TaxTMI Updates e-Newsletter
Sep 29,2023

Denial of refund of unutilised Input Tax Credit in respect of zero-rated supplies - limitation and exclusion of period for filing refund applications under Section 54/Section 55 of the CGST Act - extension of limitation on account of COVID-19 by Suo Motu Writ Petition (Civil) No. 3 of 2020 (Re: Cognizance for Extension of Limitation) - CBIC notification excluding the period 1st March, 2020 to 28th February, 2022 for filing refund applications

Denial of refund of unutilised Input Tax Credit in respect of zero-rated supplies - limitation and exclusion of period for filing refund applications under Section 54/Section 55 of the CGST Act - CBIC notification excluding the period 1st March, 2020 to 28th February, 2022 for filing refund applications - Petitioner entitled to benefit of exclusion of the period from 1st March, 2020 to 28th February, 2022 for reckoning limitation and therefore refund application was not time-barred. - HELD THAT: - The petitioner filed a refund application for unutilised ITC for the period 1st April, 2019 to 30th September, 2019 which was rejected as barred by the two-year limitation under Section 54(1) by issuing an SCN and a subsequent appellate order upheld limitation. The petitioner relied on the Supreme Court's Suo Motu Writ Petition (Civil) No. 3 of 2020 (Re: Cognizance for Extension of Limitation) and the CBIC notification dated 05.07.2022 which expressly excludes the period 1st March, 2020 to 28th February, 2022 for the purposes of filing refund applications under Sections 54 and 55. It was undisputed that, if the excluded period is applied, the refund application falls within the prescribed limitation. The benefit of the exclusion had not been afforded earlier because the CBIC notification was issued after the adjudicatory orders. The Court set aside the impugned orders and directed the respondents to process the refund with applicable interest within two weeks. [Paras 15, 16, 17, 18, 19]

Impugned orders rejecting the refund as time barred are set aside; petitioner entitled to the benefit of the excluded period and the respondents are directed to process the refund with applicable interest within two weeks.

Final Conclusion: The writ petition is allowed; the orders rejecting the refund application as barred by limitation are set aside and the respondents are directed to process the petitioner's refund claim along with applicable interest within two weeks.

Summons for recording statements under the Central Goods and Services Tax Act, 2017 - Judicial direction to comply with statutory summons - Writ challenge to investigative summons

Summons for recording statements under the Central Goods and Services Tax Act, 2017 - Judicial direction to comply with statutory summons - Validity of the summons issued for recording the petitioners' statements in an investigation and the relief to be granted in the writ petition - HELD THAT: - The Court noted that summons were issued under Section 70 of the Central Goods and Services Tax Act, 2017 to procure statements of the petitioners in an ongoing investigation and that the petitioners had raised objections. Having heard learned counsel for both sides, the Court did not set aside or quash the summons. Instead, it directed that the petitioners should comply and get their statements recorded before the authority concerned. The Court prescribed a time-bound direction that this exercise be completed within three weeks from service of the certified copy of the order of the Court. No further interference with the investigative process was directed. [Paras 5]

Petitioners directed to comply with the summons and have their statements recorded within three weeks from service of certified copy of the order; writ petition disposed.

Final Conclusion: Writ petition disposed with a direction that the petitioners shall comply with the summons issued for recording their statements in the investigation and appear before the authority within three weeks from service of the certified copy of this order.

Cancellation of GST registration - revival of registration on payment of tax, interest, penalty and filing of returns - limitations bar to appellate remedy and writ relief - restriction on utilisation of Input Tax Credit pending departmental scrutiny - judicially fashioned conditional relief following precedent

Cancellation of GST registration - revival of registration on payment of tax, interest, penalty and filing of returns - judicially fashioned conditional relief following precedent - restriction on utilisation of Input Tax Credit pending departmental scrutiny - Whether the petitioner is entitled to quash the cancellation of GST registration and obtain revival of registration subject to conditions laid down by this Court in Suguna Cutpiece Centre (as extracted in paragraph 229). - HELD THAT: - The Court applied its consistent precedent in Suguna Cutpiece Centre (paras extracted at paragraph 4 of the order) and noted that the Revenue has not challenged those earlier orders, which have attained finality. In the factual matrix where the petitioner became aware belatedly of the cancellation and the appeal before the appellate authority was rejected as time barred, the Court exercised writ jurisdiction to grant relief on the same terms set out in paragraph 229 of Suguna Cutpiece. Those terms require payment and filing of returns for the defaulted period with tax, interest, fine/fee; prohibit adjustment of such payments from any unutilised Input Tax Credit; permit utilisation of Input Tax Credit only after departmental scrutiny and approval; require filing of returns and payment in cash for post cancellation periods; and permit the respondents to impose restrictions to prevent undue passing of ITC or bill trading. The Court directed revival of registration upon compliance with those conditions and directed administrative steps to enable filing and payment, following the identical procedure adopted in the cited line of decisions. The Court acknowledged the departmental contention that appeals beyond limitation are liable to be rejected, but declined to disturb the established practice of granting conditional revival by exercise of writ jurisdiction in cases of identical circumstances where the Revenue has acquiesced. [Paras 5, 6, 7]

Writ petition allowed by quashing the cancellation and directing revival of GST registration on compliance with the conditions set out in paragraph 229 of the Suguna Cutpiece order; no costs.

Final Conclusion: The High Court allowed the writ petition and directed revival of the petitioner's GST registration on the same conditional terms as laid down in paragraph 229 of Suguna Cutpiece Centre, including payment and filing of returns, restrictions on utilisation of Input Tax Credit pending scrutiny, and administrative steps to enable compliance; no costs.

Order without application of mind - failure to record reasons / non-speaking order - quashing of order for lack of adjudicatory reasoning - liberty to issue fresh show cause notice and fresh adjudication - consideration of reply and grant of personal hearing in fresh proceedings - interest under Section 50(3) of the CGST Act, 2017 - penalty under Section 122 read with Section 73(9) of the CGST/SGST Act, 2017

Order without application of mind - failure to record reasons / non-speaking order - quashing of order for lack of adjudicatory reasoning - Impugned adjudication is vitiated for want of reasons and application of mind and therefore liable to be set aside. - HELD THAT: - The Court found that the order under challenge does not record or discuss the contentions raised by the petitioner nor does it deal with the petitioner's detailed reply and personal hearing. The omission is material because the impugned order raises a demand for interest under Section 50(3) and imposes penalty under the provisions relied upon; yet the 'findings' paragraph contains no examination of the petitioner's submissions. In these circumstances the order is a non-speaking order and cannot stand, being an order passed without application of mind. [Paras 2, 3]

The impugned order dated 28 April 2023 is quashed and set aside for failure to record reasons and for want of application of mind.

Liberty to issue fresh show cause notice and fresh adjudication - consideration of reply and grant of personal hearing in fresh proceedings - Department permitted to initiate fresh proceedings by issuing a fresh show cause notice which must be adjudicated afresh after considering the petitioner's reply and granting personal hearing; remand for fresh adjudication. - HELD THAT: - On the State's undertaking, the Court granted liberty to the Department to issue a fresh show cause notice within a stipulated time and directed that any fresh adjudication be conducted in accordance with law. The Department must consider the reply that may be filed by the petitioner and grant an opportunity of personal hearing before passing a fresh reasoned order. All contentions of the parties on the proposed proceedings were expressly kept open. The Designated Officer was reminded to record appropriate reasons in any fresh order. [Paras 5, 6, 7]

Liberty granted to the Department to issue a fresh show cause notice and to adjudicate the matter afresh after considering the petitioner's reply and after affording personal hearing; prior order set aside.

Final Conclusion: Impugned order dated 28 April 2023 is quashed and set aside; the Department may issue a fresh show cause notice within four weeks and adjudicate afresh with consideration of the petitioner's reply and after granting personal hearing; parties' contentions left open; no costs.

Detention, Seizure and Release of goods and conveyances in transit - limitation for issuance of notice under Section 129(3) - calculation of period "within seven days of such detention or seizure" - service/dispatch of notice and its effect on limitation

Limitation for issuance of notice under Section 129(3) - calculation of period "within seven days of such detention or seizure" - service/dispatch of notice and its effect on limitation - Validity of the notice in Form GST Mov-07 issued after the seven-day period prescribed by Section 129(3) of the TNGST Act, 2017 - HELD THAT: - The Court examined the language of Section 129(3) of the TNGST Act, 2017 which requires that the proper officer detaining or seizing goods or conveyance shall issue a notice specifying the penalty payable within seven days of such detention or seizure, and thereafter pass an order within seven days from the date of service of such notice. The provision does not state "within seven days from the date of detention or seizure"; therefore the seven-day period runs from the date on which the detention or seizure is effected and is to be calculated inclusive of that date. Applying this rule to the facts, detention/seizure occurred on 30.08.2023 and the last day for issuance of the notice was 06.09.2023. The notice in Form GST Mov-07 was dispatched by e-mail and affixed on the vehicle on 07.09.2023, which is after the expiry of the statutory seven-day period. Because the notice was not issued within the prescribed period, it is vitiated by delay. The Court quashed the impugned notice on this ground and directed release of the goods/conveyance if not already released, while preserving the respondent's liberty to initiate penalty proceedings under other provisions after compliance with statutory requirements. [Paras 10, 11, 12, 13]

Impugned notice quashed as issued after expiry of the seven-day period under Section 129(3); goods/conveyance to be released if not released; respondent may impose penalty under other provisions after compliance.

Final Conclusion: Writ petition allowed; impugned Form GST Mov-07 quashed for being issued beyond the seven-day period prescribed by Section 129(3) of the TNGST Act, 2017, and the goods/conveyance directed to be released if not already released; liberty to respondent to proceed under other provisions after due compliance.

Limitation for filing statutory appeal to Appellate Authority - Condonation of delay/extension of time for filing appeal by Appellate Authority - Revocation of cancellation of GST registration - Effect of pending revocation application on computation/exclusion of limitation period

Limitation for filing statutory appeal to Appellate Authority - Effect of pending revocation application on computation/exclusion of limitation period - Whether the appeal filed on 14.07.2023 was liable to be rejected as time barred or whether the time taken in prosecuting the application for revocation of cancellation (filed under Section 30) is to be excluded, permitting consideration of the appeal on merits. - HELD THAT: - The Court noted that the petitioner was served with a Show Cause Notice leading to cancellation of GST registration by order dated 06.02.2023 and thereafter filed an application for revocation of the cancellation under Section 30, which was rejected on 14.03.2023. The statutory appeal to the Appellate Authority was filed on 14.07.2023 with a delay of 39 days. Having considered the sequence of proceedings, the Court held that the time taken in filing and prosecuting the revocation application is liable to be excluded for purposes of computing limitation for the statutory appeal. In view of that exclusion, the Court directed that the Appellate Authority should consider the petitioner's appeal on its merits and in accordance with law without rejecting it on the sole ground of limitation.

The appeal shall be considered on merits by the Appellate Authority without reference to limitation; the writ petition disposed directing fresh consideration.

Final Conclusion: Writ petition disposed by directing the Appellate Authority to consider the petitioner's statutory appeal on merits and in accordance with law, excluding the time taken in prosecuting the revocation application, and not to reject the appeal solely on the ground of limitation.

Condonation of delay - limitation and finality - disposal of appeal on merits - comply with the mandatory requirements of Section 107 of the TNGST Act, 2017 - vacation of attachment notice subject to deposit from Electronic Credit Ledger

Condonation of delay - limitation and finality - disposal of appeal on merits - comply with the mandatory requirements of Section 107 of the TNGST Act, 2017 - Direction to the appellate authority to take up, number and decide the appeal filed online on 04.07.2023 despite delay, subject to statutory compliance. - HELD THAT: - The petitioner sought quashing of the assessment order but, in essence, sought relief for the delayed filing of the appeal beyond the limitation prescribed under Section 107 of the TNGST Act, 2017. The Court noted the respondents' contention that the question of limitation attains finality in light of the Supreme Court decision relied upon by them. Nevertheless, rather than striking down the appeal on limitation grounds at this stage, the Court directed the third respondent to accept the appeal filed online on 04.07.2023, to number it and to decide it on merits and in accordance with law. The direction is qualified: the appeal is to be disposed expeditiously, preferably within six months from receipt of a copy of the order, and only after the petitioner complies with the mandatory requirements of Section 107 of the TNGST Act, 2017. The Court framed this remedy as a protective judicial direction permitting adjudication on merits subject to statutory prerequisites, without prejudging the limitation defence urged by the respondents.

The third respondent is directed to take up, number and decide the appeal filed online on 04.07.2023 on merits and in accordance with law, preferably within six months, subject to the petitioner complying with the mandatory requirements of Section 107 of the TNGST Act, 2017.

Vacation of attachment notice subject to deposit from Electronic Credit Ledger - Whether the Attachment Notice should be vacated as an interim relief. - HELD THAT: - As an ancillary and conditional relief linked to permitting the appeal to be adjudicated, the Court ordered that the Attachment Notice stand vacated provided the petitioner deposits 10% of the disputed tax from its Electronic Credit Ledger. This conditional vacation operates as an interim measure balancing the petitioner's ability to seek appellate adjudication and the revenue's interest, while leaving substantive entitlement to be determined on merits in the appeal.

Attachment Notice vacated on the condition that the petitioner deposits 10% of the disputed tax from its Electronic Credit Ledger.

Final Conclusion: Writ petition disposed by directing the appellate authority to admit and decide the delayed online appeal filed on 04.07.2023 on merits within a limited time, subject to statutory compliance with Section 107 of the TNGST Act, 2017; attachment notice vacated conditionally on deposit of 10% of the disputed tax from the Electronic Credit Ledger.

Zero-rated supply - refund of IGST on export of goods - duty drawback and double benefit doctrine - rectification of shipping bill on account of inadvertent HSN/suffix error - retrospective application of administrative circular

Zero-rated supply - refund of IGST on export of goods - duty drawback and double benefit doctrine - rectification of shipping bill on account of inadvertent HSN/suffix error - Petitioner entitled to refund of IGST paid on exports despite inadvertent mention of suffix 'A' instead of 'B' in the shipping bill where duty drawback rates for both suffixes are the same and the mistake is admitted by the Customs House Agent. - HELD THAT: - The Court found as undisputed that the duty drawback rates under the two tariff items (suffixes A and B) are identical and therefore there was no claim for a higher duty drawback that would give rise to a double benefit objection. The CHA filed an affidavit admitting the inadvertent error in recording the HSN/suffix on the shipping bills. Reliance was placed on the Court's earlier decision in Sunlight Cable Industries and other High Court precedents which hold that where the drawback rates are the same the customs component alone is represented and granting IGST refund does not confer double benefit. Applying those principles to the admitted factual mistake and the parity of drawback rates, the Court concluded that the petitioner's entitlement to refund could not be withheld on that ground and directed sanction of the IGST refund with interest. [Paras 14, 16, 17]

Refund of IGST paid in respect of the zero rated exports allowed; respondents directed to sanction the refund with interest.

Retrospective application of administrative circular - refund of IGST on export of goods - Circular No. 37 of 2018 cannot be applied retrospectively to deny refund for exports made prior to its issuance, and in any event the circular addresses cases of claimed higher duty drawback which is not the factual matrix here. - HELD THAT: - The Court noted that the exports occurred in July and September 2017 whereas the Circular relied upon by respondents is dated 9 October 2018. It is a settled principle that such administrative circulars cannot be given retrospective effect to defeat rights already accrued. Further, the circular's premise is denial of refund where exporters have availed higher duty drawback; since the drawback rates were the same in this case, the circular's rationale did not cover the present factual situation. Accordingly, the circular could not be pressed into service to deny the petitioner's refund claim. [Paras 15, 16]

Circular No. 37 of 2018 held inapplicable to deny the petitioner's refund claim.

Final Conclusion: Writ petition allowed: respondents directed to refund the IGST claimed on the specified exports along with interest as per law and to release the amount within two weeks of receipt of authenticated copy of the order.

Reimbursement of GST by the procuring entity - liability of subsumed taxes on contracts entered into prior to introduction of GST - application of G.O.(Ms)No.264, Finance (Salaries) Department, dated 15.09.2017 and G.O.(Ms)No.296, Finance (Salaries) Department, dated 09.10.2017 - interest under Sec 50 of CGST Act, 2017 - consideration of representation on merits after granting opportunity

Reimbursement of GST by the procuring entity - liability of subsumed taxes on contracts entered into prior to introduction of GST - application of G.O.(Ms)No.264, Finance (Salaries) Department, dated 15.09.2017 and G.O.(Ms)No.296, Finance (Salaries) Department, dated 09.10.2017 - interest under Sec 50 of CGST Act, 2017 - Direction to the first respondent to consider and decide the petitioner's representation for reimbursement of GST and interest in respect of contracts awarded prior to 01.07.2017 in accordance with law and relevant Government orders after granting opportunity. - HELD THAT: - The Court observed that contractors awarded works prior to the introduction of GST may face change in tax incidence owing to subsuming of earlier taxes, and that the State Government issued G.O.(Ms)No.264 and G.O.(Ms)No.296 providing that the procuring entity shall bear the risk of change in tax law for government works and prescribing methodology to estimate value of subsumed taxes. In view of those notifications and earlier decisions of this Court on similar petitions, the writ petitions were disposed by directing the first respondent to examine the petitioner's representation dated 24.11.2020 on its merits and to pass appropriate orders in accordance with law, including the relevant Government orders, after granting the petitioner a reasonable opportunity to be heard. The direction contemplates consideration of reimbursement of GST and any claim for interest under Sec 50 of the CGST Act, 2017, as applicable, rather than an absolute adjudication on the merits of the tax liability itself. [Paras 8, 9]

First respondent directed to consider the representation and pass orders in accordance with law and the cited Government orders after affording a reasonable opportunity within four weeks.

Final Conclusion: Writ petitions disposed by directing the first respondent to consider the petitioner's claim for reimbursement of GST (and applicable interest) in accordance with law and relevant Government orders, after granting a reasonable opportunity, within four weeks; no order as to costs.

Rectification under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017 - suo motu rectification - opportunity of hearing before passing orders on rectification

Rectification under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017 - suo motu rectification - Availability of remedy by filing an application under Section 161 against the respondent's suo motu rectification order dated 06.07.2023. - HELD THAT: - The High Court recorded that the impugned order dated 06.07.2023 is a suo motu rectification of an earlier order dated 04.07.2023 and noted the petitioner's grievance that its representation dated 06.05.2023 was not considered. Rather than adjudicating the merits of the assessment or rectification, the Court directed that the appropriate statutory remedy is an application under Section 161 of the TNGST Act, 2017. The petitioner was instructed to file the rectification application within the period specified under Section 161, and the respondent was directed, upon receipt of the application, to consider and decide it on merits and in accordance with law after hearing the petitioner. The Court thereby declined to quash or modify the impugned order in these proceedings and mandated statutory process for review and fresh consideration by the tax authority. [Paras 6, 7, 8]

Petitioner permitted to seek remedy by filing an application under Section 161 within the stipulated period; respondent to decide the application on merits after hearing; writ petition disposed.

Final Conclusion: Writ petition disposed with direction that the petitioner may file a rectification application under Section 161 of the TNGST Act, 2017 within the statutory period and the respondent shall consider and decide the same on merits after hearing; no costs.

Vehicle in movement - e-way bill - detention under Section 129(1) - transportation not commenced / parking and loading - reconsideration by appellate authority

Vehicle in movement - e-way bill - detention under Section 129(1) - transportation not commenced / parking and loading - Whether the appellate authority should re-examine and decide if the vehicle was in movement at the time of alleged interception, thereby attracting the provisions under Sections 68 and 129 of the Act of 2017, and whether the appeal requires fresh consideration. - HELD THAT: - The writ petition challenged the appellate authority's dismissal of the petitioner's appeal against detention and penalty imposed for alleged transportation without an e-way bill and tax invoice. The Court observed that certain factual contentions (including timing of e-way bill generation, location and timing reflected in Form GST-MOV-II, and the parking receipt) were raised in the writ petition and were not dealt with by the appellate authority. In view of these lacunae in the appellate decision, the matter is remitted for fresh consideration so that the authority may examine whether the vehicle had commenced movement at the relevant time and whether the statutory provisions relied upon (notably relating to movement, e-way bill requirement and detention) apply. The appellate authority is directed to afford a reasonable opportunity of hearing to all interested parties, to permit production of relevant documents, to pass a reasoned and speaking order and to decide the appeal independently on merits within four weeks from communication of this order. The High Court expressly refrained from adjudicating the merits or expressing any view that would influence the appellate determination.

The appeal is remitted to the appellate authority to reconsider, after hearing parties and on the basis of evidence, whether the vehicle was in movement at the time of interception and whether Sections 68 and 129 apply; a reasoned order to be passed within four weeks.

Final Conclusion: Writ petition disposed by remanding the appeal to the appellate authority for fresh, reasoned consideration on whether the vehicle was in movement (and thus subject to the e-way bill and detention provisions), after affording hearing and permitting production of documents; Court did not decide the merits.

Technical disqualification of bid - evaluation and acceptance of bids - judicial review in tender and contract matters - arbitrariness and mala fides - restraint in interference with commercial decisions - public interest in procurement process

Technical disqualification of bid - evaluation and acceptance of bids - judicial review in tender and contract matters - Validity of the petitioner's disqualification from technical evaluation for non-filing of specified GST returns and the consequent challenge to acceptance of Respondent No.3's bid. - HELD THAT: - The Court examined the petitioner's contention that its technical bid was rejected without proper application of mind and that Respondent No.3 similarly failed to meet the GST return criterion. Applying the established principle that courts must exercise restraint in interfering with commercial and tender decisions, the Court relied on the approach in Tata Motors Ltd. which permits intervention only where arbitrariness, mala fides, bias or irrationality is demonstrated or where overwhelming public interest requires it. Having considered the materials and submissions, and noting that Respondent No.3 had already been selected as the successful L-1 bidder, the Court found no demonstrable instance of such gross illegality or arbitrariness warranting judicial interference with the procurement process. The petition therefore did not disclose sufficient grounds for upsetting the evaluation and acceptance of bids by the tendering authority.

Writ petition dismissed; no interference with the tender decision.

Final Conclusion: The High Court dismissed the petition challenging the technical rejection of the petitioner's bid and the selection of Respondent No.3, holding that no material was placed before the Court to justify judicial interference in the tender evaluation and award process.

Nonspeaking order - opportunity of personal hearing - Section 75(4) of the Central Goods and Services Tax Act, 2017 - remand for fresh consideration - quashing of order

Nonspeaking order - opportunity of personal hearing - Section 75(4) of the Central Goods and Services Tax Act, 2017 - remand for fresh consideration - Impugned orders were passed without recording reasons and without affording the petitioner the personal hearing contemplated by Section 75(4), justifying setting aside and remand. - HELD THAT: - The Court found that the impugned orders do not disclose the reasoning of the adjudicating authority and that the petitioner's objections and supporting documents filed in reply were not taken into account. The orders were adverse to the petitioner yet no opportunity of personal hearing was afforded as envisaged under Section 75(4) of the Central Goods and Services Tax Act, 2017. On this limited procedural ground, and without adjudicating the merits, the Court set aside the impugned orders and remitted the matter to the respondent for fresh consideration. The petitioner was directed to file a fuller reply with all documents and to appear personally before the respondent on the specified date; the respondent was directed to consider the petitioner's case afresh and pass orders within one month thereafter.

Impugned orders quashed and matter remitted for fresh consideration after affording personal hearing and opportunity to file fuller reply; respondent to decide within one month.

Final Conclusion: Writ petitions allowed on limited procedural ground: the impugned orders are set aside for want of reasons and for failure to afford the personal hearing mandated by Section 75(4); matter remitted for fresh decision after the petitioner files a better reply and appears in person, with the respondent to decide within one month.

Composite supply - principal supply - printing services vs goods - classification under heading 9989 - exemption under S. No. 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate) - services relating to admission to, or conduct of examination - educational institution (as defined in the notification) - availability of exemption to suppliers of services to educational boards

Composite supply - principal supply - printing services vs goods - classification under heading 9989 - Whether supply of printed examination materials by the applicant is a supply of service (printing) as principal element of a composite supply and thus classifiable under heading 9989. - HELD THAT: - The Authority examined whether supplies of question papers, OMR sheets and related materials-where the content is supplied by the educational institution but the physical inputs (paper, ink) belong to the applicant-should be treated as sale of goods or as rendering of printing services. Relying on the definition of composite supply and the CBIC clarification that printing of content supplied by the recipient is the principal supply, the Authority held that the predominant element is the printing service (the recipient supplies the manuscript/intangible input while the printer supplies physical inputs). Accordingly, the composite supply is to be classified based on the principal supply, namely printing, and falls under the service heading 9989. [Paras 7]

Supply of printed examination materials is a composite supply whose principal supply is printing services and is classifiable as a service under heading 9989.

Exemption under S. No. 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate) - services relating to admission to, or conduct of examination - educational institution (as defined in the notification) - Whether printing of pre examination items, post examination items, and scanning/processing of results supplied to educational institutions are exempt under S. No. 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate). - HELD THAT: - The Authority considered the wording and scope of S. No. 66(b)(iv) which exempts services provided to an educational institution by way of services relating to admission to, or conduct of, examination. It noted the notification's definition of "educational institution" and the CBIC clarifications treating Central and State educational boards as educational institutions for the limited purpose of conduct of examinations. Applying these provisions and clarifications to the facts-where the applicant supplies printing, scanning and result processing services to such institutions-the Authority concluded that these services fall within services relating to conduct of examination and are therefore exempt from GST under the said entry. [Paras 7]

Printing of pre examination and post examination items, and scanning and processing of results supplied to educational institutions qualify as services relating to conduct of examination and are exempt under S. No. 66(b)(iv).

Availability of exemption to suppliers of services to educational boards - entitlement to exemption - Whether the applicant is entitled to avail the exemption for the specified services when supplied to educational institutions/boards. - HELD THAT: - Having found that the principal supply is printing (a service) and that the services (pre exam printing, post exam printing, scanning and result processing) fall within services relating to conduct of examination provided to educational institutions, the Authority considered the practical effect of the notifications and CBIC clarifications. It concluded that suppliers rendering these services to educational institutions/boards are entitled to the exemption; consequently, the applicant may avail the benefit of the exemption for the specified services. [Paras 7, 8]

The applicant is entitled to avail the exemption for the discussed services supplied to educational institutions/boards.

Final Conclusion: The Authority ruled that the applicant's supply of printed examination materials is predominantly a printing service classifiable under heading 9989, and that printing of pre and post examination items as well as scanning and result processing supplied to educational institutions/boards fall within the exemption at S. No. 66(b)(iv) of Notification No. 12/2017, entitling the applicant to the benefit of that exemption.

Full and true disclosure under Section 245C - immunity from prosecution and penalty under Section 245H - discretion of the Settlement Commission in granting immunity - scope of judicial review of Settlement Commission orders (fraud, malice, contravention of the Act, prejudice) - entertainment of application under Section 245D following Commissioner's report

Immunity from prosecution and penalty under Section 245H - discretion of the Settlement Commission in granting immunity - Validity of the Settlement Commission's grant of immunity from prosecution and penalty to the assessee - HELD THAT: - The Court held that Section 245H(1) vests a discretionary power in the Settlement Commission to grant immunity if it is satisfied that the applicant co-operated and made a full and true disclosure of income and its source. The Commission's exercise of discretion was to be tested for illegality, mala fides, fraud or contravention of the statute but not re-evaluated on sufficiency of evidence as if on appeal. On the facts the Commission recorded that the assessee had co-operated, offered additional income (including income related to leasing) and explained non-disclosure as attributable to RBI accounting guidelines; having considered the Commissioner's report and other material, the Commission concluded prima facie that there was full and true disclosure and granted immunity subject to usual safeguards. The Court found that the Commission had applied its mind to relevant materials and law and that the High Court erred in remanding the limited question of immunity for fresh consideration. [Paras 6, 7, 9, 14]

Settlement Commission's grant of immunity under Section 245H was valid and the High Court's remand on this question was set aside; the Commission's order dated 04.03.2008 is restored.

Full and true disclosure under Section 245C - entertainment of application under Section 245D following Commissioner's report - Whether disclosures before the Settlement Commission must be distinct from 'discoveries' made by the Assessing Officer for the application to be maintainable - HELD THAT: - The Court rejected a rigid rule that material disclosed before the Commission must always be different from what had been discovered by the Assessing Officer. Section 245C and Section 245H contemplate that an applicant make a full and true disclosure before the Commission; such disclosure may include income discovered by the Assessing Officer or additional income offered by the assessee. The object of Chapter XIX-A is settlement and reduction of disputes; therefore, it is not impermissible for an assessee to seek settlement by offering income which may have been discovered during assessment proceedings, provided the Commission is satisfied about cooperation and disclosure. The Court also noted that the Commission followed the procedure under Section 245D by calling for and considering the Commissioner's report. [Paras 5, 7]

Disclosure before the Settlement Commission need not be artificially required to differ from discoveries of the Assessing Officer; the Commission may entertain applications that include such disclosures if satisfied on the statutory preconditions.

Scope of judicial review of Settlement Commission orders (fraud, malice, contravention of the Act, prejudice) - Extent to which courts may review the Settlement Commission's exercise of discretion in granting settlement and immunity - HELD THAT: - The Court reaffirmed the narrow scope of judicial review: courts should not function as appellate tribunals to reappraise the sufficiency of material on which the Commission acted. Interference is permissible only where the Commission's order contravenes the statute, causes prejudice to a party, or is vitiated by fraud, malice or bias. Applying these principles, the Court held that the High Court erred in substituting its view for that of the Commission and in remanding the immunity question merely because it considered the Commission's reasoning insufficient. [Paras 10, 11, 13]

Judicial interference with the Commission's discretionary orders is limited to narrow grounds; the High Court exceeded that scope in remanding the immunity question.

Final Conclusion: The Settlement Commission's order dated 04.03.2008 granting immunity under Section 245H and determining additional income was based on proper application of law and relevant material; the High Court's remand on the question of immunity was unwarranted and is set aside, and the Settlement Commission's order is restored.

Disallowance under Section 14A of the Income-tax Act - application of Rule 8D - Assessing Officer's satisfaction having regard to the accounts - causal connection between expenditure and exempt income - treatment of Corporate Social Responsibility expenditure

Disallowance under Section 14A of the Income-tax Act - application of Rule 8D - Assessing Officer's satisfaction having regard to the accounts - causal connection between expenditure and exempt income - Deletion by the Tribunal of the disallowance computed under Section 14A was justified because the Assessing Officer failed to examine the assessee's accounts or record objective satisfaction before invoking Rule 8D. - HELD THAT: - Section 14A(2) mandates that the Assessing Officer, having regard to the accounts of the assessee, must be satisfied that the assessee's claim about expenditure relating to exempt income is incorrect before determining expenditure by the prescribed method. Rule 8D supplies the methodology but cannot be resorted to without first arriving at such satisfaction on the basis of scrutiny of accounts. The Assessing Officer in the present case recorded only conjectural conclusions that certain administrative and audit expenses must have been incurred, and quantified disallowance under Rule 8D(iii), without examining any ledger, account or other material to demonstrate why the assessee's specific explanation (that being cash rich no special expenditure was incurred) was not believable. The court applied the principle emphasised in Godrej & Boyce, Maxopp and the Division Bench decision in Coforge that an AO must objectively record reasons based on accounts before rejecting an assessee's claim (including a claim of no expenditure) and then compute disallowance under Rule 8D. As the AO did not discharge this duty and proceeded on assumptions, the Tribunal rightly deleted the Section 14A disallowance and the deletion was upheld. [Paras 15, 16]

Deletion of the Section 14A disallowance upheld; AO's action set aside for lack of account scrutiny and objective satisfaction.

Treatment of Corporate Social Responsibility expenditure - Tribunal's deletion of the disallowance of CSR expenditure was upheld. - HELD THAT: - The CSR claim had been contested by the Assessing Officer as capital in nature, but the Tribunal, following its earlier decisions for prior assessment years and in view of relevant precedent (and the concession that CSR issue was covered by earlier decision of this court), found that the CSR expenses were not personal expenditure, not for violation of law, and not capital so as to be disallowable. The revenue conceded that the CSR issue was covered by precedent and pursued the appeal only insofar as Section 14A was concerned. The High Court found no infirmity in the Tribunal's deletion of the CSR addition. [Paras 4, 16]

Deletion of the disallowance of CSR expenses upheld.

Final Conclusion: The appeal is dismissed; the Tribunal's deletions of the additions under Section 14A and in respect of CSR expenses are affirmed.

Wilful attempt to evade tax - delayed payment not amounting to evasion - self-assessment of tax - absence of criminal intent - penalty and criminal prosecution simultaneous

Delayed payment not amounting to evasion - self-assessment of tax - wilful attempt to evade tax - Delayed payment of tax, where the tax was acknowledged in the return and ultimately paid, does not constitute a wilful attempt to evade tax under Section 276C of the Income Tax Act. - HELD THAT: - The court recorded that filing of the return for Assessment Year 2011-12 and the computation of tax therein were not disputed, that the tax was acknowledged in the returns and subsequently paid albeit belatedly, and that a penalty had been levied for the delay. Applying precedents which hold that mere delay in payment cannot be equated with evasion where there is no false entry, omission or other circumstance enabling evasion, the court concluded there was no willful attempt to evade tax on the facts. The determinative reasoning is that absent any false entry, omission or deliberate conduct to defeat payment, mere default in payment does not import the element of wilful evasion required under Section 276C. [Paras 13, 15, 16]

Delayed payment of tax, acknowledged in the return and later paid, does not amount to a wilful attempt to evade tax; therefore criminal prosecution under Section 276C is not sustainable on these facts.

Penalty and criminal prosecution simultaneous - absence of criminal intent - Maintenance of criminal proceedings concurrent with levy of penalty is not permissible in the absence of a demonstrable criminal intent to evade tax. - HELD THAT: - The court observed that while civil remedies (such as levy of penalty and interest) and criminal proceedings may coexist in law, simultaneous maintenance of both requires that a criminal intent existed from the outset. On the material before the court there was no evidence of deliberate and willful default or any act to evade payment; the tax had been self-assessed and subsequently paid. In consequence, continuing the criminal complaint amounted to an abuse of process insofar as no mens rea for evasion was shown. [Paras 16, 18]

In the absence of criminal intent, continuation of criminal proceedings alongside civil/penalty measures is unwarranted; the complaint and consequential proceedings are liable to be quashed.

Final Conclusion: The petition is allowed. Complaint No. 8983 dated 04.12.2014 and the summoning order dated 22.12.2014, along with consequential proceedings, are quashed qua the petitioners on the ground that delayed payment (acknowledged in the return and subsequently paid) does not constitute wilful evasion and there is no demonstrable criminal intent.

Liability of directors under Section 179 - Condition precedent of non-recovery from company - Defective show cause notice lacking particulars of recovery steps - Quashing of order and remand for fresh proceedings

Defective show cause notice lacking particulars of recovery steps - Condition precedent of non-recovery from company - Liability of directors under Section 179 - Quashing of order and remand for fresh proceedings - Impugned order under Section 179 was quashed because the show cause notice and order were silent about steps taken to recover tax from the company, a condition precedent to proceed against directors. - HELD THAT: - The Court found that the show cause notice issued to the petitioner did not disclose material particulars as to satisfaction of the prerequisite that tax dues could not be recovered from the company. Relying on the decision in Ashita Nilesh Patel (paras 18-23 of that judgment reproduced in the order), the Court held that absence of any record of recovery efforts in the notice and the order renders proceedings under Section 179 unsustainable. In the circumstances, the impugned order holding the petitioner, a former director, jointly and severally liable was set aside. The Court, while quashing the order, allowed the Revenue an opportunity to initiate fresh proceedings by issuing a fresh show cause notice with necessary details so that the petitioner can meet the case of the department; all other contentions were left open. [Paras 6, 8, 9]

Order dated 27.03.2019 under Section 179 quashed for want of requisite particulars in the show cause notice; Revenue permitted to issue fresh notice and proceed in accordance with law.

Final Conclusion: Writ petition allowed; impugned order under Section 179 set aside on the ground that the show cause notice and order did not record steps taken to recover dues from the company; Revenue may, if it so chooses, initiate fresh proceedings by issuing a show cause notice containing necessary particulars. All other contentions left open.

Reopening of assessment under Section 148 of the Income Tax Act - reason to believe test - inquiry under Section 133(6) of the Income Tax Act - statement recorded under Section 132(4) of the Income Tax Act - prior examination / previous adjudication of same material

Reopening of assessment under Section 148 of the Income Tax Act - reason to believe test - inquiry under Section 133(6) of the Income Tax Act - prior examination / previous adjudication of same material - Validity of the notice dated 28.03.2021 under Section 148 for the assessment year 2014-15 - HELD THAT: - The court examined the reasons recorded for reopening which relied on information from DDIT(Inv.) and a statement recorded under Section 132(4) alleging the assessee was a beneficiary of the Satish Saraf Group and had converted cash to cheques. The petitioner had, in response to a summons under Section 133(6), produced ledger evidence showing the transactions in question related to 'Hrim Comtrade' and denied any dealings with the Satish Saraf Group. The court noted that the same transaction and explanation (profit from commodity transactions via Hrim Comtrade) had already been gone into in earlier proceedings (assessment framed under Section 143(3) read with Section 147) where the material filed by the assessee was verified and accepted to the extent relevant. On that basis the court found that the purported 'reason to believe' did not disclose any fresh material warranting reopening, since the matter had been previously examined and explained by the assessee; consequently further investigation under Sections 147/148 was not justified on the basis shown. [Paras 6, 7]

Impugned notice dated 28.03.2021 issued under Section 148 for assessment year 2014-15 quashed and set aside.

Final Conclusion: The petition under Article 226 is allowed: the notice dated 28.03.2021 under Section 148 for AY 2014-15 is quashed on the ground that the reasons relied upon did not disclose fresh material beyond what had already been examined; rule made absolute.

Genuine hardship - power under Section 119(2)(b) to condone delay for avoiding genuine hardship - condonation of delay in filing return for claiming carry forward of losses - substantial justice - non-speaking or inadequately reasoned order

Power under Section 119(2)(b) to condone delay for avoiding genuine hardship - genuine hardship - condonation of delay in filing return for claiming carry forward of losses - substantial justice - non-speaking or inadequately reasoned order - Validity of the Board's refusal under Section 119(2)(b) to condone 152 days' delay in filing the return for Assessment Year 2014-15 so as to permit carry forward of long term capital loss - HELD THAT: - The Court reviewed Section 119(2)(b) and relevant precedents and Circular No.8/2001/No.9/2015, holding that the Board has wide discretionary power to condone belated claims, including claims to carry forward losses, where genuine hardship would otherwise result. The petitioner filed the return 152 days late and offered explanations - illness of the senior accountant, corruption of computer data, heavy rainfall and staff engagement with group company accounts, and imminent retirement/ill health of staff - which the Court found to be bona fide and capable of constituting circumstances beyond the assessee's control. The impugned order's observation that the petitioner was a 'habitual defaulter' was held to be misconceived on the facts (three out of five years had no delay owing to extensions). The Court emphasised that the Board's exercise of discretion must be equitable, balancing and justice oriented rather than hyper technical, and that where an acceptable explanation establishes a prima facie genuine claim, the authority ought to have considered condonation rather than mechanically rejecting it. Because the Board ignored the legal position and the petitioner's explanations, and produced an inadequately reasoned order, the Court concluded the refusal to condone delay could not stand and quashed the order, allowing the condonation application. [Paras 10, 11, 12]

Impugned order dated 16.05.2018 quashed; application under Section 119(2)(b) to condone delay in filing the return for Assessment Year 2014-15 and to permit carry forward of the long term capital loss is allowed.

Final Conclusion: The Board's order refusing condonation of delay in filing the return for Assessment Year 2014-15 is quashed; the petitioner's application under Section 119(2)(b) is allowed and the petitioner is permitted to claim carry forward of the long term capital loss.

Bogus purchases - estimation of gross profit on unproved purchases - reopening of assessment - onus of proving genuineness of transactions - disallowance of expenditure not laid out wholly and exclusively for business - application of a uniform yardstick in estimating profit - judicial deference to a reasonable and possible view

Bogus purchases - estimation of gross profit on unproved purchases - application of a uniform yardstick in estimating profit - Whether the ITAT was justified in directing the Assessing Officer to estimate gross profit at 12.5% on alleged bogus purchases. - HELD THAT: - The ITAT considered factual material and precedents and rejected the AO's higher estimation of gross profit as arbitrary. It observed that no single uniform percentage can be uniformly applied to all cases of alleged bogus purchases and, adopting the approach of co-ordinate benches, directed estimation of gross profit at 12.5% of the purchases held to be bogus. The High Court held that this approach represents a reasonable and possible view open to the Tribunal on the facts and material on record and therefore did not raise any substantial question of law warranting interference.

ITAT's direction to estimate gross profit at 12.5% on the alleged bogus purchases affirmed as a reasonable view.

Reopening of assessment - onus of proving genuineness of transactions - judicial deference to a reasonable and possible view - Whether the Assessing Officer's approach for reopening assessment and making additions on account of alleged bogus purchases was justified. - HELD THAT: - The Tribunal found that the AO's approach to reopen the assessment and make additions was not correct in the facts of the case, noting that the assessee had furnished documentary material to justify purchases even though parties were not produced in person. The High Court agreed that the ITAT's conclusion on the correctness of the AO's approach and its consequent directions constitute a tenable view on the evidence and materials, and therefore no substantial question of law arises for interference.

ITAT's finding that the AO's approach to reopening the assessment was not correct upheld; no interference by the High Court.

Final Conclusion: The Revenue's appeal is dismissed; the ITAT's order allowing estimation of gross profit at 12.5% on alleged bogus purchases and its conclusion regarding the impropriety of the AO's approach to reopening the assessment are sustained as reasonable and possible views, and no substantial question of law is made out.

Switch from ITR-2 to ITR-5 e-filing functionality - availability of deductions/rebates in return of income - recourse under Section 119 of the Income Tax Act, 1961 - CBDT duty to resolve systemic e-filing glitch

Switch from ITR-2 to ITR-5 e-filing functionality - availability of deductions/rebates in return of income - CBDT duty to resolve systemic e-filing glitch - Private discretionary trusts directed to use ITR-5 for AY 2021-22 and AY 2022-23 faced omission of deductions/rebates previously available when treated as individual assessees; Court recognised the recurring e-filing glitch and the resulting inability to embed claimed deductions in the Return of Income. - HELD THAT: - The Court recorded that the petitioner trusts were required to switch to ITR-5 e-filing from AY 2021-22, and that deductions/rebates available when they filed as individuals were not available in the new ITR format. The Court observed that this omission ordinarily frustrates the embedding of deductions in the Return of Income and noted that the respondents/revenue had, until recently, represented that the e-filing glitch would be resolved. Given that the problem is recurring and may affect other private discretionary trusts, the Court found the administrative difficulty substantive and not suitably addressed by the respondents' suggestion of pursuing ordinary appellate remedies. In light of these factors, the Court accepted the grievance and directed administrative intervention to remedy the systemic defect rather than leaving taxpayers to pursue individual appellate relief. [Paras 7, 8, 9, 10, 11]

The Court disposed of the writ petitions by acknowledging the trusts' grievance about loss of deductions/rebates due to the ITR-5 e-filing format and directing administrative resolution by the CBDT.

Recourse under Section 119 of the Income Tax Act, 1961 - CBDT duty to resolve systemic e-filing glitch - Whether the petitions should be treated as applications under Section 119 and be considered by the CBDT with a speaking order to address the recurring e-filing difficulty. - HELD THAT: - The Court directed respondent no. 2 (the CBDT) to treat the writ petitions as applications made under Section 119 of the Income Tax Act, 1961, and to consider them in that statutory framework. The Court emphasised that the CBDT should take into account the history of representations by the revenue that the e-filing glitch would be fixed, the closure of earlier applications for physical filing on that basis, and the recurring nature of the problem. The CBDT was requested to pass a speaking order addressing the difficulty articulated by the petitioner trusts and furnish a copy to them. The Court thereby required fresh administrative consideration rather than remitting to appellate forums for individual relief. [Paras 6, 10, 11, 12, 13]

The CBDT was directed to treat the writ petitions as Section 119 applications, to consider and resolve the systemic e-filing difficulty, and to pass a speaking order communicating its decision.

Final Conclusion: Writ petitions disposed by directing respondent no. 2/CBDT to treat the petitions as applications under Section 119, consider the recurring e-filing deficiency that prevents embedding claimed deductions in the Return of Income for AY 2021-22 and AY 2022-23, and pass a speaking order; matters listed for compliance on 09.11.2023.

Exemption of gifts from specified relatives under Section 56 - unexplained cash credits and additions under Section 68 - retracted statement recorded under Section 132(4) and requirement of corroborative evidence - prohibition of double taxation - treatment of diary notings and cross entries as evidence for additions

Exemption of gifts from specified relatives under Section 56 - Deletion of addition of Rs. 45,142/- treated as unexplained cash credit where amount was a gift from father and below the exempt limit under Section 56. - HELD THAT: - The Tribunal found it was not disputed that the sum in question was received by the assessee from his father and was disclosed in the return of income. Since the gift amount was below the threshold of Rs. 50,000/- prescribed under Section 56, it fell within the statutory exemption. Absent any contrary material, the addition as unexplained cash credit could not be sustained and was therefore deleted. [Paras 5, 6]

The addition of Rs. 45,142/- is deleted.

Unexplained cash credits and additions under Section 68 - retracted statement recorded under Section 132(4) and requirement of corroborative evidence - prohibition of double taxation - treatment of diary notings and cross entries as evidence for additions - Deletion of additions confirmed under Section 68 (aggregate amounts confirmed by CIT(A)) on the grounds of absence of corroborative material, retraction of the declaratory statement, uncertainty as to year of taxability and certain cross entries/outstanding items. - HELD THAT: - The Tribunal recorded that the Department had treated the same receipts in multiple assessment years, making the year of taxability uncertain and risking double taxation. The statement of the assessee recorded on 23.05.2008, which formed the basis for additions, was subsequently retracted on 05.07.2008; in the absence of independent corroborative evidence from the Revenue, admissions in a retracted statement could not sustain additions. The Tribunal also noted that some entries evidenced concurrent inflow and outflow (cross entries) and an item shown as an 'outstanding' amount did not constitute disclosed income. Diary notings relied upon by the Department were not sufficient to treat them as books of account establishing unexplained credits. Applying these legal principles and authorities, the Tribunal concluded the additions confirmed by the CIT(A) were unsustainable and directed their deletion. [Paras 11, 12, 13, 14]

Additions confirmed by the CIT(A) under Section 68 are deleted and the appeal is allowed.

Final Conclusion: The appeal is allowed: the addition of the gift amount is deleted as exempt under Section 56, and the additions confirmed under Section 68 are deleted for lack of corroboration, on account of the assessee's retracted statement, uncertainty as to year of taxability and certain cross entries/outstanding entries.

Taxability of sale of software - fees for technical services - make available - re-characterisation of receipts - sale of software versus service component - Article 12(4)(b) of India Singapore DTAA - business profits - characterisation as royalty

Taxability of sale of software - fees for technical services - sale of software versus service component - re-characterisation of receipts - Article 12(4)(b) of India Singapore DTAA - make available - Whether amounts received on sale of software could be taxed in India as fees for technical services and whether the assesssing officer validly re-characterised and bifurcated receipts as FTS under Article 12(4)(b) of the India Singapore DTAA and the Act. - HELD THAT: - The Tribunal found no material change in facts from the earlier assessment year where identical receipts were held not to be royalty. The Assessing Officer re characterised part of the receipts as FTS without articulating any factual basis or justification for bifurcation between product sale and service component, and the final orders do not identify the limb of Article 12(4) relied upon. Documentary evidence (copies of invoices) on record indicate sale of software only and do not disclose any service element. Further, there is no material establishing that any alleged services satisfied the treaty "make available" requirement so as to render them FTS under Article 12(4)(b). The Dispute Resolution Panel itself directed that only the service component, if any, could be taxed; however, the Assessing Officer has not explained how such component was identified or quantified. In absence of cogent findings, evidentiary basis or satisfaction of the make available condition, the additions treating receipts as FTS are unsustainable. [Paras 9, 10, 11, 12, 13]

Additions treating amounts received on sale of software as fees for technical services are deleted and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals for assessment years 2018-19 and 2019-20, holding that the Assessing Officer's re characterisation of software sale receipts as fees for technical services was unsupported by facts or evidence and that the make available requirement under Article 12(4)(b) was not established; the additions are therefore deleted.

Arm's length price - Transfer pricing adjustment - Reimbursement of ESOP expenses - Determination of ALP under transfer pricing provisions - Comparable Uncontrolled Price Method - Remand for recomputation of ALP - Principles of natural justice

Arm's length price - Reimbursement of ESOP expenses - Comparable Uncontrolled Price Method - Whether the ALP of the international transaction of reimbursement of ESOP expenses can be taken as nil and whether the transfer pricing addition on account thereof is sustainable. - HELD THAT: - The Tribunal found on the record that the amounts in question related to vested RSUs which had been exercised and that invoices were raised by the Associated Enterprise and payment was remitted by the assessee. The ESOP expenses were debited to profit and loss and treated as operating cost and were recouped by the assessee (with contractual margin) as part of consideration for services. The TPO's conclusion that the ESOP expense was merely notional and hence ALP should be 'Nil' was held to be factually incorrect because it failed to appreciate that actual payment had been made on the basis of invoices and that the costs related to vested and exercised RSUs. In these circumstances the Tribunal held that ALP cannot be taken as nil and the impugned transfer pricing addition cannot be sustained as framed by the TPO/DRP/AO. [Paras 12, 13, 14, 15]

Transfer pricing addition based on treating ALP as nil is set aside; grounds 3, 4 and 5 are allowed.

Remand for recomputation of ALP - Determination of ALP under transfer pricing provisions - Whether the matter should be remitted for recomputation of ALP and, if so, on what basis. - HELD THAT: - Having concluded that ALP cannot be treated as nil, the Tribunal directed the TPO/Assessing Officer to re-compute the ALP and any transfer pricing adjustment by following the method adopted by the assessee for determining the ALP of the international transaction of reimbursement of ESOP expenses. The direction is limited to recomputation in accordance with the methodology adopted by the assessee, leaving quantification to the tax authorities consistent with that approach. [Paras 15]

TPO/Assessing Officer to re-compute ALP and any transfer pricing adjustment by applying the assessee's method; remand for recomputation ordered.

Principles of natural justice - Transfer pricing adjustment - Disposition of ancillary grounds relating to opportunity of hearing, consequential effect of the adjustment, penalty and other general or procedural pleas. - HELD THAT: - Ground No. 6 (alleged violation of principles of natural justice) and Ground No. 7 (contention regarding corresponding effect and cost base) were treated as infructuous in light of the primary remand and hence dismissed. Grounds No. 1 (general challenge to assessment order) and No. 2 (jurisdictional plea regarding NFAC) were not pressed during hearing and therefore dismissed on that basis. No independent relief was accorded on these ancillary or unpressed grounds. [Paras 15]

Grounds 6 and 7 dismissed as infructuous; Grounds 1 and 2 dismissed as not pressed.

Final Conclusion: The appeal is partly allowed: the transfer pricing addition treating ALP of the ESOP reimbursement as nil is set aside and the matter is remitted to the TPO/Assessing Officer to re-compute ALP and any adjustment following the assessee's methodology; ancillary and unpressed grounds are dismissed.

Non applicability of amended procedural provision to returns processed before its commencement - mandatory condition under section 80AC for claiming Chapter VI A(C) deductions - scope of section 143(1)(a)(v) as a procedural mechanism to give effect to section 80AC - limits of section 143(1)(a)(ii) - "incorrect claim apparent from any information in the return" - strict construction of exemption provisions

Non applicability of amended procedural provision to returns processed before its commencement - scope of section 143(1)(a)(v) as a procedural mechanism to give effect to section 80AC - Validity of disallowance of deduction under section 80P by invoking section 143(1)(a)(v) when the return was processed prior to the amendment bringing that sub clause to include Chapter VI A(C) deductions. - HELD THAT: - Section 143(1)(a)(v), as amended by Finance Act, 2021, to cover disallowance of deductions under Chapter VI A(C) applies only from the date the amendment came into force and is a procedural provision to give effect to the substantive condition in section 80AC. A procedural amendment cannot be applied to machine processing of returns carried out before the amendment became law. The Tribunal held that the amended sub clause operates w.e.f. 01.04.2021 (and cannot be invoked for processing done prior thereto), and that any retroactive effect is confined to processing actions performed on or after the amendment's commencement; consequently, disallowance under section 80P effected by processing in July/August 2020 could not validly invoke the amended section 143(1)(a)(v). [Paras 5]

Disallowance under section 80P could not be validly made by invoking the amended section 143(1)(a)(v) in respect of returns processed prior to the amendment; appeals allowed on this ground.

Limits of section 143(1)(a)(ii) - "incorrect claim apparent from any information in the return" - strict construction of exemption provisions - Whether the disallowance of deduction under section 80P in returns processed before the 2021 amendment could be sustained under section 143(1)(a)(ii) by treating late filing (date of filing) as information in the return making the claim 'apparent' and therefore incorrect. - HELD THAT: - The Explanation to section 143(1) defines "incorrect claim apparent from any information in the return" by reference to entries or information required to be furnished under the Act to substantiate such entry. The date of filing is not an item of information required to substantiate a claim of deduction within the return form and normally appears only in the acknowledgement; it thus cannot be treated as information in the return making the claim 'incorrect' under sub clause (ii). Given the exhaustive definition using the word "means", the provision is to be strictly construed and does not permit invoking sub clause (ii) to deny eligibility under section 80AC/80P where the only defect is lateness of filing. [Paras 5]

Disallowance under section 80P could not be sustained under section 143(1)(a)(ii) for returns processed prior to the 2021 amendment; appeals allowed on this ground.

Final Conclusion: The Tribunal allowed the appeals: deductions under section 80P could not be disallowed by processing stage adjustments in July/August 2020 under the amended section 143(1)(a)(v) (which only applies from 01.04.2021), and the alternative reliance on section 143(1)(a)(ii) was held inapplicable because the date of filing is not "information in the return" capable of rendering the claim an "incorrect claim apparent from any information in the return."

Addition under section 68 - onus on assessee to explain nature and source of cash deposits/credits - admission of additional evidence under Rule 46A of the I.T. Rules - violation of principles of natural justice by non confrontation with adverse material - remand for de novo consideration - reference to Addl./Joint Commissioner under section 144A

Addition under section 68 - onus on assessee to explain nature and source of cash deposits/credits - Whether the addition of Rs. 13,50,000 as unexplained cash credited to the assessee's books could be sustained. - HELD THAT: - The Tribunal found that the Assessing Officer disbelieved the assessee's claim of gifts without having required or recorded the supporting particulars which the AO later said were missing; the CIT(A) relied on the AO's remand report but did not set out or confront the assessee with the contents of the additional material relied upon. The Tribunal observed that the AO's order does not show that specific evidentiary requests (as later relied upon) were made before passing the assessment and that the CIT(A) admitted additional evidence under Rule 46A. Because material adverse to the assessee (the remand report) was used without confronting the assessee and without adequate findings on identity, creditworthiness and genuineness of donors, the Tribunal concluded that the matter could not be finally adjudicated on the existing record. Consequently the CIT(A)'s confirmation of the addition is set aside and the issue is restored to the file of the Assessing Officer for fresh decision after affording reasonable opportunity to the assessee.

Impugned confirmation of the addition is set aside and the issue is remanded to the Assessing Officer for de novo adjudication after providing the assessee a reasonable opportunity to meet the case.

Admission of additional evidence under Rule 46A of the I.T. Rules - violation of principles of natural justice by non confrontation with adverse material - remand for de novo consideration - Whether the additional evidence admitted by the CIT(A) and the procedure followed on remand satisfied requirements of fair opportunity and natural justice. - HELD THAT: - The Tribunal noted that the CIT(A) had admitted additional evidence under Rule 46A, and that summons were issued to the alleged donors during remand. However, there is no record in the AO's order or the CIT(A)'s order demonstrating that the AO had originally called for, or given the assessee opportunity to produce, the supporting particulars later relied upon; nor is there evidence that the AO communicated the remand report contents to the assessee before relying upon them. Using the remand report without confronting the assessee amounted to procedural unfairness. For these reasons the Tribunal directed that the Assessing Officer shall decide the issue afresh, after furnishing the assessee reasonable opportunity to produce evidence and to meet adverse material.

Admission of additional evidence by the CIT(A) does not cure the procedural defects; the matter is remitted for fresh consideration with opportunity to the assessee.

Reference to Addl./Joint Commissioner under section 144A - remand for de novo consideration - Whether the Assessing Officer should obtain directions from the Addl./Joint Commissioner under section 144A before proceeding afresh. - HELD THAT: - Given the incidental nature of the inquiry into the cash receipts and the absence of clear findings on critical facts, the Tribunal directed that the Assessing Officer should make a reference to the Addl./Joint Commissioner under section 144A to obtain guidance as to whether the materials on record are sufficient to accept the assessee's claim or, if not, the lines on which further investigation should be carried out. The Tribunal emphasised that both the Assessing Officer and the Addl./Joint Commissioner must approach the matter afresh without being influenced by earlier orders.

Assessing Officer to seek directions under section 144A and then proceed to decide the issue de novo in accordance with those directions, affording fresh opportunity to the assessee.

Final Conclusion: The appeal is partly allowed for statistical purposes: the CIT(A)'s confirmation of the addition is set aside and the issue of the challenged addition of Rs. 13,50,000 is restored to the Assessing Officer for de novo adjudication after providing the assessee reasonable opportunity and, before concluding the fresh proceedings, the Assessing Officer shall obtain directions from the Addl./Joint Commissioner under section 144A as directed.

Revisionary jurisdiction under section 263 of the Income Tax Act, 1961 - erroneous and prejudicial to the interests of revenue - Dividend Distribution Tax liability and timing of payment - assessment under section 143(3) read with sections 143(3A) & 143(3B)

Revisionary jurisdiction under section 263 of the Income Tax Act, 1961 - erroneous and prejudicial to the interests of revenue - Dividend Distribution Tax liability and timing of payment - Validity of the Pr. CIT's initiation and order under section 263 challenging non-levy/non-quantification of Dividend Distribution Tax in the assessment for AY 2018-19. - HELD THAT: - The Tribunal examined whether the assessing officer omitted to levy Dividend Distribution Tax (DDT) for the dividend declared in the preceding year and whether that omission rendered the assessment order erroneous and prejudicial to revenue so as to justify exercise of revisionary jurisdiction under section 263. The assessee produced tax-audit disclosures and challans showing deposit of DDT for the financial year 2016-17 (the dividends declared in that year) with payment dates of 10.01.2017 and 14.03.2017 and included the particulars in the return filed for the relevant year. The Pr. CIT's view was that DDT and interest relevant to the dividend declared in FY 2016-17 fell to be paid in FY 2017-18 (relevant to AY 2018-19) and that the AO had failed to verify and quantify such tax in the scrutiny assessment. On the material before the Tribunal, however, the DDT in respect of dividends declared in FY 2016-17 had been deposited before the close of that financial year and were incorporated in the return for the relevant assessment year; consequently the asserted omission did not exist and the basis for invoking section 263 was not made out. Applying these findings, the Tribunal held that the Pr. CIT erred in proceeding under section 263 and that the assessment order framed under section 143(3) read with sections 143(3A) & 143(3B) did not suffer from the alleged error prejudicial to revenue. [Paras 8, 9]

Order under section 263 quashed and the assessment order dated 25.03.2021 restored.

Final Conclusion: The Tribunal allowed the appeal, quashed the Pr. CIT's revisionary order under section 263 for AY 2018-19 and restored the assessment framed under section 143(3) read with sections 143(3A) & 143(3B), holding that the asserted non-payment/omission in respect of Dividend Distribution Tax was not established.

Assessment under section 153A in case of search - Incriminating material unearthed during search as condition for disturbing completed assessments - Scope of block assessment versus completed/unabated assessments - Re-opening of completed assessments under sections 147/148 where no incriminating material is found

Assessment under section 153A in case of search - Incriminating material unearthed during search as condition for disturbing completed assessments - Scope of block assessment versus completed/unabated assessments - Whether additions/disallowances could be made in respect of a completed/unabated assessment under section 153A in the absence of any incriminating material found during the search. - HELD THAT: - The Tribunal examined the assessment passed under section 153A and observed that the Assessing Officer did not refer to any incriminating material, loose papers or recorded statements found during the search to justify the disallowance of aircraft expenses and depreciation. Relying on the Supreme Court's analysis in the reported batch (PCIT v. Abhisar Buildwell (P) Ltd. and the authorities summarized therein), the Tribunal followed the principle that while section 153A gives jurisdiction to assess or reassess total income for the six-year period triggered by a search, completed/unabated assessments can be disturbed under section 153A only if incriminating material relating to those assessment years is unearthed during the search. If no such material is found, the Assessing Officer cannot make additions in respect of completed assessments under section 153A; the Revenue's remedy in that situation is to initiate reassessment under sections 147/148, subject to their conditions. Applying that principle to the facts, the Tribunal held that the impugned additions cannot stand because they were not founded on incriminating material discovered in the search. [Paras 9, 10, 11]

Additions/disallowances in the completed assessment could not be sustained under section 153A in absence of incriminating material; those additions are deleted.

Admission of partial disallowance by assessee during appellate proceedings - Computation and quantification on remand - Quantification of disallowance in respect of aircraft expenses where the assessee conceded a percentage of personal use during appellate remand proceedings. - HELD THAT: - During remand and in rejoinder the assessee accepted that, due to inadequate documentation, personal use of the aircraft amounted to 15% and that 85% was for business. Having accepted that quantification, the Tribunal directed that the Assessing Officer calculate the addition on that basis (i.e., allow 85% and disallow 15% of the relevant aircraft expenses and depreciation) and delete the balance of the addition. The Tribunal therefore remitted computation to the Assessing Officer limited to implementing the agreed percentage. [Paras 11]

AO directed to compute the addition treating 15% of aircraft expenses/depreciation as personal use and delete the remainder of the addition.

Final Conclusion: Appeal partly allowed: impugned additions made in a completed assessment under section 153A are deleted for lack of incriminating material; limited quantification remand granted to compute addition at 15% personal use as admitted by the assessee, with the rest deleted.

Condonation of delay - locus to maintain writ petition - petitioner's standing under Article 32 - expeditious disposal of writ petitions affecting revenue - nomination of Bench by Chief Justice for expedition

Condonation of delay - Delay in filing the Special Leave Petition - HELD THAT: - The Court expressly condoned the delay in filing the petition as recorded at the outset of the order and proceeded to hear the matter. No further conditions were imposed in relation to the condonation. [Paras 1]

Delay condoned.

Locus to maintain writ petition - petitioner's standing under Article 32 - Petitioner's locus to maintain the writ petition before the High Court - HELD THAT: - On consideration of the record, including this Court's earlier order dated 15-7-2016 in which the petitioner was permitted to place documents before the Directorate of Revenue Intelligence, the Court was satisfied that the petitioner possesses locus to approach the High Court for the claimed reliefs. In light of that satisfaction, the Court directed that the High Court should proceed to consider and decide the writ petition on its merits and refrain from entering upon the question of locus. [Paras 9]

Petitioner has locus; High Court shall decide the writ petition on merits without adjudicating locus.

Expeditious disposal of writ petitions affecting revenue - nomination of Bench by Chief Justice for expedition - Direction for expeditious adjudication of the writ petition by the High Court - HELD THAT: - Noting the public revenue implications and the petitioner's contention of continued undervaluation in imports, the Court declined to further comment on the impugned order that placed the matter at the bottom of the Board but considered that the interests of justice required expedition. The Court requested the Chief Justice of the High Court to nominate a Bench to dispose of the writ petition expeditiously, preferably within three months, so that the substantive issues affecting revenue may be addressed promptly. [Paras 8]

Request to Chief Justice to nominate Bench and to dispose of the writ petition expeditiously (preferably within three months).

Final Conclusion: The Special Leave Petitions are disposed of with delay condoned; the Supreme Court recorded that the petitioner has locus to maintain the writ petition and directed that the High Court, after nomination of an appropriate Bench by its Chief Justice, proceed to decide the writ petition expeditiously on merits (preferably within three months). Pending applications are disposed of.

Condonation of delay - release of seized goods on payment of penalty - dismissal as academic/infructuous - questions of law kept open

Condonation of delay - dismissal as academic/infructuous - Whether the Special Leave Petitions and Appeals should be proceeded with after the goods were released on payment of penalty. - HELD THAT: - The Court recorded and allowed condonation of delay. It further noted that the goods in question had been released in 2017 upon payment of penalty, a fact not disputed by the Revenue. In view of the release of the goods and recovery of penalty, the lis in these matters had become academic or infructuous for the purposes of granting the relief sought, and the petitions and appeals were therefore dismissed without adjudication on the substantive legal questions. [Paras 1, 2, 3]

Delay condoned; all Special Leave Petitions and Appeals dismissed as academic because the goods were released on payment of penalty.

Questions of law kept open - Whether the Court should decide the substantive questions of law raised in the petitions and appeals. - HELD THAT: - Although the proceedings were dismissed on account of the factual development (release of goods on payment of penalty), the Court expressly refrained from deciding any substantive question of law raised by the parties. Those legal questions were left open for consideration in an appropriate proceeding where they may be live and justiciable. [Paras 3, 4]

Substantive questions of law not adjudicated and are kept open.

Final Conclusion: The Court condoned the delay and dismissed the Special Leave Petitions and Appeals as academic because the goods had been released on payment of penalty; however, any substantive question(s) of law raised were not decided and are left open. Pending applications are disposed of.

Limitation for adjudication under Section 28(9) of the Customs Act - interpretation of the expression 'where it is possible to do so' in Section 28(9) - Call Book placement and its effect on limitation and resumption of adjudication - bar on resumption of adjudication after statutory period has elapsed

Limitation for adjudication under Section 28(9) of the Customs Act - interpretation of the expression 'where it is possible to do so' in Section 28(9) - bar on resumption of adjudication after statutory period has elapsed - Whether the time period for adjudicating the impugned show cause notice under Section 28(9) of the Customs Act had lapsed, and whether the Commissioner (Adjudication) could resume adjudication after the delay. - HELD THAT: - The Court found that the statutory period for adjudication prescribed by Section 28(9), as in force at the material time, had long since expired. The record discloses that from the date of the show cause notice (30.04.2009) until 21.07.2016 no effective steps were taken to adjudicate the notice despite absence of any impediment; intermittent correspondence seeking RUDs and internal requests did not render adjudication "not possible" within the statutory time. Although the show cause notice was placed in the Board's Call Book and later retrieved, the Court held that deferral by Call Book did not justify the prolonged non-adjudication in the circumstances and could not revive the expired statutory period. The Court applied its recent precedent and statutory text (including the "where it is possible to do so" qualification) to conclude that once the period under Section 28(9) has elapsed the respondents are barred from proceeding with adjudication. [Paras 34, 35, 36]

The period for adjudication under Section 28(9) had elapsed and the Commissioner cannot resume or proceed with adjudication of the impugned show cause notice.

Final Conclusion: The writ petitions are allowed: the impugned letters recommencing adjudication are set aside and the impugned show cause notice cannot be adjudicated because the statutory period under Section 28(9) has lapsed.

Amendment of documents under Section 149 - Requirement of documentary evidence existing at the time of export - Rebate of service tax under Notification No. 41/2012 - Declaration in the electronic shipping bill under paragraph 2 - Procedure for rebate under paragraph 3 versus rate-based rebate under paragraph 2 - Discretion of the Proper Officer to permit amendments - Requirement of strict compliance of conditions of an exemption/notification

Amendment of documents under Section 149 - Requirement of documentary evidence existing at the time of export - Declaration in the electronic shipping bill under paragraph 2 - Amendment of shipping bills under Section 149 to incorporate the declaration for claiming service tax rebate under paragraph 2 of Notification No. 41/2012 was permissible where the documentary evidence relied upon was in existence at the time of export. - HELD THAT: - The Court read Section 149 together with Notification No. 41/2012 and held that Section 149 does not prescribe a time bar or specific reasons for seeking amendment but permits the Proper Officer, in his discretion, to authorise amendment provided the amendment is based on documentary evidence which existed at the time of export. The relief sought by the respondents was limited to incorporation of a declaration in the shipping bills that they intended to claim the rate based rebate under paragraph 2. The Court found that the respondents had produced the relevant shipping bills, invoices, bank realisation records and other documents along with their amendment applications of 14 March 2017 and had stated that no claim would be made under paragraph 3. In those circumstances the omission to make the declaration in the original shipping bills did not bar amendment under Section 149, since the documentary evidence antecedent to export was available for verification and no prejudice or missing document was pointed out by the revenue. [Paras 7, 8, 13]

Amendment to incorporate the paragraph 2 declaration was allowable under Section 149 because documentary evidence in existence at the time of export had been submitted.

Rebate of service tax under Notification No. 41/2012 - Procedure for rebate under paragraph 3 versus rate-based rebate under paragraph 2 - Requirement of strict compliance of conditions of an exemption/notification - Failure to make the paragraph 2 declaration at the time of export and the submission belatedly did not preclude grant of the rate based rebate where the conditions for the paragraph 2 procedure were met and documentary evidence was available; the plea of mandatory, strict compliance did not apply to deny amendment in the facts of these cases. - HELD THAT: - The Court distinguished decisions where time sensitive or foundational formalities were held to be indispensable, observing that Notification No. 41/2012 contemplates two alternative procedures (paragraphs 2 and 3) and that a declaration in the electronic shipping bill under paragraph 2 is intended to facilitate rate based rebate but the absence of that declaration is not fatal where the exporter can demonstrate entitlement through documents existing at the time of export. The Court noted respondents had declared they would not claim paragraph 3 benefits and had produced bank realisation certificates and other original documents; the revenue did not point to any missing document or inability to verify. Consequently, the argument that the use of 'shall' in the notification renders the declaration an absolute bar was rejected on these facts. [Paras 9, 10, 11, 12, 13]

The requirement of strict compliance with the notification did not justify denial of the amendment in the present cases where the requisite documentary evidence and conditions for paragraph 2 rebate were satisfied.

Final Conclusion: The appeals by the Commissioner of Customs are dismissed; the High Court upheld the CESTAT orders allowing amendment of the shipping bills under Section 149 and permitting the respondents to claim the service tax rebate under paragraph 2 of Notification No. 41/2012 for exports made during 01 April 2014 to 31 March 2015.

Supply from Domestic Tariff Area to Special Economic Zone treated as export - Refund of export duty paid under protest - Binding effect of High Court judgment until stayed or set aside by a higher court - Pendency of a Review Petition does not negate the binding nature of an existing precedent - Refund claim within prescribed time limit under Section 27 of the Customs Act, 1962 - Compliance with unjust enrichment requirement for refund

Supply from Domestic Tariff Area to Special Economic Zone treated as export - Refund of export duty paid under protest - Entitlement of the SEZ unit to refund of export duty paid on iron and steel supplies from DTA pursuant to the Gujarat High Court's decision - HELD THAT: - The Tribunal recorded that Section 2(m) of the SEZ Act treats supplies from DTA to SEZ as export and that the respondent paid export duty 'under protest'. The jurisdictional Deputy Commissioner accepted the refund claims on remand after the Commissioner (Appeals) directed processing on merits, holding that the refund applications were within time and satisfied unjust-enrichment requirements. The Tribunal noted that the Gujarat High Court had held levy of export duty on DTA SEZ supplies unjustified, that the Supreme Court had earlier dismissed the Revenue's SLP and that the Dy. Commissioner's finding in the original order was not challenged, thereby supporting the respondent's entitlement to refund. The Tribunal found no reason to interfere with the sanctioning of refunds by the lower authority. [Paras 3]

Refunds sanctioned in favour of the respondent were lawful and the entitlement to refund stands upheld.

Binding effect of High Court judgment until stayed or set aside by a higher court - Pendency of a Review Petition does not negate the binding nature of an existing precedent - Whether the mere pendency or restoration of the Revenue's Review Petition in the Supreme Court negates the binding effect of the Gujarat High Court decision relied upon by the respondent - HELD THAT: - The Tribunal examined the Commissioner (Appeals)'s reasoning that mere filing or pendency of a review petition before the Supreme Court does not render an existing High Court or Supreme Court precedent non-binding. The Commissioner (Appeals) relied on authorities holding that filing of a review petition is not a ground to disapply a binding precedent. The Tribunal agreed that because the Gujarat High Court's order had neither been stayed nor set aside by the Apex Court, the pendency or restoration of the departmental review proceedings did not justify upsetting the refunds already sanctioned. Consequently, the pendency of the review did not vitiate the binding effect of the High Court decision for the purposes of the present refund claims. [Paras 6, 7]

The pendency or restoration of the Revenue's review petition in the Supreme Court does not negate the binding effect of the Gujarat High Court judgment; it is not a ground to deny the refunds.

Refund claim within prescribed time limit under Section 27 of the Customs Act, 1962 - Compliance with unjust enrichment requirement for refund - Whether the respondent's refund claims complied with statutory time limits and unjust-enrichment conditions - HELD THAT: - On remand, the Dy. Commissioner examined the refund claims and concluded they were filed within the time prescribed by Section 27 of the Customs Act, 1962 and that the respondent had complied with the requirement relating to unjust enrichment. The Commissioner (Appeals) and the Tribunal accepted these findings and found no infirmity in the lower authority's conclusion to sanction the refunds on those procedural and substantive bases. [Paras 3]

The refund claims were filed within the prescribed time and satisfied the unjust-enrichment requirement; the sanction of refunds was proper.

Final Conclusion: The appeals filed by the Revenue are dismissed; the orders sanctioning refunds to the respondent are sustained because the High Court decision disallowing export duty on DTA SEZ supplies remains binding (not stayed or set aside), the pendency of the Revenue's review petition does not negate that binding effect, and the refund claims satisfied time limit and unjust enrichment requirements.

Confiscation for want of import licence - confiscation under Section 111(d) of the Customs Act, 1962 - redemption fine under Section 125 of the Customs Act, 1962 - penalty for prohibited/restricted import - value ascertainment by market survey and margin of profit - remand for disclosure of margin of profit - import restriction under Foreign Trade Policy 2009-2014 (Tariff Item No.63090000)

Confiscation for want of import licence - confiscation under Section 111(d) of the Customs Act, 1962 - redemption fine under Section 125 of the Customs Act, 1962 - penalty for prohibited/restricted import - value ascertainment by market survey and margin of profit - remand for disclosure of margin of profit - Whether the redemption fine and penalty imposed by the Adjudicating Authority required enhancement and whether the confiscation and allied monetary reliefs were sustainable. - HELD THAT: - The Tribunal applied its earlier decision in Venus Traders (Tri.-Mumbai) and examined the authorities' exercise of confiscation for import of restricted goods without the required licence. The Tribunal noted that confiscation under the provision invoked for want of licence was sustainable. With respect to redemption fine and penalty, the Tribunal observed the precedent which considered the validity of value ascertainment by market survey, the remand direction to disclose margin of profit and the limited scope for fresh ascertainment many years after import. In that precedent the Tribunal, while upholding confiscation, reduced monetary reliefs as appropriate to meet the ends of justice. Having regard to that reasoning and to the fact that no appeals against confirmed duties and penalties were filed by the respondent, the Tribunal concluded that the redemption fine and penalty imposed by the Adjudicating Authority were adequate and required no enhancement. The Revenue's prayer for enhancement was therefore rejected and the impugned order affirmed. [Paras 6, 7, 8]

The redemption fine and penalty confirmed by the Adjudicating Authority are upheld; the Revenue's appeal for enhancement is dismissed.

Final Conclusion: Applying the Tribunal's earlier reasoning in Venus Traders, the confiscation for import without licence is sustained and the redemption fine and penalty imposed are held sufficient; the Revenue's appeal seeking enhancement is dismissed and the impugned order is upheld.

Transaction value - rejection of declared value - contemporaneous imports / NIDB data - comparability (quality, quantity, GSM, time of order) - burden on Revenue to provide cogent evidence - Section 14 of the Customs Act - Customs Valuation Rules - Rule 5 (similar goods) - Customs Valuation Rules - Rule 12 (procedure for rejection of declared value) - exemption from countervailing duty under Notification No. 30/2004-CE - non availment of Cenvat credit and entitlement of importers - binding effect of Supreme Court decision in SRF Ltd. and Board Circular

Transaction value - rejection of declared value - contemporaneous imports / NIDB data - comparability (quality, quantity, GSM, time of order) - Customs Valuation Rules - Rule 5 - Customs Valuation Rules - Rule 12 - burden on Revenue to provide cogent evidence - Declared transaction value of the appellant cannot be rejected solely on the basis of contemporaneous higher import values without establishing comparability and adducing cogent evidence. - HELD THAT: - The Tribunal held that rejection under Section 14 and the Customs Valuation Rules requires cogent reasons and evidence. Mere reliance on NIDB or EDI data showing higher contemporaneous CIF values is insufficient unless the proper officer establishes that those imports are identical or similar in relevant commercial particulars (quality, quantity, GSM, brand, time of import, time of placement of order, etc.) as required by Rule 5 and follows the procedure under Rule 12. Rule 12 contemplates an enquiry and written communication of grounds for doubt; the proper officer must discharge the onus of proving that the declared transaction value is not the true transaction value. Where the record contains only contemporaneous import listings without verification of comparability or clarification whether the values are declared transaction values or departmental assessed/enhanced values, the Revenue has failed to discharge its burden and enhancement is not sustainable. Applying these principles to the facts, the Tribunal found no material other than NIDB data to justify rejection and enhancement, and therefore directed acceptance of the declared transaction value. [Paras 9, 14]

Enhancement of declared value based solely on contemporaneous import data/NIDB without establishing comparability or adducing cogent evidence is unlawful; the declared transaction value is to be adopted for assessment.

Exemption from countervailing duty under Notification No. 30/2004-CE - non availment of Cenvat credit and entitlement of importers - binding effect of Supreme Court decision in SRF Ltd. and Board Circular - Importers are entitled to claim exemption from CVD under Notification No. 30/2004-CE even if they did not claim the benefit at importation, and the condition of non availment of Cenvat credit is not to be read as a condition that importers must themselves have foregone a statutory credit. - HELD THAT: - Relying on the Supreme Court decision in SRF Ltd. and consequent CBEC Circular, the Tribunal held that the proviso regarding non availment of Cenvat credit applies to the domestic manufacturer and does not bar an importer from claiming the CVD exemption. The Board Circular clarifying the effect of SRF Ltd. and subsequent tribunal precedent were treated as binding on departmental officers; assessing officers are therefore duty bound to verify and grant the exemption even where it was not claimed at the time of clearance, and a failure to do so does not preclude granting relief subsequently. Applying settled precedent and the cited circulars, the Tribunal found that the appellants were entitled to the benefit of Notification No. 30/2004 CE and directed consequential relief. [Paras 10, 14]

The appellants are entitled to exemption from CVD under Notification No. 30/2004 CE; lack of claim at import and the proviso on Cenvat credit do not disentitle importers in the circumstances.

Final Conclusion: The Tribunal set aside the impugned orders: declared transaction value must be adopted because enhancement based only on contemporaneous/NIDB data was unsupported, and the appellants are entitled to CVD exemption under Notification No. 30/2004 CE with consequential relief as per law.

Presumption under Section 28D that incidence of duty has been passed on to the buyer - Rebuttable nature of presumption of passing on - Unjust enrichment - Onus to prove non-passing on of duty - Acceptability of Chartered Accountant's certificate to rebut unjust enrichment - Role of sale invoices and audited accounts in proving non-passing on - Requirement of reassessment for entertaining refund claims post ITC Ltd. decision

Presumption under Section 28D that incidence of duty has been passed on to the buyer - Rebuttable nature of presumption of passing on - Onus to prove non-passing on of duty - Acceptability of Chartered Accountant's certificate to rebut unjust enrichment - Role of sale invoices and audited accounts in proving non-passing on - Whether the assessee has rebutted the presumption of passing on of CVD and whether the refunds should be disbursed to the assessee instead of being credited to the Consumer Welfare Fund - HELD THAT: - The Tribunal accepted that Section 28D creates a rebuttable presumption that the incidence of duty is passed to the buyer, but emphasised that this presumption can be displaced by sufficient documentary evidence. The assessee produced sale invoices, audited annual accounts for Financial Years 2014-15 and 2015-16, and a Chartered Accountant's certificate stating that the enhanced CVD was borne by the assessee and not passed on to buyers. The sale invoices did not show recovery of CVD from customers and the sale prices remained unchanged before and after reassessment. Commissioner (Appeals) rightly considered the notes in the statutory auditor's reports and concluded that charging the excess CVD as an expense did not inevitably prove passing on to buyers. Having accepted the invoices and audited notes, the onus shifted to the Department to produce contrary documents or cogent reasoning to falsify the evidence; no such material was produced. The Tribunal relied on precedent accepting CA certificates and sale invoices as sufficient to rebut unjust enrichment where the Department fails to controvert them, and on administrative guidance to accept CA certificates for this purpose. The Mafatlal principle that a claimant must prove loss or injury was considered inapplicable on these facts because the assessee demonstrated that the duty was not included in the sale price and thus had suffered the loss. The Tribunal also noted that reassessment proceedings under the Customs Act were taken where necessary in view of subsequent Supreme Court authority, and that Commissioner (Appeals) had allowed reassessment before granting relief. [Paras 7, 8, 9, 10, 11]

The finding of Commissioner (Appeals) that the presumption of passing on was rebutted is upheld; the refunds and lawful interest are to be paid to the assessee rather than credited to the Consumer Welfare Fund.

Final Conclusion: The appeals filed by the Department are dismissed. The Commissioner (Appeals) order upholding entitlement of the assessee to the sanctioned refunds (and interest) is affirmed and the refund amounts are to be disbursed to the assessee.

Penalty under 114(i) and 114(aa) of the Customs Act, 1962 - liability of Customs House Agent for client verification under the Customs House Agents Licensing Regulations, 2004 - vicarious/civil liability of a transporter for negligence of driver in relation to export cargo - personal liability of intermediary who arranges documents and pays expenses for export consignments - duty of certifying officer to physically verify loading before signing ARE-1 - effect of earlier appellate decision exonerating CHA on subsequent penalty proceedings

Liability of Customs House Agent for client verification under the Customs House Agents Licensing Regulations, 2004 - effect of earlier appellate decision exonerating CHA on subsequent penalty proceedings - Whether penalty imposed on M/s. Krishna Shipping Agency, CHA could be sustained in view of earlier Tribunal decision dropping proceedings under the CHALR, 2004. - HELD THAT: - The Tribunal noted that identical proceedings under the CHALR, 2004 against the CHA had earlier been dropped by this Tribunal on the basis that the CHA had taken reasonable steps to verify identity of the exporter, bills were filed on documents furnished, and there was no evidence that the CHA knew of irregularities prior to departmental detection. Having been previously exonerated from action under CHALR, the adjudicatory findings forming the basis for penal action in the present order could not be sustained. On that basis, the penalty previously imposed on M/s. Krishna Shipping Agency, CHA was set aside. [Paras 9, 10, 11]

Penalty imposed on M/s. Krishna Shipping Agency, CHA is set aside.

Vicarious/civil liability of a transporter for negligence of driver in relation to export cargo - penalty under 114(i) of the Customs Act, 1962 - Whether penalty against M/s. Krishna Shipping Transport Agency is sustainable for the alleged negligence of its driver in relation to loading of the container. - HELD THAT: - The Tribunal found that the driver deputed by the transporter left the vehicle during loading and made an implausible statement about leaving with an unknown person, constituting complete negligence. The Tribunal treated such negligence as attracting liability under section 114(i) for abetment of the attempted smuggling. In view of the driver's conduct being attributable to the transporter, the penalty imposed on M/s. Krishna Shipping Transport Agency was confirmed. [Paras 12]

Penalty of Rs.8.00 Lakhs confirmed against M/s. Krishna Shipping Transport Agency.

Personal liability of intermediary who arranges documents and pays expenses for export consignments - penalty under 114(i) of the Customs Act, 1962 - Whether penalty against Shri Srikant Taparia is sustainable for his role in handling export documents and paying export expenses on behalf of the exporter. - HELD THAT: - The Tribunal recorded that Shri Srikant Taparia handled export consignments, provided logistics, paid clearing charges and expenses on behalf of the exporter, and thus was 'hand in glove' with the exporter. Those activities were held to demonstrate active engagement in the smuggling attempt, rendering him liable for penal action. Consequently, no leniency was extended and the penalty imposed on him was confirmed. [Paras 13]

Penalty of Rs.2.00 Lakhs confirmed against Shri Srikant Taparia.

Duty of certifying officer to physically verify loading before signing ARE-1 - penalty under 114(i) and 114(aa) of the Customs Act, 1962 - Whether Shri Ajay Kumar Ghosh, Superintendent of Central Excise, can be exonerated from penalty where he signed the ARE-1 without being present at the site during loading. - HELD THAT: - The Tribunal rejected the defence that Shri Ghosh had delegated the on-site examination to a subordinate and that his signing was in good faith. The ARE-1 requires concurrent sealing and counter-signature; no counter-signature by the subordinate was recorded and Shri Ghosh was not present at the site when loading took place. On these findings the Tribunal held that Shri Ghosh was actively involved (or sufficiently culpable) and therefore the adjudicating authority's exoneration was not acceptable. The Tribunal imposed penalty on Shri Ghosh. [Paras 14, 15]

Penalty of Rs.2.00 Lakhs imposed on Shri Ajay Kumar Ghosh; revenue's appeal in this regard is allowed.

Final Conclusion: The appeal by the CHA is allowed and the penalty against M/s. Krishna Shipping Agency, CHA is set aside; the appeals filed by M/s. Krishna Shipping Transport Agency and Shri Srikant Taparia are dismissed and their respective penalties are confirmed; the revenue's appeal is allowed in part by setting aside the adjudicating authority's exoneration of Shri Ajay Kumar Ghosh and imposing penalty on him.

Time barred - limitation under Section 128 of the Customs Act, 1962 - refund of duty collected without authority of law - collection without authority of law under Article 265 - effect of laboratory test report on liability to anti-dumping duty - remand for adjudication on merits

Time barred - limitation under Section 128 of the Customs Act, 1962 - effect of laboratory test report on liability to anti-dumping duty - Whether the appeal before the Commissioner (Appeals) was time barred and from which date the period of limitation under Section 128 of the Customs Act, 1962 is to be computed. - HELD THAT: - The tribunal examined the chronology: importation and Bill of Entry filed on 26.12.2018; departmental examination directing deposit of anti dumping duty and samples sent for testing; CSIR report dated 11.09.2019 finding the goods did not attract anti dumping duty; rejection of the refund claim by the Assistant Commissioner communicated to the appellant on 31.01.2020; and filing of the appeal before the Commissioner (Appeals) on 20.03.2020. The tribunal held that the period of limitation prescribed under Section 128 must be counted from receipt of the order rejecting the refund claim, not from the date of the laboratory report, and that the appellant filed the appeal within 60 days of receipt of that order. The tribunal considered the contention based on collection without authority of law and Article 265 but rested its decision on the computation of limitation and the respondent's receipt of the rejection order. As the appeal was found to be within the statutory period, the tribunal set aside the Commissioner (Appeals)'s order which had dismissed the appeal as time barred, and remanded the matter for decision on merits.

The appeal was not time barred; the matter is remitted to the Commissioner (Appeals) to decide the appeal on merits within two months from receipt of the certified copy of this order.

Final Conclusion: The impugned order dismissing the appeal as time barred is set aside; the appeal is remanded to the Commissioner (Appeals) for decision on merits within two months.

Capability of use test for inputs under DFIA - absence of actual-user condition in transferable DFIA - construction of exemption notifications under export-promotion schemes - interpretation of SION description versus ITC/CTH mismatch - application of Para 4.12 of the Foreign Trade Policy

Capability of use test for inputs under DFIA - absence of actual-user condition in transferable DFIA - Imported Lithium Ion Cells are covered by the DFIA description 'Automotive Battery' and eligible for duty exemption because they are capable of use as automotive batteries in agricultural tractors; actual proof of having been used in the exported product is not required for a transferee of DFIA. - HELD THAT: - The Tribunal accepted the appellant's technical literature and expert opinion showing that Lithium Ion Cells can form EV battery packs and that electric agricultural tractors commercially available use Li-ion batteries. Relying on earlier authorities and DGFT clarifications, the Tribunal applied the settled principle that for transferable DFIAs the imported input need only be capable of being used in the export product described in the SION; actual use by the original license-holder or by the transferee need not be established. The Tribunal found no ambiguity in the notification that would justify denying the benefit, held that export-promotion exemptions are to be liberally construed at the applicability threshold, and concluded that the impugned batteries fell within the automotive-battery description and were therefore eligible for exemption under Notification No.19/2015-Cus. [Paras 3, 4, 5]

Appellant entitled to DFIA exemption: Lithium Ion Cells are covered by 'Automotive Battery' as capable of use in electric agricultural tractors and actual use need not be proved.

Application of Para 4.12 of the Foreign Trade Policy - interpretation of SION description versus specific/generic terminology - Para 4.12 applies where the description in SION is generic; 'Automotive Battery' was held to be a description that, on facts, engages the capability test rather than imposing an absolute requirement of specific nomenclature or one-to-one correlation. - HELD THAT: - The Tribunal reviewed the Commissioner (Appeals)'s view that 'Automotive Battery' is a generic term bringing Para 4.12(i) into play but concluded that even if Para 4.12 is relevant, its requirements are satisfied by evidence that the imported item is capable of use in the export product. The Tribunal followed judicial precedents interpreting generic versus specific descriptions and DGFT notes emphasising that the material need only be capable of use in manufacture of the export product. Consequently, the presence of a generic description does not exclude the imported Lithium Ion Cells when technical material establishes capability of use. [Paras 3, 5]

Para 4.12 does not bar the claim where the imported material is shown to be capable of use as the input described in SION.

Interpretation of SION description versus ITC/CTH mismatch - construction of exemption notifications under export-promotion schemes - Mismatch between ITC/HS (CTH) codes in the Bill of Entry and those appearing in the DFIA does not, by itself, defeat the claim for DFIA benefits if the imported goods fall within the description specified in the DFIA. - HELD THAT: - The Tribunal endorsed earlier decisions holding that ITC/CTH codes are not determinative where the description in the DFIA otherwise covers the imported goods. It noted SIONs do not prescribe specific CTHs for inputs and that Customs cannot read an HSN-code requirement into the licence. The Tribunal therefore rejected the assessing officer's denial based solely on differing ITC headings and observed that Notification No.19/2015 and DFIA practice require satisfaction of description, quantity and value rather than strict CTH matching. [Paras 3, 5]

Difference in ITC/CTH numbers does not bar DFIA exemption where the imported goods are otherwise covered by the DFIA description.

Final Conclusion: The appeal is allowed: Lithium Ion Cells imported against transferable DFIAs issued for 'Automotive Battery' used in agricultural tractors are covered by the DFIA and eligible for exemption under Notification No.19/2015-Cus, notwithstanding CTH/ITC mismatches or absence of proof of actual use, since the inputs were shown to be capable of use in the export product and DFIA-related exemptions are to be applied on that basis.

Option to pay redemption fine under Section 125 of the Customs Act - absolute confiscation for smuggled goods - prohibited goods by virtue of non-compliance with import conditions - burden of proof on carrier in respect of gold under Section 123 - penalty for use of false or incorrect material under Section 114AA of the Customs Act - penalty for improper importation under Section 112 - confiscation of packing material used for concealment under Section 119

Option to pay redemption fine under Section 125 of the Customs Act - absolute confiscation for smuggled goods - prohibited goods by virtue of non-compliance with import conditions - Whether the absolute confiscation of the gold bars without offering the option of redemption fine was sustainable. - HELD THAT: - The Tribunal held that where goods (such as gold bars in form other than jewellery) are importable on payment of duty but become liable for confiscation due to concealment or non-declaration, the adjudicating authority is ordinarily obliged to offer the option to redeem under the second limb of Section 125(1). Executive circulars or administrative instructions cannot override statutory provisions. Reliance on precedents finding absolute confiscation in cases where goods were treated as 'prohibited' by reason of non-compliance was examined, but the Tribunal distinguished those authorities on facts and statutory basis. Applying the statutory scheme and judicial authorities favouring redemption where import is not absolutely prohibited, the Tribunal modified the adjudicating order to allow redemption of the seized gold on payment of a redemption fine and applicable baggage rate duty, having regard to the method of importation and higher baggage duty applicable. [Paras 4, 5]

Absolute confiscation set aside to the extent that the appellant is allowed to redeem the seized gold bars on payment of a redemption fine of Rs.5,00,000 and payment of applicable baggage rate of duty.

Penalty for use of false or incorrect material under Section 114AA of the Customs Act - penalty for improper importation under Section 112 - Whether penalty under Section 114AA could be imposed on the appellant for allegedly making false or incorrect declarations/documents. - HELD THAT: - Section 114AA penalises knowingly using or causing to be used any declaration, statement or document which is false or incorrect in any material particular. The Tribunal found no material on record to show that the appellant made or caused to be made any false or incorrect declaration or document; the case against the appellant was non-declaration and concealment, not use of false documentation. Reliance on decisions of coordinate benches and government orders supported the view that Section 114AA is not attracted where no false declaration or document is shown to have been used. Accordingly, the penalty under Section 114AA was set aside. The penalty under Section 112(b) (for improper importation) was not challenged and therefore left intact. [Paras 4, 5]

Penalty imposed under Section 114AA is set aside; penalty under Section 112(b) is upheld (unchallenged).

Confiscation of packing material used for concealment under Section 119 - penalty for improper importation under Section 112 - Validity of confiscation of packing material (shoes and socks) and imposition of penalty under Section 112(b) as left unchallenged by the appellant. - HELD THAT: - The appellant did not contest the confiscation of packing material seized as items used for concealing the gold nor the penalty under Section 112(b). Those parts of the adjudicating order were accordingly sustained by the Tribunal. No further adjudication on these aspects was required. [Paras 4, 5]

Confiscation of packing material under Section 119 and penalty under Section 112(b) are upheld.

Final Conclusion: The appeal is allowed in part: the absolute confiscation of the gold bars is modified to permit redemption on payment of a redemption fine of Rs.5,00,000 and applicable baggage duty; the penalty under Section 114AA is set aside; the confiscation of packing material under Section 119 and the penalty under Section 112(b) are upheld.

Classification of electrical motors under Heading 8501 - Specificity rule under General Rules for Interpretation (Rule 3(a)) - Exclusion of electrical machinery from Section XVII (Note 2(j)) - Stepper motor as DC motor of output not exceeding 37.5W (sub heading 8501 10 12) - Use of Explanatory Notes in tariff classification - Principal/sole use test in classification

Classification of electrical motors under Heading 8501 - Specificity rule under General Rules for Interpretation (Rule 3(a)) - Stepper motor as DC motor of output not exceeding 37.5W (sub heading 8501 10 12) - Exclusion of electrical machinery from Section XVII (Note 2(j)) - Classification of the stepper motor (3800 B07F 0000) proposed to be imported for use in manufacture of idle air control valve. - HELD THAT: - The Authority considered the technical character and function of the subject stepper motor, the applicants submissions, and the view of the concerned Principal Commissioner. The motor is a brushless DC stepper motor that converts electrical energy into controlled mechanical movement and generates output not exceeding 37.5W. The Explanatory Notes and tariff structure identify stepper motors of this output under sub heading 8501 10 12. Rule 3(a) of the General Rules for Interpretation requires preference for the heading providing the most specific description where goods are prima facie classifiable under more than one heading; accordingly a specific entry for stepper motors prevails over more general headings. The Authority noted Note 2(j) of Section XVII which excludes electrical machinery of Chapter 85 from being treated as 'parts' of goods of that Section, and also considered relevant administrative instructions and judicial pronouncements (including discussion of the principal/sole use test), but found those authorities fact specific and not sufficient to displace the application of the specificity rule and the tariff wording in the present case. Applying these principles to the subject goods, the Authority concluded that the motor answers to the description in sub heading 8501 10 12 and is not to be classified as a part under Chapter 84 or other broader headings. [Paras 5, 6, 7, 8]

The stepper motor (3800 B07F 0000) is classifiable under sub heading 8501 10 12 of the First Schedule to the Customs Tariff Act, 1975.

Final Conclusion: Advance ruling allowed: the subject stepper motor for use in manufacture of idle air control valve is classifiable under sub heading 8501 10 12.

Admission of additional grounds - plea of Exemption Notification No. 30/2004-CE - bench's discretion to permit additional legal grounds

Admission of additional grounds - plea of Exemption Notification No. 30/2004-CE - Miscellaneous application for leave to plead additional ground invoking Exemption Notification No. 30/2004-CE was allowed. - HELD THAT: - The applicant sought permission in a supplementary list to take an additional legal ground that the matter was covered by Exemption Notification No. 30/2004-CE dated 09.07.2004. The Assistant/Authorized Representative raised no objection, treating the contention as purely legal. The Tribunal, noting that similar permissions have been granted earlier by the bench and that the point is a legal ground, allowed the miscellaneous application and permitted the additional ground to be taken on record. [Paras 3]

Miscellaneous application allowed; additional legal ground based on Exemption Notification No. 30/2004-CE permitted to be taken on record.

Final Conclusion: The Tribunal allowed the miscellaneous application and permitted the appellant to plead the additional legal ground based on Exemption Notification No. 30/2004-CE, the Assistant/Authorized Representative having no objection.

Submission of claim on or before the last date mentioned in the public announcement - Inadmissibility of belated claims in liquidation - Time bound nature of the Insolvency and Bankruptcy Code - Effect of prosecuting an appeal against the liquidation order on the obligation to submit claims - Non entitlement of suspended directors/shareholders to seek relief against conduct of the Committee of Creditors - Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (submission and proof of claims)

Submission of claim on or before the last date mentioned in the public announcement - Inadmissibility of belated claims in liquidation - Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (submission and proof of claims) - Time bound nature of the Insolvency and Bankruptcy Code - Whether the appellant's claim submitted 390 days after the last date in the public announcement could be admitted. - HELD THAT: - The Tribunal noted the liquidation commencement date, the public announcement and the last dates for receipt and verification of claims, and construed Regulation 16 as mandating submission of claims on or before the last date mentioned in the public announcement. The appellant submitted his claim well after the cut off (an inordinate delay of 390 days). The Tribunal held that the Code is a time bound process and a liquidator cannot accept a belated claim, as doing so would contravene the Code and its objectives. The adjudicatory conclusion affirmed the Adjudicating Authority's rejection of the delayed claim. [Paras 13, 14, 15, 16, 20]

The belated claim submitted by the appellant was inadmissible and the Adjudicating Authority's rejection was upheld.

Effect of prosecuting an appeal against the liquidation order on the obligation to submit claims - Time bound nature of the Insolvency and Bankruptcy Code - Whether the appellant's pursuit of appeals against the liquidation order excused or justified his failure to submit the claim within the prescribed period. - HELD THAT: - The Tribunal considered the chronology: the last date for submission of claims preceded the appellant's filing of an appeal challenging the liquidation order. It held that instituting an appeal, particularly in the absence of any stay, does not relieve a stakeholder of the obligation to submit a claim within the stipulated period. The appellant's contention that prosecuting remedies against the liquidation order explained the delay was rejected as untenable. [Paras 13, 16, 19]

Prosecuting an appeal did not excuse the failure to submit the claim within the prescribed period; the contention was rejected.

Non entitlement of suspended directors/shareholders to seek relief against conduct of the Committee of Creditors - Whether the appellant, as a suspended managing director and shareholder, was entitled to challenge the conduct of the Committee of Creditors or seek relief against the CIRP participants at the belated stage. - HELD THAT: - The Tribunal recorded that suspended directors had been uncooperative and were perceived to be creating hurdles in the CIRP. It observed that a shareholder/suspended director is not entitled to seek relief against the Committee of Creditors or to challenge the conduct of the IRP/RP/Liquidator at a belated stage, particularly after earlier unsuccessful challenges in higher forums. The Tribunal found no substance in the appellant's attempts to reopen or delay the process. [Paras 10, 21, 22]

The appellant was not entitled to such relief and the challenge was appropriately dismissed as an abuse causing delay.

Final Conclusion: The appeal is dismissed and the Adjudicating Authority's order rejecting the belated claim is upheld; no interference is warranted with the liquidation process.

Existence of operational debt - default under Section 9 of the Insolvency and Bankruptcy Code - pre-existing dispute under the Mobilox test - novation of contract and consent of creditor - summary jurisdiction of the adjudicating authority under the IBC

Existence of operational debt - default under Section 9 of the Insolvency and Bankruptcy Code - Whether an operational debt was due and payable by the Corporate Debtor and whether there was default such as would justify admission under Section 9. - HELD THAT: - The Tribunal applied the Mobilox framework and examined documentary material and correspondence. It found that the Operational Creditor had, by conduct and correspondence, received payments directly from Anwesha and had not previously sought payment from the Corporate Debtor before 22.02.2021. There was no document produced to show that the Corporate Debtor had admitted the alleged debt or that the Operational Creditor had contemporaneously treated the Corporate Debtor as the debtor. On these facts, the question whether the Corporate Debtor was the principal debtor could not be resolved as a plain debt-and-default case suitable for summary admission under Section 9 without addressing the underlying dispute. [Paras 15, 16, 18, 19, 24]

The adjudicating authority erred in treating the matter as a straight debt/default case; the admitted facts show a dispute affecting the existence/liability of the operational debt which precluded admission under Section 9.

Pre-existing dispute under the Mobilox test - novation of contract and consent of creditor - Whether there existed a pre-existing dispute between the parties about payment terms (including the asserted arrangement that Anwesha would pay directly) prior to the demand notice, and whether the purported modified arrangement amounted to a novation requiring creditor's consent. - HELD THAT: - The Tribunal found that although the minutes of the meeting of 05.11.2019 did not bear the Operational Creditor's signature, subsequent emails (including communication of 09.11.2019) and bank statements established that Anwesha communicated an undertaking to pay directly and that the Operational Creditor accepted and acted upon that arrangement by receiving RTGS payments and collecting post-dated cheques. The Corporate Debtor's reply to the demand notice of 09.03.2021 expressly denied liability and referred to the revised arrangement. Applying Mobilox, the Tribunal held that these materials together constituted a plausible, non-spurious pre-existing dispute which the adjudicating authority should have recognised without undertaking a final merits adjudication on novation. [Paras 18, 19, 20, 23, 24]

There was a plausible pre-existing dispute about payment responsibility and the asserted novation/modified arrangement, which barred admission of the Section 9 application.

Summary jurisdiction of the adjudicating authority under the IBC - pre-existing dispute under the Mobilox test - Whether the Adjudicating Authority exceeded its summary jurisdiction by investigating who was the principal debtor and making findings on that disputed question in a Section 9 proceeding. - HELD THAT: - The Tribunal emphasised that Section 9 proceedings permit only summary inquiry and, following Mobilox, the adjudicating authority should reject an application if a plausible pre-existing dispute is shown. In the present case, the Adjudicating Authority went into the substance of the dispute to determine which entity was the principal debtor, despite the existence of documentary material and correspondence creating a plausible dispute. That approach was contrary to the limited scope of enquiry mandated under Section 9 and Mobilox. [Paras 6, 11, 22, 24, 25]

The Adjudicating Authority exceeded its limited summary jurisdiction by delving into contested factual/legal questions which should have led to rejection of the Section 9 application once a plausible pre-existing dispute was shown.

Final Conclusion: The appeal is allowed; the admission of the Section 9 application and consequent initiation of CIRP were set aside because a plausible pre-existing dispute about payment responsibility existed prior to the demand notice and the Adjudicating Authority exceeded its summary jurisdiction. The Corporate Debtor is released from CIRP and the Operational Creditor remains free to pursue appropriate alternative remedies as permissible in law; the order of the Adjudicating Authority directing deposit for IRP expenses is modified as directed by the Tribunal.

Suspension of limitation under Section 22(1) and exclusion under Section 22(5) of SICA - Fresh cause of action from issuance of DRT recovery certificate - Acknowledgement of debt under Section 18 of the Limitation Act, 1963 - OTS proposals as acknowledgement and renewal of limitation - Computation of limitation for initiation of CIRP under Section 7 IBC - Application of Supreme Court precedents on limitation, acknowledgement and recovery certificates

Suspension of limitation under Section 22(1) and exclusion under Section 22(5) of SICA - Fresh cause of action from issuance of DRT recovery certificate - Computation of limitation for initiation of CIRP under Section 7 IBC - Whether the period during which proceedings were suspended under SICA is excluded from computation of limitation so that the fresh cause of action for the Financial Creditor accrues after abatement of SICA/AIFR proceedings (February 2017) and the Section 7 application filed on 19/08/2019 is within limitation. - HELD THAT: - The Tribunal found that Section 22(1) SICA barred proceedings for recovery while an inquiry/scheme/appeal under SICA was pending and Section 22(5) expressly excludes the suspended period in computing limitation. Applying Sabarmathi Gas Ltd. and related Supreme Court precedent, the Tribunal held that where the Financial Creditor's right to enforce the Recovery Certificate (dated 19/11/2009) was statutorily stayed by BIFR/AIFR orders and the Corporate Debtor failed to secure continuation of proceedings post-repeal of SICA, the right to enforce accrued only after the stay/abatement ceased in February 2017. Consequently the cause of action for instituting CIRP under Section 7 is to be reckoned from February 2017 and not from the original date of default in 1997 or from the date of the Recovery Certificate when enforcement was stayed. The Tribunal distinguished decisions relied upon by the Appellant where no acknowledgment or timely interruption existed and applied the exclusion and condonation reasoning mandated by the apex authority. [Paras 12, 13, 15, 16]

The period of suspension under SICA is excluded and February 2017 is to be treated as the date when the fresh cause of action arose; the Section 7 petition filed on 19/08/2019 is within limitation on that basis.

Acknowledgement of debt under Section 18 of the Limitation Act, 1963 - OTS proposals as acknowledgement and renewal of limitation - Computation of limitation for initiation of CIRP under Section 7 IBC - Whether the correspondence and One Time Settlement (OTS) proposals, part payments and related letters exchanged between 2008 and 2019 constitute acknowledgements under Section 18 of the Limitation Act and therefore restart/renew the period of limitation for filing the Section 7 petition. - HELD THAT: - On the facts, the Tribunal recorded multiple written OTS proposals and partial payments by the Corporate Debtor (including pre- and post Recovery Certificate communications) that referred to the debt and to terms of payment. Relying on binding Supreme Court precedent (including Dena Bank, Kotak Mahindra and Kotak v. KEW Precision Parts) the Tribunal reiterated that an acknowledgment under Section 18 need not be an unconditional promise to pay and may be inferred from written communications evidencing a present subsisting liability and a jural relationship. The Tribunal held that the OTS correspondence, combined with part payments and repeated promises to pay, amounted to valid acknowledgements within the relevant period, thereby operating to restart limitation. Prior decisions cited by the Appellant on conditional offers or part payments were distinguished on the basis of the factual matrix and applicable Supreme Court pronouncements. [Paras 24, 25, 26, 28, 29]

The OTS proposals, related letters and part payments constitute acknowledgements under Section 18 and renew the period of limitation, supporting the conclusion that the Section 7 petition was filed within time.

Final Conclusion: The appeal is dismissed. Applying SICA's suspension and its exclusion for computation of limitation, and holding that the parties' OTS correspondence and part payments constituted valid acknowledgements under Section 18, the Tribunal concluded that the Financial Creditor's Section 7 application filed on 19/08/2019 was within limitation; appeal rejected and connected interlocutory applications closed.

Grant of bail under PMLA and twin conditions in Section 45 - requirement of reasoned order for judicial pronouncement - docket order without prepared detailed judgment - preliminary satisfaction by court before releasing accused on bail - effect of incomplete predicate-offence investigation on bail

Requirement of reasoned order for judicial pronouncement - docket order without prepared detailed judgment - Whether the trial Court erred in granting bail by a docket order pronounced on 16.08.2023 without a contemporaneously prepared reasoned judgment and in circumstances where the detailed order was not available immediately. - HELD THAT: - The High Court found that the trial Court had pronounced a docket order on 16.08.2023 enlarging the accused on bail and that, when records were called for the following day, no prepared detailed order was found in the trial Court records. The subsequent detailed order produced on 21.08.2023 did not indicate that a reasoned order had been dictated and signed at the time of pronouncement, and the absence of a contemporaneous prepared text raised suspicion about the propriety of the manner in which bail was granted. The Court relied on the principle that a judicial officer should not pronounce the operative portion of a judgment in open court without the entire text of the judgment being prepared/dictated, and observed that the deficit in procedure warranted interference by the High Court notwithstanding that administrative action may also be appropriate. Taking these defects into account, the High Court concluded that the manner of pronouncement and the lack of immediate availability of a reasoned order undermined the grant of bail. [Paras 2, 26]

The bail order of 16.08.2023 was set aside on the ground that it was a docket order pronounced without a prepared reasoned judgment being available at the time of pronouncement.

Grant of bail under PMLA and twin conditions in Section 45 - preliminary satisfaction by court before releasing accused on bail - effect of incomplete predicate-offence investigation on bail - Whether the trial Court properly recorded satisfaction as required by the PMLA regime (twin conditions) and whether delay or incompletion in the predicate-offence investigation by other agencies entitled the accused to bail. - HELD THAT: - The High Court examined the substance of the material on record, including prior orders of the High Court and the Supreme Court, the nature and gravity of the alleged money-laundering (involving numerous consignments and funds diverted abroad), ongoing steps by the Enforcement Directorate (including letters rogatory), and the accused's conduct in relation to cooperation with investigation. The Court noted that the detailed order produced did not demonstrate satisfaction of the twin conditions mandated by Section 45 of the PMLA Act, and found that delay in completion of predicate-offence investigation by DRI/CBI or closure of similar cases elsewhere cannot be presumed to establish the accused's innocence or constitute a ground mandating bail. The Court further observed risk factors such as the international connections of the accused, the alleged diversion of funds abroad, and the possibility of absconding or tampering, which weighed against release. Applying these considerations, the High Court concluded that the trial Court had not properly recorded the requisite satisfaction and that neither the pendency nor delay in predicate investigations entitled the accused to bail in the circumstances. [Paras 22, 23, 24, 26, 27]

The High Court held that the trial Court failed to satisfy and record the twin conditions under Section 45 of PMLA before granting bail and rejected the contention that delay or incompletion of predicate investigations entitled the accused to bail; consequently the bail granted was set aside.

Final Conclusion: The Criminal Original Petition filed by the Enforcement Directorate is allowed. The trial Court's order dated 16.08.2023 granting bail to the respondent is set aside for being a docket order pronounced without a contemporaneous reasoned judgment and for failure to record the requisite satisfaction under the twin conditions of Section 45 of the PMLA; connected miscellaneous petition closed.

Liability under reverse charge mechanism for Goods Transport Agency where consignor or consignee falls under specified sub-clauses - definition of Goods Transport Agency and requirement of consignment note - transport services by individual truck/lorry owners not constituting GTA - application of judicial precedent and coordinate-bench discipline

Liability under reverse charge mechanism for Goods Transport Agency where consignor or consignee falls under specified sub-clauses - definition of Goods Transport Agency and requirement of consignment note - transport services by individual truck/lorry owners not constituting GTA - application of judicial precedent and coordinate-bench discipline - Payment of freight for transportation of limestone by individual truck owners does not attract Service Tax under the GTA reverse charge mechanism as applied in the impugned order. - HELD THAT: - The Tribunal found on the material that transportation was effected by individual truck/lorry owners engaged under work orders and that such operators did not issue consignment notes. The statutory definition of GTA and the operation of Rule 2(1)(d)(v) require the activity to fall within the GTA concept (including the issuance of consignment notes) for the reverse charge to apply. Co ordinate Bench decisions treating transport by individual vehicle owners as outside the GTA levy - including the Bench's own decision in K.M.B. Granites (upheld by the Madras High Court) and other consistent CESTAT precedents - establish that absence of consignment notes and the involvement of individual truck owners preclude characterization as GTA. Judicial discipline and the binding effect of consistent coordinate bench rulings led the Tribunal to follow those authorities and reject the Revenue's demand that the freight paid be taxable under GTA. [Paras 11, 12]

Demand of Service Tax on freight paid to individual truck owners under the GTA reverse charge was set aside.

Final Conclusion: The appeal is allowed; the confirmed demand of Service Tax under the GTA reverse charge for the period 2006-07 to 2010-11 is quashed, applying the consistent view of coordinate CESTAT benches (one of which was upheld by the Madras High Court).

Remand for fresh consideration - refund of Cenvat credit - export of services - application of Export of Services Rules - adjudicatory scope of appellate authority - effect of earlier findings in original order

Adjudicatory scope of appellate authority - effect of earlier findings in original order - Whether the Commissioner (Appeals) erred in rejecting the appellant's refund appeal by relying on issues which had been accepted in the original order and were not in dispute before the Commissioner (Appeals). - HELD THAT: - The Tribunal found that the show cause notice contained six grounds; the Joint Commissioner had accepted two of those grounds in the Order in Original and the appellant did not appeal those two findings. The appellant, however, had confined its appeal before the Commissioner (Appeals) to the remaining four contested grounds. The Commissioner (Appeals) rejected the appeal principally on the two issues already accepted in the original order and which were not in issue before him, and failed to advert to or decide the four issues that the appellant had actually raised on appeal. That course amounted to a mis disposition of the appeal by deciding matters not in dispute and omitting adjudication on the contested points. [Paras 6, 7]

The Commissioner (Appeals) erred in deciding the appeal on issues not in dispute and in failing to decide the contested issues; the matter requires corrective action.

Remand for fresh consideration - refund of Cenvat credit - export of services - application of Export of Services Rules - Whether the appeal should be remanded to the Commissioner (Appeals) for fresh adjudication of the four contested grounds. - HELD THAT: - In view of the Commissioner (Appeals) having decided the appeal on matters not before him and having omitted to give findings on the four grounds actually contested by the appellant, the Tribunal concluded that the appropriate remedy is to remit the matter to the Commissioner (Appeals) for fresh consideration of those four issues. The Tribunal directed that the Commissioner (Appeals) decide the four issues afresh within two months from receipt of the certified copy of the Tribunal's order. [Paras 8, 9]

The matter is remanded to the Commissioner (Appeals) to decide the four contested issues afresh within two months.

Final Conclusion: The appeal is remitted to the Commissioner (Appeals) for fresh adjudication of the four issues which were actually contested before him; the Commissioner (Appeals) is directed to decide those issues within two months from receipt of the certified copy of this order.

Works contract - composite contract involving supply of goods and services - vivisect value of material - determination of value of service portion under Rule 2A(i)(c) of the Service Tax (Determination of Value) Rules, 2006 - value adopted for payment of VAT to be excluded from taxable service value - extended period of limitation - penalty not imposable

Works contract - composite contract involving supply of goods and services - vivisect value of material - Classification of the appellant's maintenance and repair agreements as works contract and liability to service tax for the period prior to 01.07.2012 - HELD THAT: - The Tribunal applied earlier decisions holding that contracts which comprise supply of goods along with services are composite works contracts and, where the value of materials cannot be vivisected, the proper classification is works contract. In that legal backdrop, services performed by the appellant in relation to maintenance and repair of HEMM involving supply of spares fall within the works contract category. Consequentially, for the period prior to 01.07.2012 the demand of service tax under the head of maintenance and repair service is not sustainable and is set aside. [Paras 6, 7]

Services are works contract in nature; appellant not liable to pay the impugned service tax for the period prior to 01.07.2012 and the related demand is set aside.

Determination of value of service portion under Rule 2A(i)(c) of the Service Tax (Determination of Value) Rules, 2006 - value adopted for payment of VAT to be excluded from taxable service value - Method of valuing the service portion where VAT has been paid on the value of goods supplied - HELD THAT: - The Tribunal held that where the value of goods transferred in execution of the works contract is ascertainable because VAT/sales tax has been paid or is payable on that actual value, the value so adopted for VAT purposes must be excluded from the gross amount charged for the works contract to determine the service portion under Rule 2A(i)(c). In the present case the appellant had discharged VAT on spare parts; therefore the value of those goods is to be excluded and the taxable service value determined accordingly. [Paras 6]

Taxable value of the service portion is to be determined by excluding the value on which VAT has been paid in terms of Rule 2A(i)(c); this finding is in favour of the appellant.

Extended period of limitation - Invocability of the extended period of limitation - HELD THAT: - The Tribunal observed that the controversy primarily concerned interpretation and classification under the Service Tax (Determination of Value) Rules, 2006. Given that the dispute turned on legal classification and valuation rules rather than concealment or suppression warranting extended limitation, the extended period of limitation was not invocable in the facts of the case. [Paras 7]

Extended period of limitation cannot be invoked; issue answered for the appellant.

Penalty not imposable - Imposition of penalty - HELD THAT: - Having decided the substantive issues in favour of the appellant on classification and valuation, and on the facts of the case, the Tribunal held that no penalty is imposable upon the appellant. [Paras 7]

No penalty is imposable; issue answered in favour of the appellant.

Final Conclusion: The appeals are allowed: the demand of service tax confirmed by the impugned orders is set aside (the service is held to be a works contract and, where VAT was paid on spare parts, that value is excluded under Rule 2A(i)(c)), extended limitation is not invocable and no penalty is imposable; consequential relief, if any, to follow.

Exemption threshold after 60% exemption - Classification as hire versus rent a cab service - Penalty not leviable where substantive relief granted

Exemption threshold after 60% exemption - The gross value of taxable service rendered by each appellant falls below the threshold limit after excluding 60% of the gross receipt and therefore the appellants are not liable to service tax. - HELD THAT: - The Tribunal examined the contractual arrangements and receipts of each appellant and applied the principle that for computing the threshold limit the allowance under Notification No.01/2006 (exempting 60% of the consideration) must be excluded from taxable consideration. The Tribunal noted that departmental authorities had accepted this approach in similar cases and followed the view in Ashok Kumar Mishra, holding that after excluding 60% of the consideration the appellants' taxable value is below the prescribed threshold and hence they fall within the exempt category. [Paras 6]

Appeals allowed on the ground that the taxable turnover is below the threshold limit after applying the 60% exemption; no service tax is payable.

Classification as hire versus rent a cab service - The service provided by the appellants is a contract of hire (provision of buses on per kilometre remuneration) and not a rent a cab service. - HELD THAT: - On scrutiny of the agreements, the Tribunal found that each appellant provided one bus to M/s PRTC, received remuneration on a per kilometre basis, and bore running costs such as diesel, repairs and drivers' salaries. There was no arrangement of 'renting'. Reliance was placed on the High Court of Uttarakhand decision in R.S. Travels to support the proposition that where there is a contract of hire and no renting, the service cannot be assessed as rent a cab. Applying that principle, the Tribunal concluded that the services rendered were not taxable as rent a cab. [Paras 6]

Appeals allowed on the classification issue; services are hire of buses and not rent a cab.

Penalty not leviable where substantive relief granted - Penalties do not survive where the appeals succeed on both exemption and classification grounds. - HELD THAT: - Having allowed the appeals on the threshold/exemption point and on classification, the Tribunal held that there is no occasion to sustain the penalties imposed by the Department. The Tribunal therefore set aside the impugned orders in their entirety. [Paras 6, 7]

Penalties set aside as the substantive demands are not sustainable.

Final Conclusion: The impugned orders are set aside and all seven appeals are allowed: the appellants are not liable to service tax because their taxable turnover falls below the threshold after applying the 60% exemption and because the service rendered is hire of buses and not rent a cab; consequential penalties are vacated.

Service tax liability on free services provided during warranty - value of services included in price of goods - absence of specific reimbursement by principal to dealer - precedential effect of earlier Tribunal decision

Service tax liability on free services provided during warranty - value of services included in price of goods - absence of specific reimbursement by principal to dealer - Whether service tax is payable on the free warranty services rendered by the authorised dealer to car purchasers - HELD THAT: - The Tribunal applied its earlier decision in Hindustan Auto House, which held that the so-called 'free services' were not truly free because their value was already included in the price paid by customers and had been considered for excise duty and sales tax. The finding in Hindustan Auto House also recorded that there was no evidence of specific reimbursement by the vehicle manufacturer to the dealer for those services. Applying that reasoning to the present appeals, and in the absence of any material to show that the manufacturer specifically reimbursed amounts to the appellant, the demand of service tax could not be sustained. The Tribunal further noted that a subsequent appellate order in the appellant's favour had not been set aside by the department. Consequently, the Tribunal concluded that the earlier precedent squarely covered the facts of these appeals and required setting aside the impugned order confirming the demand.

The impugned order confirming service tax demand is set aside and the appeals are allowed.

Final Conclusion: Applying the Tribunal's earlier reasoning that warranty 'free services' are not chargeable where their value is included in the price and there is no specific reimbursement by the manufacturer, the appeals are allowed and the order confirming the service tax demand is set aside.

Refund of tax paid under mistake of law - limitation for refund under Section 11B of the Central Excise Act - date of discovery of mistake as commencement of limitation - doctrine of unjust enrichment and burden to prove non passing of incidence - Article 265 - levy and collection of tax only by authority of law

Refund of tax paid under mistake of law - limitation for refund under Section 11B of the Central Excise Act - date of discovery of mistake as commencement of limitation - Whether the refund claim for service tax paid between May 2011 and November 2011 was barred by limitation under Section 11B or recoverable as payment made under a mistake of law. - HELD THAT: - The Court agreed with the CESTAT and recent High Court decisions that where service tax was not leviable, a payment made under a mistake of law is not to be treated as a duty within the four corners of Section 11B so as to attract its prescribed limitation. In such cases the relevant limitation is governed by the date when the mistake was discovered; consequently a claim filed upon discovery of the mistake cannot be summarily rejected as time barred by reference to Section 11B. The Court noted consistent High Court authority and constitutional principle under Article 265 that monies collected without authority of law cannot be retained, and therefore found no ground to interfere with the CESTAT's conclusion that the refund was maintainable despite the passage of the period contemplated by Section 11B. [Paras 14]

CESTAT's conclusion that the refund claim was not barred by limitation was upheld and the departmental appeal dismissed on this ground.

Doctrine of unjust enrichment and burden to prove non passing of incidence - refund of tax paid under mistake of law - Whether the claim was hit by the doctrine of unjust enrichment and what material must be produced to discharge that burden. - HELD THAT: - The Court observed that the adjudicating authorities had earlier recorded absence of documentary evidence from the assessee to show that the incidence of the tax was not passed on to the ultimate consumer. The CESTAT's order did not address this aspect. While the Court upheld entitlement to refund, it directed that the assessee must place adequate material before the competent Assessing Authority to demonstrate that the incidence of service tax was not passed on, because the burden to address unjust enrichment is embedded in the principal provision dealing with refund. The Court therefore left the question of unjust enrichment to be considered and satisfied by the assessing authority on the material to be produced by the assessee. [Paras 16]

The matter of unjust enrichment was not finally adjudicated in favour of the assessee; the assessee must furnish appropriate evidence to the Assessing Authority to discharge the burden on unjust enrichment.

Final Conclusion: The departmental appeal is dismissed; the CESTAT's order allowing refund on the ground that the tax was not leviable is upheld, subject to the assessee placing before the competent Assessing Authority adequate material to satisfy the requirement against unjust enrichment, and the Assessing Authority dealing with that material.

Adjournment for sufficient cause - dismissal for non-prosecution - limited grant of adjournments (maximum three) - abuse of adjournment - duty of advocate to appear

Adjournment for sufficient cause - limited grant of adjournments (maximum three) - abuse of adjournment - Whether repeated adjournments sought by the appellant without production of the medical certificate and beyond permissible limits warranted refusal of further adjournment and dismissal of the appeals for non-prosecution. - HELD THAT: - The Tribunal recorded that despite previous adjournments granted on the appellant's written requests and specific directions to produce medical certificates, no medical certificate was produced and no fresh request for adjournment was made on the last listed date. Section 35C(1A) permits adjournments where sufficient cause is shown but contains a statutory ceiling on adjournments; Rule 20 empowers the Tribunal to dismiss an appeal for default or hear it on merits, while permitting restoration where sufficient cause is later shown. The Tribunal relied on Supreme Court authority condemning mechanical or repeated adjournments and emphasising the duty of advocates to appear and the corrosive effect of delay on the justice delivery system. Having regard to the absence of the required medical evidence, the history of repeated adjournments and the settled judicial admonitions against indulgence in routine adjournments, the Tribunal concluded there was no justification to grant further time and that the appeals should be dismissed for non-prosecution. [Paras 5, 6]

Appeals dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982, having regard to the absence of justification for further adjournments.

Final Conclusion: The Tribunal, applying the statutory scheme permitting adjournments only for sufficient cause and the Tribunal's power to dismiss for default, and having regard to judicial warnings against routine adjournments and the counsel's non compliance with directions to produce medical certificates, dismissed the appeals for non prosecution.

Contextual limitation of judicial observations - interpretation of observations in relation to the Kerala Value Added Tax Act - non-general applicability of observations - clarification of earlier judgment

Interpretation of observations in relation to the Kerala Value Added Tax Act - non-general applicability of observations - clarification of earlier judgment - Scope and applicability of the observations recorded in paragraphs 9.1 and 9.4 of this Court's judgment dated 10.04.2023. - HELD THAT: - The Court clarified that the observations made in paragraphs 9.1 and 9.4 of its earlier judgment were expressed specifically in the context of the Kerala Value Added Tax Act and the notifications issued under that Act. The Court emphasised that those observations are not to be read as general propositions applicable to other State enactments. The clarification was made after noting submissions that the State revenue would not be prejudiced and that the duty demand in the subject proceedings had been satisfied, which removed practical impediments to issuing the clarification. Having regard to these circumstances, the Court confined the reach of its earlier observations to the statutory and factual matrix of the Kerala VAT regime addressed in the earlier decision. [Paras 9]

Observations in paragraphs 9.1 and 9.4 of the judgment dated 10.04.2023 are clarified to be limited to the Kerala Value Added Tax Act and are not general observations applicable to other State enactments; the Miscellaneous Application is disposed of accordingly.

Final Conclusion: The Court granted the requested clarification limiting the earlier observations to the Kerala Value Added Tax Act and disposed of the Miscellaneous Application on that basis.

Provisional attachment under Section 35 of the MVAT Act - lapse of provisional attachment after one year - voidability of transfers to defraud revenue under Section 38 of the MVAT Act - notice under Section 38 cannot be issued to a non-dealer - liability of the registered dealer as distinct from former directors

Provisional attachment under Section 35 of the MVAT Act - lapse of provisional attachment after one year - Whether the provisional attachment of the petitioner's and relatives' demat accounts effected by communication to NSDL continues to have effect - HELD THAT: - The Court examined the communication invoking Section 35 and observed that subsection (2) mandates cessation of every provisional attachment after one year from service of the order under subsection (1) unless the statutory proviso for extension with reasons recorded was validly invoked. No order extending the one year period was shown to the Court. Consequently, the provisional attachment communicated to NSDL had, by operation of law, ceased to have effect and the demat accounts were no longer provisionally attached. [Paras 11]

Provisional attachment of the demat accounts has lapsed by operation of law and stands revoked.

Voidability of transfers to defraud revenue under Section 38 of the MVAT Act - notice under Section 38 cannot be issued to a non-dealer - liability of the registered dealer as distinct from former directors - Whether the intimation issued under Section 38 of the MVAT Act to the petitioner, a former director who is not the registered dealer, was maintainable - HELD THAT: - The Court noted Section 38 addresses creation of charges or transfers by a dealer to defraud revenue and empowers the Commissioner to hold enquiry and declare such transfers void. The impugned intimation was addressed to the petitioner who had resigned as director before the relevant period in question and who was not the registered dealer. On the record the department had not verified these facts and had proceeded on an erroneous premise that the petitioner continued as director. Prima facie therefore the notice under Section 38 could not properly be issued to a person who is not the dealer liable under the Act. In view of these considerations the Court found it appropriate to grant interim protection and stay the impugned notice. [Paras 12, 14, 15]

Stay granted on the intimation dated 11th April 2022 issued under Section 38 insofar as it is addressed to the petitioner; the department may proceed against the dealer entities or their present directors in accordance with law.

Final Conclusion: Interim relief granted: the provisional attachment of the demat accounts has lapsed by operation of law and the Section 38 intimation against the petitioner (a former director who is not the registered dealer) is stayed; respondents directed to file a reply and are not precluded from recovery action against the dealer entities or their present directors.

Presumption under Section 139 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Rebuttable presumption and standard of proof by preponderance of probabilities - Onus on the accused to raise a probable defence - Remand for retrial to permit fresh evidence and opportunity to rebut presumption

Presumption under Section 139 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Onus on the accused to raise a probable defence - Whether the trial court erred in acquitting the accused by treating the defence's general denial and absence of complainant's documentary proof as sufficient to rebut the presumption under Section 139 in a complaint under Section 138 NI Act. - HELD THAT: - The High Court held that Section 139 mandates a presumption in favour of the holder that a cheque was issued in discharge of a debt or liability once execution is admitted. That presumption is rebuttable but the burden on the accused is to raise a probable defence on the preponderance of probabilities. The trial court's acquittal rested on the complainant's inability to produce certain documents and on the defence's general denial; however, the accused adduced no evidence to rebut the statutory presumption. The High Court observed that mere denial by the accused, without cogent evidence or materials creating a probable defence, is insufficient to discharge the evidentiary onus placed by Section 139. Reliance was placed on the Supreme Court precedents cited in the judgment to explain the standard and effect of the presumption under Section 139. In those circumstances the trial court misapplied the law by treating the lacuna in documentary proof as having the effect of rebutting the statutory presumption when the defence had not produced materials to raise a probable defence.

The acquittal was legally unsustainable because the presumption under Section 139 had not been rebutted; the trial court erred in law and fact in holding that no case under Section 138 was made out.

Remand for retrial to permit fresh evidence and opportunity to rebut presumption - Natural justice and opportunity to adduce evidence - Whether the matter should be remanded for fresh trial and further evidence to enable proper application of Section 139 and allow the accused an opportunity to rebut the presumption. - HELD THAT: - Having found that the trial court misapplied Section 139, the High Court directed remand for retrial rather than pronouncing final conviction. The court emphasised the principle of natural justice and ordered that the trial court issue notice to both parties, call for relevant documents, allow the complainant to prove the materials in accordance with law and afford the accused sufficient opportunity to rebut the presumption. The High Court required the trial court to consider the fresh materials and evidence and decide the matter afresh in accordance with law, preferably within six months from communication of the order. The order also directed that the trial court ensure presence of the accused by due process of law and proceed expeditiously.

The matter is remanded to the trial court for retrial and fresh consideration of evidence on the presumption under Section 139, with directions to permit parties to adduce and rebut evidence and to decide the case afresh.

Final Conclusion: The appeal is allowed; the trial court's order of acquittal under Section 138 NI Act is set aside as contrary to law for having treated mere denial and absence of certain documents as sufficient to rebut the presumption under Section 139. The case is remanded for retrial with directions to permit fresh evidence, afford the accused an opportunity to rebut the presumption, and to decide the matter afresh in accordance with law.

Section 138 of the Negotiable Instruments Act - Section 141 of the Negotiable Instruments Act - arraigning the company as an accused is imperative - vicarious liability of company officers - leave to appeal under Section 378(4) CrPC

Section 138 of the Negotiable Instruments Act - Section 141 of the Negotiable Instruments Act - arraigning the company as an accused is imperative - vicarious liability of company officers - Whether the learned Magistrate erred in dismissing the complaint under Section 138 of the Negotiable Instruments Act by applying Section 141 when the disputed cheques were drawn by a company and the company was not arraigned as an accused. - HELD THAT: - The learned Magistrate found on evaluation of the complaint and evidence that the disputed cheques were drawn by Status Seramik India Private Limited and the transactions were with the company, even though the designation of the signatory was not reflected on the cheques. On that factual basis the Magistrate applied the scheme of Section 141 concerning offences by companies and the vicarious liability of persons in charge of the company. The High Court noted the settled law in Aneeta Hada that arraignment of the company is imperative for maintaining prosecution under Section 141 and that other persons can be proceeded against only on the touchstone of vicarious liability as stipulated in the provision. Given the Magistrate's findings that the cheque was drawn on behalf of the company and the binding principle that a company must be arraigned, the High Court found no arguable ground to admit the appeal for reconsideration.

Leave to appeal under Section 378(4) CrPC refused; criminal appeal rejected.

Final Conclusion: The application for leave to appeal is refused as no arguable case is made out-the Magistrate correctly applied Section 141 in light of the finding that the cheques were drawn by a company and the settled requirement that a company must be arraigned; accordingly the criminal appeal stands dismissed.

Liability of drawer under Section 138 of the Negotiable Instruments Act - vicarious/constructive liability of directors and Section 141 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act and its rebuttal - standard for rebutting reverse onus - preponderance of probabilities - dishonour on ground "account closed" within Section 138 - appellate interference with order of acquittal - perversity and misreading of evidence

Liability of drawer under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act and its rebuttal - dishonour on ground "account closed" within Section 138 - Respondent No.2 (drawer) is guilty under Section 138 of the Negotiable Instruments Act for issuing cheques from his personal account which were dishonoured. - HELD THAT: - The High Court found that the cheques in question were drawn by respondent No.2 from his personal bank account and were dishonoured with the endorsement "account closed". Once the cheque as executed by the drawer was proved, the statutory presumption under Section 139 arose that it was issued for discharge of a debt or liability; that presumption is rebuttable but only on the preponderance of probabilities. The trial court misread evidence in treating the payments as solely to the company and in holding that vicarious liability required impleading the company; the High Court held that a drawer who issues cheques from his personal account in discharge of an obligation can be personally liable under Section 138 irrespective of the company's position. Applying the settled tests on presumptions and on dishonour for "account closed", the Court concluded the evidence was sufficient to displace the magistrate's view and to convict respondent No.2 under Section 138. [Paras 34, 35, 36, 37, 38]

Order of acquittal against respondent No.2 set aside; respondent No.2 convicted under Section 138 of the NI Act, sentenced to imprisonment and directed to pay compensation with interest.

Vicarious/constructive liability of directors and Section 141 of the Negotiable Instruments Act - appellate interference with order of acquittal - perversity and misreading of evidence - Order of acquittal in favour of respondent No.3 is maintained. - HELD THAT: - The Court examined the record and found no material to attribute criminal liability to respondent No.3: he was not a drawer or signatory of the cheques and there was no evidence establishing his personal involvement in the transactions that would attract Section 138 or impute liability under Section 141. The High Court therefore declined to disturb the trial court's acquittal of respondent No.3, noting the settled principle that an appellate court should not reverse an acquittal unless the view of the trial court is perverse or based on misreading or non-consideration of material evidence. [Paras 27, 37]

Acquittal of respondent No.3 affirmed.

Final Conclusion: The criminal appeal is allowed in part: the magistrate's acquittal of respondent No.2 is set aside and he is convicted and sentenced under Section 138 of the Negotiable Instruments Act with a compensation order; the acquittal of respondent No.3 is affirmed. The trial court is directed to take steps for surrender/warrant as necessary.