TaxTMI Updates e-Newsletter
Sep 30,2023

Service of summary electronically in FORM GST DRC-01 and FORM GST DRC-02 - Notice and order for demand of amounts payable under the Act - Notice issued under Section 74(1) of the CGST Act with electronic summary requirement - Substantial compliance

Service of summary electronically in FORM GST DRC-01 and FORM GST DRC-02 - Notice issued under Section 74(1) of the CGST Act with electronic summary requirement - Notice and order for demand of amounts payable under the Act - Whether the show cause notice dated 02.08.2023 issued under Section 74(1) of the CGST Act is infirm for not being accompanied by the electronic summary in FORM GST DRC-01 & FORM GST DRC-02, and if so, the remedy. - HELD THAT: - The Court noted that Rule 142(1) of the CGST Rules requires that any notice issued under the relevant sections, including Section 74, be accompanied by a summary electronically in FORM GST DRC-01 and, where applicable, FORM GST DRC-02. The petitioner complained that the show cause notice dated 02.08.2023 proposing penalty was not accompanied by the prescribed electronic summary. The respondents accepted that the summary had not been issued in the requisite form and undertook to furnish it. The Court held that, although the summary is required to be furnished along with the notice, issuance of the electronic summary at this stage would constitute substantial compliance with the statutory requirement. In consequence, the Court directed the proper officer to issue the electronic summaries in FORM GST DRC-01 and FORM GST DRC-02 as expeditiously as possible and preferably within one week from the date of the order. [Paras 5, 6, 7, 8, 9]

The omission to furnish the electronic summary with the show cause notice is to be cured by issuing FORM GST DRC-01 and FORM GST DRC-02 forthwith; the proper officer is directed to electronically issue the summaries preferably within one week.

Final Conclusion: Writ petition disposed of by directing the proper officer to electronically issue the summary of the show cause notice in FORM GST DRC-01 and FORM GST DRC-02 as expeditiously as possible and preferably within one week; petition otherwise closed.

Blocking and unblocking of Input Tax Credit - requirement to state specific reasons in a show cause notice - no mechanical issuance of show cause notice pursuant to administrative circular - prima facie belief requirement for issuing show cause notice in ITC cases - limitation under rule 86A(3) on retention/unblocking of blocked ITC

Blocking and unblocking of Input Tax Credit - requirement to state specific reasons in a show cause notice - Validity of the show cause notice issued for recovery of the amount equal to the blocked ITC - HELD THAT: - The show cause notice issued under Section 73 was set aside because it failed to disclose any reasons for proposing recovery and thus could not elicit a meaningful response. The opening paragraph of the notice was a mechanical reproduction of statutory language without specifying the factual or prima facie basis for the proposed demand. Proceedings initiated pursuant to such a notice cannot cover allegations that are not stated in the notice; factual averments in the respondents' counter-affidavit therefore cannot be treated as pleaded in the show cause notice. The Court observed that a proper show cause notice must state the reason(s) for raising a demand so that the taxpayer can meaningfully respond. [Paras 11, 14, 20, 21, 22]

Impugned show cause notice set aside for failure to disclose reasons; proceedings under that notice quashed.

No mechanical issuance of show cause notice pursuant to administrative circular - prima facie belief requirement for issuing show cause notice in ITC cases - limitation under rule 86A(3) on retention/unblocking of blocked ITC - Permissible scope and application of the administrative Circular relied upon by respondents for unblocking/utilising blocked ITC - HELD THAT: - The Court held that the Circular cannot be read as authorising a mechanical creation of demand or automatic appropriation of blocked ITC without the proper officer forming the requisite belief and stating reasons. Administrative instructions must be applied consistently with the Act and the Rules; if understood to mandate mechanical issuance of show cause notices and creation of demands, they would be contrary to law. The Court relied on its prior consideration of similar instructions in M/s Parity Infotech Solutions Pvt. Ltd. to underline that a show cause notice in ITC matters is maintainable only where the proper officer forms at least a prima facie view that ITC was wrongly availed or utilised by reason of fraud, wilful misstatement or suppression of facts, and that directions inconsistent with the time-limit in rule 86A(3) cannot be sustained. [Paras 12, 13, 15, 16, 17]

Circular cannot be invoked to justify mechanical issuance of show cause notices or automatic appropriation of blocked ITC; such administrative steps must comply with statutory requirements and limitations.

Blocking and unblocking of Input Tax Credit - Permissibility of further action by respondents after quashing the specific show cause notice - HELD THAT: - While the impugned show cause notice is set aside for procedural insufficiency, the Court clarified that respondents are not precluded from taking any steps permissible in accordance with law. The decision annulled the defective notice but did not inhibit the exercise of lawful powers by the proper officer, subject to statutory and procedural safeguards. [Paras 23]

Respondents may pursue lawful action in accordance with law notwithstanding the quashing of the defective show cause notice.

Blocking and unblocking of Input Tax Credit - Claim for interest on the amount of ITC blocked during the period of blockage - HELD THAT: - The Court rejected the petitioner's claim for interest on the period when the ITC remained blocked. It observed there is no statutory provision entitling the petitioner to interest for the period of blockage and declined to exercise discretion to award interest given the factual controversy raised by respondents in their counter-affidavit. [Paras 24]

Prayer for interest on blocked ITC declined for lack of statutory basis; claim for interest dismissed.

Final Conclusion: The show cause notice issued for recovery identical to the blocked ITC was quashed because it did not state reasons and was incapable of eliciting a meaningful response; administrative circulars cannot be used to mechanically create demands or appropriate blocked ITC without the proper officer forming and recording the requisite prima facie belief and complying with statutory limits, and the respondents remain free to take lawful action; claim for interest on the blocked ITC was rejected for want of statutory basis.

Constitution of second appellate tribunal - entertainment of writ petitions in absence of statutory appellate forum - interim stay of tax demand upon deposit - mandatory deposit condition for grant of interim relief

Constitution of second appellate tribunal - entertainment of writ petitions in absence of statutory appellate forum - interim stay of tax demand upon deposit - mandatory deposit condition for grant of interim relief - Court entertained writ petition because the Second Appellate Tribunal has not been constituted and granted an interim stay of the balance tax demand subject to deposit of the entire tax demand within fifteen days. - HELD THAT: - The High Court proceeded to entertain the writ petition only on the ground that the statutory Second Appellate Tribunal has not yet been constituted, thereby leaving the petitioner without the alternate statutory appellate remedy. In exercise of its writ jurisdiction and as an interim measure during the pendency of the petition, the Court directed that the petitioner shall deposit the entire tax demand within fifteen days from the date of the order; upon such deposit the remaining part of the demand shall be stayed for the duration of the writ proceedings. The Court issued notice to the opposite parties and recorded the procedural timetable for filing of reply and rejoinder. The order implements a conditional stay predicated on the specified deposit, rather than a blanket injunction without quantification or deposit.

Writ entertained because the Second Appellate Tribunal is not constituted; petitioner to deposit the entire tax demand within fifteen days and, on such deposit, the balance of the demand is stayed during pendency of the writ petition.

Final Conclusion: The High Court entertained the petition in view of non-constitution of the Second Appellate Tribunal and granted an interim stay of the tax demand on the condition that the petitioner deposits the entire tax demand within fifteen days; notice was issued and the matter listed for further hearing.

Opportunity of personal hearing before an adverse order under Section 73 of the Central Goods and Services Tax Act, 2017 - validity of a 'summary of order' in the absence of prior service or uploading of the antecedent adjudication order - availability of statutory appeal under Section 107 of the Central Goods and Services Tax Act, 2017 - rectification remedy under Section 161 of the Central Goods and Services Tax Act, 2017 - scrutiny of returns and invocation of Rule 142 of the Central Goods and Services Tax Rules, 2017

Validity of a 'summary of order' in the absence of prior service or uploading of the antecedent adjudication order - opportunity of personal hearing before an adverse order under Section 73 of the Central Goods and Services Tax Act, 2017 - Impugned 'summary of order' dated 04.04.2022 could not be sustained because the adjudication order that should have preceded it was neither uploaded on the portal nor served under acknowledgement prior to or since 04.04.2022. - HELD THAT: - The Court treated the question of opportunity of hearing as material but proceeded on the admitted factual position placed by learned Revenue counsel that the adjudication order antecedent to the impugned summary was not uploaded nor served on the petitioner on any day prior to 04.04.2022 and had not been served up to the date of hearing. In view of that concession, the procedural requirement of communication of the order (and the attendant opportunity, where relevant) was not complied with. Although the existence of alternative statutory remedies - namely appeal under Section 107 and rectification under Section 161 - was noted and the temporal limits for pursuing an appeal were recorded, the decisive finding rested on non-communication/non-uploading of the adjudication order. The Court therefore allowed the writ petition without adjudicating the substantive merits of the tax demand, while preserving the respondents' right to initiate fresh proceedings and preserving the rights and contentions of both sides in any such fresh proceedings. [Paras 5, 6, 7]

Writ petition allowed; impugned summary of order set aside as communication/uploading of the antecedent adjudication order had not occurred; respondents may initiate fresh proceedings if so advised and all rights of the parties are preserved.

Final Conclusion: The writ petition was allowed on the ground that the antecedent adjudication order to the impugned summary had neither been uploaded nor served; the summary order cannot stand, and the respondents remain free to commence fresh proceedings with all rights preserved.

Assessment u/s 153C - Period of limitation in issuing notice - Search conducted at third party - As per HC [2023 (3) TMI 1408 - ALLAHABAD HIGH COURT] the impugned show-cause notice was issued to the petitioner on 04.02.2022, one year has already passed whereafter the present petition came to be filed and in absence of any plausable explanation as to delay and also in face of statutory remedy of objection available to the petitioner, which objection has also been filed, we do not consider it a fit case to offer any interference

HELD THAT:- Having regard to the observations made by the High Court reserving liberty to the petitioner(s) to take all objections before the concerned statutory authority.

We are not inclined to interfere with the judgment and order impugned in these petitions.

Hence, these special leave petitions are dismissed.

Validity of Revision u/s 263 by CIT - payments made to persons specified under Section 40A(2)(b) allowed in assessment order - ITAT gave a finding of fact that no such issue was ever raised by CIT in the notice served upon the assessee and the assessee was not even confronted by the CIT before passing the Order - as decided by HC [2022 (4) TMI 1081 - BOMBAY HIGH COURT] there is a finding by the Tribunal, as noted earlier, that no issue was raised by the CIT in respect of particulars of payment made to persons specified under Section 40A(2)(b) of the Act and even the show cause notice is silent about that.

HELD THAT:- There is a huge delay of 411 days in filing the Special Leave Petition. Nevertheless, we have heard learned counsel for the petitioner on merits of the case. The delay has not been explained to the satisfaction of this Court. Neither, do we find any merit in the petition. Hence, the special leave petition is dismissed both on the ground of delay as well as on merits.

Income taxable in India - taxing of the sale of software and subscribers as royalty income - HELD THAT:- Learned panel advocate appearing for the petitioner submitted that the issues which arise in this special leave petition have been considered by this Court in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] Hence, appropriate orders may be made in this special leave petition.

In view of the aforesaid, the special leave petition is dismissed.

Compliance with CBDT Circular No. 19 of 2019 regarding Document Identification Number (DIN) - validity of communication where mandated DIN is omitted from the body of the order - treatment of intimation/cover letter as part of the substantive order - quashing of order under Section 263 for non-compliance with mandated formalities

Compliance with CBDT Circular No. 19 of 2019 regarding Document Identification Number (DIN) - validity of communication where mandated DIN is omitted from the body of the order - Whether the order passed under Section 263 satisfied the requirement of quoting the DIN as mandated by CBDT Circular No. 19 of 2019 and whether omission rendered the order invalid - HELD THAT: - The Tribunal examined the material and found that the substantive order under Section 263 did not incorporate the Document Identification Number in its body as required by the Circular. Paragraph 4 of the Circular treats communications not conforming with the specified requirements as invalid and deemed never to have been issued. The Revenue relied on an intimation letter which contained the DIN, but the Tribunal queried and found no justification showing that the substantive order itself referred to or contained the DIN in conformity with paragraph 2 of the Circular. In absence of the DIN within the body of the order, the Tribunal concluded that the mandatory requirement was not satisfied and accordingly treated the order as non-compliant with the Circular.

The order under Section 263 did not satisfy the CBDT Circular's requirement to quote the DIN in the body of the order and was thus non-compliant.

Treatment of intimation/cover letter as part of the substantive order - treatment of communications issued in tandem with an order - Whether the intimation letter enclosing the order, which mentioned the DIN, could be treated as part of the substantive order so as to meet the Circular's requirement - HELD THAT: - The revenue contended that the intimation letter accompanying the order should be read as part and parcel of the substantive order because the letter expressly mentioned the DIN. The Tribunal examined this contention and specifically asked the revenue to demonstrate how the intimation letter together with the manual order fulfilled the Circular's categorical requirement that the body of the communication (the order) must refer to the DIN. The revenue failed to demonstrate that the substantive order itself incorporated or referred to the DIN in the manner mandated by paragraph 2 of the Circular. The Tribunal therefore rejected the submission that the intimation letter could cure the omission in the substantive order.

The intimation letter mentioning the DIN could not be treated as part of the substantive order for the purpose of compliance with the Circular; the omission in the order remained incurable on that basis.

Quashing of order under Section 263 for non-compliance with mandated formalities - rectification under section 254(2) by miscellaneous application - Whether the Tribunal was justified in quashing the Section 263 order for non-compliance with the Circular and in dismissing the Revenue's miscellaneous application for rectification - HELD THAT: - Upon finding that the substantive order did not satisfy the CBDT Circular's requirement to quote the DIN and that the revenue could not demonstrate compliance by relying on the intimation letter, the Tribunal allowed the assessee's appeal and quashed the Section 263 order. The revenue's subsequent miscellaneous application seeking rectification was considered and the Tribunal, after querying the revenue and receiving no satisfactory answer as to how the substantive order complied with the Circular, dismissed the application. The High Court, on hearing the parties, found no substantial question of law arising from the Tribunal's factual and legal conclusions and declined to interfere.

The Tribunal was justified in quashing the Section 263 order for non-compliance with the CBDT Circular and in dismissing the revenue's miscellaneous application; the High Court dismissed the appeal.

Final Conclusion: The appeal is dismissed: the Tribunal correctly found the substantive order under Section 263 non-compliant with CBDT Circular No. 19 of 2019 for omission of the DIN in the order's body, rejected the attempt to cure that omission by relying on an intimation letter, allowed the assessee's appeal and dismissed the revenue's rectification application, and no substantial question of law warranted interference.

Look-Out Circular (LOC) - detrimental to the economic interests of India - intimation about arrival/departure - fundamental right to travel under Article 21 - procedure established by law - security/surety as condition for travel

Look-Out Circular (LOC) - intimation about arrival/departure - security/surety as condition for travel - fundamental right to travel under Article 21 - Modification of the LOC issued at the instance of the Income Tax Department into an intimation about arrival/departure, subject to conditions - HELD THAT: - The Court found that although the petitioner had concealed ownership/control of a Hong Kong company and substantial transactions had occurred in that company's bank account, the case did not, on the material before the Court, amount to a matter that would be 'detrimental to the economic interests of India' so as to justify continued prevention of travel. No criminal proceedings had been instituted despite demands and assessments under the Black Money Act, 2015; the petitioner has familial ties in India and parents willing to stand as sureties and offer property as security. Balancing the petitioner's fundamental right to travel and the public/economic interest, the Court held that instead of continuing the LOC preventing departure, the LOC would be converted into an intimation under the OM so that the originating agency is informed of arrival/departure. The Court imposed stringent conditions to mitigate flight risk: provision and verification of original title documents of parental properties as security, undertaking to abide by orders in pending appellate/assessment proceedings, furnishing travel itinerary and contact details, continuing cooperation with investigations, and attendance before the Income Tax authority for compliance. The Court recorded that non-cooperation by the petitioner would permit fresh action in accordance with applicable OMs. [Paras 110, 111, 112, 113, 115]

The LOC issued at the behest of the Income Tax Department is modified into an intimation under Clause 6(I) of the OM of 2021 and shall operate subject to specified conditions including deposit/verification of parental property documents as security, an undertaking to abide by tax proceedings, disclosure of travel itinerary and continuous cooperation; petitioner to appear for compliance on the specified date.

Detrimental to the economic interests of India - procedure established by law - Validity of the OM provisions (including the phrase 'detrimental to the economic interests of India') not adjudicated in this petition - HELD THAT: - The Court observed that the broader legal challenge to the Office Memoranda governing LOCs, and the legal significance of the phrase 'detrimental to the economic interests of India', were pending before higher fora (including matters before the Supreme Court and Division Bench of this Court). Accordingly, the Court refrained from deciding the constitutional or vires issues raised about the OM itself and proceeded to decide the petition on a case-by-case factual balance. The Court emphasised that until higher court determinations, petitions invoking LOCs must be assessed on their individual facts and relevant precedents. [Paras 83]

The Court does not adjudicate the validity of the OM or the phrase 'detrimental to the economic interests of India' and proceeds to determine the present petition on its facts; the broader challenge to the OM remains pending before higher courts.

Final Conclusion: The Court modified the LOC issued against the petitioner into an intimation about his arrival/departure under the OM of 2021, subject to enumerated conditions (security by parental properties, verified originals, undertaking to abide by tax orders, filing itinerary and cooperation); the constitutional and vires challenges to the OM, including the scope of 'detrimental to the economic interests of India', were not decided and remain pending before higher courts.

Waiver of loan - benefit or perquisite under Section 28(iv) - characterisation of receipt as capital or revenue - rectification under Section 254(2) - alternative remedy under Section 260A - writ jurisdiction under Article 226 - principle in Commissioner of Income Tax v. Mahindra and Mahindra

Rectification under Section 254(2) - alternative remedy under Section 260A - writ jurisdiction under Article 226 - Entertainability and maintainability of the writ petition challenging the Tribunal's order on a miscellaneous application under Section 254(2) in presence of an alternative statutory remedy under Section 260A. - HELD THAT: - The Court rejected the contention that the mere availability of an appeal under Section 260A operates as an absolute bar to a writ under Article 226. Decisions relied upon by the Revenue were examined and held not to create an inflexible rule of non-entertainment; instead, the High Court's exercise of writ jurisdiction is discretionary and guided by principles articulated by the Apex Court, including that exhaustion of statutory remedy is a rule of policy and convenience and that exceptions arise where the controversy is purely legal, involves jurisdictional defects, violations of natural justice, or where resort to the statutory route would be futile. Where the legal question is pristine and does not require detailed factual enquiry, it may be appropriate to entertain the writ rather than relegate parties to statutory appeals. [Paras 18, 19, 20, 21, 22]

The objection to maintainability based on availability of remedy under Section 260A is rejected; the writ petition is entertainable in the exercise of discretion.

Waiver of loan - benefit or perquisite under Section 28(iv) - principle in Commissioner of Income Tax v. Mahindra and Mahindra - characterisation of receipt as capital or revenue - Whether waiver of the principal amount of loans constitutes a 'benefit or perquisite' taxable under Section 28(iv) for Assessment Year 2006-2007. - HELD THAT: - The Court accepted the Apex Court's reasoning in Mahindra and Mahindra that, for Section 28(iv) to apply, the 'benefit or perquisite' must be other than in the shape of money; a waiver that results in an actual cash receipt to the debtor is not 'other than in the shape of money' and therefore falls outside Section 28(iv). Accordingly, the purpose or characterisation of the original loan (capital or working capital) is irrelevant to that legal test. The Court observed that the subsequent legislative amendment to clause (iv) of Section 28 (Finance Bill 2023) - which expressly includes benefits in cash - corroborates the interpretation in Mahindra and Mahindra, but the law as applicable to the Assessment Year 2006-2007 is governed by the Apex Court's rule. [Paras 29, 30, 31, 32, 33]

Waiver of loan principal in the facts of this case is not taxable under Section 28(iv) for Assessment Year 2006-2007; Mahindra and Mahindra governs the issue.

Rectification under Section 254(2) - waiver of loan - Direction to the Tribunal on remand regarding the miscellaneous petition filed under Section 254(2). - HELD THAT: - Having found that the legal principle in Mahindra and Mahindra applies and that the waiver of loan principal does not fall within Section 28(iv) for the relevant year, the Court set aside the ITAT order dated 05.09.2022 and directed the Tribunal to reconsider M.P. No.47/Bang/2022 in light of the reasoning in this order. The Court limited the reconsideration to applying the discussed legal principle and prohibited re-opening fresh questions of fact. [Paras 34, 35]

The ITAT order dated 05.09.2022 is set aside and the Tribunal is directed to reconsider the miscellaneous petition in light of this judgment without re-opening fresh questions.

Final Conclusion: The ITAT order dated 05.09.2022 in M.P.No.47/Bang/2022 in ITA No.1317/BANG/2018 for Assessment Year 2006-2007 is set aside; the High Court, exercising discretionary writ jurisdiction, applied the Apex Court's decision in Mahindra and Mahindra to hold that waiver of loan principal is not taxable under Section 28(iv) for the relevant year and directed the Tribunal to reconsider the miscellaneous petition accordingly; the writ petition is disposed.

Reopening of assessment - Power to reopen assessment under Section 148 - Escapement of income - Requirement of tangible material / live link for reopening - Roving or fishing inquiry - Partnership deed - payment of interest on capital and remuneration (enabling versus mandatory) - Suspicion insufficient for reassessment

Reopening of assessment - Escapement of income - Partnership deed - payment of interest on capital and remuneration (enabling versus mandatory) - Validity of reopening the assessee's assessment under Section 148 on the ground that partners' interest on capital and remuneration had not been offered as income - HELD THAT: - The Court held that reopening the assessment on the ground that interest on capital and remuneration ought to have been offered was not sustainable. On construction of the partnership deeds, the clauses permitting payment of interest on capital and remuneration were enabling and not mandatory; there was no material to show that the partners had in fact received such payments. The Division Bench's earlier analysis in the firm's petitions (reproduced in the record) was applied: mere incorporation of provisions for interest and remuneration in a deed does not compel an inference that such payments were payable as of right or had been paid, and therefore cannot by itself establish escapement of income. In the absence of tangible material linking the alleged payments to the assessee, the statutory condition precedent for exercise of the power to reopen (formation of a bona fide belief of escapement based on relevant material) was not satisfied, rendering the reopening invalid.

Reopening on the ground of non-payment/non-disclosure of interest on capital and remuneration was held invalid and the notices quashed.

Power to reopen assessment under Section 148 - Requirement of tangible material / live link for reopening - Suspicion insufficient for reassessment - Roving or fishing inquiry - Validity of reopening the assessment to investigate alleged undisclosed capital gain and unexplained investments - HELD THAT: - The Court found that the reasons recorded for reopening in respect of alleged sale proceeds and unexplained investments were grounded in suspicion and aimed at deep verification rather than being supported by tangible material demonstrating escapement. The record showed that the property sale was reflected in the HUF's balance-sheet, sale consideration was received by cheque and the consequent long term capital gain had been declared by the HUF; no particulars demonstrating a live link to the petitioner's escapement of income were shown. Reliance was placed on precedents that prohibit using Section 148 for fishing or roving inquiries; reopening cannot be resorted to merely to carry out scrutiny where only suspicion exists.

Reopening insofar as it sought to probe alleged capital gains and investments-based on suspicion-was held impermissible and the notices quashed.

Final Conclusion: All writ petitions were allowed; the impugned notices issued under Section 148 in the respective petitions were quashed and set aside as the record did not disclose tangible material to form a bona fide belief of escapement and reopening amounted to a roving/fishing inquiry.

Validity of Form 3 under the Direct Tax Vivad Se Vishwas Act, 2020 - Set-off of brought forward unabsorbed business losses and brought forward unabsorbed depreciation - Remand for recalculation and issuance of fresh Form 3 - Release of interim deposit

Validity of Form 3 under the Direct Tax Vivad Se Vishwas Act, 2020 - Impugned Form 3s dated 15.04.2021 set aside - HELD THAT: - The Court entertained petitions challenging Form 3 issued under the 2020 Act and, having heard parties and noted the respondent's stand, set aside the impugned forms which bore the date 15.04.2021. The setting aside was ordered in the context of the respondent accepting an error in its calculations (as recorded in the counter-affidavit) and proposing to modify tax calculations accordingly. The order does not decide the substantive merits of all contentions but removes the existing Form 3s from operation to permit corrective action by the revenue.

Impugned Form 3s are set aside.

Set-off of brought forward unabsorbed business losses and brought forward unabsorbed depreciation - Remand for recalculation and issuance of fresh Form 3 - Respondents permitted to rework calculations and issue fresh forms aligned with the stand in the counter-affidavit; petitioner given leave to challenge any fresh forms - HELD THAT: - The respondent accepted that an error was made by not granting set-off of brought forward unabsorbed business losses and brought forward unabsorbed depreciation of prior assessment years computed on net income basis against income of the impugned assessment years assessable on net income basis; accordingly the respondent will modify the tax calculations. The Court granted liberty to the revenue to rework calculations on the basis of the counter-affidavit and issue fresh Form 3s as deemed fit. The order preserves the petitioner's right to assail any fresh forms in accordance with law. The remand is for recalculation and reissuance, not for fresh adjudication of issues disposed of by the respondent's expressed stand.

Revenue may rework calculations consistent with the counter-affidavit, issue fresh Form 3s, and petitioner may challenge them if aggrieved.

Release of interim deposit - Interim deposit made by petitioner to be released - HELD THAT: - The Court noted that during pendency of the petitions an interim direction required the petitioner to deposit a cumulative amount with the designated authority and that the petitioner represented that the amount was deposited. In consequence, the Court directed release of the deposited amount to the petitioner within six weeks.

The deposited amount shall be released to the petitioner within six weeks.

Final Conclusion: The impugned Form 3s dated 15.04.2021 are set aside; the revenue is permitted to rework tax calculations (including accepting and applying set-off of brought forward losses and depreciation as stated in its counter-affidavit), to issue fresh Form 3s, and the petitioner may challenge any fresh forms; the interim deposit made by the petitioner shall be released within six weeks.

Accommodation entry / fictitious loan - Section 148A enquiry under the Income tax Act regarding escaped income - Documentary reply and bank evidence as rebuttal to reopening - Right to opportunity to rebut fresh material and personal hearing before framing assessment

Accommodation entry / fictitious loan - Section 148A enquiry under the Income tax Act regarding escaped income - Documentary reply and bank evidence as rebuttal to reopening - Right to opportunity to rebut fresh material and personal hearing before framing assessment - Whether the order recording that income of Rs.40,00,000/- had escaped assessment could be sustained without furnishing the material relied upon and without affording the assessee opportunity to meet any fresh material and a personal hearing - HELD THAT: - The Court examined the notice and the reply filed by the petitioner, noting that the petitioner asserted the sum represented a deposit made by him (with supporting ITRs, account ledgers and bank statements) rather than a loan from BKR. The AO, however, proceeded to conclude that income had escaped assessment. The Court did not adjudicate the correctness of the AO's conclusion on merits. Instead, observing that the principal allegation is that the petitioner was beneficiary of an accommodation entry and that the AO must establish the factual basis for such allegation, the Court directed that the AO must first furnish the material relied upon to establish the alleged fictitious loan; if any fresh material is produced the assessee must be given an opportunity to respond; and the AO must accord personal hearing to the petitioner and/or his authorised representative before framing the assessment order. These directions leave the ultimate question of escapement of income to be decided after the AO complies with the procedural safeguards ordered by the Court. [Paras 4, 11, 12]

The matter is remitted to the Assessing Officer to furnish the material establishing the alleged fictitious loan, allow the petitioner to respond to any fresh material, and accord personal hearing before framing the assessment.

Final Conclusion: Writ petition disposed by remitting the matter to the Assessing Officer with directions to produce the material relied upon to prove the alleged fictitious loan, permit the petitioner to respond to any fresh material, and grant personal hearing prior to framing assessment for AY 2019-20.

Condonation of delay - limitation - time-barred appeal - departmental appeal - circular issued for organized tax evasion - ex-parte hearing

Condonation of delay - limitation - circular issued for organized tax evasion - time-barred appeal - Validity of the department's delay condonation application and consequent admission of the departmental appeal filed after the prescribed limitation period. - HELD THAT: - The Tribunal examined the chronology: the assessee's appellate order was received on 11.12.2018, making 09.02.2019 the last date to file the departmental appeal. The Department filed the appeal on 02.06.2020, 479 days late, and sought condonation relying on CBDT Circular No.23/2019 dated 06.09.2019 and OM dated 16.09.2019 which direct filing of appeals on merit in cases involving organized tax evasion. The Tribunal observed that the Circular and OM were issued after the expiry of the limitation period and therefore could not retrospectively justify the delay. Further, the Department did not satisfactorily explain the delay between issuance of the Circular and the actual filing (a period of over nine months), and the COVID-19 lockdown did not account for the earlier unexplained delay. In view of the lack of a plausible explanation for the entire period of delay and the fact that the Circular was issued only after limitation had expired, the Tribunal found no ground to condone the delay and held the appeal to be barred by limitation. [Paras 6, 7, 8]

The condonation application is rejected and the departmental appeal is dismissed as time-barred.

Final Conclusion: The departmental appeal was dismissed for want of limitation; the request to condone the delay was refused because the Board's Circular relied upon was issued after the limitation period had expired and the Department failed to satisfactorily explain the delay in filing the appeal.

Disallowance of commission payments and proof by bank/TDS - verification of transactions by summoning witness under statutory power - treatment of alleged bogus purchases by allowing only profit element - application of element of profit at 15% for adjustments in bogus purchase cases

Disallowance of commission payments and proof by bank/TDS - verification of transactions by summoning witness under statutory power - Whether the addition of the alleged commission payments was correctly made by the AO or rightly deleted by the CIT(A). - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition of the commission payments. The AO failed to verify the authenticity of the payments by summoning the alleged agent, and the assessee had supported the payments by bank transactions and deduction of TDS. The CIT(A) examined the factual material, applied relevant case law, and found no evidence that the payments were to related parties, excessive, or accommodation entries. On these facts, the AO's disallowance was not justified and was deleted. [Paras 9, 10]

Addition of commission payments deleted; revenue ground dismissed.

Treatment of alleged bogus purchases by allowing only profit element - application of element of profit at 15% for adjustments in bogus purchase cases - Whether the CIT(A) was justified in restricting the addition on alleged bogus purchases to the profit element computed at 15% of the aggregate purchases. - HELD THAT: - The Tribunal found no infirmity in the CIT(A)'s approach of considering only the embedded profit element in the impugned purchases. The CIT(A) applied judicial precedents and limited the addition to 15% of the aggregate purchases, treating the profit element as the appropriate quantification of tax effect where purchases were questioned. On the record and in view of applicable decisions, the Tribunal sustained the CIT(A)'s methodology and dismissed the revenue's challenge. [Paras 11, 12]

Addition restricted to 15% of the aggregate purchases; revenue ground dismissed.

Treatment of alleged bogus purchases by allowing only profit element - application of element of profit at 15% for adjustments in bogus purchase cases - Whether the CIT(A) was correct in directing the AO to determine the profit element at 15% on the sundry creditors balance held to be bogus. - HELD THAT: - The Tribunal agreed with the CIT(A)'s consistent application of the profit-element approach used in the earlier issue, directing that the element of profit be determined at 15% of the impugned sundry creditors amount. The CIT(A) followed judicial authorities and limited the tax effect to the profitability element rather than sustaining the full addition, and the Tribunal found no error in that conclusion. [Paras 13, 14]

Profit element at 15% to be applied to the sundry creditors; revenue ground dismissed.

Final Conclusion: Both the revenue's appeal and the assessee's appeal are dismissed; the deletion of the commission addition is confirmed and the additions on alleged bogus purchases and sundry creditors are sustained only to the extent of the profit element computed at 15%.

Penalty under section 271(1)(c) - Concealment of income versus bona fide claim / full disclosure - Tax Audit Report (Form 3CD) as integral part of return - Debatable question of law / bona fide belief defence to penalty - Effect of disallowance on entitlement to deduction under section 80IAB

Penalty under section 271(1)(c) - Concealment of income versus bona fide claim / full disclosure - Tax Audit Report (Form 3CD) as integral part of return - Debatable question of law / bona fide belief defence to penalty - Effect of disallowance on entitlement to deduction under section 80IAB - Whether penalty under section 271(1)(c) is sustainable for disallowances relating to amortised leasehold development expenditure and depreciation on right-to-use leasehold land where the claims were disclosed in the return, certified in the tax audit report, and involved debatable questions of law - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of penalty under section 271(1)(c) on two disallowances because the claims were disclosed on the face of the computation and certified in the tax audit report, indicating bona fides and full disclosure. The CIT(A) relied on precedent that Form 3CD is integral to the return and that mere disallowance on merits does not amount to concealment. The Tribunal noted that the issues were debatable: coordinate-bench decisions in the assessee's quantum appeals had deleted the corresponding additions on merits, and judicial decisions of the Jurisdictional High Court and the Supreme Court (Reliance Petro Products) support that where particulars are disclosed and a claim is bona fide or arguable, penalty under section 271(1)(c) is not attracted. The Tribunal also accepted the assessee's contention that, even if disallowances were sustained, the eligible profit for deduction under section 80IAB would increase, negating any tax effect and reinforcing absence of mala fide conduct. Applying these principles, the Tribunal concluded that the Assessing Officer erred in imposing penalty for furnishing inaccurate particulars where disclosure, tax-audit certification, and existence of a bona fide/debatable legal position precluded finding of concealment. [Paras 4, 8, 9]

Penalty under section 271(1)(c) deleted as levy was not sustainable where the claims were disclosed, tax-audit certified and involved debatable questions of law; Revenue's appeal dismissed.

Final Conclusion: The Tribunal confirmed the CIT(A)'s order deleting the penalty imposed under section 271(1)(c) for AY 2011-12, holding that full disclosure in the return and tax-audit certification, together with the debatable nature of the legal issues (and absence of tax effect due to section 80IAB implications), precluded a finding of concealment; the Revenue's appeal is dismissed.

Deduction under section 80IB(11A) for profits derived from an industrial undertaking - Export incentives: Duty Drawback and MEIS/DEPB - Proximate nexus test - whether incentive income is "derived from" the industrial undertaking - Revisional jurisdiction under section 263 of the Income-tax Act - Binding precedent of the Hon'ble Supreme Court in M/s. Saraf Exports

Deduction under section 80IB(11A) for profits derived from an industrial undertaking - Export incentives: Duty Drawback and MEIS/DEPB - Proximate nexus test - whether incentive income is "derived from" the industrial undertaking - Binding precedent of the Hon'ble Supreme Court in M/s. Saraf Exports - Deductibility under section 80IB(11A) of amounts received under Duty Drawback and MEIS/DEPB - HELD THAT: - The Tribunal examined whether receipts under the Duty Drawback and MEIS/DEPB schemes form part of profits "derived from" the industrial undertaking so as to qualify for deduction under section 80IB(11A). Earlier decisions (e.g., Meghalaya Steels) treated certain subsidies as directly affecting manufacturing cost, while Liberty India and Sterling Foods had addressed export incentives. The Hon'ble Supreme Court in M/s. Saraf Exports held that DEPB/Duty Drawback are not related to the business of an industrial undertaking in a proximate manner and arise only upon export, and therefore are not profits derived from the undertaking for the purposes of section 80-IB. Applying that binding ratio, the Tribunal concluded that the amounts received under Duty Drawback and MEIS/DEPB are not eligible for deduction under section 80IB(11A).

Deduction under section 80IB(11A) is not allowable in respect of Duty Drawback and MEIS/DEPB receipts.

Revisional jurisdiction under section 263 of the Income-tax Act - Binding precedent of the Hon'ble Supreme Court in M/s. Saraf Exports - Validity of the Principal Commissioner of Income Tax's exercise of revisionary power under section 263 directing recomputation by disallowing the deduction - HELD THAT: - The Pr. CIT found that the assessing officer's allowance of the deduction was erroneous and prejudicial to revenue because it included export incentive receipts which, in light of the Supreme Court's ruling in M/s. Saraf Exports, are not deductible under section 80IB(11A). The Tribunal, following the Supreme Court's decision, held that the Pr. CIT was justified in treating the assessment as erroneous and prejudicial and in directing the AO to recompute income after disallowing the said deduction.

The exercise of revisionary jurisdiction under section 263 by the Pr. CIT is upheld and the direction to the AO to disallow the deduction is sustained.

Final Conclusion: The Tribunal dismissed the assessee's appeal for AY 2017-18, following the Hon'ble Supreme Court's decision in M/s. Saraf Exports that receipts under Duty Drawback and DEPB/MEIS do not qualify for deduction under section 80IB(11A), and upholding the Pr. CIT's exercise of revisionary power under section 263 to direct recomputation excluding those receipts.

Deduction under Section 54F - Meaning of "residential house" for proviso to Section 54F(1) - Burden to prove classification of property - Long Term Capital Gains Account Scheme

Deduction under Section 54F - Meaning of "residential house" for proviso to Section 54F(1) - Burden to prove classification of property - Long Term Capital Gains Account Scheme - Whether the assessee was entitled to deduction under Section 54F for reinvestment of long term capital gains where one of the properties held at the time of transfer was contended to be commercial. - HELD THAT: - The Tribunal found that the sole reason for disallowance was the conclusion by the Assessing Officer and the CIT(A) that the assessee owned two residential houses on the date of transfer, thereby attracting the proviso to Section 54F(1). The assessee produced the conveyance deed for the Nirvana Courtyard unit which described it as "shops/Office premises". The AO had not examined the conveyance deed before treating the Nirvana unit as a residential flat. On the material on record the Tribunal held that the Nirvana unit was a commercial unit and that the assessee, therefore, owned only one residential property on the relevant date. Consequently the conditions in the proviso to Section 54F(1) were not satisfied and the proviso did not operate to deny the exemption. The Tribunal noted that the assessee had deposited the sale consideration in the Long Term Capital Gains Account Scheme and had utilised it to acquire the residential house, satisfying the requirement for claiming deduction under Section 54F. For these reasons the Tribunal concluded that the AO erred in denying the claim and allowed the deduction.

The deduction claimed under Section 54F is allowed as the Nirvana property is a commercial unit and the proviso to Section 54F(1) is not attracted.

Final Conclusion: The appeal is allowed; the Tribunal reversed the disallowance and permitted the assessee's deduction under Section 54F for Assessment Year 2012-13.

Conversion of stock-in-trade into investment - characterisation of income as capital gains or business income - intention of the assessee and conduct as determinative - maintenance of separate portfolios for investment and trading - CBDT Circular No. 6/2016 and guidance on listed shares held over 12 months

Conversion of stock-in-trade into investment - characterisation of income as capital gains or business income - CBDT Circular No. 6/2016 and guidance on listed shares held over 12 months - intention of the assessee and conduct as determinative - Profits on sale of listed shares which the assessee converted from stock-in-trade to investment are taxable as capital gains (short-term or long-term as declared) and not as business income. - HELD THAT: - The Tribunal found on the facts that the assessee, by board resolution, resolved to treat the listed shares held as on 31.03.2014 as investments and thereafter reflected the same in the books and balance sheet by classifying shares under "Non Current Investments" and showing transfer to investments. CBDT Circular No.6/2016 recognises the difficulty of inferring intention and directs that where an assessee opts to treat listed shares as investments, the surplus on transfer shall be treated as capital gains, and further that where listed shares are held for more than 12 months the assessee's desire to treat the income as capital gain shall not be put to dispute. The Tribunal applied these instructions, noting that the CIT(A) had accepted long-term capital gains and that the assessee's conduct in subsequent years was consistent with the declared stand. The Tribunal also relied on authoritative decisions of the jurisdictional High Court holding that conversion of stock-in-trade into investments is permissible and, where the factual matrix supports conversion and separate portfolios, the income should be taxed as capital gains. On this combined footing - board resolution, accounting treatment, consistency of conduct, CBDT Circular guidance and judicial precedent - the Tribunal held that both long-term and short-term gains arising from the sale of the said shares should be taxed as capital gains as declared by the assessee. [Paras 18, 19, 20, 21, 23]

The assessee's characterization of the gains as long-term and short-term capital gains is accepted and the gains shall be taxed as declared capital gains rather than business income.

Final Conclusion: The assessee's appeal is allowed; the gains on sale of the shares are held to be capital gains as declared (LTCG and STCG) and the Revenue's appeal is dismissed.

Refund of amounts deposited towards provisional duty after finalization of provisional assessment under customs law - provisional assessment under Rule 9B - adjustment under Rule 9B(5) and consequent refund mechanism - doctrine of unjust enrichment in the context of provisional assessment - requirement to establish non-passing on of burden for entitlement to refund

Refund of amounts deposited towards provisional duty after finalization of provisional assessment under customs law - provisional assessment under Rule 9B - adjustment under Rule 9B(5) and consequent refund mechanism - doctrine of unjust enrichment in the context of provisional assessment - Entitlement to claim refund of provisional duty paid as a condition for clearance of imported goods after conclusion of assessment proceedings under the Customs Act. - HELD THAT: - The Court held that claims for refund of amounts provisionally deposited pursuant to provisional assessment procedures can be the subject matter of refund after finalization of assessment proceedings. The impugned judgments follow this Court's earlier rulings in Allied and Oriental, which treated provisional assessment under Rule 9B (and its counterparts) as giving rise to adjustments under the assessment process and recognized refund entitlement where the provisional deposit exceeds the finally assessed duty. The Court observed that the doctrine of unjust enrichment does not operate to bar such refunds in the context of provisional assessment where finalization shows excess provisional deposit, consistent with the reasoning in Allied and relevant observations in Mafatlal regarding Rule 9B(5) and the mechanism for adjustment and refund. [Paras 2, 3, 4, 5]

Claims for refund of provisional duty deposited for clearance of imported goods are maintainable after conclusion of assessment proceedings and entitlement is governed by the adjustment and refund mechanism applicable to provisional assessment.

Requirement to establish non-passing on of burden for entitlement to refund - doctrine of unjust enrichment in the context of provisional assessment - Whether the three-Judge Bench decision in Sahakari Khand Udyog Mandal Ltd. imposes a general rule that an assessee must prove non-passing on of the duty burden to consumers before claiming refund of provisional deposits. - HELD THAT: - The Court examined the subsequent three-Judge Bench decision in Sahakari Khand Udyog Mandal Ltd. and concluded that its observations must be confined to the facts of that case. The Court noted that Sahakari did not properly reconcile or displace Allied, and in the present set of appeals there was no basis to treat Sahakari as overruling the principle that provisional assessment adjustments and consequent refunds are permissible. Accordingly, the requirement identified in Sahakari to establish non-passing on of burden is not accepted as a universal bar to refunds arising from provisional assessment where the adjustment process demonstrates entitlement. [Paras 4, 5]

Sahakari Khand Udyog Mandal Ltd.'s observations are confined to its facts and do not override the principle that provisional assessment refunds are permissible; the contention that a general proof of non-passing on is required is not accepted for the cases before the Court.

Final Conclusion: The revenue appeals are dismissed; the impugned judgments upholding entitlement to refunds of provisional duty deposits after finalization of assessment are affirmed, and the contrary observations in Sahakari Khand Udyog Mandal Ltd. are confined to its facts.

Jurisdiction of Customs authority - Extra-territorial operation - Show cause notice - Section 1(2) of the Customs Act - territorial scope - Interim stay of proceedings

Jurisdiction of Customs authority - Extra-territorial operation - Section 1(2) of the Customs Act - territorial scope - Show cause notice - Validity of show cause notices issued by Customs authorities to foreign exporters on grounds that the Customs Act lacks extra territorial operation and thus the authority lacked jurisdiction. - HELD THAT: - The Court examined whether the designated officer had jurisdiction to issue show cause notices to petitioners who are foreign exporters and whether the Customs Act, particularly in the context of subsection (2) of Section 1 as amended by the Finance Act, 2018, could be applied to transactions said to have occurred in a foreign territory. The respondents relied on a CESTAT decision; however, the Court recorded prima facie dissatisfaction with the departmental stance and, taking into account the pre and post amendment effect of Section 1(2), concluded that a substantial question of law touching the root of authority and jurisdiction was raised. On that prima facie determination of jurisdictional defect, the Court granted interim relief and stayed the impugned show cause notices pending final disposal of the petitions.

On a prima facie view the petitioners have raised a substantial jurisdictional issue under Section 1(2) and the impugned show cause notices are stayed pending final hearing.

Show cause notice - Interim stay of proceedings - Directions to the Revenue to justify issuance of the impugned notices and to verify whether petitioners are covered by an earlier order in a related matter. - HELD THAT: - The Court observed that the officer who actually issued the impugned notice should have first ascertained jurisdiction and therefore directed that the Deputy Commissioner of Customs who issued the notice file an affidavit justifying the action. The Court also required the department to consider whether the present notices fall within the observations or outcome of an earlier order in respect of the petitioners, and directed the respondents to take instructions and apply that position. These procedural directions were given so that the authority may determine whether further adjudication in the petition is necessary or whether the notices ought to be dropped as in the earlier case.

Deputy Commissioner of Customs to place on record an affidavit justifying issuance of the notices and the department to verify/apply the position recorded in the earlier order; the matter to proceed thereafter.

Final Conclusion: The Court granted interim relief by staying the impugned show cause notices addressed to the foreign petitioners and directed the Revenue to file an affidavit by the Deputy Commissioner who issued the notices and to determine whether the notices are covered by an earlier order; the petitions remain pending for final hearing after completion of pleadings.

Seizure and confiscation of prohibited goods contrary to other law - interpretation of "prohibited goods" under the Customs Act - registration requirement under the Insecticides Act as constituting a prohibition on import and manufacture - scope of exemption under Section 38(1)(b) of the Insecticides Act - legal consequence of non enforcement of Section 11(3) of the Customs Act

Seizure and confiscation of prohibited goods contrary to other law - interpretation of "prohibited goods" under the Customs Act - registration requirement under the Insecticides Act as constituting a prohibition on import and manufacture - legal consequence of non enforcement of Section 11(3) of the Customs Act - Validity of detention and seizure of imported Ethephon and whether Customs authorities had jurisdiction to seize as prohibited goods - HELD THAT: - The Court held that import of Ethephon is not per se prohibited under the Customs Act but may be confiscable under Section 111(d) if there exists a prohibition under any other law then in force. Ethephon is a scheduled substance under the Insecticides Act and Section 17(1)(c) read with Section 3(e)(i) makes import/manufacture subject to conditions of registration under Section 9. Non fulfilment of such prior registration renders the commodity "prohibited goods" within the meaning of Section 2(33) of the Customs Act. Consequently, in the absence of a valid Registration Certificate and compliance with registration conditions, the Customs authorities had jurisdiction to detain and seize the goods under Section 110 read with Section 111(d). The Court rejected the contention that the registration requirement is a mere regulatory formality devoid of consequences. The Court further observed that the proviso in Section 38(1)(b) of the Insecticides Act (claimed exemption) raises fact intensive questions of scientific and expert nature which are to be examined by the statutory/quasi judicial authority and not to be decided in writ jurisdiction at this stage. Finally, the Court noted that Section 11(3) of the Customs Act (requiring notification of prohibitions under other laws) has not been brought into force and is therefore inapplicable; accordingly no further notification was necessary for Customs to proceed under existing provisions. [Paras 21, 22, 23, 37, 45]

Seizure and detention of Ethephon were not set aside; Customs had jurisdiction to proceed against the import in absence of requisite registration under the Insecticides Act and Section 11(3) being unenforced does not vitiate the proceedings.

Scope of exemption under Section 38(1)(b) of the Insecticides Act - burden of proof for claiming exemption - Whether the petitioner's claim that Ethephon is exempt from the Insecticides Act should be adjudicated in writ jurisdiction or left to the statutory proceedings - HELD THAT: - The Court recorded that the petitioner's plea of exemption under Section 38(1)(b) involves technical and fact intensive enquiries (chemical/environmental effects and expert evidence) which are unsuitable for final determination in writ proceedings. The burden to establish an exemption lies on the claimant; the petitioner had raised the exemption before the seizing authority but the Court observed that such contentions are to be tested and determined by the adjudicating/quasi judicial authority in the confiscation proceedings under Section 124. Accordingly the Court declined to decide the exemption claim on merits and left it open for fresh consideration in the statutory adjudication, while directing expedition of those proceedings. [Paras 35, 36, 38, 42, 43]

Claim of exemption under Section 38(1)(b) is not adjudicated by this Court and is left open for determination by the statutory/quasi judicial authority in the pending confiscation proceedings; those proceedings are to be expeditiously concluded.

Final Conclusion: Writ petition dismissed insofar as it sought quashing of seizure and immediate release of goods; the Court upheld the legality of detention and seizure in view of the registration requirement under the Insecticides Act and the unenforced status of Section 11(3) of the Customs Act, and directed the adjudicating authority to expeditiously decide the pending confiscation proceedings (the petitioner's exemption claim to be considered afresh by that authority).

Provisional release of seized imported goods under Section 110-A of the Customs Act, 1962 - binding effect of an adjudication order unless stayed - duty of Customs authorities to consider representations and exercise discretion fairly and non-arbitrarily - conditioning provisional release on bond/undertaking and security/bank guarantee - valuation dispute and alleged misdeclaration as ground for seizure

Provisional release of seized imported goods under Section 110-A of the Customs Act, 1962 - binding effect of an adjudication order unless stayed - Entitlement of the petitioner to provisional release of the imported silver goods pending further proceedings, in view of the Order in Original dropping the show cause notice and absence of any stay. - HELD THAT: - The Court found that the Order in Original dated 16th December, 2022 dropped the proceedings against the petitioner and, as there is no stay of that order, the order is binding on the revenue until set aside. The disputed issue pertains only to valuation and the imported goods are not prohibited. Relying on relevant precedents, the Court held that in the absence of any stay, the authorities were not justified in refusing provisional release and the petitioner was entitled to seek relief under the provisions governing provisional release pending adjudication and appeal. [Paras 9, 12]

Petitioner entitled to provisional release of the goods in view of the Order in Original and absence of any stay.

Duty of Customs authorities to consider representations and exercise discretion fairly and non-arbitrarily - conditioning provisional release on bond/undertaking and security/bank guarantee - Legitimacy of the respondents' refusal to consider repeated requests for provisional release and the appropriate conditions for such release. - HELD THAT: - The Court observed that the respondents failed to even respond to repeated representations over an extended period, which was contrary to the obligation of the authority to consider applications for provisional release and to exercise its discretion in a manner consonant with fairness, non arbitrariness and non discrimination. The Court noted the departmental circular providing guidelines (including the possibility of requiring bank guarantees or security deposits and a bond undertaking to pay duty/penalty as adjudged) but emphasized that the circular confers guidance without ousting the statutory discretion of the officers. Applying these principles, the Court directed provisional release subject to payment of duty as declared and furnishing a bond with an undertaking to pay any differential duty, fine or penalty finally adjudged, thereby imposing reasonable conditionality while upholding the duty to consider representations. [Paras 10, 11, 13]

Respondents' refusal to consider applications was unjustified; goods to be released on conditions including payment of duty as declared and furnishing of bond/undertaking (and other appropriate security as may be required).

Final Conclusion: Writ petition allowed: goods to be provisionally released on the petitioner paying duty on the declared value and furnishing a bond undertaking to pay any differential duty, fine or penalty as may be adjudged; petition disposed of with no costs.

Seizure of goods - Imported goods - Cleared for home consumption - Confiscation under Section 111(m) - Principles of natural justice - Provisional release of seized goods

Imported goods - Cleared for home consumption - Confiscation under Section 111(m) - Validity of seizure/confiscation of goods which had been cleared for home consumption and subsequently sold to the petitioner - HELD THAT: - The Court held that once goods are cleared for home consumption they cease to retain the status of "imported goods" under the statutory definition and, therefore, could not be validly confiscated on that basis. The goods in the present case were admitted to have been cleared in favour of the importer and thereafter sold to the petitioner; the authorities did not challenge the sale by the importer to the petitioner. The respondents' reliance on the opening words "any goods" in Clause (m) of Section 111 does not sustain confiscation where the goods no longer remain imported goods and are not shown to be banned or otherwise unlawful. The Court observed that mere allegations of under-valuation against the importer, and pending proceedings against that importer, did not authorise seizure/confiscation of goods held by a downstream purchaser in the absence of a demonstrable statutory basis or illegality attaching to those goods. [Paras 9, 11]

Seizure/confiscation quashed and seized goods directed to be released as they had been cleared for home consumption and sold to the petitioner.

Seizure of goods - Principles of natural justice - Provisional release of seized goods - Whether the procedure of seizure complied with principles of natural justice and required pre-seizure notice to the petitioner - HELD THAT: - The Court found that no notice was served upon the petitioner before seizure, which amounted to a violation of principles of natural justice in the circumstances of this case. Although prior notice may not be mandatory in every case under the statute, where goods are not shown to be banned or otherwise illicit and the authorities were aware of the identity of the importer and purchaser, depriving a bona fide purchaser of goods without notice was impermissible. The Court emphasised that routine business transactions cannot be frustrated by seizure in the absence of statutory justification or demonstrable illegality; the appropriate statutory remedy against the importer does not automatically permit confiscation of goods from a downstream purchaser. [Paras 10]

Seizure set aside for non-compliance with principles of natural justice; goods to be released forthwith.

Final Conclusion: Writ petition allowed; the seizure memo dated 14.02.2023 is quashed and the respondents are directed to release the seized goods forthwith. Observations in the order shall not be used in proceedings on the show cause notice issued to the importer.

Provisional release of seized goods - Section 110A of the Customs Act, 1962 - consideration on merits and in accordance with law - judicial direction for disposal of pending representation

Provisional release of seized goods - Section 110A of the Customs Act, 1962 - judicial direction for disposal of pending representation - Respondents must consider and decide the petitioner's representation dated 23-11-2022 seeking provisional release of seized goods under Section 110A of the Customs Act, 1962, within a stipulated time frame. - HELD THAT: - The Court noted that the petitioner's imported goods were seized on 04-08-2022 and that a representation for provisional release under Section 110A was submitted on 23-11-2022 but remained undecided while the DRI investigation was pending. The respondents contended that consideration should await a DRI report. The Court held that no prejudice would be caused to the respondents by an adjudicative decision on the representation and directed that the representation be decided on its merits and in accordance with law. The Court expressly refrained from expressing any opinion on the merits of the petitioner's claim and limited its direction to a time-bound disposal of the pending representation, thereby exercising supervisory jurisdiction to ensure timely administrative action. [Paras 6, 7, 8, 9]

The respondents are directed to decide the petitioner's representation dated 23-11-2022 for provisional release of seized goods under Section 110A of the Customs Act, 1962, on merits and in accordance with law, within six weeks from receipt of a copy of the order.

Final Conclusion: Writ petitions disposed by directing the respondents to pass final orders on the petitioner's representation dated 23-11-2022 for provisional release of seized goods under Section 110A of the Customs Act, 1962, on merits and in accordance with law, within six weeks; no expression of opinion on merits; no costs.

Issuance of show cause notice under Section 124 in respect of licensing under Section 146 - Validity of show cause notice - Licence for customs brokers and regulatory scheme under Section 146 - Void ab initio

Issuance of show cause notice under Section 124 in respect of licensing under Section 146 - Validity of show cause notice - The show cause notice issued invoking Section 124 of the Customs Act in proceedings concerning grant/renewal of a customs broker licence under Section 146 is legally unsustainable. - HELD THAT: - The Tribunal examined the statutory scheme and found that Section 146 deals with licensing of customs brokers and empowers the Board to frame regulations for grant, suspension or revocation of licences and related procedures. Section 124, by contrast, governs issuance of notices antecedent to confiscation of goods and imposition of penalties under the Chapter dealing with confiscation. The impugned notice expressly invoked Section 124 though the subject matter concerned licensing under Section 146. Because Section 124 does not cater to proceedings for licensing of customs brokers, issuance of a notice under that provision for the stated purpose was not authorised by the statute. Consequently the notice was held to be legally void ab initio and all proceedings initiated pursuant thereto carried no legal force. The Tribunal therefore set aside the proceedings on this preliminary jurisdictional/legality ground without adverting to the merits of the underlying allegations. [Paras 5, 6, 7]

The show cause notice issued under Section 124 in the licensing matter is void ab initio; proceedings arising therefrom are set aside.

Final Conclusion: The appeal is dismissed; the impugned show cause notice is quashed as a nullity and all proceedings initiated pursuant to that void notice are dropped.

Anti-dumping duty - Tariff classification - Scope of final findings of DGTR - Reliance on post-adjudication clarification

Anti-dumping duty - Scope of final findings of DGTR - Reliance on post-adjudication clarification - Whether the imported product 'Amoxicillin Sodium with Clavulanate Potassium (Blend Sterile) (5:1)' is liable to anti-dumping duty under the final findings/notification imposing duty on 'Amoxicillin Trihydrate'. - HELD THAT: - The Tribunal examined the DGTR clarification dated 22.11.2019, produced by the appellant and acknowledged by the department, which states that the product covered by the final findings and duty table is 'Amoxycillin' also known as 'Amoxycillin Trihydrate', and expressly records that 'Amoxicillin Sodium with Clavulanate Potassium (Blend Sterile) (5:1)' is not covered under the scope of the product under consideration. Although that clarification post-dated the adjudicating authority's order, the department has accepted the clarification. In view of the admitted document and the concession by the department, the Tribunal held that the goods imported by the appellant do not fall within the product description on which anti-dumping duty was imposed, and accordingly the levy of anti-dumping duty on the imported product is not sustainable.

Impugned order sustaining classification under CTH 29411030 and levy of anti-dumping duty on the imported product is set aside; the appeal is allowed and the anti-dumping duty levy on the appellant's import is held not sustainable.

Final Conclusion: On the admitted DGTR clarification, acknowledged by the department, the imported product is not covered by the DGTR final findings imposing anti-dumping duty on Amoxicillin Trihydrate; consequently the levy is unsustainable and the appeal is allowed.

Classification of projectors as devices designed for use with an automatic data processing machine - Principal use test for tariff classification - Application of General Rules of Interpretation - Rule 1 and Rule 3 - Chapter Note 6(E) to Chapter 84 - machines working in conjunction with automatic data processing machines - Eligibility for exemption under Notification No. 24/2005-Customs (Sr. No. 17) for goods principally used in an automatic data processing system

Classification of projectors as devices designed for use with an automatic data processing machine - Principal use test for tariff classification - Application of General Rules of Interpretation - Rule 1 - Chapter Note 6(E) to Chapter 84 - Data Projector (Model ZH 350, ZW350e, ZX 350e) are classifiable under sub heading 8528 62 00 - HELD THAT: - The Authority analysed the functional attributes and marketing of the subject projectors and applied the interpretative rules. A projector's classification depends on its compatibility with input devices (such as computers) and its principal application. Chapter Note 6(E) directs that machines working in conjunction with automatic data processing machines are to be classified according to their function. The projectors' specifications (computer compatibility standards, presence of VGA port and other connectors) and their marketing under business/education categories demonstrate they are principally meant for use with automatic data processing machines. Although the devices possess additional ports and adjustable aspect ratios, those features only afford ancillary utility and do not alter the principal function. Applying GRI Rule 1 and the principal use analysis, and preferring the specific sub heading under GRI Rule 3 where applicable, the Authority concluded that the impugned goods fall within the sub heading for projectors capable of directly connecting to and designed for use with an automatic data processing machine of Heading 8471 (sub heading 8528 62 00). [Paras 5, 7]

The projectors are classifiable under sub heading 8528 62 00.

Eligibility for exemption under Notification No. 24/2005-Customs (Sr. No. 17) for goods principally used in an automatic data processing system - Principal use test for tariff classification - The projectors are eligible for exemption under Sr. No. 17 of Notification No. 24/2005 Customs, dated 1 3 2005, as amended - HELD THAT: - Sr. No. 17 of Notification No. 24/2005 exempts goods of a kind solely or principally used in an automatic data processing system and falling under Heading 8528 62. Having held the impugned projectors to be classifiable under sub heading 8528 62 00 and having found that their principal use is in conjunction with automatic data processing machines, the Authority concluded that the projectors satisfy the condition of being principally used with machines of Heading 8471 and thus qualify for the exemption under the notification. [Paras 6, 7]

The projectors are entitled to the exemption under Sr. No. 17 of Notification No. 24/2005 Customs.

Final Conclusion: Data Projector models ZH 350, ZW350e and ZX 350e are held classifiable under sub heading 8528 62 00 and eligible for exemption under Sr. No. 17 of Notification No. 24/2005 Customs, dated 1 3 2005, as amended.

Clean slate principle under the Insolvency and Bankruptcy Code - extinguishment of pre existing statutory claims not part of the resolution/liquidation process - waterfall mechanism under Section 53 of the IBC - relinquishment and realisation of security under Section 52 of the IBC - binding effect of approved resolution plan and freeze of claims under Section 31 (post amendment) - limits of rights of revenue authorities in liquidation proceedings - effect of sale on 'AS IS WHERE IS' basis vis a vis IBC protections - proviso to Section 100 of the Transfer of Property Act - enforceability of charge against transferee for consideration without notice

Clean slate principle under the Insolvency and Bankruptcy Code - extinguishment of pre existing statutory claims not part of the resolution/liquidation process - binding effect of approved resolution plan and freeze of claims under Section 31 (post amendment) - waterfall mechanism under Section 53 of the IBC - relinquishment and realisation of security under Section 52 of the IBC - Whether the State's GST/VAT claim and consequent charge could be enforced against the petitioner after the asset was sold in liquidation where the claim was not admitted during the CIRP/liquidation and the purchaser relied upon the liquidator's sale deed covenant. - HELD THAT: - The Court held that the IBC is a complete code which provides for freezing and extinguishment of claims that do not form part of an approved resolution plan and prescribes a statutory waterfall for distribution in liquidation. On the facts the State's tax claim was not admitted during the CIRP and no claim was lodged during the liquidation; therefore the claim did not form part of the liquidation distribution and stood extinguished as per the principles expounded in Ghanshyam Mishra and allied authorities and the statutory scheme. Section 52 affords secured creditors limited options (relinquish security to the estate or realise security) and Section 53 prescribes the order of priority; a revenue claim which was not substantiated and admitted cannot be allowed to override the statutory waterfall or resurrect a charge against a transferee who purchased the asset in liquidation. The clause in the liquidator's sale deed excluding liability for governmental dues reinforced the purchaser's entitlement to a clean slate. Consequently the State could not validly maintain the challenged mutation and demand once it failed to establish and admit its claim in the insolvency/liquidation process. [Paras 5]

The State's claim and the consequential charge recorded in revenue entry No. 6295 cannot be enforced against the petitioner; the impugned order dated 05.01.2022 and mutation No. 6295 are set aside.

Effect of sale on 'AS IS WHERE IS' basis vis a vis IBC protections - proviso to Section 100 of the Transfer of Property Act - enforceability of charge against transferee for consideration without notice - Whether the petitioner's title obtained by registered sale deed in liquidation is to be certified in revenue records despite the State subsequently seeking to record a charge. - HELD THAT: - The Court found that the sale deed executed by the liquidator contained express covenants that the purchaser would not be liable for pre existing governmental dues because such dues fall within the liquidation/waterfall mechanism. The State's later attempt to register a charge in the revenue records was undertaken after the sale and after the State failed to lodge a valid claim in the liquidation process; under Section 100 of the Transfer of Property Act a charge cannot be enforced against a transferee who took the property for consideration without notice of such charge. On these combined statutory and contractual grounds the petitioner was entitled to registration/certification of the sale entry. [Paras 5, 6]

Respondents directed to certify entry No. 4454 in the revenue records pursuant to the registered sale deed dated 17.12.2021 and to remove/decline the charge recorded as entry No. 6295.

Final Conclusion: Writ petition allowed; order dated 05.01.2022 and mutation entry No. 6295 set aside. Respondents directed to certify revenue entry No. 4454 pursuant to the registered sale deed dated 17.12.2021. No costs.

Pre-existing dispute - admission of application under Section 9 and initiation of CIRP - summary jurisdiction of the adjudicating authority in Section 9 proceedings - Mobilox test: existence of a plausible contention requiring further investigation - counterclaims not adjudicable in Section 9 proceedings

Pre-existing dispute - Mobilox test: existence of a plausible contention requiring further investigation - summary jurisdiction of the adjudicating authority in Section 9 proceedings - Whether a genuine pre-existing dispute between the parties existed which would bar admission of the Section 9 application and commencement of CIRP. - HELD THAT: - The Tribunal applied the guiding principle in Mobilox that the adjudicating authority, exercising summary jurisdiction under Section 9, must reject an application only if a notice or record demonstrates the existence of a real dispute or a suit/arbitration pending; the authority need only be satisfied that a plausible contention requiring further investigation exists and not that the defence will succeed. The Adjudicating Authority examined the replies to the legal notice and demand notice and noted absence of contemporaneous communications, supporting invoices, or documentary evidence to substantiate the Corporate Debtor's claim of defective supplies in FY 2016-17. Although credit notes aggregating Rs.35,91,500/- were issued for certain supplies, the Corporate Debtor failed to produce invoices or proof of the asserted counter-claims and of other payments it now relies upon; the ledger entries and post hoc contentions were not supported by evidence on record. The Adjudicating Authority therefore found the dispute to be a patently feeble, moonshine defence and held that disputes of claims and counterclaims cannot be adjudicated in a Section 9 summary proceeding. On that basis the Authority concluded that no real pre-existing dispute barred admission of the Section 9 petition. [Paras 15, 16, 17, 18]

No real pre-existing dispute was found; the Section 9 application was rightly admitted and CIRP initiated.

Counterclaims not adjudicable in Section 9 proceedings - admission of application under Section 9 and initiation of CIRP - Whether the Adjudicating Authority erred in admitting the Section 9 application despite the Corporate Debtor's counterclaims and alleged adjustments/payments. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that ledger entries and allegations of adjustments or additional payments advanced before the Tribunal were not supported by contemporaneous documents or creditor communications placed before the Adjudicating Authority. Relying on precedent that disputes as to claims and counterclaims cannot be adjudicated in Section 9 proceedings, the Authority correctly limited its inquiry to whether default and a non-spurious dispute existed. Finding default established on the admitted sums and no genuine dispute to preclude admission, the Authority's admission of the Section 9 petition was held to be correct. The Tribunal also observed that later assertions of payments or adjustments raised for the first time before it appeared to be an after-thought to avoid insolvency proceedings. [Paras 16, 18, 19]

The adjudicating authority did not err in admitting the Section 9 petition; counterclaims and belated reconciliation contentions could not defeat admission.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's order admitting the Section 9 petition and commencing CIRP was upheld; the amount deposited pursuant to the Tribunal's interim order is to be refunded, the IRP directed to constitute the CoC and proceed with CIRP and related fee/costs matters in accordance with law, and Bank of Baroda granted liberty to pursue its claims with the IRP.

Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - characterisation of transactions as joint venture investment versus financial debt - financial debt - authority of managing director to bind the company by availing unsecured loan - admission of default by the corporate debtor - remand for fresh consideration

Characterisation of transactions as joint venture investment versus financial debt - financial debt - authority of managing director to bind the company by availing unsecured loan - admission of default by the corporate debtor - The Appellate Tribunal found that the Adjudicating Authority erred in treating the payments as investment under a joint venture (and not as a financial debt) and in construing the acknowledgment by the managing director as a personal undertaking that excluded corporate liability. - HELD THAT: - The Tribunal noted there was no dispute that Rs.3.20 crores were disbursed from the Financial Creditor to the Corporate Debtor and that the Section 7 application was filed within limitation. Although the AA relied on the earlier MoU dated 04.03.2017 and treated the transaction as a joint venture, that MoU had been terminated by mutual consent on 29.04.2017 and, on the same date, a fresh MoU was executed acknowledging an unsecured loan. The Board resolution authorising the Managing Director to avail unsecured loans supported the position that the liability to repay primarily vested with the Corporate Debtor. The Corporate Debtor had also, before the AA, admitted inability to repay the debt due to financial distress. On these findings the Tribunal held that the amounts took the character of a loan from the Financial Creditor to the Corporate Debtor and that the AA therefore erred in dismissing the Section 7 petition on the basis recorded. [Paras 11]

Impugned dismissal was erroneous; payments, in view of termination of the joint venture MoU and the subsequent acknowledgements and board authorisation, were to be treated as an unsecured loan and the AA's contrary conclusion was set aside.

Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - remand for fresh consideration - The Tribunal remanded the matter to the Adjudicating Authority for fresh consideration of the Financial Creditor's Section 7 application. - HELD THAT: - Having set aside the AA's order, the Tribunal directed that the AA reconsider the Section 7 petition in the light of the correct characterisation of the transaction and the corporate authorisations and admissions recorded on the file. The remand was for consideration of the application afresh by the AA and did not itself admit the petition; the Appellant was directed to appear before the AA on the date specified. [Paras 12]

Appeal allowed insofar as the impugned order is set aside and the matter is remanded to the Adjudicating Authority for fresh consideration of the Section 7 application.

Final Conclusion: The appeal was allowed; the National Company Law Tribunal's order dismissing the Section 7 petition was set aside and the matter remitted to the Adjudicating Authority for fresh consideration of the Financial Creditor's application, with the appellant directed to appear before the AA on the specified date.

Applicability of amended Regulation 33 and Clause 12 of Schedule 1 - binding nature of auction terms in EOI vis-a -vis statutory liquidation regulations - forfeiture of earnest money deposit (EMD) - validity of IBBI circular dated 26.08.2019

Applicability of amended Regulation 33 and Clause 12 of Schedule 1 - binding nature of auction terms in EOI vis-a -vis statutory liquidation regulations - Whether the liquidator was bound to follow the terms of Clause 12 of Schedule 1 as substituted on 25.07.2019 or whether the terms laid down by the liquidator in the EOI dated 08.07.2020 governed the sale. - HELD THAT: - The Tribunal held that the amendment to Clause 12 of Schedule 1 (substituted on 25.07.2019) was in force at the time the EOI was issued and therefore the liquidator was required to act in accordance with Regulation 33 and the terms of Schedule 1 when conducting the auction. The liquidator could not ignore the substituted Clause 12 and lay down its own timeline in the EOI that conflicted with the statutory framework. The court noted that the circular dated 26.08.2019 (which attempted to limit application of the amendment) had been withdrawn and in any event could not override or substitute the clear provision of the subordinate legislation. Consequently, the liquidator's unilateral terms in the EOI that departed from the amended Clause 12 were unsustainable. [Paras 14, 15, 16]

The substituted Clause 12 of Schedule 1 was applicable and the liquidator's inconsistent EOI terms were not binding; the liquidator was required to follow the provisions of Regulation 33 and Schedule 1.

Forfeiture of earnest money deposit (EMD) - binding nature of auction terms in EOI vis-a -vis statutory liquidation regulations - Whether the forfeiture of the EMD and other monies paid by the respondent for failure to meet the liquidator's EOI timeline was permissible. - HELD THAT: - Applying the conclusion that the statutory timeline under the substituted Clause 12 governed the sale process, the Tribunal found the forfeiture effected by the liquidator under the EOI terms to be unsustainable. The NCLT's order setting aside the forfeiture and directing refund of the EMD with interest was supported: the liquidator could not rely on its own divergent timeline to justify forfeiture where the statutory regime prescribed different timelines and conditions. The Tribunal also rejected the appellant's contention about additional interest burden, noting that the forfeited amount was deposited and accruing interest. [Paras 1, 16, 17]

Forfeiture of the EMD by the liquidator under the EOI terms was illegal; the direction to refund the forfeited amount with interest as ordered by the Adjudicating Authority is upheld.

Final Conclusion: The appeal is dismissed. The Tribunal upholds the Adjudicating Authority's finding that the substituted Clause 12 of Schedule 1 (as on 25.07.2019) governed the auction and that the liquidator's inconsistent EOI terms did not justify forfeiture; the order directing refund of the forfeited EMD with interest is affirmed.

Suspension of initiation of corporate insolvency resolution process under Section 10A - Event of default under a restructuring/One Time Restructuring (OTR) agreement - Effect of RBI Resolution Framework (post-implementation performance, Clause 48) on asset classification - Amendment, supplementation and supersession of original loan documents by restructuring agreement - Right of financial creditor to invoke remedies (including initiation of CIRP) on post-restructuring default - Maintainability of Section 7 application based on post-OTR default

Suspension of initiation of corporate insolvency resolution process under Section 10A - Event of default under a restructuring/One Time Restructuring (OTR) agreement - Effect of RBI Resolution Framework (post-implementation performance, Clause 48) on asset classification - Amendment, supplementation and supersession of original loan documents by restructuring agreement - Right of financial creditor to invoke remedies (including initiation of CIRP) on post-restructuring default - Whether the Section 7 application was barred by Section 10A because the default relied upon related back to pre-Section 10A defaults, or whether the application was maintainable being based on a default under the OTR agreement dated 21.05.2021. - HELD THAT: - The Tribunal held that Section 10A prohibits initiation of CIRP only for defaults that occurred during the Section 10A suspension period; it does not prohibit proceedings based on defaults that occur after the restructuring. The OTR agreement, executed pursuant to the RBI Resolution Framework, amended and supplemented the original loan agreements and created independent post-implementation payment obligations (including FITL) with a moratorium and a repayment schedule commencing 31.03.2022. Clause 8.1 of the OTR defines events of default under the OTR (non-payment of installments of principal or interest under the Loans and FITL) and Clause 8.2 expressly entitles the lender to pursue legal remedies, including initiation of insolvency proceedings, upon such post-OTR default. Clause 48 of the RBI Circular governs post-implementation asset classification (downgrading to NPA from the date of implementation of the resolution plan or earlier NPA date) and therefore addresses asset classification only; it does not convert a post-OTR event of default into a pre-OTR default for the purpose of Section 10A. The Section 7 petition was filed on the basis of the event of default under the OTR occurring on 31.03.2022, which is outside the Section 10A period, and the mere notation of an earlier NPA date in the petition (in obedience to Clause 48) does not render the petition barred by Section 10A. Applying these principles, the Adjudicating Authority correctly admitted the Section 7 application on the post-OTR default. [Paras 19, 21, 22, 24, 25]

Section 7 application was maintainable as it was founded on a post-OTR event of default occurring on 31.03.2022 and was not barred by Section 10A.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority did not err in admitting the Section 7 petition because the insolvency application was based on a default under the One Time Restructuring agreement dated 21.05.2021 occurring on 31.03.2022, which is outside the Section 10A suspension period.

Service tax on mounting of printed material - appellate tribunal's finding upheld - non-prejudicial omission in reasoning

Appellate tribunal's finding upheld - service tax on mounting of printed material - The final order of the Customs, Excise and Service Tax Appellate Tribunal was sustainable and required no interference. - HELD THAT: - The Supreme Court examined the Tribunal's judgment and found no infirmity in its ultimate conclusion. Although the Tribunal omitted a couple of lines in paragraph 6.8 referring to the admitted position that the respondent had been paying service tax on additional services relating to mounting of printed material or boards, that omission was not disputed by the appellant and was not material to the correctness of the Tribunal's conclusion. The Court observed that had the omitted lines been recorded, no further consideration would have been necessary, but the omission did not vitiate the order. [Paras 6]

Tribunal's order affirmed; appeal dismissed.

Final Conclusion: The appeal is dismissed; the Tribunal's order is affirmed despite a non-prejudicial omission in paragraph 6.8, and pending applications stand disposed of.

Quantification of tax liability - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - written communication as 'quantified' under Section 121(r) - disqualification under Section 125(1)(e) - opportunity of hearing under Section 127(3) and (4) - strict interpretation of amnesty/settlement scheme

Quantification of tax liability - written communication as 'quantified' under Section 121(r) - disqualification under Section 125(1)(e) - eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Whether the petitioner was eligible to make a declaration under the SVLDR Scheme in view of the requirement that the amount of duty must have been quantified on or before 30th June, 2019. - HELD THAT: - The court held that the requirement of 'quantified' means a written communication of the amount of duty payable and that mere furnishing of turnover or bifurcation of goods does not amount to such quantification. The petitioner's letter dated 27th May, 2019 only furnished turnover details and did not communicate any duty amount; the first written quantification by the department occurred by show cause notice dated 14th January, 2020, which is after the cut-off date of 30th June, 2019. Consequently, the petitioner fell within the exception in Section 125(1)(e) (subject to audit where the amount involved was not quantified on or before 30th June, 2019) and was ineligible to make a declaration under the Scheme. The court relied on the statutory definition in Section 121(r), analogous decisions interpreting 'quantification,' and the Scheme's FAQs to conclude that eligibility must be determined strictly and that unilateral or evidential disclosures by the assessee are insufficient to satisfy the 'quantified' requirement. [Paras 16, 18, 19, 23, 24]

The petitioner was not eligible to avail the SVLDR Scheme because the amount of duty was not 'quantified' on or before 30th June, 2019; the petitioner's application was rightly rejected on ineligibility grounds.

Opportunity of hearing under Section 127(3) and (4) - strict interpretation of amnesty/settlement scheme - natural justice and applicability of hearing - Whether the respondents were obliged to afford the petitioner an opportunity of hearing under Section 127(3) and (4) before rejecting the SVLDRS-1 application. - HELD THAT: - The court held that the procedural protection in Section 127(3)-(4) (opportunity to be heard where the designated committee's estimate exceeds the declarant's declared amount) applies only after a declarant is found eligible under Section 125 and the designated committee issues an estimate under Section 127(2). Since the petitioner was ineligible at the threshold under Section 125(1)(e), the entitlement to a hearing under Section 127(3)-(4) did not arise. The court further observed that even if a hearing had been granted, it would not have altered eligibility because the quantification necessary to make the petitioner eligible was absent as of the cut-off date; therefore reliance on precedents requiring natural justice where quantification existed did not assist the petitioner. [Paras 25, 26, 27, 28]

No obligation arose to afford a hearing under Section 127(3)-(4) because the petitioner was ineligible under Section 125(1) at the threshold, and refusal to grant a hearing did not vitiate the rejection.

Final Conclusion: The writ petition is dismissed. The petitioner was ineligible to participate in the SVLDR Scheme because the departmental quantification of duty occurred after the cut-off date of 30th June, 2019, and the procedural hearing provisions did not apply to an ineligible declarant; rule discharged and petition dismissed with no order as to costs.

Right to hearing - natural justice - duty to furnish particulars - order passed in a hurried manner - remand for fresh consideration - limitation - exemption under notification No.9/2003-ST and 24/2004-ST - precedential effect of Tribunal decision

Right to hearing - natural justice - duty to furnish particulars - order passed in a hurried manner - Validity of the impugned Order in Original in view of the department's failure to furnish particulars and to hear the petitioner - HELD THAT: - The Court found that the respondent was duty bound to inform the petitioner about the fate of Order in Appeal No.63 of 2010 (M ST) dated 26.03.2010 and whether that order had been disturbed; the respondent failed to furnish the details sought by the petitioner and proceeded to pass the impugned order without granting time to the petitioner or hearing him. The impugned order was thus held to have been passed in a hurried manner, without compliance with the duty to furnish particulars and without affording the petitioner an opportunity of hearing, thereby infringing the principles of natural justice. For these reasons the Court set aside the impugned order and directed fresh consideration on merits after hearing the petitioner. [Paras 13, 14, 15]

Impugned Order in Original set aside for want of hearing and failure to furnish details; matter remitted for fresh decision.

Remand for fresh consideration - precedential effect of Tribunal decision - limitation - exemption under notification No.9/2003-ST and 24/2004-ST - Scope and direction of further proceedings on remand - HELD THAT: - The Court remanded the matter to the Additional Commissioner to pass fresh orders on merits after hearing the petitioner within three months from receipt of the order. The petitioner was permitted to make all legal submissions available in law, including contentions relating to limitation, reliance on Tribunal decisions and claimed exemptions under the specified notifications. The Court did not adjudicate these substantive contentions, leaving them for fresh decision by the authority after hearing and consideration of the materials and submissions. [Paras 15]

Matter remanded to the respondent/Additional Commissioner to decide afresh on merits after hearing the petitioner within three months; petitioner may advance all legal submissions.

Final Conclusion: The impugned Order in Original dated 03.03.2022 is set aside for failure to furnish requested particulars and for want of hearing; the matter is remitted to the Additional Commissioner for fresh adjudication on merits after hearing the petitioner within three months, with liberty to advance all legal submissions. No costs.

Retrospective taxation by Finance Act, 2010 - renting of immovable property as taxable service - extended period of limitation / longer limitation period - invocation of extended limitation where levy was under judicial challenge - time-barred demand - non-applicability of penalty where extended limitation not invokable

Renting of immovable property as taxable service - retrospective taxation by Finance Act, 2010 - extended period of limitation / longer limitation period - invocation of extended limitation where levy was under judicial challenge - time-barred demand - non-applicability of penalty where extended limitation not invokable - Whether the show cause notice issued by invoking the extended period of limitation is sustainable for service tax on renting of immovable property for the period 01.06.2007 to 31.03.2010. - HELD THAT: - The Tribunal found as matter of fact that the appellant had provided renting of immovable property from 01.06.2007 and that, during the relevant period, the validity of levy on such renting was under judicial challenge culminating in a decision of the Hon'ble Delhi High Court holding the levy ultra vires. The retrospective amendment by Finance Act, 2010 made the levy taxable with effect from 01.06.2007, thereby altering the legal position only after the period in dispute. In these circumstances, the Tribunal applied its earlier reasoning in Jindal Vegetable Products Limited, drawing upon the principle in Continental Foundation Jt. Venture that where there was bona fide doubt about the interpretation and validity of the levy during the period in question, the conditions for invoking the extended/longer period of limitation are not satisfied. Since the extended limitation was therefore incorrectly invoked, the demand confirmed on that basis is time barred; the same reasoning also precludes imposition of the penalty which depends on the same elements required for invoking the longer limitation period. [Paras 6, 7, 8]

The show cause notice issued by invoking the extended period is not sustainable and the demand (and consequential penalty) for the period 01.06.2007 to 31.03.2010 is time barred.

Final Conclusion: The impugned order confirming service tax demand (and penalty) under the head 'renting of immovable property' for the period 01.06.2007 to 31.03.2010 is set aside; the appeal is allowed and no demand is sustainable for that period.

Management, Maintenance or Repair Service - reimbursable expenditure - pure agent - Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 - inclusion in taxable value - Section 67(3)

Reimbursable expenditure - pure agent - Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - Section 67(3) - Management, Maintenance or Repair Service - Whether amounts collected from occupants towards electricity, water and diesel as reimbursement are includible in the taxable value of services of management, maintenance or repair for the periods in dispute. - HELD THAT: - The Tribunal accepted that the amounts recovered corresponded to actual costs incurred by the appellant and there was no material showing collection over and above those actual payments or any profit element. Reliance was placed on the Supreme Court decision in Inter Continental Consultants & Technocrats Ltd and the Tribunal's prior order in VITP Pvt Ltd which held that reimbursable expenditure, when shown to be actual amounts collected on behalf of others, are not includible in the assessable value prior to their specific statutory inclusion w.e.f. 14.05.2015. While the Department relied on Rule 5(1) to treat costs incurred in providing taxable services as consideration, the Tribunal found that, on the facts and documents (agreements, invoices and apportionment), the electricity, water and diesel collections were reimbursements and not part of the appellant's gross value. The adjudicating authority's contrary reliance on Rule 5(1) was therefore displaced in respect of these three items. [Paras 14]

Amounts collected as reimbursement for electricity, water and diesel are not includible in the taxable value of Management, Maintenance or Repair services for the periods in dispute; the demand in respect of these charges is set aside.

Management, Maintenance or Repair Service - inclusion in taxable value - parking charges - Whether parking charges collected by the appellant are includible in the taxable value of services of management, maintenance or repair for the periods in dispute. - HELD THAT: - The Tribunal observed that parking charges were not collected on a reimbursable basis and there was nothing on record to show that such collections represented payments made to third parties on behalf of the occupants. The provision of parking was held to be an integral part of the maintenance service provided by the appellant. Reliance placed by the Department on precedents treating parking charges as part of taxable maintenance service was accepted on the facts. The adjudicating authority's inclusion of parking charges in the taxable value was therefore sustained. [Paras 15, 16]

Demand of service tax on parking charges is confirmed and sustained; penalties are, however, set aside.

Final Conclusion: The Tribunal allowed the appeals in part: set aside the demands relating to electricity, water and diesel reimbursements (held not includible in taxable value for the periods in dispute) but confirmed the demand in respect of parking charges; all penalties were waived and consequential benefits were granted to the appellant.

Copy Rights Service exclusion for original literary, dramatic, musical and artistic works - Renting of immovable property service - remand for verification of payments, property tax and adjustments - penalty under Section 76 of the Finance Act, 1994

Copy Rights Service exclusion for original literary, dramatic, musical and artistic works - absence of demand under Copy Right Service in show cause notice - Sustainability of the portion of the confirmed demand attributable to Copy Right Service. - HELD THAT: - The Tribunal examined whether the amount of Rs.8,41,684/- confirmed as service tax related to Copy Right Service is exigible. Copy Rights Service as defined excludes rights covered by sub-clause (a) of clause (1) of Section 13, which deals with original literary, dramatic, musical and artistic works. The Copy Rights service rendered by the appellant related to original artistic works and therefore fell within the exclusion. The Tribunal also noted that the show cause notice did not contain any demand categorized under Copy Right Service. On both grounds the demand for this portion was held unsustainable. [Paras 8]

Demand of Rs.8,41,684/- attributable to Copy Right Service set aside; corresponding interest and penalty under Section 76 set aside for this part.

Remand for verification of payments, property tax and adjustments - appropriation of payments and exclusion of property tax in computing taxable value - Verification of the appellant's claims regarding lessees' payments, additional property tax excluded, and short adjustment which, if accepted, may extinguish the remaining confirmed liability. - HELD THAT: - The appellant asserted (i) receipt by the lessees of Rs.1,91,121/- as per Supreme Court direction which was not accounted for by the adjudicating authority, (ii) that property tax actually paid exceeded the amount excluded by the adjudicating authority (actual Rs.57,66,009/- versus excluded Rs.56,83,647/- giving an additional exclusion of Rs.82,362/-), and (iii) a short adjustment of Rs.40,087/- which was not appropriated. The Tribunal observed that these contentions require factual verification and quantification by the adjudicating authority and accordingly remanded the matter for fresh consideration of these specific claims. [Paras 9, 10]

Matter remanded to the adjudicating authority with directions to verify and decide the claims relating to lessees' payment, the additional property tax exclusion, and the short adjustment; final liability to be determined thereafter.

Final Conclusion: Part of the confirmed demand attributable to Copy Right Service (Rs.8,41,684/-) is set aside (with interest and penalty for that part), and the remaining contested adjustments are remanded to the adjudicating authority for verification and fresh decision; appeal disposed accordingly.

Classification of services - cargo handling services - Goods Transport Agency service - composite service and vivisection - essential character test - negative list - transportation of goods - reverse charge liability - extended period of limitation

Classification of services - Goods Transport Agency service - negative list - transportation of goods - reverse charge liability - composite service and vivisection - Nature of services rendered by the Appellant to SSTAPL during April 2012 to December 2014 - HELD THAT: - The Tribunal analysed the Work Order with its contractual scope (liaisoning with railway authorities, collection of RR and weighment list, supervision of offloading, cleaning, heaping, loading of trucks and transportation to JSL) and held that the principal activity was transportation of material from Sukinda siding to Jindal Stainless. Other activities were incidental or ancillary to that principal transport service. Because the consignment notes for those transactions were issued by SSTAPL in favour of JSL and the invoices reflected transportation, the transactions qualified as services of transportation falling under the negative list entry for transportation of goods by road and not as separate cargo handling services. Consequently the liability to pay service tax rested on the recipient under the GTA mechanism and the demand framed on the Appellant as cargo handling service for this period is unsustainable. [Paras 21, 22]

Services to SSTAPL (April 2012 to December 2014) are transportation/GTA-related and outside liability as cargo handling; recipient has rightly discharged tax.

Classification of services - Goods Transport Agency service - composite service and vivisection - essential character test - abatement - Nature of services rendered directly to JSL by the Appellant during January 2015 to March 2017 - HELD THAT: - The Tribunal examined the JSL work orders which described handling together with transportation of inward and outward rake cargo, with contract charges on a per metric tonne basis. Applying the Board circular clarifications and the principle that a single composite service should not be artificially vivisected, the Tribunal held that loading/unloading and related activities were ancillary to the principal GTA service. Separate rate-heads in the contract were for convenience and do not alter the essential character of a composite GTA service. Since consignment notes were issued by the Appellant and reverse charge was discharged by JSL, the service constituted GTA service and not cargo handling, and the demand as cargo handling for this period is unsustainable on merits. [Paras 24, 25, 31]

Services to JSL (January 2015 to March 2017) are GTA (composite transportation) and not cargo handling; demand is unsustainable.

Extended period of limitation - audit acceptance and estoppel - Sustainability of demand under extended period of limitation - HELD THAT: - The Tribunal noted that audit proceedings for earlier years had been conducted and the disputed issue was not raised then. On that basis and applying the settled principle that authorities cannot subsequently adopt a different view once an audit-accepted position exists, the Tribunal found there was no suppression of facts warranting invocation of extended limitation. Accordingly the demand confirmed by invoking extended period is not sustainable. [Paras 32, 33]

Demand cannot be sustained on the ground of extended period of limitation.

Final Conclusion: The appeal is allowed. The demand confirmed under 'cargo handling service' for April 2012-December 2014 and January 2015-March 2017 is set aside on merits and on limitation; consequential interest and penalty are not exigible.

Construction of Complex service - definition of residential complex under Section 65(91a) of the Finance Act, 1994 - personal use exclusion in the definition of residential complex - service tax exemption for projects under Jawaharlal Nehru National Urban Renewal Mission / Rajiv Awaas Yojana - liability for construction services provided to government or government-owned entities - precedential application - issue not res integra

Construction of Complex service - definition of residential complex under Section 65(91a) of the Finance Act, 1994 - personal use exclusion in the definition of residential complex - service tax exemption for projects under Jawaharlal Nehru National Urban Renewal Mission / Rajiv Awaas Yojana - Whether construction of houses under the JnNURM scheme (for Ahmedabad Municipal Corporation / Safai Kamdar) is taxable as Construction of Complex service - HELD THAT: - The Tribunal found the material fact undisputed that the construction was undertaken under the JnNURM/Rajiv Awaas Yojana for providing residential accommodation to the urban poor and not for commercial activity. Applying the exclusion in the statutory definition of a residential complex - which excludes complexes constructed by a person directly engaging another for design/planning where the construction is intended for personal use - the Tribunal held such construction falls within the "personal use" exclusion (the explanation expressly includes permitting use as residence on rent or without consideration). The bench followed a series of its previous decisions and administrative clarifications (including CBEC letters and notifications relied upon in the quoted precedents) holding that identical projects under JnNURM/Rajiv Awaas Yojana are not leviable to service tax. On that basis the impugned demand was held unsustainable and set aside. [Paras 4, 5]

Impugned demand in respect of construction under JnNURM / Rajiv Awaas Yojana for residential purpose is not sustainable; appeal allowed and order set aside.

Construction of Complex service - personal use exclusion in the definition of residential complex - liability for construction services provided to government or government-owned entities - precedential application - issue not res integra - Whether construction of residential quarters for/for the benefit of Gujarat State Police Housing Corporation Ltd. (GSPHCL) is liable to service tax - HELD THAT: - The Tribunal examined earlier decisions holding that where residential complexes are constructed for use by a government or government-owned entity and are intended for personal use (including permitting residence by others on rent or without consideration), such activity falls within the exclusion from the definition of "residential complex" and is not subject to service tax. The bench applied those consistent precedents (including cases treating state-owned corporations as an extended arm of government for these purposes and CBEC clarifications) and concluded that construction for GSPHCL likewise attracts the exclusion. Following the earlier Tribunal rulings, the demand could not be sustained and was set aside. [Paras 4, 5]

Impugned demand in respect of construction for GSPHCL is not sustainable; appeal allowed and order set aside.

Final Conclusion: Following earlier Tribunal decisions and the exclusionary language of the definition of "residential complex" (personal use), the Bench held that construction services rendered under JnNURM/Rajiv Awaas Yojana and construction for GSPHCL are not leviable to service tax; the impugned orders are set aside and the appeals are allowed with consequential reliefs.

Consolidation of show cause notices - Same subject-matter doctrine - Transfer of proceedings for joint adjudication - Non-interference with High Court order - Mandamus to adjudicate within fixed time

Consolidation of show cause notices - Same subject-matter doctrine - Transfer of proceedings for joint adjudication - High Court's direction to revive and transfer two show cause notice proceedings on the same subject-matter to a single authority for joint adjudication was upheld. - HELD THAT: - The Supreme Court examined the High Court's finding that both show cause notices - one issued by the Directorate General of Central Excise Intelligence, Delhi Zonal Unit dated 1-3-2016 and the subsequent show cause notice dated 23-10-2017 issued by the Commissioner, Central Goods and Services Tax Commissionerate, Alwar - related to the same subject-matter. Finding that the High Court was justified in directing that the two notices be adjudicated and heard together by one authority, the Court declined to interfere with the impugned judgment. Acting on that premise, the Court directed that both notices be adjudicated by a single authority, namely the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi and/or the equivalent authority, and ordered final disposal within six months. The respondents were directed to cooperate with the designated authority to enable adjudication within the stipulated period. The Supreme Court's order did not decide the merits of the show cause notices but remitted the matters for joint adjudication by the specified authority within the time fixed.

The High Court order directing joint adjudication of the two show cause notices by a single authority is affirmed; both matters are remitted for adjudication by the Additional Director General (or equivalent) within six months, with respondents directed to cooperate.

Final Conclusion: Special Leave Petition dismissed; the High Court's order directing that the two show cause notices on the same subject-matter be adjudicated together by a single authority is affirmed and the matters are remitted to the Additional Director General (or equivalent authority) for decision within six months; pending applications disposed of.

Manufacture - transformation into a new product - fresh excise levy - mere blending or addition - essential characteristic - usage remains the same - conformity to specifications

Mere blending or addition - manufacture - transformation into a new product - essential characteristic - usage remains the same - fresh excise levy - conformity to specifications - Addition or blending of Multi-Functional Additives with Motor Spirit and duty paid High Speed Diesel does not amount to manufacture of a new product attracting fresh excise levy where the essential characteristic, usage and specifications remain unchanged. - HELD THAT: - The Tribunal's decision, which this Court endorsed, applied settled principle that the mere addition or blending that produces negligible or inconsequential changes does not constitute manufacture or the emergence of a new product. The determinative inquiry is whether the essential characteristic of the resulting article has changed; if it has not, and the product's use remains the same and it conforms to the same specifications as the original product, no fresh excise liability arises. The Court noted that the Tribunal followed earlier precedents and this Court's approach on the point, and that the issue has recently been decided against the revenue in a related decision.

Appeals dismissed; addition/blending did not result in manufacture of a new product liable to fresh excise as essential characteristics, usage and specifications remained unchanged.

Final Conclusion: The appeals by the revenue fail and are dismissed: blending Multi-Functional Additives into Motor Spirit and duty-paid HSD, where the essential characteristic and usage remain unchanged and the product conforms to the same specifications, does not amount to manufacture of a new product attracting fresh excise levy.

Physician samples valuation - transaction value - application of Section 4(1)(a) of the Central Excise Act, 1944 - Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - captively consumed goods / cost of production valuation - remand for factual re-examination and re-quantification

Physician samples valuation - transaction value - Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - application of Section 4(1)(a) of the Central Excise Act, 1944 - remand for factual re-examination and re-quantification - Whether the valuation of physician samples should be determined under Rule 4, Rule 8 or Section 4(1)(a) and whether the transaction value relied upon by the assessee must be accepted or can be rejected. - HELD THAT: - The Tribunal held that the correct provision to determine the value of physician samples depends on the facts and nature of each removal and the transaction with the recipient; no single rule applies indiscriminately. Where a genuine transaction at arm's length exists between the manufacturer and an independent buyer (or where price is charged to a distributor), Section 4(1)(a) (transaction value) may govern and the transaction value cannot be rejected without basis. Conversely, Rule 4 is applicable where no sale occurs at the time of removal and valuation must adopt the price at the nearest ascertainable time of sale (as reflected in precedents such as Cadila and decisions upholding the use of Rule 4). Rule 8 is relevant where the principal supplies raw materials and the job-worker clears the goods to the principal; in such circumstances Rule 8 (or the principles applicable to job work) may apply rather than Rule 4. The Tribunal found the impugned order deficient in articulating and applying the facts to the appropriate valuation provision, and observed that prior administrative circulars and judicial pronouncements have at times taken differing positions, making factual scrutiny essential. Accordingly, the matter was not finally adjudicated on merits by the Tribunal but was remitted for detailed factual examination and proper application of the relevant valuation provision(s). The Tribunal also noted that the question of imposition of penalty was not before the original authority for reconsideration. [Paras 7, 8, 9]

The matter is remanded to the original authority for detailed scrutiny of each clearance to determine the correct valuation provision (Rule 4, Rule 8 or Section 4(1)(a)) to be applied, to re-quantify and recover any differential duty with interest as appropriate; the impugned findings are modified and the penalty issue is not to be decided by the original authority on this remand.

Final Conclusion: The Tribunal modified the impugned order and remitted the matters to the original authority to examine, on a clearance by clearance basis, the nature of each transaction and apply the appropriate valuation rule or Section 4(1)(a), re-quantify any demand with interest, and proceed accordingly; the penalty aspect was not directed to be decided on remand.

Entitlement to cenvat credit of duty paid by supplier - reversal of cenvat credit where input goods are exempted - acceptance of duty payment by departmental officers as determinative - no-loss-of-revenue principle - specific bar under Sub-section (1A) of Section 5 relating to exemption and Cenvat credit

Entitlement to cenvat credit of duty paid by supplier - reversal of cenvat credit where input goods are exempted - acceptance of duty payment by departmental officers as determinative - Whether the appellant was entitled to retain Cenvat credit of duty paid on iron ore pellets bought from a supplier whose payment of duty had been accepted by the department, despite a contention that those pellets were exempt from duty and thus required reversal of credit. - HELD THAT: - The Tribunal examined the position where the supplier had paid and the department had accepted duty on iron ore pellets which the appellant had used as input. Relying on the Tribunal's earlier reasoning affirmed by the Bombay High Court in Ajinkya Enterprises , the court noted that where duty on final products has been accepted by the department and there is no adjustment or refund sought in respect of that duty, the recipient-manufacturer is entitled to avail the benefit of duty paid by the supplier without being required to reverse Cenvat credit merely because the input item is shown to be exempt under a notification. The Tribunal further followed the principle in the decision of the Apex Court in MDS Switchgear Limited , which holds that departmental acceptance of the valuation and payment of duty by the supplier, coupled with the absence of any quantified loss of revenue or valuation exercise negativing that payment, precludes treating part of the duty as a mere deposit or requiring reversal by the recipient unit. Applying these principles to the facts - acceptance of duty payment by the revenue, use of the pellets in manufacture, and clearance of final product on payment of duty - the Tribunal concluded that there was no juridical basis to demand reversal of Cenvat credit from the appellant. [Paras 6, 7, 8, 9]

The appellant was correctly entitled to retain the Cenvat credit; the demand for reversal was unsustainable and is set aside.

Final Conclusion: Appeal allowed; the demand for reversal of Cenvat credit on iron ore pellets is quashed and the impugned order is set aside, with consequential reliefs, the Tribunal holding that acceptance of duty payment by the supplier and by the department entitles the recipient-manufacturer to the credit.

Refund of excess tax paid - Tax deducted at source on works contract - treatment of labour component and valuation of taxable goods - Assessment and refund procedure under the Tripura Value Added Tax Act, 2004 - interplay of assessment and refund powers - Remand for fresh assessment and refund determination with opportunity of hearing

Refund of excess tax paid - Assessment and refund procedure under the Tripura Value Added Tax Act, 2004 - interplay of assessment and refund powers - Tax deducted at source on works contract - treatment of labour component and valuation of taxable goods - Impugned rejection of the petitioner's refund application was set aside and matter remanded for fresh consideration under the Tripura Value Added Tax Act, 2004. - HELD THAT: - The petitioner, a works contractor for ONGC for the years 2010-11 to 2015-16, alleges excess tax was deducted at source because TDS was applied at full works-contract value without excluding components such as labour or declared goods as indicated by governing precedent. The petitioner filed returns indicating refundable amounts and applied for refund, submitting invoices, TDS certificates and work orders. The respondent rejected the refund application on the ground that assessment orders under the Tripura VAT Act for the relevant years had not been passed. Having regard to the statutory provisions and the facts that substantial tax was claimed to be refundable and that the petitioner was not afforded a determination on assessment and refund, the court set aside the impugned order dated 31-8-2021 and remanded the matters for the Respondent No. 3 to pass appropriate orders under the assessment and refund provisions after giving the petitioner a reasonable opportunity of being heard. The court directed completion of the exercise within three months and granted liberty to the petitioner to challenge the ensuing order before the court if aggrieved. [Paras 4, 6]

Impugned order rejecting the refund set aside; matters remanded to Respondent No.3 to pass orders under the assessment and refund provisions of the Tripura VAT Act, 2004 after hearing the petitioner within three months.

Final Conclusion: The writ petitions are disposed of by setting aside the rejection of the refund application and remanding the assessment and refund claims for years 2010-11 to 2015-16 to the designated assessing authority for fresh adjudication after hearing, to be completed within three months; liberty granted to challenge the resulting order.

Forfeiture of gratuity - offence involving moral turpitude - termination of service as condition for forfeiture - payment of gratuity as statutory right - Section 4(6) of the Payment of Gratuity Act, 1972

Section 4(6) of the Payment of Gratuity Act, 1972 - termination of service as condition for forfeiture - offence involving moral turpitude - payment of gratuity as statutory right - Whether the petitioner's gratuity could be forfeited under Section 4(6) of the Payment of Gratuity Act, 1972 in the absence of termination and while criminal proceedings were pending. - HELD THAT: - The Court held that forfeiture under Section 4(6) requires the statutory conditions to be fulfilled and that payment of gratuity is a statutory right, not a gratuitous or discretionary payment. The determinative requirement is termination of service on grounds specified in Section 4(6) (including conviction for an offence involving moral turpitude committed in the course of employment) before gratuity can be forfeited. The Deputy Chief Labour Commissioner's conclusion treated the pendency of criminal and CBI proceedings and disciplinary punishment of demotion as sufficient to deny gratuity, but the Court found this approach legally untenable because the petitioner was not dismissed or terminated; rather, he was demoted and had retired. The Court relied on the principles laid down in Jorsingh Govind Vanjari Vs. Divisional Controller, Maharashtra State Road Transport Corporation, Jalgaon Division, Jalgaon and Union Bank of India & Ors. Vs. C.G. Ajay Babu & Anr. that misconduct alone or pendency of criminal proceedings does not satisfy the statutory pre requisite for forfeiture; conviction by a competent court or termination on specified grounds is essential. The Court also noted precedents emphasising that the provisions of Section 4(6) must be scrupulously applied and that employers cannot, by administrative action or internal punishment short of termination, defeat the statutory right to gratuity (see Jaswant Singh Gill , Steel Authority of India Ltd. & Anr. , and Oriental Bank of Commerce ). Given that several criminal proceedings against the petitioner were pending and there was no termination from service on grounds constituting an offence involving moral turpitude proven in a court of law, Section 4(6) was not attracted and the Deputy Chief Labour Commissioner erred in setting aside the Assistant Labour Commissioner's direction for payment of gratuity. [Paras 9, 14, 19, 21]

The order of the Deputy Chief Labour Commissioner dated March 16, 2018 is set aside; the order of the Assistant Labour Commissioner dated May 18, 2017 is affirmed and the respondents are directed to pay the petitioner his gratuity with interest as ordered by the Court.

Final Conclusion: Writ petition allowed: the Deputy Chief Labour Commissioner's order denying gratuity is set aside, the Assistant Labour Commissioner's order directing payment of gratuity is affirmed, and the respondents are directed to pay the gratuity with interest within four weeks.

Validity and execution of a will - compliance with Section 63 of the Indian Succession Act (formalities for execution of wills) - proof of execution under Section 68 of the Indian Evidence Act - attesting witness evidence as primary proof of execution - test of satisfaction of the prudent mind - test of judicial conscience in presence of suspicious circumstances - onus on the propounder to dispel suspicious circumstances - sound disposing state of mind and voluntariness of the testator - relevance of allegations of bigamy to testamentary validity

Validity and execution of a will - compliance with Section 63 of the Indian Succession Act (formalities for execution of wills) - proof of execution under Section 68 of the Indian Evidence Act - attesting witness evidence as primary proof of execution - test of judicial conscience in presence of suspicious circumstances - sound disposing state of mind and voluntariness of the testator - onus on the propounder to dispel suspicious circumstances - The Will was validly executed and proved; concurrent findings upholding the Will do not warrant interference. - HELD THAT: - The courts applied the statutory formalities under Section 63 and the requirement of proof under Section 68, and accepted the testimony of an attesting witness (PW2) who stated that the testator signed the Will and that the witness signed in the presence of the testator. The Court applied settled principles - that execution need not be proved with mathematical accuracy but must satisfy the prudent mind, that at least one attesting witness alive and available must be examined, and that where suspicious circumstances arise the propounder bears a heavier onus to dispel them. On the record there was categorical evidence of execution by the testator out of his free will and in a sound disposing state of mind, and no material evidence of unsoundness, undue influence, fabrication or other suspicious circumstances requiring rejection of the Will. In these circumstances the High Court and the Civil Court were right in upholding the Will and their concurrent findings do not call for interference. [Paras 10, 11, 12, 13, 14]

Concurrent findings that the Will was duly executed and proved are affirmed and do not warrant interference.

Relevance of allegations of bigamy to testamentary validity - Allegations of the testator's second marriage and bigamy are not material to the determination of the Will's validity and are not entertained. - HELD THAT: - The Court observed that the main lis concerns the validity of the Will; allegations of second marriage and bigamy do not bear on whether the Will was executed in compliance with statutory formalities, by a testator of sound disposing mind and free will, or whether there were suspicious circumstances affecting execution. Consequently, such submissions were declined as irrelevant to the adjudication of testamentary validity. [Paras 15]

The Court refused to entertain allegations of second marriage/bigamy as irrelevant to the question of the Will's validity.

Final Conclusion: The appeal is dismissed. The validity of the Will, having been proved in accordance with settled legal principles and statutory formalities, is upheld and consequential benefits shall be disbursed accordingly; interlocutory applications disposed of and no order as to costs.