order No.8 of 2014 cannot be sustained. - HELD THAT: - The petitioner carried out processes such as cutting and drilling of MS angles and allied operations. Earlier decisions of the Tribunal in the petitioner's own matters held that such processing does not amount to manufacture and thus the products were non-excisable; those conclusions were accepted by the Department for earlier periods and the CESTAT's findings for later periods were upheld by the Supreme Court when challenged. Although the respondent initially proposed classification under Heading 7308 and invoked recovery under Section 11(A), subsequent administrative and appellate orders recognised that no new product was manufactured. The impugned order takes a contrary view treating the processes as manufacture and confirming duty and penalty; in light of the binding Tribunal/ appellate outcomes and the Department's prior acceptance, that conclusion cannot be sustained.

Order No.8 of 2014 dated 11.12.2014 confirming demand and imposing penalty is quashed; the Writ Petition is allowed.

Final Conclusion: The writ petition succeeds: the demand and penalty confirmed by the Commissioner by Order No.8 of 2014 are set aside on the ground that the processing activity did not amount to manufacture and therefore was not liable to central excise as held by the Tribunal and accepted by higher authorities.

Penalty under section 11AC of the Central Excise Act, 1944 - payment of duty prior to issuance of show cause notice and penalty liability - error in SAP ERP software as defence to penalty - Cenvat credit - revenue neutrality of intra unit transfers - non speaking order and duty to decide specific contentions

Penalty under section 11AC of the Central Excise Act, 1944 - payment of duty prior to issuance of show cause notice and penalty liability - error in SAP ERP software as defence to penalty - Whether payment of duty and a claimed software error absolved the appellant from liability to penalty for short payment of duty. - HELD THAT: - The Court upheld the Tribunal's conclusion that payment of the shortfall in duty, even if made before issuance of the show cause notice, does not, by itself, absolve the appellant from imposition of penalty. Prior decisions of higher fora rejecting payment before notice as an absolute defence were followed. The Court further found that the appellant's plea of a long standing SAP ERP technical error was not a satisfactory explanation for gaps persisting over two to three years, particularly where invoices showed duty being collected from customers but not remitted to Revenue. The Tribunal's view that the alleged system error could not have continued unnoticed for such an extended period was not perverse, and the finding against the appellant on finished goods was affirmed. [Paras 10, 11, 18]

Finding against the appellant on the defence of prior payment and software error; the Tribunal's conclusion upholding penalty in respect of finished goods is confirmed.

Cenvat credit - revenue neutrality of intra unit transfers - non speaking order and duty to decide specific contentions - Whether clearances of intermediate/unfinished goods between the appellant's two units were revenue neutral (by virtue of Cenvat credit) and therefore not liable to penalty - and whether the Tribunal dealt with this contention. - HELD THAT: - The Tribunal's impugned order refers to the appellant's submission that transfers between Unit No.1 and Unit No.2 were revenue neutral and that the receiving unit could take Cenvat credit, but the Tribunal did not address this specific contention in its discussion. The Revenue was unable to show that the Tribunal considered and decided the point. Because the Tribunal failed to deal with the pleaded contention on revenue neutrality, the order is non speaking on this ground. The matter is therefore remitted to the Tribunal to decide the question on merits confined to unfinished/intermediate goods transfers between the two units, as raised in paragraph 3.2(i) of the impugned order. [Paras 14, 17, 19, 20]

Tribunal's order set aside to the extent it failed to decide the revenue neutrality contention; matter remitted to the Tribunal for fresh consideration on that specific issue (limited to unfinished goods transfers between the two units).

Final Conclusion: The judgment affirms the Tribunal's rejection of the appellant's defence of prior payment and SAP ERP error in respect of finished goods and confirms imposition of penalty on that count, but sets aside the Tribunal's order as non speaking on the contention of revenue neutrality of intra unit transfers of unfinished goods and remits that discrete issue to the Tribunal for fresh decision.

Transaction value - valuation by Cost Accountant (CAS-4) certificate - disregard of sales below manufacturing cost (Fiat India principle) - extended period of limitation where suppression or fraud is alleged - acceptance of documents placed before audit team and its effect on limitation

Transaction value - valuation by Cost Accountant (CAS-4) certificate - disregard of sales below manufacturing cost (Fiat India principle) - Whether valuation for excise purposes must be determined by the transaction value as certified in the CAS-4 and whether the Fiat India ratio could be applied to disregard the assessee's declared sale prices. - HELD THAT: - The Tribunal examined the amended valuation regime which post-01.07.2000 adopts transaction value as the primary determinative criterion. Transaction value means the price actually paid or payable for the goods and includes amounts connected with the sale. Where the assessee's valuation is supported by a qualified Cost Accountant's CAS-4 certificate and that certificate has been placed on the Revenue's records and scrutinised by the audit party without objection, the valuation so certified constitutes the transaction value. The Fiat India line of authorities addresses circumstances where persistent and exceptional below-cost sales indicate that such prices are not 'ordinarily sold' and may be disregarded; however, that ratio cannot be blindly applied where the statutory test under the amended provision points to transaction value and where the Revenue had on record and scrutinised the CAS-4. Given that the CAS-4 certificate was before the audit party and accepted for scrutiny, the adjudicating authority was obliged to base valuation on the CAS-4 transaction value rather than invoke Fiat India to substitute a fictional price. [Paras 7, 8]

Valuation must follow the transaction value as per the CAS-4 certificate on record; the Fiat India ratio is not to be blindly applied where the CAS-4 transaction value has been placed before and scrutinised by the audit party.

Extended period of limitation where suppression or fraud is alleged - acceptance of documents placed before audit team and its effect on limitation - Whether invocation of the extended period of limitation was justified where the Revenue had received and scrutinised the assessee's CAS-4 and other documents during audit. - HELD THAT: - The Tribunal found that the audit team had called for and acknowledged receipt of the CAS-4 certificate and other details, and the Assistant Commissioner recorded that the assessee had furnished all required documents without issuing any deficiency notice. Where the Revenue was thus aware of the method of valuation and possessed the relevant certified documents during audit, there was no room for alleging suppression, fraud or concealment that would warrant invoking the extended limitation period. Consequently, the Show Cause Notice dated 26.04.2018 was held to be time-barred for invocation of extended limitation on the grounds relied upon. [Paras 7, 8]

Invocation of the extended period of limitation was not justified; the Show Cause Notice was barred by limitation given the Revenue's prior knowledge and scrutiny of the CAS-4 and related documents.

Final Conclusion: The impugned order upholding valuation other than the CAS-4 transaction value is set aside; the adjudicating authority is directed to accept valuation as per the CAS-4 certificate and the appeal is allowed with consequential benefits, the extended period of limitation having been held unjustified.

Cenvat credit on catering and housekeeping services - Rule 12A transfer of CENVAT credit by LTU - credit on recoveries from employees towards canteen services - invocation of extended period - penalty under section 78 Finance Act 1994

Cenvat credit on catering and housekeeping services - Entitlement to Cenvat credit on catering and house-keeping services - HELD THAT: - The Tribunal accepted the settled principle that service tax paid on catering and house-keeping services were eligible inputs prior to the negative list, and both the adjudicating authority and the first appellate authority had correctly held such credits to be admissible. The appellant's contention that the show-cause notice lacked specific grounds was rejected because the notice's narration sufficiently alleged inadmissibility and justified adjudication on merits. [Paras 5]

Cenvat credit on catering and house-keeping services was held to be admissible.

Rule 12A transfer of CENVAT credit by LTU - Permissibility of transfer and utilisation of Cenvat credit between LTU-registered premises (EOU to DTA) - HELD THAT: - Rule 12A permits a large taxpayer to transfer CENVAT credit between its registered premises by prescribed entries and transfer challans. A plain reading of the provision shows that credit available with one registered manufacturing premise can be utilised by another registered manufacturing premise; where transfer originates from premises providing taxable service, recipient must also provide taxable service. Applied to the facts, the Tribunal concluded that credit attributable to the EOU could be taken and utilised by the appellant's DTA unit registered under LTU. [Paras 5]

The credit attributable to the EOU could be utilised by the appellant DTA under Rule 12A.

Credit on recoveries from employees towards canteen services - invocation of extended period - penalty under section 78 Finance Act 1994 - Admissibility of credit on amounts recovered from employees and consequences for invocation of extended period and penalty - HELD THAT: - The Tribunal noted authoritative decisions (including the Bombay High Court in UltraTech Cement Ltd) holding that credit on recoveries made from employees for canteen services is not admissible. However, recognising that the law on admissibility had been unsettled, the Tribunal held that invocation of the extended period was not permissible in the circumstances of this case; further, because the second show-cause notice related only to the normal period and there was no indication of mala fide intent by the appellant, confirmation of penalty under section 78 was held to be unsustainable. [Paras 6, 7]

Credit on recoveries from employees held inadmissible; extended period could not be invoked; penalty under section 78 set aside.

Final Conclusion: The appeal is partially allowed: credits on catering and housekeeping services and inter-unit transfer under Rule 12A were upheld in favour of the appellant, while credits on employee recoveries were held inadmissible; invocation of the extended period was refused and the penalty under section 78 was set aside.

Admissibility of Cenvat Credit - Hotel Accommodation Service used for business purpose - Mandap Keeper Service used for organising business conferences - input service "directly used for the purpose of business" doctrine - distinction from Outdoor Catering Service employed for personal consumption

Mandap Keeper Service used for organising business conferences - admissibility of Cenvat Credit - input service "directly used for the purpose of business" doctrine - Cenvat Credit in respect of Mandap Keeper Service is admissible. - HELD THAT: - The Tribunal found that the Mandap Keeper Service was utilised for arranging a business conference which was a necessity for running the appellant's business and that the expenditure was borne and recorded by the appellant. The Tribunal relied on earlier decisions of the same forum (including the appellant's sister unit) where Cenvat Credit on Mandap Keeper Service was allowed, and on that basis concluded that the service is an input service directly used for the purpose of business and therefore eligible for Cenvat Credit. [Paras 4, 5]

Cenvat Credit on Mandap Keeper Service allowed; impugned order set aside on this point.

Hotel Accommodation Service used for business purpose - admissibility of Cenvat Credit - input service "directly used for the purpose of business" doctrine - distinction from Outdoor Catering Service employed for personal consumption - Cenvat Credit in respect of Hotel Accommodation Service is admissible. - HELD THAT: - The Tribunal recorded that hotel accommodation was used for lodging staff who travelled for business purposes, the expenditure was borne and booked by the appellant, and precedents of this Tribunal (including decisions allowing Cenvat Credit on hotel stay) support allowance. The Tribunal distinguished contrary authority relied upon by the Revenue as relating to outdoor catering services provided for personal consumption, which are factually different and therefore inapplicable. Applying the principle that an input service directly used for the purpose of business is eligible, the Tribunal allowed the credit. [Paras 4, 5, 6]

Cenvat Credit on Hotel Accommodation Service allowed; impugned order set aside on this point.

Final Conclusion: The impugned order is set aside and the appeal is allowed: Cenvat Credit in respect of Mandap Keeper Service and Hotel Accommodation Service has been held admissible, financial entries being borne by the appellant and the services being directly used for the purpose of the appellant's business; contrary decisions relied upon by the Revenue were distinguished as relating to services for personal consumption.

Eligibility of input service credit - renting/hiring of crates as an input service - distinction between renting of crates and outward transportation/GTA services - restriction of credit 'upto the place of removal' applicable to outward transportation of goods only - rejection of credit for services availed beyond the place of removal

Eligibility of input service credit - renting/hiring of crates as an input service - distinction between renting of crates and outward transportation/GTA services - restriction of credit 'upto the place of removal' applicable to outward transportation of goods only - Credit of service tax paid on hiring/renting of crates used for packing/stacking and supplied to buyers' premises is admissible as input service credit. - HELD THAT: - The Tribunal found that the services for which credit was denied related to renting of crates and not to outward transportation (GTA) services. The amendment substituting 'upto the place of removal' in the definition of input services restricts availability of credit only in respect of outward transportation of goods; it does not render other distinct input services ineligible merely because the same crates accompanied goods to the buyer's premises. The appellant produced invoices for hiring charges of crates (recorded in the paper book at paras. 73-75) and the Tribunal followed the earlier decision in the appellant's own case in favour of allowing credit. Applying this reasoning, the rejection of credit by the authorities below was held to be unjustified. [Paras 5]

The denial of input credit on service tax paid for hiring/renting of crates is set aside and the appeal is allowed with consequential reliefs.

Final Conclusion: Appeal allowed; impugned order denying input credit on hiring/renting of crates set aside and credit held admissible, with consequential reliefs if any.

Eligibility of input service credit on warranty repair and maintenance services - nexus between input services and manufacturing activity - place of removal limitation on availing input service credit - exclusion in definition of input services relating to repair and maintenance of motor vehicles

Eligibility of input service credit on warranty repair and maintenance services - nexus between input services and manufacturing activity - Credit on service tax paid for repair and maintenance carried out by dealers during warranty claims is eligible as input service for the appellant. - HELD THAT: - The Tribunal found that the appellant, a manufacturer of motor vehicle parts and accessories, was obliged to supply parts to vehicle manufacturers to meet warranty claims and had included warranty charges in the assessable value while discharging excise duty. The repair and maintenance services performed by dealers during warranty claims are connected to and have nexus with the appellant's manufacturing activity, and the appellant availed credit of service tax paid on such services. The original show-cause allegation that input services lacked nexus with manufacturing was factually incorrect and was effectively rejected. On these facts the Tribunal held that the services qualify as input services for the appellant and the denial of credit on this ground was unjustified. [Paras 5, 6]

Credit on warranty repair and maintenance services is allowable as input service since such services have nexus with the appellant's manufacturing activity.

Place of removal limitation on availing input service credit - Denial of credit on the ground that input services were availed beyond the place of removal is not sustainable in the facts of this case. - HELD THAT: - The Tribunal observed that the adjudicating authority introduced a new ground - that the services were availed outside the place of removal - which was not in the show-cause notice. The Court held the cited apex decision regarding services availed beyond place of removal was inapplicable because the warranty repair and maintenance services were not services connected with outward transportation but were in relation to supply of parts during warranty period. Further, the Tribunal noted that input services listed under Rule 2(l) are not confined to being availed inside the factory and there is no legal basis to restrict all input services to the place of removal. Reliance upon authority to bar credit on the ground of place of removal was therefore rejected. [Paras 6]

Rejection of credit solely because the warranty services were availed beyond the place of removal is without legal basis and cannot sustain the disallowance.

Exclusion in definition of input services relating to repair and maintenance of motor vehicles - The exclusion in the definition of 'input services' for repair and maintenance relating to motor vehicles which are not capital goods does not apply to the appellant. - HELD THAT: - The Tribunal analysed the exclusion introduced w.e.f. 1.7.2012 and noted that the exclusion disallows credit for repair and maintenance of motor vehicles not being capital goods except when such services are used by (a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person, or (b) an insurance company in respect of a motor vehicle insured or reinsured by such person. The appellant, being a manufacturer of parts and accessories who supplies to original vehicle manufacturers and who has included warranty charges in assessable value, does not fall within the exclusion's ambit. Consequently, the exclusion could not be invoked to deny credit to the appellant. [Paras 7]

The exclusion in the definition of input services does not operate to deny credit to the appellant; the disallowance on this ground is unsustainable.

Final Conclusion: The appeal is allowed: the disallowance of input service credit on warranty repair and maintenance services for Jan.'16 to Jun.'17 is set aside, the Tribunal finding that such services have nexus with the appellant's manufacturing activity, the place-of-removal objection is inapplicable, and the statutory exclusion does not cover the appellant.

Penalty for suppression of sales - willful and deliberate suppression - opportunity of hearing before imposing penalty - remand for fresh consideration of penalty - deemed assessment under Section 22(2) of the TNVAT Act, 2006

Penalty for suppression of sales - willful and deliberate suppression - Imposition of penalty cannot be sustained in the absence of a specific finding that the sale suppression was willful and deliberate. - HELD THAT: - The Enforcement Wing found two sale invoices not accounted and the dealer paid the tax liability during inspection. The Assessing Officer confirmed the proposal for penalty but did not record any independent reasoning or a specific finding that the non-accounting of the two invoices was willful and deliberate. The Court held that where penalty is imposed for suppression, the Assessing Officer must expressly record a finding that the suppression was willful and deliberate; absent such a finding the order imposing penalty is not sustainable. The Court did not express any view on the factual claim that one invoice related to an interstate transaction, leaving factual determination to the Assessing Officer on reconsideration. [Paras 7, 8]

Impugned penalty order set aside for lack of specific finding of willful and deliberate suppression.

Opportunity of hearing before imposing penalty - remand for fresh consideration of penalty - The matter of penalty is remitted to the Assessing Officer for fresh consideration after affording the petitioner an opportunity of hearing. - HELD THAT: - Because the Assessing Officer did not record the determinative finding required to sustain a penalty, the Court remitted the question of penalty for fresh consideration. The Assessing Officer is directed to reconsider the issue of penalty, hear the petitioner, address the contention about the nature of the invoices (including the claim of interstate transaction) and record express findings on whether suppression was willful and deliberate. The reconsideration is to be completed within six weeks from receipt of this order. [Paras 8, 9]

Penalty matter remitted to the Assessing Officer to be reconsidered after hearing the petitioner within six weeks; impugned penalty order set aside in the meantime.

Final Conclusion: Writ petition allowed in part: impugned order insofar as it imposes penalty is set aside and remitted to the Assessing Officer for fresh consideration after hearing the petitioner; other aspects of assessment left undisturbed.

Availability of efficacious alternative remedy - extraordinary writ jurisdiction under Article 226 - exceptions to alternative remedy - want of jurisdiction or breach of principles of natural justice - reopening/re-assessment on basis of subsequent judicial decision - hierarchy of statutory appeals and sales tax revision

Availability of efficacious alternative remedy - extraordinary writ jurisdiction under Article 226 - hierarchy of statutory appeals and sales tax revision - Maintainability of writ petitions in view of existence of statutory appeals under the Rajasthan Value Added Tax Act, 2003 - HELD THAT: - The Court examined whether the writ petitions challenging reassessment orders could be entertained directly under Article 226 despite the statutory appellate forum. Applying settled principles, the Court treated non-entertainment of writs where an efficacious alternative remedy exists as a discretionary rule of self-imposed limitation. The Court held that the Act of 2003 provides a complete and effective machinery (first appeal to Deputy Commissioner (Appeals), second appeal to the Rajasthan Tax Board and thereafter sales tax revision) for redressal of grievances arising from reassessment under Sections 24-26. The petitions did not disclose any inherent lack of jurisdiction by the assessing authority or any breach of principles of natural justice; show-cause notices were issued prior to reassessment. The existence of pending and decided appeals by similarly situated assessees (including decisions in favour of assessee and reference to the Board's Full Bench) further established that the statutory remedy is efficacious. In these circumstances the Court refrained from bypassing the appellate scheme and declined to decide merits of reassessment issues in writ proceedings.

Writ petitions dismissed for want of maintainability; parties relegated to statutory appeals, with liberty to file appeals within 60 days.

Exceptions to alternative remedy - want of jurisdiction or breach of principles of natural justice - reopening/re-assessment on basis of subsequent judicial decision - Whether the present cases fall within exceptions justifying entertainment of writs (such as absence of jurisdiction, violation of natural justice, or use of a subsequent judicial decision to reopen assessments) - HELD THAT: - The Court considered the appellants' contentions that reassessments were invalid because they allegedly lacked jurisdiction, violated principles applicable to reopening (escaped assessment), or were impermissibly based on a subsequent Supreme Court decision. The Court found no pleadings or material establishing an inherent lack of jurisdiction or breach of natural justice; show-cause notices were issued and replies considered. The legal argument that subsequent judicial pronouncements cannot justify reassessment was not decided on merits; the Court declined to adjudicate such contentions in writs because the statutory appellate process is available and capable of addressing those legal issues. The existence of appellate orders (including waivers of penalty and favourable Board orders and a Full Bench reference) reinforced that these issues are appropriately resolved in the statutory fora.

No exception established to justify bypassing statutory appeals; substantive challenges to reassessment left to the appellate authorities and Tax Board.

Final Conclusion: The High Court dismissed the writ appeals on grounds of maintainability, holding that efficacious statutory remedies under the VAT law are available and applicable; substantive challenges to the reassessment orders were left to the appellate authorities and the Rajasthan Tax Board, and the Court granted liberty to file the statutory appeals within 60 days.

Delegation of power - validity of orders passed by subordinate officer - limitation for reassessment / time-barred reassessment - refund of tax due on account of quashing of orders - competent authority's power to extend limitation - direction to pass fresh order in accordance with law

Delegation of power - validity of orders passed by subordinate officer - time-barred reassessment - refund of tax due on account of quashing of orders - Orders dated 26.04.2018 (two orders) and 04.05.2018 passed by the Assessing Officer/Value Added Tax Officer (VATO) (WARD-50) were without delegated authority and therefore liable to be quashed; consequent entitlement to refund for the fourth quarter of 2012-13 because reassessment for that period is time-barred. - HELD THAT: - The respondents did not dispute that there was no delegation of authority to the VATO (WARD-50) to pass the impugned orders. On that admitted factual and legal position the Court concluded that the orders passed by that officer lacked jurisdiction and must be quashed. Having quashed those orders, the Court held that no reassessment for the fourth quarter of 2012-13 is possible at this stage because the limitation expired on 31.03.2019; accordingly the respondents are bound to refund the amount attributable to that period. The respondents were directed to release the refund within four weeks.

Impugned orders of 26.04.2018 and 04.05.2018 passed by VATO (WARD-50) quashed; refund payable for fourth quarter of 2012-13 and to be released within four weeks.

Competent authority's power to extend limitation - direction to pass fresh order in accordance with law - remand for fresh consideration - Proceedings relating to the fourth quarter of 2013-14 were not finally adjudicated and the matter was left open for the competent authority to pass any fresh order (including after grant of extension of limitation), subject to legal challenge. - HELD THAT: - The Court noted that time remains for the competent authority to pass an assessment order for the fourth quarter of 2013-14 if the Commissioner grants permission for extension of limitation. The Court expressly declined to decide whether such an extension is justified and preserved the petitioner's right to raise all pleas before the appropriate forum if an adverse order is passed. The respondents were directed to pass any fresh order in accordance with law within eight weeks; failing compliance the petitioner would be entitled to the refund relating to that quarter.

Matter remitted for fresh action on the fourth quarter of 2013-14; respondents to pass any fresh order in accordance with law within eight weeks, failing which refund for that quarter to be made.

Final Conclusion: The orders dated 26.04.2018 (two orders) and 04.05.2018 passed by VATO (WARD-50) are quashed; respondents to refund the amount relating to the fourth quarter of 2012-13 within four weeks. As to the fourth quarter of 2013-14 the respondents may pass a fresh order in accordance with law within eight weeks (subject to any lawful extension of limitation), failing which the petitioner shall be entitled to the refund for that quarter.

Penalty for suppression of turnover - willful and deliberate suppression - opportunity of hearing before imposing penalty - remand for fresh consideration of penalty - deemed assessment under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006

Penalty for suppression of turnover - willful and deliberate suppression - opportunity of hearing before imposing penalty - remand for fresh consideration of penalty - Validity of the penalty imposed without the Assessing Officer recording a specific finding that the non-accounting of two sale invoices was willful and deliberate and without affording a fresh hearing on that issue. - HELD THAT: - The assessment for the year 2015-2016 proceeded from a deemed assessment under Section 22(2) of the TNVAT Act and a surprise inspection on 27.10.2015 revealed two unaccounted sale invoices, following which the dealer paid the tax liability. A pre-revision notice was issued and the Assessing Officer confirmed the proposal imposing penalty. The Court observed that when a penalty is sought for suppression, the Assessing Officer must independently record reasons and a specific finding that the suppression was willful and deliberate. In the present case no such finding was articulated, and the Assessing Officer did not address the petitioner's contention (including the claim that one invoice related to an interstate transaction) nor is there evidence that the petitioner was afforded a fresh opportunity to be heard on the question of wilfulness. For these reasons the Court declined to express a view on the merits but concluded that the absence of a recorded finding on wilfulness and the lack of a proper hearing vitiate the penalty order. The matter was therefore remitted to the Assessing Officer to reconsider the penalty issue, after giving the petitioner an opportunity of hearing, and to pass a reasoned order within the time directed. [Paras 7, 8, 9]

The penalty portion of the impugned order is set aside and the matter is remitted to the Assessing Officer to reconsider imposition of penalty after affording the petitioner a hearing and recording specific findings on whether the suppression was willful and deliberate; to be decided within six weeks.

Final Conclusion: Writ petition allowed in part; penalty under the impugned order set aside and matter remitted to the Assessing Officer for fresh, reasoned consideration after hearing the petitioner, to be completed within six weeks.