TaxTMI Updates e-Newsletter
Oct 14,2023

Detention and seizure under Section 129 of the UPGST Act - requirement and non production of e way bill / TDF 01 in transit - scope of inspection of goods in movement under Section 68 of the UPGST Act - validity of assessment and levy of tax and penalty founded solely on absence of e way bill - precedential application of prior High Court decisions regarding e way bill non production

Requirement and non production of e way bill / TDF 01 in transit - validity of assessment and levy of tax and penalty founded solely on absence of e way bill - precedential application of prior High Court decisions regarding e way bill non production - Whether the order of detention, assessment of value, levy of tax and imposition of penalty sustained where the sole foundation for action was non production of TDF 01 (e way bill). - HELD THAT: - The Court found that the impugned orders rested exclusively on the allegation that the TDF 01 form was not carried with the goods in transit. Identical factual and legal circumstances had been considered by this Court in earlier decisions (M/s Godrej and Boyce Manufacturing Co. Ltd. and M/s H.B.L. Power Systems Ltd.), which held that detention and consequential adverse action cannot be sustained solely for non production of the e way bill when the movement of goods is otherwise shown. Applying those precedents to the present record, the Court concluded that orders founded only on the absence of TDF 01 could not be maintained and therefore the assessment, tax demand and penalty based on that foundation were unsustainable.

Impugned orders of detention, assessment, levy of tax and penalty founded solely on non production of TDF 01 quashed.

Scope of inspection of goods in movement under Section 68 of the UPGST Act - detention and seizure under Section 129 of the UPGST Act - Whether the respondent authorities exceeded their powers under the UPGST Act in inspecting, detaining or seizing the goods and in proceeding to assessment where inspection powers alone were invoked. - HELD THAT: - The Court observed that Section 68 confers power to inspect goods in movement, but that power is not an unrestricted licence to detain, assess and impose penalty absent lawful foundation. Although the authorities recorded inspection and discrepancies between invoiced and physically verified quantities, the determinative foundation cited in the impugned orders was non possession of the TDF 01. Having accepted that the precedent decisions govern such situations, the Court held that the exercise of power in the present case amounted to an impermissible extension beyond mere inspection when based solely on non production of the e way bill; consequently the impugned exercise of powers under Section 129 and related provisions could not be sustained.

Findings upholding detention/seizure and assessment as an excess of powers in the facts of this case set aside; inspection power recognised but not permitting the impugned consequential actions.

Final Conclusion: Writ petition allowed; impugned orders dated 27.12.2017 and 23.11.2008 quashed for being founded solely on non production of the TDF 01 (e way bill); respondents directed to refund the amount deposited by the petitioner within two months on production of certified copy of this order.

Failure to record reasons - violation of principles of natural justice - cancellation of GST registration under Section 29 of UP GST Act - requirement of speaking and reasoned order - remand for fresh consideration by first appellate authority - costs for non-appearance / non-filing of reply

Failure to record reasons - violation of principles of natural justice - cancellation of GST registration under Section 29 of UP GST Act - requirement of speaking and reasoned order - Validity of the orders cancelling GST registration, rejecting the revocation application and dismissing the appeal where no reasons were recorded - HELD THAT: - The Court found that the order cancelling the petitioner's GST registration, the order rejecting the revocation application and the appellate order dismissing the appeal were passed without recording any cogent reasons. The Court reiterated that reasons constitute the linchpin of adjudication, are essential to give effect to principles of natural justice, and enable meaningful exercise of appellate rights. In absence of reasons the impugned orders are lifeless and susceptible to challenge. Having examined the record, the Court concluded that the statutory scheme contemplates cancellation under Section 29, but the impugned decisions failed to state reasons and therefore cannot be sustained in law.

Impugned orders dated 20.11.2020 / 7.12.2020, 21.1.2021 and 17.11.2021 set aside for want of reasons.

Remand for fresh consideration by first appellate authority - requirement of speaking and reasoned order - costs for non-appearance / non-filing of reply - Relief by way of remand and imposition of costs in view of procedural defaults by the petitioner - HELD THAT: - Although the impugned orders were set aside for lack of reasons, the Court noted that the petitioner had failed to file a reply to the notice and had not appeared on multiple dates before the appellate authority. In light of these procedural defaults the Court directed that the matter be remitted to the first appellate authority for a fresh, reasoned and speaking decision after affording reasonable opportunity of hearing. The Court imposed a cost on the petitioner to reflect the petitioner's failure to participate in earlier proceedings and to ensure fairness in the re-adjudication.

Matter remitted to the first appellate authority to pass a fresh reasoned and speaking order within two months from production of certified copy; petitioner to deposit costs of Rs. 20,000/- within two weeks before the first appellate authority.

Final Conclusion: Writ petition allowed: impugned cancellation, revocation-rejection and appellate orders set aside for want of reasons; matter remitted for fresh adjudication by the first appellate authority with direction to pass a speaking and reasoned order after hearing; costs of Rs. 20,000/- imposed on the petitioner.

Non-speaking order - Duty to pass a reasoned order - Right to personal hearing - Remand for fresh consideration - Input Tax Credit set-off against tax liability - Quashing of order for failure to consider submissions

Non-speaking order - Duty to pass a reasoned order - Quashing of order for failure to consider submissions - Impugned assessment order is a non-speaking order and is quashed. - HELD THAT: - The Court found that the impugned order consisted of a one line conclusion which did not deal with or record reasons in respect of the grounds raised by the petitioner. For that reason the order was held to be non speaking and therefore unsustainable. The court exercised its supervisory jurisdiction to quash the impugned order on the ground that the authority failed to consider the petitioner's submissions and record reasons for its conclusions. [Paras 3]

Impugned order quashed as non speaking for failure to consider and record reasons on the petitioner's submissions.

Right to personal hearing - Remand for fresh consideration - Input Tax Credit set-off against tax liability - Matter remitted to the respondent to decide afresh after affording opportunity of personal hearing and considering petitioner's submissions including payment by Input Tax Credit, in the light of M/s. Refex Industries Limited. - HELD THAT: - The Court directed that the respondent shall reconsider the petitioner's case afresh, giving personal hearing and taking into account the reply and records filed by the petitioner and the principle laid down in the authority cited by the petitioner. The remand requires the authority to revisit the questions of tax liability, interest and penalty insofar as they depend on the contention that tax was discharged through Input Tax Credit and that payment was made before initiation of proceedings. The exercise was ordered to be completed within four months from receipt of the order. [Paras 3]

Case remitted for fresh consideration after personal hearing and in the light of the cited authority; adjudication to be completed within four months.

Final Conclusion: Impugned order set aside as non speaking; matter remitted to the assessing authority to decide afresh after affording personal hearing and considering the petitioner's submissions (including discharge by Input Tax Credit) in the light of the cited decision; exercise to be completed within four months; no order as to costs.

Eligibility for input tax credit - Non-obstante clause in Section 16(2) prescribing conditions for input tax credit - Burden of proof for claiming input tax credit - Discrepancy between Form GSTR-2A and GSTR-3B and requirement of cogent evidence - Denial of input tax credit for failure to furnish evidence or appear for hearing

Eligibility for input tax credit - Burden of proof for claiming input tax credit - Discrepancy between Form GSTR-2A and GSTR-3B and requirement of cogent evidence - Denial of input tax credit for failure to furnish evidence or appear for hearing - Denial of the assessee's claim for input tax credit where the assessee did not produce evidence or appear, and whether the writ court should intervene. - HELD THAT: - The Court noted that Section 16(2) prescribes mandatory conditions for entitlement to input tax credit and that Section 155 places the burden of proving eligibility on the claimant. The Assessing Authority compared Form GSTR-2A with GSTR-3B for the relevant tax period and, in the absence of any documents or appearance by the petitioner to discharge the burden under Section 155, had no material other than the returns to accept the claimed credit. Given the petitioner received a show cause notice, did not respond or attend the hearing, and failed to lead cogent and credible evidence to reconcile discrepancies between GSTR-2A and GSTR-3B, the Assessing Authority was entitled to deny the input tax credit. The Court held that where the assessee abandons the opportunity to prove the claim, the writ jurisdiction cannot be used to assist in substantiating the claim. [Paras 3, 5]

The denial of input tax credit by the Assessing Authority was upheld and the writ petition was rejected.

Final Conclusion: The petition challenging denial of input tax credit was dismissed since the petitioner failed to discharge the statutory burden of proof and did not appear to contest the assessment; the Assessing Authority's decision to deny the credit was sustained.

Writ petition maintainability - Disputed questions of fact - Alternate remedy under Section 107 of the CGST Act, 2017 - Pre-deposit for statutory appeal

Writ petition maintainability - Disputed questions of fact - Alternate remedy under Section 107 of the CGST Act, 2017 - Maintainability of the writ petition challenging Order in Original No.25 of 2023 (DGGI) dated 31.05.2023 which appropriated amounts, imposed interest and penalty. - HELD THAT: - The Court observed a material variance between outward supplies declared in GSTR 1 and GSTR 3B, giving rise to a disputed factual difference in tax liability. Because the controversy turns on disputed questions of fact concerning tax liabilities and adjustments recorded in statutory returns, the writ petition was held not to be the appropriate forum for adjudication. The petitioner has an effective alternate remedy by way of appeal to the Appellate Authority under Section 107 of the CGST Act, 2017; accordingly the petition is not maintainable and substantive adjudication in writ jurisdiction is declined. [Paras 3]

Writ petition is not maintainable owing to disputed questions of fact and the existence of an alternate remedy under Section 107 of the CGST Act, 2017.

Pre-deposit for statutory appeal - Liberty to prefer appeal - Directions regarding the remedy to be pursued by the petitioner and the conditions for entertaining the appeal. - HELD THAT: - In the exercise of supervisory jurisdiction the Court granted liberty to the petitioner to challenge the impugned order before the Appellate Authority within a limited time. As a condition for filing the statutory appeal, the Court directed a pre deposit to be made calculated as ten per cent of the disputed difference identified in the impugned order. The Court fixed a time limit of thirty days from receipt of the order for filing the appeal and ordered disposal of the writ petition with that liberty. [Paras 4, 5]

Petitioner granted liberty to prefer an appeal within thirty days and required to make a pre deposit equal to 10% of the disputed difference; writ petition disposed of accordingly.

Final Conclusion: Writ petition dismissed as not maintainable in view of disputed questions of fact and availability of appeal under Section 107 of the CGST Act, 2017; petitioner permitted to appeal within thirty days subject to a pre deposit of 10% of the disputed difference, and the writ petition is disposed of with no costs.

Transition of unutilized Input Tax Credit under Section 140 - revenue neutral transaction - imposition of interest and penalty for erroneously availed transitional credit - appropriateness of interest under Section 50(3) and Section 73(9) - penalty under Section 122(2)(a) read with Section 74(1)

Transition of unutilized Input Tax Credit under Section 140 - revenue neutral transaction - imposition of interest and penalty for erroneously availed transitional credit - appropriateness of interest under Section 50(3) and Section 73(9) - penalty under Section 122(2)(a) read with Section 74(1) - Whether interest and penalty could be sustained in respect of the transitional Input Tax Credit which was later allowed to be transitioned and reversed, where no loss was caused to the revenue - HELD THAT: - The petitioner had unutilised credit as on 30.06.2017 which, owing to technical glitches, could not be transitioned earlier but was subsequently allowed to be transitioned on 17.08.2021. The petitioner had earlier (wrongly) availed and utilised that credit in GSTR-3B and thereafter reversed/debited the amount once the Tran-1 application was accepted. The Court found the matter to be revenue neutral because, had the transition been allowed at the relevant time, the amount would have been legitimately available for utilisation; by availing and later reversing the credit the revenue did not suffer loss. In these circumstances, sustaining demands of interest and penalties under the provisions invoked (including interest under Section 50(3) or Section 73(9) and penalty provisions relied upon) would be hyper-technical and not tenable. The Court relied on the absence of prejudice to revenue and on precedent dealing with similar facts to hold that imposition of interest and penal consequences could not be countenanced.

Demand of interest and penalty in respect of the transitional credit refused; writ allowed to the extent of setting aside interest and penalty as the issue is revenue neutral.

Final Conclusion: Writ petition allowed insofar as the impugned order seeks to impose interest and penalty in respect of the transitional Input Tax Credit that was later allowed and reversed; no costs.

Assessment under section 74 of the GST Act - Appeal remedy under Section 107 of the TNGST Act, 2017 - Failure to receive statutory notices and availability of appellate remedy - Pre-deposit condition and interim relief of vacation of bank attachment

Assessment under section 74 of the GST Act - Failure to receive statutory notices and availability of appellate remedy - Validity of the impugned assessment order dated 21.01.2023 and whether the High Court should interfere with it - HELD THAT: - The Court noted that the impugned Assessment Order in Form GST DRC-07 for the tax period 2018-2019 was founded upon alleged discrepancies between GSTR-1 and GSTR-3B and that statutory notices in Form GST DRC-01A and GST DRC-01 were issued prior to passing the assessment. The petitioner asserted closure of business, voluntary surrender and cancellation of registration on 29.04.2019 and non-receipt of notices because the official e-mail and portal were no longer accessed. The Court found no scope for interfering with the impugned Assessment Order and observed that the petitioner ought to have availed the statutory appellate remedy under Section 107 of the TNGST Act, 2017 within the prescribed period, rather than seeking writ relief at this stage. [Paras 8, 9]

The High Court declined to interfere with the impugned assessment order and recorded that the petitioner should have preferred the statutory appeal within the prescribed time.

Appeal remedy under Section 107 of the TNGST Act, 2017 - Pre-deposit condition and interim relief of vacation of bank attachment - Appropriate procedural relief and further course of action where disputed questions of fact exist - HELD THAT: - Concluding that the controversy may involve disputed questions of fact, the Court exercised its supervisory jurisdiction to direct a practical course: the petitioner was permitted to file a statutory appeal against the Assessment Order before the Appellate Authority within thirty days from receipt of the order. The Court conditioned interim relief on compliance: upon filing the appeal within the stipulated period together with the requisite pre-deposit, the bank account attachment of the petitioner shall be vacated. The direction effectively remits the merits to the appellate forum for fresh consideration in accordance with law. [Paras 10, 11]

Petitioner directed to file the statutory appeal within thirty days and, subject to filing the appeal with the pre-deposit, the attachment of the bank account shall be vacated; the matter is thereby left for determination by the Appellate Authority.

Final Conclusion: Writ petition disposed by directing the petitioner to prefer a statutory appeal against the Assessment Order for 2018-2019 within thirty days; on filing the appeal with the required pre-deposit the bank attachment will be vacated, and the appellate authority will consider the matter on merits.

Provisional attachment - operation of order ceasing after one year under Section 83(2) of the CGST Act - petition rendered academic - bank interdiction of account on basis of provisional attachment orders

Provisional attachment - operation of order ceasing after one year under Section 83(2) of the CGST Act - petition rendered academic - Validity and continued operation of the provisional attachment orders culminating in the order dated 05.08.2022 - HELD THAT: - The Court noted that the Commissioner of CGST, Belapur had passed a provisional attachment order on 05.08.2022 and that, in terms of Section 83(2) of the CGST Act, one year has elapsed since that order. As a consequence the said order is no longer operative. On that basis the petition challenging the provisional attachment orders (including the order dated 05.08.2022) was held to have been rendered academic. The Court recorded the respondent's statement that no further provisional attachment orders have been passed after 05.08.2022 and treated the lapse of the one-year period as determinative of non-operation of the last order. [Paras 1, 2, 4]

The provisional attachment order dated 05.08.2022 is no longer operative and the petition is rendered academic insofar as it challenges those orders.

Bank interdiction of account on basis of provisional attachment orders - provisional attachment - Relief against interdiction of the petitioner's bank accounts arising from the provisional attachment orders mentioned in the petition - HELD THAT: - Although the petition was academic on the basis that the last provisional attachment order had lapsed, the Court considered it appropriate to issue a practical direction to the concerned bank. The bank (respondent no.3) was directed not to interdict operation of the petitioner's bank accounts on account of any of the provisional attachment orders listed in the petition. This direction was given to restore operation of the accounts in light of the non-operative status of the last order and the absence of any subsequent provisional attachment orders as represented on record. [Paras 5, 6]

Respondent bank is directed not to interdict operation of the petitioner's bank accounts on account of the provisional attachment orders specified in the petition.

Provisional attachment - Right to challenge any future provisional attachment orders - HELD THAT: - The Court expressly clarified that the petitioner is not precluded from assailing any future order of provisional attachment should one be passed. All rights and contentions of the parties were reserved, leaving open the petitioner's remedy against any subsequent attachment. [Paras 7, 8]

Petitioner remains entitled to challenge any future provisional attachment order; rights and contentions are reserved.

Final Conclusion: The Court held that the last provisional attachment order dated 05.08.2022 has ceased to operate after the lapse of one year under Section 83(2) of the CGST Act, rendering the petition academic; directed the bank not to interdict the petitioner's accounts on account of the provisional attachment orders specified in the petition; and left open the petitioner's right to challenge any future provisional attachment orders, with all rights reserved.

Natural justice - validity of show cause notice - preponement of hearing - cancellation of GST registration - necessity of material particulars in notice

Validity of show cause notice - necessity of material particulars in notice - natural justice - The show cause notice dated 26.06.2023 was legally infirm for being vague and deficient in particulars and thereby violating principles of natural justice. - HELD THAT: - The Court found that the show cause notice alleged "wrongful availment of input tax credit (ITC)" but did not specify the quantum of ITC or the period in respect of which wrongful availment was alleged. A show cause notice must contain necessary details so that the noticee can make an effective reply; absence of such material particulars renders the notice incomplete. The deficiency in particulars amounted to a breach of the requirements of fair hearing and natural justice. [Paras 5]

The show cause notice dated 26.06.2023 is set aside for being vague and violative of principles of natural justice.

Preponement of hearing - cancellation of GST registration - natural justice - The order of cancellation of the petitioner's GST registration dated 01.07.2023, passed before the scheduled hearing date, was improper and unlawful. - HELD THAT: - The authority had fixed 06.07.2023 as the date for appearance, yet cancelled registration on 01.07.2023. Where a date of hearing is fixed, it is not just to hear and decide the matter before that notified date. Preponing the hearing and deciding without affording the scheduled opportunity to be heard compounded the defect in the proceedings and amounted to a violation of natural justice. In view of the invalidity of the underlying notice and the premature decision, the cancellation could not be sustained. [Paras 4, 5, 6]

The order of cancellation dated 01.07.2023 is set aside as ex facie illegal for being passed prior to the notified hearing date and in breach of natural justice.

Cancellation of GST registration - fresh notice and verification - Whether the authority may proceed afresh: the Court permitted respondent No.1 to issue a fresh notice if materials exist. - HELD THAT: - Although the impugned proceedings have been set aside, the Court left open the respondent's right to initiate proceedings afresh. If respondent No.1 possesses materials indicating violation of the relevant GST Acts, he may put the petitioner on notice with appropriate particulars for such alleged violations and proceed in accordance with law, thereby ensuring compliance with the requirements of a valid show cause notice and observance of natural justice. [Paras 6]

Respondent No.1 is permitted to issue a fresh notice and proceed, if materials are available, subject to providing necessary particulars and affording a proper hearing.

Final Conclusion: Writ petition allowed; the show cause notice dated 26.06.2023 and the cancellation order dated 01.07.2023 are set aside for want of necessary particulars and for being passed prior to the notified hearing date. Respondent may, if material exists, initiate fresh proceedings by issuing a proper notice and affording a fair hearing. No order as to costs.

Provisional attachment under Section 83 of the CGST Act - Document Identification Number (DIN) requirement as per CBIC circular - requirement of reasons in administrative orders - drastic measure and intrusion into private affairs - ex facie lack of jurisdiction - alternative remedy under Rule 159 of the CGST Rules - violation of Articles 14 and 21 of the Constitution

Document Identification Number (DIN) requirement as per CBIC circular - requirement of reasons in administrative orders - Validity of the provisional attachment order dated 22.05.2023 insofar as it did not mention DIN and did not state reasons for attachment. - HELD THAT: - The Court held that attachment of a bank account is a serious and drastic intrusion into private affairs and therefore the impugned provisional attachment must meet threshold requirements of lawful exercise of power. The omission of DIN (alleged to be due to technical difficulty) and the absence of reasons in the body of the order undermined the legality of the measure. The Court emphasised that reasons must be made available and the formal defects could not be treated as immaterial when fundamental rights and liberty are at stake. On these grounds the provisional attachment was held liable to be set aside. [Paras 4, 5]

Provisional attachment was invalid for failure to comply with mandatory formalities and absence of stated reasons and was set aside.

Provisional attachment under Section 83 of the CGST Act - drastic measure and intrusion into private affairs - ex facie lack of jurisdiction - violation of Articles 14 and 21 of the Constitution - Whether provisional attachment was justified on the facts where the petitioner had made substantial payment and the tax figure was provisional prior to adjudication. - HELD THAT: - The Court found that the respondents' asserted tax demand was provisional and made prior to issuance of any show cause notice or adjudication. Given that the petitioner had itself paid a substantial sum acknowledged by respondents, continuing a bank attachment on a provisional and unadjudicated figure amounted to an oppressive exercise of power. The Court concluded that such an attachment in the circumstances was wholly without jurisdiction, would be oppressive if continued, and infringed the petitioner's rights under Articles 14 and 21. [Paras 3, 5, 6]

Attachment was unjustified on the stated facts, amounted to an ex facie lack of jurisdiction and violated Articles 14 and 21; it was set aside.

Alternative remedy under Rule 159 of the CGST Rules - ex facie lack of jurisdiction - Whether the petitioner should be relegated to the alternative remedy under Rule 159 instead of immediate relief by writ. - HELD THAT: - Respondents relied on availability of an alternative remedy under Rule 159. The Court held that where an order is ex facie without jurisdiction, it would not be just or proper to require the affected person to first pursue statutory alternative remedies. In such circumstances immediate relief by writ is appropriate and the availability of Rule 159 does not bar grant of relief. [Paras 7, 8]

Petitioner need not be relegated to the alternative remedy; writ relief was rightly granted.

Final Conclusion: Writ petition allowed; provisional attachment dated 22.05.2023 set aside as invalid and without jurisdiction, and the petitioner need not be relegated to alternative remedy under Rule 159.

Registration cancellation - appeal before Appellate Authority - digital filing and mapping of appellate authority - manual submission of documents due to cancelled registration - direction to register and decide appeal expeditiously

Appeal before Appellate Authority - digital filing and mapping of appellate authority - direction to register and decide appeal expeditiously - manual submission of documents due to cancelled registration - registration cancellation - Whether the appeal said to have been filed by the petitioner should be accepted, registered and proceeded with despite digital filing difficulties arising from non-mapping of the Appellate Authority and cancellation of the petitioner's registration, and whether the petitioner may tender supporting documents manually. - HELD THAT: - The petitioner produced a provisional acknowledgment which prima facie manifests that an appeal was filed before the Appellate Additional Commissioner (ST), Tirupati. The difficulty in digital acceptance is attributable to the appellate authority not being mapped/constituted and to the petitioner's GST registration having been cancelled, which prevents digital upload of supporting documents. In the interest of justice and without adjudicating the merits of the appeal, the Court directed the 1st respondent to register the appeal if otherwise in order and to process it for hearing within two weeks from receipt of the order. Recognising the practical impediment caused by cancellation of registration, the Court granted liberty to the petitioner to submit all relevant documents manually; the Appellate Authority was directed to admit such documents, afford an opportunity of hearing to both parties and pass an appropriate order in accordance with law and rules expeditiously. [Paras 2, 4]

The Appellate Authority is directed to register and take up the appeal if in order and to admit manual submissions of supporting documents, hear the parties and decide the appeal in accordance with law within an expeditious timeframe.

Final Conclusion: Writ petition disposed by directing the Appellate Authority to register the appellant's appeal if otherwise in order, to permit manual filing of supporting documents owing to cancelled registration, to hear the parties and pass an appropriate order expeditiously (registration and processing to commence within two weeks).

Construction of the proviso to Section 153A as applied by Section 153C(1) - date from which the six assessment years are to be reckoned for a person other than the searched person - abatement of pending assessment or reassessment proceedings in search cases - protection against disproportionate prejudice to a third party whose documents are seized

Construction of the proviso to Section 153A as applied by Section 153C(1) - date from which the six assessment years are to be reckoned for a person other than the searched person - abatement of pending assessment or reassessment proceedings in search cases - Whether, for a person other than the one in whose premises a search under Section 132 is conducted, the date for reckoning the six assessment years (and for determining abatement of pending proceedings) is the date of the search or the date on which the books/documents/assets seized are received by the Assessing Officer having jurisdiction over that other person. - HELD THAT: - The Court accepted the construction in SSP Aviation [2012 (4) TMI 335 - DELHI HIGH COURT] that the proviso in Section 153A, when read with the proviso in Section 153C(1), was intended to govern not only abatement but also the date from which the six-year period is to be reckoned for a third person whose books/documents/assets are seized. The statutory text and Parliamentary intent support treating the reference in the second proviso to Section 153A, for such other person, as a reference to the date of receipt of the seized material by the Assessing Officer having jurisdiction over that person. The revenue's contention that the relevant date must be the date of initiation of the search (i.e., the date of seizure in respect of the main searched person) was rejected. The Court observed that adopting the revenue's view would allow the AO who conducted the search to delay forwarding materials and thereby unfairly extend the exposure period of the third party, producing disproportionate and oppressive consequences which Parliament could not have intended. A plain reading of Section 153C(1) therefore requires the date to be the date of receipt by the jurisdictional Assessing Officer, and this interpretation avoids the harsh consequences that would follow if the date were made to "relate back" to the date of the original search. [Paras 9, 10, 11]

The date for reckoning the six assessment years and for determining abatement, in respect of a person other than the one searched, is the date on which the seized books/documents/assets are received by the Assessing Officer having jurisdiction over that other person; the revenue's contrary contention is rejected.

Final Conclusion: Appeals dismissed; the High Court and tribunal orders upholding the view that the relevant date for a third party is the date of receipt of seized material by the jurisdictional Assessing Officer are affirmed.

Bad debt claim u/s.36(1) (viii) - assessee has debited the principal amount - Tribunal treating the hire purchases as stock in trade - debt be treated as bad trading debt -Disallowance of depreciation on leased assets - disallowance u/s 14A - “Theory of apportionment” of expenses (including interest) - HC [2023 (8) TMI 1360 - GUJARAT HIGH COURT] deleted addition - HELD THAT:- SLP disposed of owing to low tax effect.

Reopening of assessment after four years under Section 148 - notice issued beyond four-year period - regular assessment and assessment order under Section 143(3) - disclosure of material facts during regular assessment - judicial review of validity of reopening where material was placed before Assessing Officer

Reopening of assessment after four years under Section 148 - disclosure of material facts during regular assessment - regular assessment and assessment order under Section 143(3) - Validity of reopening assessment by issuing notice under Section 148 after the four-year period where the assessee had placed full material facts before the Assessing Officer during regular assessment proceedings - HELD THAT: - The Court recorded that notices under Section 148 were issued after the expiry of four years from the end of the relevant assessment year. It noted that the returns were taken up for regular assessment and that an order under Section 143(3) was passed. The High Court had found as a categorical fact that the assessee, Asian Paints Ltd. [2023 (1) TMI 424 - BOMBAY HIGH COURT] had placed full material facts regarding the expenditure in question before the Assessing Officer during the course of the regular assessment proceedings. Having regard to that finding, the Supreme Court found no merit in the petitions challenging the reopening and upheld the High Court's conclusion that the reopening was not sustainable in the circumstances. The petitioners' challenge to the reopening therefore failed on the basis that material facts had already been disclosed during the regular assessment process.

Special leave petitions dismissed; High Court's finding that full material facts were placed during regular assessment upheld.

Final Conclusion: Delay in filing condoned. The High Court's factual finding that the assessee had placed full material facts during the regular assessment was accepted and the special leave petitions challenging the reopening under Section 148 were dismissed.

Jurisdiction to reassess completed/unabated assessments - incriminating material found during search - scope of Section 153A - reassessment under Sections 147/148 - liberty to initiate reassessment where no incriminating material is found

Jurisdiction to reassess completed/unabated assessments - incriminating material found during search - scope of Section 153A - reassessment under Sections 147/148 - In the absence of any incriminating material unearthed during a search, the Revenue has no jurisdiction under Section 153A to reopen or reassess completed/unabated assessments for the relevant assessment years; the remedy available to the Revenue is to initiate reassessment under Sections 147/148 subject to their conditions. - HELD THAT: - The Court confined the determinative question to whether search proceedings that do not yield any incriminating material empower the Revenue to reassess completed or unabated assessments under the block assessment provisions. The record admitted that no incriminating material was found during the search. The Tribunal's view - that additions made without reliance on incriminating material have no leg to stand on - was upheld. The Court observed that this position finds support in higher court rulings which interpret the statutory scheme to permit reopening of completed assessments under Section 153A only when incriminating material relating to the relevant assessment year is recovered during the search. Where no such material is found, the Court held that the correct course for the Revenue is to proceed under the ordinary reassessment provisions (Sections 147/148), subject to the conditions those provisions impose; accordingly the power to initiate reassessment under Sections 147/148 is saved and the Revenue's contentions in that regard are left open for determination. The Court clarified that observations in the higher court rulings which broaden reassessment power apply in the context where incriminating material has in fact been unearthed during the search; they do not assist the Revenue in this case where no incriminating material was found. All contentions concerning reassessment procedure and relevant provisions (including the applicability of other provisions) are kept open for future proceedings under Sections 147/148. [Paras 10, 11, 12, 14, 15]

The Tribunal's orders setting aside the additions are sustained; the question is answered against the Revenue and the appeals are dismissed while leaving open the Revenue's remedy to proceed under Sections 147/148 subject to their conditions.

Final Conclusion: Appeals dismissed. In the absence of any incriminating material recovered during the search, the Revenue lacked jurisdiction under the block assessment provision to reopen completed/unabated assessments for AY 2010-11 and AY 2011-12; the Revenue retains the statutory remedy of reassessment under Sections 147/148 subject to fulfilment of their conditions, and all contentions related to such reassessment are left open.

Stay of recovery under Section 220(6) - registration and exemption as a charitable institution under Section 12A - definition of charitable purpose and proviso to Section 2(15) - rectification application under Section 154 and pendency as ground for interim relief - prima facie case and hardship in granting stay of tax demand

Stay of recovery under Section 220(6) - prima facie case and hardship in granting stay of tax demand - Whether the order directing partial deposit as condition for stay should be upheld or whether stay of the entire demand pending disposal of the appeal should be granted. - HELD THAT: - The Court found that the petitioner, a registered charitable educational society, had a strong prima facie case and that requiring a pre-deposit would occasion undue hardship given the nature of the institution and its longstanding claim to exemption. The authorities had left both the appeal and the rectification application undecided for over two and a half years, and the Assessing Authority ought to have taken a decision earlier. The Court also treated the departmental circular clarifying that education and medical relief constitute charitable purpose even if incidental commercial activities are involved as relevant to the petitioner's claim. In view of these factors and the delay in adjudication by revenue, the exercise of discretion in directing a substantial pre-deposit was found unjustified and the impugned conditional stay was quashed. [Paras 8, 9, 10, 11]

Impugned order directing deposit for stay set aside; there shall be stay of recovery of the entire demand till disposal of the appeal.

Registration and exemption as a charitable institution under Section 12A - definition of charitable purpose and proviso to Section 2(15) - rectification application under Section 154 and pendency as ground for interim relief - Whether the petitioner's asserted charitable status and the pendency of rectification/appeal justified favourable interim relief. - HELD THAT: - The Court noted that the petitioner is registered under Section 12A and has been availing exemption on the basis of being a charitable institution engaged in education and medical relief. The departmental circular clarifying that education and medical relief fall within charitable purpose even if commercial activities are incidental supported the petitioner's position. Given that the rectification application and appeal had remained undecided for more than two and a half years, the delay was a relevant factor militating in favour of staying recovery pending final adjudication. On this combined factual and legal matrix, the Court concluded that the stay application should have been allowed without imposing the pre-deposit ordered by the respondent. [Paras 3, 5, 8, 9, 10]

Petitioner's charitable status and prolonged pendency of rectification/appeal warranted granting stay of recovery of the demand until disposal of the appeal.

Final Conclusion: Writ petition allowed; the impugned order dated 04.09.2023 is set aside and there shall be stay of recovery of the entire demand dated 19.03.2021 until disposal of the appeal filed on 17.04.2021; no order as to costs.

Revenue expenditure - capital expenditure - replacement versus improvement - enduring benefit/advantage test - reliance on auditors' report - allowability under Section 37 of the Income Tax Act, 1961

Revenue expenditure - capital expenditure - replacement versus improvement - enduring benefit/advantage test - reliance on auditors' report - allowability under Section 37 of the Income Tax Act, 1961 - Characterisation of expenditure on replacement of door shutters, fixing of bus bars and fabrication of frame for fixing false ceiling for AY 1995-96 as revenue or capital expenditure. - HELD THAT: - The Tribunal erred in placing undue reliance on the assessee's auditors and annual accounts to classify the expenditures as capital. Expenditure incurred to run the business effectively, efficiently and profitably, while leaving the underlying fixed assets essentially untouched, is revenue expenditure even if the benefit may extend over a period. The mere installation of items of apparently superior quality does not automatically convert a replacement into capital expenditure; the enduring benefit test may break down where the expenditure is in the nature of maintenance or replacement necessary for continuing the business. Having regard to the reasoning in the lead matter (ITA No.1398/2006) and applying that view mutatis mutandis, the Court held that the contested items fall within revenue expenditure and are allowable, and that the Tribunal's restoration of disallowance based principally on the auditors' observations was unsustainable. [Paras 7, 9, 11]

The expenditures in question are revenue in nature and allowable to the assessee; the Tribunal's disallowance is set aside and the appeal is disposed of in favour of the assessee.

Final Conclusion: The questions of law framed are answered in favour of the assessee for AY 1995-96: the replacement expenditures challenged by the revenue are revenue expenses allowable under the principles applied in the lead matter, and the appeal is disposed of accordingly.

Re-opening of assessment under Section 147 read with notice under Section 148 - protection under Section 152(2) where assessee already assessed to an amount not lower than correct liability - computation of tax on book profits under Section 115JA vis-a -vis normal provisions - jurisdictional requirement of tangible material to form belief that income has escaped assessment - inadmissibility of hypothetical future additions as basis for reopening

Protection under Section 152(2) where assessee already assessed to an amount not lower than correct liability - computation of tax on book profits under Section 115JA vis-a -vis normal provisions - Whether proceedings under Section 147/148 were maintainable when the assessee had been assessed on book profits under Section 115JA and, even if the alleged escaped income was taken into account, the assessee would not be liable to tax in an amount higher than already assessed. - HELD THAT: - The court accepted the assessee's affidavit and computations showing that tax liability was determined on book profits under Section 115JA and that the tax and taxable income would remain unchanged even if the revenue's allegation regarding the cost of acquisition were accepted. Section 152(2) permits dropping proceedings under Section 147 where the assessee can show he has been assessed to an amount not lower than what he would be liable for even after taking into account the alleged escaped income. Applying that principle, the court held there was no jurisdiction to reopen since no additional tax would be attracted; the reassessment could therefore be dropped. [Paras 5, 6, 9]

Proceedings under Section 147/148 were without jurisdiction and had to be dropped because the assessee was already assessed at an amount not lower than the correct liability even if the alleged escaped income were taken into account.

Jurisdictional requirement of tangible material to form belief that income has escaped assessment - inadmissibility of hypothetical future additions as basis for reopening - Whether the Assessing Officer could validly reopen the assessment on the basis of the recorded reasons which relied on an asserted overstatement of cost of acquisition, absent fresh tangible material and based on speculation about possible future additions. - HELD THAT: - The court found that the Assessing Officer had not placed any fresh tangible material before himself; the return and computation disclosed the facts regarding cost of acquisition. The officer could not base jurisdiction on a conjecture that hypothetical additions might be made later. Reopening requires sufficient material to form a belief that income chargeable to tax has escaped; reliance on possible future findings or investigations is impermissible. Consequently, the notice was held to be issued without jurisdiction. [Paras 8, 9]

The reopening was invalid for want of fresh tangible material and for impermissibly relying on hypothetical future additions; the notice was therefore without jurisdiction.

Final Conclusion: Rule made absolute; the notice dated 8th April 2005 under Section 148 and the order dated 4th February 2014 rejecting objections are quashed and set aside.

Special audit under Section 142(2A) of the Income-tax Act - Requirement of prior opportunity of being heard - Application of mind by the approving authority - Scope of power for ordering special audit - complexity, volume, multiplicity and specialized nature of accounts and public interest

Special audit under Section 142(2A) of the Income-tax Act - Application of mind by the approving authority - Validity of the approval for conducting a special audit and nomination of the auditor - HELD THAT: - The Court examined the material placed on record including the note-sheet of the competent authority and the assessing officer's comments and concluded that the approval for special audit was not vitiated. The competent authority recorded tentative findings after considering the assessee's written submissions and comments of the AO, sought and received the AO's view that the audit would be in the interest of revenue, and thereafter granted approval and nominated the auditor. The Court held that the note-sheet and surrounding material demonstrate an application of mind and sufficed to support the sanction for special audit under the wide and inclusive language of sub-section (2A), which is to be read liberally in favour of the Revenue subject to the safeguard of prior opportunity of being heard. [Paras 7, 8, 9]

Approval for special audit and nomination of auditor upheld; impugned orders found legal and proper.

Requirement of prior opportunity of being heard - Special audit under Section 142(2A) of the Income-tax Act - Whether due and sufficient opportunity of being heard was afforded to the assessee before granting special audit - HELD THAT: - The Court reviewed the sequence of show-cause notices, opportunities fixed, the authorized representative's appearance and written submissions, and the subsequent note-sheet which recorded that further opportunity was given because earlier attempts did not include production and inspection of books. On this material the Court concluded that the proviso to sub-section (2A) - requiring opportunity of being heard - was complied with in substance and fact in the present case. [Paras 6, 7, 8, 10]

Due and sufficient opportunity of being heard was afforded; the procedural safeguard under sub-section (2A) is satisfied.

Scope of power for special audit - complexity, volume, multiplicity and specialized nature of accounts and public interest - Special audit under Section 142(2A) of the Income-tax Act - Whether the assessee being a government-owned body or the absence of direct showing of adverse interest to Revenue precludes ordering a special audit - HELD THAT: - The Court rejected the contention that government ownership of the assessee or lack of express showing that Revenue's interest was adversely affected forbids a special audit. It observed that the provision contemplates a broad exercise of power where public interest and factors such as complexity, volume, multiplicity of transactions or specialized nature of business may justify a special audit. The approving authority is entitled to form a view on such grounds and the power is to be construed broadly subject to procedural safeguards. [Paras 4, 8, 10]

Government ownership or absence of explicit showing of prejudice to Revenue does not invalidate the order; special audit may be ordered where public interest and other enlisted factors are present.

Final Conclusion: The petition challenging the orders approving a special audit and nominating the auditor is dismissed. The Court found that procedural safeguards were observed and the competent authority applied its mind; accordingly no interference with the impugned orders is warranted.

Scope of order under Section 148A(d) of the Income Tax Act, 1961 - reopening of assessment and notice under Section 148 of the Income Tax Act, 1961 - reassessment under Section 147 of the Income Tax Act, 1961 - existence of information suggesting escaped assessment - search and seizure as source of incriminating information - right to agitate merits during reassessment proceedings - judicial review under Article 226 in re-opening cases

Scope of order under Section 148A(d) of the Income Tax Act, 1961 - existence of information suggesting escaped assessment - search and seizure as source of incriminating information - reopening of assessment and notice under Section 148 of the Income Tax Act, 1961 - right to agitate merits during reassessment proceedings - judicial review under Article 226 in re-opening cases - Validity of the order passed under Section 148A(d) and the consequential notice under Section 148 in respect of Assessment Year 2015-16 - HELD THAT: - The High Court upheld the order under Section 148A(d) and the consequential notice under Section 148. The court held that the statutory role at the stage of Section 148A(d) is limited to ascertaining whether information exists which suggests that income chargeable to tax has escaped assessment, and does not contemplate detailed adjudication on the merits of that information. The Assessing Officer recorded that incriminating documents seized in search and seizure proceedings in the case of Tradenext Securities Limited indicated that the petitioner was a beneficiary of long-term capital gains exempt u/s 10(38) and that contract notes appeared fabricated, leading to the conclusion that information exists to suggest escapement of income for AY 2015-16. Given that the scheme of the Act provides for detailed consideration and defence during reassessment proceedings under Section 148 and onward, the availability of departmental remedies during reassessment and appellate remedies thereafter means that challenges to the merits of the information are to be agitated in those proceedings rather than by striking down the Section 148A(d) order at the writ stage. Reliance upon binding precedents that notices under Section 148A(d) should be subject to re-assessment-stage scrutiny was noted; consequently the High Court declined to interfere with the impugned order and notice under Article 226.

Order under Section 148A(d) and notice under Section 148 in respect of AY 2015-16 are valid and do not warrant interference; petitioner may raise merits during reassessment proceedings.

Final Conclusion: Writ petition dismissed; the order passed under Section 148A(d) and the consequential notice under Section 148 for Assessment Year 2015-16 are sustained, subject to the petitioner's rights to contest the merits during reassessment and by subsequent departmental and appellate remedies.

Draft assessment order vs final assessment order - mandatory compliance of Section 144-C procedure - notice of demand and penalty accompanying assessment - jurisdictional error for non-compliance of Section 144-C - binding nature of Dispute Resolution Panel directions

Draft assessment order vs final assessment order - notice of demand and penalty accompanying assessment - mandatory compliance of Section 144-C procedure - Whether the order dated 11.12.2018 was a valid draft assessment order under Section 144-C or in substance a final assessment order, and whether inclusion of a notice of demand and penalty with the draft vitiated the proceedings. - HELD THAT: - The Court examined sub-sections (1), (2), (6), (8) and (13) of Section 144-C and held that the statutory procedure is mandatory: a draft order must be forwarded to the eligible assessee, objections (if any) considered by the Dispute Resolution Panel (DRP) and only thereafter can a final assessment and demand be issued. The operative portion of the impugned order explicitly referred to completion of assessment, issuance of an assessment order along with a demand notice and initiation of penalty proceedings, which, together with the contemporaneous issuance of a demand/penalty notice, demonstrated that the order was in substance a final assessment. The Court relied on consistent High Court authorities (and affirmed Supreme Court position noted in those authorities) which hold that issuance of demand/penalty simultaneously with a purported draft demonstrates non-compliance with Section 144-C and renders the assessment order invalid for want of jurisdiction. Given that the DRP has power to confirm, reduce or enhance proposed variations and that its directions are binding, raising a demand prior to completion of the Section 144-C process is impermissible. Applying these principles to the facts, the Bench found the Tribunal correctly treated the order as final in substance and set aside the assessment proceedings. [Paras 14, 15, 16, 17, 18]

The Tribunal's conclusion that the impugned order was in substance a final assessment (not a draft under Section 144-C) and that the assessment was vitiated for non-compliance of the mandatory Section 144-C procedure was upheld; the appeal is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding that the so called draft assessment order accompanied by a demand and penalty was in substance a final assessment; failure to follow the mandatory procedure under Section 144 C rendered the assessment proceedings invalid and the Tribunal's order setting aside the assessment was proper.

Addition on account of unexplained cash deposits - presumptive income from trading in equities and commodities - reopening of assessment under section 147 of the Income Tax Act - remand for de novo examination

Addition on account of unexplained cash deposits - presumptive income from trading in equities and commodities - Whether the Tribunal misdirected itself in directing an addition of Rs. 2,50,000 without regard to the assessee's trading loss and in light of the Assessing Officer's treatment of presumptive trading profit. - HELD THAT: - The Court examined the assessment record and the assessment order (paragraph 5) and found that the Assessing Officer, after considering the assessee's reply, had in fact dropped the proposed addition in respect of presumptive profit from trading in equities and commodities. That fact was not noticed by either the CIT(A) or the Tribunal, which dealt only with the cash-deposit addition and reduced it to Rs. 2,50,000. The High Court answered the framed question of law in favour of the assessee for statistical purposes and set aside the Tribunal's order because the Tribunal had not considered the Assessing Officer's finding that the presumptive trading profit addition was not sustained. [Paras 17, 18]

Framed question answered in favour of the assessee; Tribunal's order set aside for failure to take into account the Assessing Officer's finding regarding presumptive trading profit.

Remand for de novo examination - reopening of assessment under section 147 of the Income Tax Act - Whether the matter should be remanded to the Tribunal for fresh consideration in light of the Assessing Officer's findings in paragraph 5 of the assessment order. - HELD THAT: - Having found that the Assessing Officer's contemporaneous finding (recorded in paragraph 5 of the assessment order) - that the presumptive profit addition was not sustained after considering the assessee's reply - was overlooked by the appellate authorities, the High Court remanded the matter to the Tribunal for a de novo examination. The remand is directed to enable the Tribunal to reconsider the additions (both cash-deposit and any trading-related adjustments) against the backdrop of the Assessing Officer's recorded findings and the material on record. [Paras 19]

Matter remanded to the Tribunal for de novo examination in light of the findings in paragraph 5 of the assessment order.

Final Conclusion: The appeal is admitted and allowed for statistical purposes; the Tribunal's order is set aside and the matter is remitted to the Tribunal for de novo consideration of the additions, having regard to the Assessing Officer's finding in paragraph 5 that the presumptive trading profit addition was not sustained.

Exclusion of comparable in transfer pricing - acceptance of comparable by Transfer Pricing Officer - misdirection on facts and in law - scope and ambit of powers under Section 254 of the Income Tax Act, 1961

Exclusion of comparable in transfer pricing - acceptance of comparable by Transfer Pricing Officer - misdirection on facts and in law - Validity of the Tribunal's exclusion of Onward Technologies Ltd (OTL) as a comparable having regard to the fact that the TPO had accepted OTL as a comparable. - HELD THAT: - The Court found that the Tribunal recorded contentions of the parties but proceeded to issue operative directions excluding OTL despite the TPO having accepted OTL as a comparable and without discussing the scope of its powers under Section 254. The Tribunal's conclusion therefore appears to have been based on incorrect facts and without addressing the legal scope of its appellate power. In these circumstances the High Court set aside the impugned order and directed that the Tribunal re-examine the matter having regard to the correct factual position and the appropriate legal considerations. [Paras 13, 15, 16, 17]

Impugned order excluding OTL set aside; matter remitted to the Tribunal for fresh consideration of the validity of OTL's exclusion in light of the facts and legal principles.

Scope and ambit of powers under Section 254 of the Income Tax Act, 1961 - appellate power of Tribunal under Section 254 - Whether the Tribunal must consider and articulate the scope and ambit of its powers under Section 254 before directing exclusion of a comparable. - HELD THAT: - The Court concluded that the Tribunal should relook the issue by expressly addressing the scope and ambit of its powers under Section 254 and then, having regard to the facts on record, decide whether exclusion of OTL as a comparable is justified. The High Court did not decide the substantive merit of exclusion but required the Tribunal to determine the legal question of its powers and thereafter apply those principles to the facts. [Paras 14, 17]

Tribunal directed to decide afresh the scope and ambit of its powers under Section 254 and then determine the validity of OTL's exclusion.

Final Conclusion: The appeal is admitted; the impugned Tribunal order excluding Onward Technologies Ltd is set aside. The matter is remitted to the Tribunal to consider and articulate the scope and ambit of its powers under Section 254 of the Income Tax Act, 1961, and thereafter decide on the validity of OTL's exclusion in light of the facts on record. The question of law framed is answered in favour of the assessee for statistical purposes.

Attribution of expenses to Indian operations - head office and administrative expenses - Section 44C of the Income Tax Act - auditor's certificate as evidentiary support - substantial question of law

Attribution of expenses to Indian operations - auditor's certificate as evidentiary support - Section 44C of the Income Tax Act - Whether the expenses disallowed by the Assessing Officer were attributable to the Indian business and therefore not liable to be restricted under Section 44C. - HELD THAT: - The Tribunal recorded a factual finding (paras 4-6 of its order) that the amounts disallowed related to costs directly attributable to Indian operations, arising from integration of acquired bank systems and associated advisory, business support and IT costs. The High Court examined the KPMG certificate placed on record, which identified gross receipts and specified amounts directly attributable to India for the relevant period and certified those costs. On the basis of that certificate and the Tribunal's factual findings, the Court accepted that the contested expenses were solely for the Indian business and hence fell outside the ambit of Section 44C, which governs deduction of head office charges for non-residents. [Paras 3, 4, 6, 7]

The Court held that the expenses were attributable to the Indian business and therefore not subject to Section 44C.

Substantial question of law - auditor's certificate as evidentiary support - Whether a substantial question of law arises meriting interference with the Tribunal's factual finding. - HELD THAT: - Having accepted the Tribunal's factual finding and the KPMG certification quantifying the costs attributable to India, the Court found no arguable legal question requiring its intervention. The determinative matter turned on the factual attribution of the expenses confirmed by the auditor's certificate and accepted by the Tribunal; no legal principle was shown to be misapplied. [Paras 8, 9]

No substantial question of law arises; the appeal is closed.

Final Conclusion: The Tribunal's factual finding that the disputed expenses were directly attributable to the Indian business is upheld on the basis of the auditor's certificate; such expenses do not fall within Section 44C, and no substantial question of law is made out - the appeal is closed.

Directory nature of filing audit report in Form 10B - substantial compliance - acceptance of belated Form 10B before completion of assessment or on appeal - verification by the Assessing Officer of belatedly filed Form 10B - rectification under section 154 of the Income Tax Act - prima facie adjustment under section 143(1) of the Income Tax Act - exemption under section 11 of the Income Tax Act - exemption under section 12 of the Income Tax Act

Directory nature of filing audit report in Form 10B - substantial compliance - acceptance of belated Form 10B before completion of assessment or on appeal - verification by the Assessing Officer of belatedly filed Form 10B - rectification under section 154 of the Income Tax Act - prima facie adjustment under section 143(1) of the Income Tax Act - exemption under section 11 of the Income Tax Act - exemption under section 12 of the Income Tax Act - Belated filing of Audit Report in Form 10B is procedural/directory and, when filed before completion of assessment or during appellate proceedings, the Assessing Officer must verify the report and decide the claim for exemption under sections 11 and 12 on merits; rectification rejecting the claim solely for non-filing is not to be sustained without such verification. - HELD THAT: - The Tribunal found on the record that Form 10B was uploaded by the assessee during the pendency of the appeal (filed on 07-07-2020) and that neither the CPC nor the NFAC had verified the belatedly filed audit report before denying exemption and making a prima facie adjustment under section 143(1). Relying on judicial authority of the jurisdictional High Court and coordinate Benches of the Tribunal cited in the order, the filing requirement of Form 10B is characterised as procedural/directory and substantial compliance is sufficient. Consequently, denial of exemption solely on the ground that Form 10B was not filed along with the return without affording an opportunity to verify the belatedly filed report is not appropriate. In the absence of a completed scrutiny assessment under section 143(3), the proper course is to accept the belated Form 10B for verification and to adjudicate the exemption claim on merits. The Tribunal therefore directed the Jurisdictional Assessing Officer to examine the belated Form 10B, give the assessee adequate opportunity, and allow or reject the claim under section 11 in accordance with law. The grounds of appeal raising denial of exemption, refusal of rectification, and prima facie adjustment were allowed on this basis. [Paras 7, 8, 9]

Directed the Jurisdictional Assessing Officer to verify the belatedly filed Form 10B, afford opportunity to the assessee and decide the claim for exemption under section 11 (and section 12) on merits; appeal allowed.

Final Conclusion: The appeal is allowed for statistical purposes: the Tribunal set aside the denial of exemption and the rectification refusal insofar as they were based solely on non-filing of Form 10B, and directed the Assessing Officer to verify the belated Form 10B and decide the exemption claim under sections 11 and 12 in accordance with law.

Validity of reopening of assessment under section 147/148 - change of opinion doctrine - requirement of disclosure of material facts in original return - allowability of exemption under section 54B - proof of deposit in capital gains account

Validity of reopening of assessment under section 147/148 - change of opinion doctrine - requirement of disclosure of material facts in original return - Whether the reassessment proceedings initiated by issuance of notice under section 148/147 were valid or amounted to a mere change of opinion and thus liable to be quashed. - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the assessment record made available. The Bench accepted the finding of the CIT(A) that the reopening was based on audit objections and an Annotated Report which merely gave rise to a change of opinion rather than disclosing any new material which was not placed before the AO at the time of the original assessment. The CIT(A) had also noted that rectification proceedings under section 154 had been taken into account by the AO and no mistake in the original order was found. The factual finding that the alleged failure to disclose material facts was not established - particularly in view of the documents on file and the office note of the Additional CIT - was upheld. On this basis the reopening was held to be unjustified and the order passed under section 143(3)/147 was quashed. [Paras 7, 8, 10]

Reopening under section 147/148 quashed as it amounted to a change of opinion and was not supported by new material.

Allowability of exemption under section 54B - proof of deposit in capital gains account - requirement of disclosure of material facts in original return - Whether the assessee was entitled to claim exemption under section 54B by reason of deposit in a capital gains account and advance payment for purchase of land, and whether the AO was justified in disallowing the claim. - HELD THAT: - The Tribunal noted that the assessee's computation and assessment record contained particulars of the capital gains calculation, evidence of payment of advance through banking channels, and a bank certificate showing deposit into the capital gains account. The CIT(A)'s conclusion that these facts were on record at the time of original assessment and that the assessee had furnished requisite material was accepted. The Revenue failed to rebut the factual findings recorded by the CIT(A) that the payment of advance and deposit in the capital gains account were established, and that the reopening was not necessitated by absence of such material during the original assessment. Consequently, the AO's disallowance under section 54B was not sustained insofar as it rested on the premise of nondisclosure or absence of proof. [Paras 3, 9, 10]

Assessee's claim of exemption under section 54B supported by record and bank evidence; AO's disallowance on grounds of nondisclosure/absence of proof not upheld.

Final Conclusion: The Revenue's appeal is dismissed; the order of the CIT(A) quashing the reassessment order under section 143(3)/147 is upheld and the cross-objections of the assessee are allowed.

Territorial jurisdiction - writ jurisdiction under Article 226 - cause of action - part of cause of action - forum conveniens - seizure and jurisdiction

Territorial jurisdiction - seizure and jurisdiction - writ jurisdiction under Article 226 - Whether the Jammu & Kashmir High Court had territorial jurisdiction to entertain writ petitions challenging seizure, show-cause notice and FIR when the consignment was seized and proceedings initiated at Delhi. - HELD THAT: - The Court affirmed the Writ Court's conclusion that proceedings emanated from seizure and related actions taken in Delhi and, therefore, it was appropriate for the petitioner to pursue remedies before Courts/forums at Delhi. Reliance was placed on the principle that where the operative acts giving rise to the relief occurred within another territorial jurisdiction, the High Court in which those acts did not occur ordinarily should not exercise writ jurisdiction. The petitioner's contention that booking the consignment from Srinagar established a cause of action within this High Court's territorial limits was examined and rejected on the basis that the writ petitions and pleadings failed to furnish specific factual particulars (such as identity or location of suppliers or place of manufacture) necessary to establish that any part of the cause of action arose in Srinagar. The Court observed that mere booking of the consignment from Srinagar and receipt of communications therefrom, without descriptive pleading to show that acts constituting the cause of action occurred within the State, did not suffice to confer jurisdiction under Article 226. Consequently, the Writ Court's dismissal for lack of territorial jurisdiction was upheld. [Paras 5, 13, 18, 19, 20]

The pleas were dismissed: the High Court lacked territorial jurisdiction to entertain the petitions as the seizure and consequential proceedings occurred at Delhi and the pleadings did not establish that any part of the cause of action arose at Srinagar.

Final Conclusion: The impugned common judgment dismissing the writ petitions for want of territorial jurisdiction is upheld; both intra Court appeals are dismissed, interim directions vacated and parties to bear their own costs.

Rejection of transaction value - Reliance on NIDB data for valuation - Comparability and identity of imported goods - Burden on Revenue to prove invoice price incorrect - Arm's length pricing - Provisional assessment pending verification

Rejection of transaction value - Reliance on NIDB data for valuation - Comparability and identity of imported goods - Burden on Revenue to prove invoice price incorrect - Whether the Revenue was justified in rejecting the declared transaction value of imported tiles and re-valuing them on the basis of NIDB contemporaneous import data. - HELD THAT: - The Tribunal found that the original authority relied solely on NIDB data to reject the appellant's declared transaction value without adducing any material showing why the appellant's invoice price was incorrect or unbelievable. The record contains no outcome of the long standing suspicion noted by the Director General of Valuation, no specific findings as to under valuation by the appellant, no analysis of comparability factors (such as quality, thickness, quantity, commercial level) between the appellant's imports and the NIDB entries, and no allegation of non arm's length transactions or related party pricing. It is settled that identical or contemporaneous imports at higher prices do not, by themselves, justify rejection of transaction value; the Department must first establish that the imported goods are comparable/identical and that the invoice price is incorrect. In the absence of any such probative material or reasoning, reliance on NIDB data alone was held insufficient to reject the declared transaction value and to substitute a higher assessed value. [Paras 3, 4, 5]

The re valuation based on NIDB data was not justified; the impugned order upholding the rejection of the declared transaction value is set aside.

Final Conclusion: The appeal is allowed; the assessment rejecting the declared transaction value and re valuing the imports is set aside and consequential benefits shall follow as per law.

Eligibility for nil rate of CVD under an exemption notification for bulk drugs specified in List 1 - requirement to demonstrate conformity to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 - correction of clerical error and reassessment powers under Section 149/154 and Section 17(4) of the Customs Act, 1962

Eligibility for nil rate of CVD under an exemption notification for bulk drugs specified in List 1 - requirement to demonstrate conformity to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 - Appellant's claim for nil rate of CVD on imported Hydrocortisone under the Notification at serial number 105 of List 1 was not allowable. - HELD THAT: - The entry for serial number 105 grants nil rate of duty only to the "bulk drugs specified in List 1" read together with the explanation. The explanation defines a bulk drug to be a pharmaceutical, chemical, biological or plant product (including salts, esters, stereoisomers and derivatives) conforming to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940, and used as such or as an ingredient in formulations. Thus eligibility is contingent on demonstrating that the imported goods conform to those standards. The appellant had cleared the goods from Customs control and did not demonstrate, before the authorities, that the Hydrocortisone imported conformed to the requisite pharmacopoeial or other standards; the goods were not available for testing. For these reasons the explanation controls the description in Column (3) and the authorities were correct in rejecting the exemption claim. The contention that the omission was a clerical error capable of correction or reassessment after clearance was not accepted as a basis to grant the nil rate where the conformity requirement was not shown. [Paras 7, 8]

Claim for nil CVD on Hydrocortisone denied for failure to demonstrate conformity to the pharmacopoeial/Second Schedule standards; appeal dismissed.

Final Conclusion: The appellate tribunal dismissed the appeal, upholding the rejection of the exemption claim because the importer failed to demonstrate that the imported Hydrocortisone conformed to the pharmacopoeial or other standards required by the notification; no clerical-error correction or reassessment was permitted in the absence of such demonstration.

Transaction value - valuation under Section 14 of the Customs Act, 1962 - genuineness of addendum / subsequent agreement for price variation - mis-declaration of value - penalties under Section 112(a)&(b) and Section 114AA - acceptance of invoice value supported by Letter of Credit

Transaction value - valuation under Section 14 of the Customs Act, 1962 - acceptance of invoice value supported by Letter of Credit - genuineness of addendum / subsequent agreement for price variation - Whether the imported vessel MV Basil was undervalued for customs purposes and the declared invoice value was a mis-declaration. - HELD THAT: - The Tribunal examined the competing agreements: an MOA showing USD 63,68,295 and another contemporaneous MOA showing USD 61,31,400, together with the invoice/Bill of Entry value and the Letter of Credit opened by the importer. Applying Section 14 and the transaction value framework, the Tribunal held that transaction value is the price actually paid or payable between supplier and importer and must normally be accepted unless special circumstances rebut it. The department's reliance on the MOA evidencing a higher price was weakened by the fact that on the same date and signed by the same parties another MOA recorded the lower price. There was no evidence of any payment beyond the invoiced amount and the payment was made through banking channels (Letter of Credit). The MOA showing the higher price was treated as a proforma rather than the true sale price. On these findings the Tribunal concluded that the invoice value, supported by the Letter of Credit, represented the true transaction value and that the Revenue failed to establish mis-declaration. [Paras 9, 10]

No mis-declaration of value; the invoice value supported by the Letter of Credit is the transaction value and must be accepted.

Mis-declaration of value - penalties under Section 112(a)&(b) and Section 114AA - Whether the penalties imposed on the appellants under Section 112(a)&(b) and Section 114AA are sustainable in view of the finding on valuation. - HELD THAT: - The penalties were imposed by the adjudicating authority principally on the foundation that the transaction value had been mis-declared. Having held that mis-declaration was not established, the Tribunal addressed the consequential relief: penalties founded on the now-rejected finding of undervaluation cannot stand. The Tribunal therefore set aside the penalties imposed on the appellants under Section 112(a)&(b) and Section 114AA as not sustainable in law. [Paras 15]

Penalties under Section 112(a)&(b) and Section 114AA set aside as unsustainable in absence of mis-declaration.

Final Conclusion: The Tribunal allowed the appeals, held that the declared invoice value (supported by a Letter of Credit) was the true transaction value and there was no mis-declaration of the value of MV Basil; the confiscation/order was set aside and the penalties imposed on the other appellants were quashed.

Entitlement to exemption under notification - Condition excluding factory having plant for making bamboo or wood pulp - Option to pay concessional duty where exemption is not absolute - Interpretation of Section 5A(1)/(1A) regarding absolute exemption - CENVAT credit admissibility when concessional rate is lawfully availed

Entitlement to exemption under notification - Condition excluding factory having plant for making bamboo or wood pulp - Option to pay concessional duty where exemption is not absolute - CENVAT credit admissibility when concessional rate is lawfully availed - Appellants were entitled to avail benefit under Sl. No. 91 of Notification No. 04/2006-CE and thereby eligible to claim CENVAT credit for the specified periods. - HELD THAT: - The Tribunal examined the relevant entries and conditions of Notification No. 04/2006-CE and the scope of Section 5A(1)/(1A). Serial No. 90, which prescribes nil duty, is subject to conditions (including the quantitative limit of first clearances up to 3500 MT in a financial year and non-availment of an earlier notification) and therefore does not amount to an absolute exemption within the meaning of Section 5A(1A). Where an exemption is not absolute, a manufacturer cannot be compelled to pay duty at the nil rate and is entitled to exercise the option to pay duty under the other applicable serials (such as Sl. No. 91 or 93). Applying that principle and following the Tribunal's earlier decision in Balakrishna Paper Mills Ltd, the appellants-whose factory did not have an attached plant for making bamboo or wood pulp and who satisfied the condition at serial No. 11-were correctly within Sl. No. 91 and entitled to the concessional rate and attendant CENVAT credit. The Revenue's contention that the appellants should be treated under Sl. No. 90 and denied the option to pay under Sl. No. 91 was rejected. [Paras 6, 7, 8]

Impugned adjudications set aside; appeals allowed and appellants entitled to the benefit of Sl. No. 91 and to claim CENVAT credit for the periods in question.

Final Conclusion: The Tribunal set aside the Commissioner's orders, allowed the appeals and held that where the nil-rate entry is conditional and not an absolute exemption, the manufacturer has the option to pay duty under other applicable entries (here Sl. No. 91), entitling the appellants to concessional duty treatment and CENVAT credit for the specified periods; consequential relief, if any, to follow as per law.

Extinguishment of claims upon approval of a resolution plan - clean slate / fresh slate doctrine under the IBC - binding nature of an approved resolution plan - non-arbitrability of disputes which would reopen an approved resolution plan - pre referral limited scrutiny under Section 11 - the 'eye of the needle' test

Extinguishment of claims upon approval of a resolution plan - clean slate / fresh slate doctrine under the IBC - Approval of the Resolution Plan results in extinguishment of all claims against the corporate debtor except to the extent admitted in the Resolution Plan. - HELD THAT: - The Court held that Sections 30 and 31 of the IBC, as explained in the decisions of the Supreme Court (including Committee of Creditors and Ghanashyam Mishra), establish that approval of a resolution plan confers statutory finality and enables the successful resolution applicant to take over the corporate debtor on a clean slate. The CIRP process requires identification, verification and apportionment of claims; once the plan is approved and sanctioned by the Adjudicating Authority, claims not admitted in the plan cannot be enforced. The petitioner had challenged the RP's admission of its claim at a notional value and the validity of termination, but the Supreme Court's decision affirmed the RP's approach and gave finality to the amended resolution plan. Accordingly, the Court concluded that the approval of the Resolution Plan extinguished the petitioner's debts except to the extent admitted in the plan. [Paras 24, 26]

The approval of the Resolution Plan extinguished the petitioner's claims except insofar as they were admitted in the Resolution Plan.

Non-arbitrability of disputes which would reopen an approved resolution plan - pre referral limited scrutiny under Section 11 - the 'eye of the needle' test - Disputes that would, if adjudicated by an arbitral tribunal, reopen or rewrite an approved resolution plan are non-arbitrable and not referable under Section 11. - HELD THAT: - Applying the limited prima facie scrutiny under Section 11 (the 'eye of the needle' test), the Court found that permitting reference to arbitration would effectively reopen the Resolution Plan and undermine the statutory finality and clean slate principles. High Courts must refuse reference only where non-arbitrability is ex facie manifest; here, because the approved Resolution Plan extinguished the claims and the Supreme Court had affirmed the RP's approach, allowing arbitration would contradict the IBC scheme and relevant Supreme Court authorities. The Court therefore concluded that the disputes raised were demonstrably non-arbitrable and that reference to an arbitral tribunal was not warranted. [Paras 27, 29]

The disputes sought to be referred were non-arbitrable because referral would reopen an approved Resolution Plan; therefore no reference to arbitration was ordered.

Final Conclusion: The petition under Section 11 is dismissed: the Court held that the approved Resolution Plan extinguished the petitioner's claims except as admitted in the plan, and that the disputes which would reopen that plan are non arbitrable, so no reference to an arbitral tribunal is permitted.

Commencement of limitation for appeal under Section 61 of the IBC from date of pronouncement - constructive knowledge of an order when pronounced in presence of counsel - obligation to apply for certified copy and exclusion of time under Section 12 of the Limitation Act - limited power under Section 61(2) to condone delay by further fifteen days - interpretation of limitation provisions in light of IBC's object of timely resolution

Commencement of limitation for appeal under Section 61 of the IBC from date of pronouncement - constructive knowledge of an order when pronounced in presence of counsel - interpretation of limitation provisions in light of IBC's object of timely resolution - Limitation for filing an appeal under Section 61 of the IBC commences from the date the order is pronounced, not from the date when the aggrieved party obtains or claims knowledge of the contents. - HELD THAT: - The Tribunal held that, in the statutory scheme of the IBC, the clock for filing an appeal starts when the Adjudicating Authority pronounces its order. Where the order is pronounced in the presence of counsel for a party, constructive knowledge of the order is imputed. Reliance on authorities construing provisions under different statutes (such as the Land Acquisition Act) was examined but distinguished in light of the specific language and object of Section 61 IBC and the Supreme Court's recent rulings. The Limitation Act mechanism permitting exclusion of time taken to obtain a certified copy applies only if the aggrieved party applies for such a copy within the limitation period; that obligation reinforces the rule that limitation runs from pronouncement. Interpreting Section 61 to commence from actual receipt of a copy would frustrate the IBC's emphasis on prompt resolution and lead to uncertainty, contrary to the legislative scheme and authoritative decisions construing Section 61. [Paras 22, 31, 32, 33]

Limitation under Section 61 begins on pronouncement of the order; constructive knowledge arises when counsel are present and the contention that limitation begins on receipt of the order is rejected.

Limited power under Section 61(2) to condone delay by further fifteen days - obligation to apply for certified copy and exclusion of time under Section 12 of the Limitation Act - Whether sufficient grounds were made out to condone the delay in filing Company Appeal (AT) (Insolvency) No.1071 of 2023 (IA No.3694 of 2023). - HELD THAT: - The Tribunal found that the impugned order was pronounced on 08.05.2023 in the presence of counsel and therefore limitation began on that date. The appeal was filed on 04.07.2023, producing a delay of 27 days beyond the prescribed period. The Tribunal's condonation power under Section 61(2) is limited to a further 15 days; since the delay exceeded that limit and no sufficient grounds were shown to justify exercise of the limited discretion, the application to condone delay was dismissed. The Tribunal relied on the requirement that an aggrieved party seeking exclusion must have applied for a certified copy within the limitation period; absence of such timely action militates against condonation. [Paras 34]

IA No.3694 of 2023 to condone delay is dismissed and the appeal (CA(AT)(Ins.) No.1071 of 2023) is rejected as time barred.

Limited power under Section 61(2) to condone delay by further fifteen days - obligation to apply for certified copy and exclusion of time under Section 12 of the Limitation Act - Whether sufficient grounds were made out to condone the delay in filing Company Appeal (AT) (Insolvency) No.588 of 2023 (IA No.1956 of 2023). - HELD THAT: - The Tribunal recorded that the Adjudicating Authority pronounced the order on 12.01.2023 in the presence of the appellant's counsel, thereby fixing the commencement of limitation on that date. Even after allowing exclusion for the brief period post application for a certified copy, the appeal filed on 11.03.2023 remained beyond the permissible period (30 days plus up to 15 days condonation). The maximum condonation available under Section 61(2) could not cover the excess delay; accordingly, no sufficient grounds existed to permit filing beyond that limited extension and the application to condone delay was refused. [Paras 35, 36]

IA No.1956 of 2023 to condone delay is dismissed and the appeal (CA(AT)(Ins.) No.588 of 2023) is rejected as time barred.

Final Conclusion: Both applications for condonation of delay are dismissed; the two appeals are rejected as barred by time.

Provident Fund dues payable in full - treatment of PF claims in insolvency resolution plans - effect of moratorium on liabilities crystallising after initiation of CIRP - power to reduce or waive damages under Section 14B exercisable by Central Board (with recommendation mechanism via insolvency process) - adjustment/deduction of amounts already paid to workmen from admitted operational creditor claims

Provident Fund dues payable in full - treatment of PF claims in insolvency resolution plans - Whether the Resolution Plan's treatment of the Appellant's admitted PF dues by providing 1.5% payment was in accordance with law - HELD THAT: - The Tribunal held that provident fund dues are required to be paid in full and that the Resolution Plan's provision treating the PF claim (admitted in Form-F) by paying only 1.5% was not in accordance with law. The Tribunal relied on prior decisions (including Jet Aircraft Maintenance Engineers Welfare Association v. Resolution Professional of Jet Airways (India) Ltd.) affirming the principle that PF dues must be paid in full. Because the Resolution Plan paid only a small percentage of the admitted PF claim, the treatment of the Appellant's dues rendered the Plan inconsistent with that legal principle and required corrective measures. [Paras 7, 8]

The Resolution Plan's treatment of the admitted PF dues was held not to be in accordance with law and required rectification.

Effect of moratorium on liabilities crystallising after initiation of CIRP - Whether damages under Section 14B imposed by order dated 14.10.2019 (after initiation of CIRP) are payable under the Resolution Plan - HELD THAT: - The Tribunal observed that one part of the Section 14B damages (order dated 14.10.2019) was imposed after the initiation of the CIRP (order dated 30.09.2019) and therefore arose post-moratorium. On that basis the Tribunal found it unnecessary to direct payment of those damages as part of the Resolution Plan and refused to order their payment in these proceedings. [Paras 9, 10]

No direction issued for payment of the Section 14B damages imposed by order dated 14.10.2019.

Power to reduce or waive damages under Section 14B exercisable by Central Board (with recommendation mechanism via insolvency process) - Whether the damages of Rs. 31,16,446 imposed by order dated 25.07.2017 under Section 14B can be recommended for waiver and the mechanism for doing so - HELD THAT: - The Tribunal analysed Section 14B and paragraph 32B of the Scheme which empower the Central Board to reduce or waive damages and recognise recommendations for waiver where rehabilitation mechanisms exist. Noting the repeal of the earlier rehabilitation regime and substitution by the IBC, the Tribunal held that the recommendation function contemplated by the Scheme can be exercised in the insolvency regime and that the NCLT (and this Tribunal in appellate proceedings) can recommend waiver to the Central Board. In the facts of the case the Tribunal directed that the Successful Resolution Applicant may apply to the Central Board for 100% waiver of the damages imposed by the 25.07.2017 order, enclosing a copy of this order, within the prescribed time. [Paras 13, 14]

SRA permitted to apply to the Central Board for 100% waiver of the Section 14B damages arising from the 25.07.2017 order; no immediate direction to pay those damages.

Adjustment/deduction of amounts already paid to workmen from admitted operational creditor claims - Procedure for computing and paying the Appellant's admitted claim under Section 7A and 7Q in light of amounts already paid to workmen under the Resolution Plan - HELD THAT: - The Tribunal directed that the admitted claim under Section 7A and 7Q must be computed after deducting amounts already paid to workmen under the Resolution Plan towards PF and any amounts already paid to the Appellant under the Plan. The Resolution Professional (Respondent No.1) was directed to compute the amount of PF dues paid to workmen under the Plan and communicate the net amount payable to the Appellant within two months. Thereafter the Successful Resolution Applicant must pay the computed amount to the Appellant within 60 days (30 days in operative paragraph) of receiving the computation. This direction was framed to cure the Plan's invalidity arising from improper treatment of PF dues while preserving the Plan subject to this adjustment. [Paras 15, 16, 17, 18]

Respondent No.1 to compute amounts of PF paid to workmen under the Resolution Plan and communicate net payable under 7A/7Q; SRA to pay the computed amount within the specified timeline.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's approval of the Resolution Plan subject to corrections: the Plan must be adjusted to ensure PF dues are not improperly extinguished - RP to compute amounts already paid to workmen and SRA to pay the net admitted 7A/7Q amount; no payment directed for Section 14B damages imposed after CIRP (14.10.2019); SRA may apply to the Central Board for 100% waiver of earlier Section 14B damages (25.07.2017) and the Appeal is disposed of with liberty for further applications for non compliance.

Amendment of pleadings - date of default - bonafide amendment - liberty to amend - inordinate delay - necessity for adjudication of real controversies - no prejudice to opposite party

Amendment of pleadings - date of default - typographical error - liberty to amend - bonafide amendment - inordinate delay - Whether the Adjudicating Authority rightly allowed the application to amend Part IV of Form 5 to correct the date of default. - HELD THAT: - The Tribunal held that the amendment application sought to correct an inadvertent typographical error in Part IV of Form 5 changing the stated date of default from 23.10.2012 to 03.08.2018, the latter being the date on which the foreign award became enforceable. The Adjudicating Authority had earlier granted liberty to file an amendment, and the proposed amendment did not introduce a new cause of action but merely rectified and elucidated pre-existing facts. Considering the object of allowing amendments to avoid multiplication of litigation and to enable determination of real controversies between the parties, and that no prejudice would be caused to the corporate debtor, the Tribunal found the amendment to be bonafide. Although there was delay, the Tribunal applied the settled principle that amendments are to be allowed liberally where necessary for effective adjudication and not refused mechanically; the existence of prior liberty to amend and the nature of the error justified permitting the correction. On that basis the Tribunal concluded that allowing IA(IBC)/733(CHE)/2022 was free from legal infirmity. [Paras 41, 42, 43, 44]

The impugned order permitting amendment of Part IV of Form 5 was upheld and the appeal dismissed.

Final Conclusion: The Company Appeal is dismissed; the Adjudicating Authority's order allowing the amendment to Part IV of Form 5 is upheld as a bonafide correction necessary for adjudication, and the appeal is devoid of merits. No costs.

Offence of money-laundering - Continuing activity - Clarificatory amendment - Application of an amendment retrospectively by way of clarification - Conspiracy/complicity - Discharge under Section 227 Cr.P.C. - Prima facie evidence warranting trial

Offence of money-laundering - Clarificatory amendment - Application of an amendment retrospectively by way of clarification - Whether the Explanation to the definition of the offence of money laundering (introducing concealment, possession, acquisition, use, projecting or claiming as untainted property) applies to facts alleged prior to the amendment and therefore attracts the PML Act against the petitioner. - HELD THAT: - The Court accepted the view in Vijay Madanlal Choudhary that the amendment to Section 3 is clarificatory and operates from the date of enactment of the PML Act, 2002. Although the amendment came into force on 15.02.2013, the Court found no provision declaring it prospective only; accordingly the Explanation clarifying that processes such as concealment, possession, acquisition or use and projecting or claiming as untainted property constitute money laundering applies to the present case. Given the admitted investigation material-recovery of cash from a locker in the name of A.2 and the petitioner's custody of the locker keys-the elements described by the Explanation are attracted to the allegations against the petitioner, who is thus prima facie covered by the offence as so clarified. [Paras 8, 9, 10, 11]

The explanatory amendment to Section 3 is clarificatory and applies to the facts of this case; the allegations fall within the scope of the offence of money laundering as so understood.

Conspiracy/complicity - Prima facie evidence warranting trial - Discharge under Section 227 Cr.P.C. - Whether, on the material on record, the petitioner was entitled to discharge at the stage of Section 227 Cr.P.C. or whether the evidence/documents disclose sufficient complicity to require trial to proceed. - HELD THAT: - The Court noted the investigation revealed recovery of cash from A.2's locker and that the petitioner allegedly had custody of the locker keys; there was also an asserted agreement between A.2, A.1 and A.3 concerning grant of bail, which the Court treated as indicative of complicity. The respondents placed voluminous documentary evidence before the trial court which, in the view of the High Court, required scrutiny in the course of trial. The Court was not persuaded that the bulk of prosecution witnesses being non incriminating by themselves mandated discharge; on the prima facie appraisal required at the discharge stage, the material on record was sufficient to refuse discharge and let the matter proceed to trial. [Paras 4, 5, 6, 12, 13]

Petitioner not entitled to discharge; the material on record discloses prima facie complicity and warrants trial.

Final Conclusion: Criminal revision dismissed; the order refusing discharge is upheld and the prosecution shall proceed to trial; pending miscellaneous petitions are also dismissed.

Anticipatory bail - Prevention of Money Laundering Act - medical board report - Section 45 PMLA - restrictions on grant of bail - Section 44(2) PMLA - High Court's special powers under Section 439 CrPC - sick or infirm exception to bail under PMLA

Anticipatory bail - medical board report - sick or infirm exception to bail under PMLA - Whether the interim anticipatory bail granted to the applicant should be vacated - HELD THAT: - The Court examined the medical evidence including the report of a five-member Medical Board of SGPGI constituted pursuant to the Court's order and subsequent medical documents filed by the applicant. The SGPGI Board recorded that the applicant is a post-renal transplant patient on multiple immunosuppressive medicines, with recurrent abdominal pain from polycystic liver disease, poorly controlled diabetes requiring close observation, and an elevated creatinine requiring further evaluation; the Court observed it lacks the medical expertise to reject the opinion of such specialists. The Enforcement Directorate's challenge to the Medical Board's procedure and reliance on old documents was deprecated by the Court, which noted that it must accept the expert medical advice when it conflicts with the opinion of investigating officers. The Court also noted the proviso in Section 45 PMLA permitting bail to a sick person and that the applicant had cooperated with investigation, had no other criminal history besides the scheduled offence for which he earlier obtained bail, and the witness-influence allegation was denied by the applicant. On these combined considerations the Court found no reason to vacate the interim order and made it absolute. [Paras 9, 12, 24, 26, 27]

Interim anticipatory bail stands; the order dated 30.05.2023 is made absolute and the anticipatory bail application is allowed.

Section 45 PMLA - restrictions on grant of bail - Section 44(2) PMLA - High Court's special powers under Section 439 CrPC - Whether the limitations in Section 45 of the PMLA operate to deny the High Court its special power to grant bail under Section 439 CrPC - HELD THAT: - Relying on this Court's earlier reasoning in Ramji Singh and construing Sections 44 and 45 of the PMLA harmoniously, the Court observed that Section 44(2) saves the special powers of the High Court under Section 439 CrPC. The Court accepted the view that the restrictions in Section 45 were intended for courts other than constitutional courts and, read together with Section 44(2), do not oust the High Court's power to consider bail applications, including where sickness is claimed (which is expressly recognised by the proviso to Section 45). Accordingly, the High Court may exercise its constitutional jurisdiction to grant bail after applying the statutory tests. [Paras 22, 23]

The High Court retains its special power to grant bail under Section 439 CrPC despite Section 45 PMLA; the sick or infirm exception is available to be considered by the High Court.

Final Conclusion: The Court refused to vacate interim anticipatory bail and made the order dated 30.05.2023 absolute, relying on the SGPGI Medical Board's findings, the applicant's medical condition and cooperation with investigation, and the view that the High Court's special bail powers under Section 439 CrPC remain exercisable notwithstanding the restrictions in Section 45 PMLA.

Default bail under Section 167(2) of the Code of Criminal Procedure, 1973 - indefeasible right to statutory bail - completion of investigation versus further investigation - filing of charge-sheet as a final report under Section 173(2) Cr.P.C. - incomplete or piecemeal charge-sheet and its effect on statutory bail - PMLA special procedure and subsequent complaint under Section 44 of the PMLA, 2002

Default bail under Section 167(2) of the Code of Criminal Procedure, 1973 - completion of investigation versus further investigation - filing of charge-sheet as a final report under Section 173(2) Cr.P.C. - PMLA special procedure and subsequent complaint under Section 44 of the PMLA, 2002 - Whether the petitioner was entitled to default bail under Section 167(2) Cr.P.C. despite filing of prosecution complaint/charge-sheet by the Enforcement Directorate and ongoing further investigation in related ECIRs under the PMLA. - HELD THAT: - The Court found that the petitioner was arrested on 04.05.2023, the prosecution complaint in ECIR/RNZO/18/2022 was filed on 12.06.2023 and cognizance was taken on 19.06.2023; on these facts the Court concluded that the investigation in respect of the first ECIR in which the petitioner was remanded had been completed and a final report/charge-sheet had been filed within the statutory period. The Court applied the established principle that an indefeasible right to default bail accrues where investigation remains incomplete and no charge-sheet is filed within the prescribed period (see Uday Mohanlal Acharya v. State of Maharashtra ); however, it held that where a final report/charge-sheet has in fact been filed within the period and cognizance taken, Sub section (2) of Section 167 Cr.P.C. is satisfied so as to defeat the claim of default bail. The Court further considered the special regime under the PMLA and relied on the statutory provision permitting subsequent complaints and further investigation (Section 44 of PMLA, 2002) and the reasoning in Vijay Madanlal Choudhary that ECIR and the PMLA inquiry process operate under a distinct mechanism; having regard to that special procedure and the material on record, the Court held that filing of the prosecution complaint in ECIR/RNZO/18/2022 constituted a filing of the final report in that ECIR for purposes of Section 167(2) Cr.P.C. The Court rejected the submission that the prosecution had filed an incomplete or piecemeal charge-sheet in order to frustrate statutory bail, distinguishing authorities where the charge-sheet was held to be piecemeal or investigation incomplete (see Chitra Ramkrishna and Central Bureau of Investigation v. Kapil Wadhawan ) on the ground that in the present case the investigation in the first ECIR had been completed and cognizance had been taken. [Paras 9, 11, 12, 13]

The petitioner's application for default bail under Section 167(2) Cr.P.C. is not maintainable on the facts; investigation in the primary ECIR was held to be complete and the prosecution complaint had been filed and cognizance taken within the statutory period.

Final Conclusion: Criminal Miscellaneous Petition dismissed; default bail under Section 167(2) Cr.P.C. refused as the Court concluded that the investigation in the primary ECIR was complete and the prosecution complaint/charge sheet had been filed and cognizance taken within the prescribed period, and the PMLA regime permits subsequent complaints and further investigation.

Direction for interim payment pending appellate remedy - liberty to file appeal on compliance with payment condition - right to contest adjudication and penalty before appellate authority - relief where appellate order passed ex parte for want of adjournment - balancing interest of revenue and assessee

Direction for interim payment pending appellate remedy - balancing interest of revenue and assessee - Whether the appellants should be directed to make an interim payment of the demanded service tax as a condition for pursuing appellate remedy. - HELD THAT: - The Court found that though the adjudication and enhanced penalty orders remain on paper and no recovery has been effected, the interests of revenue and the appellants require intermediate measures. Observing that the appellants had an alternative statutory remedy which they did not pursue and that their explanations were unsatisfactory, the Court exercised its discretionary power to direct a conditional interim payment. The order is specific and limited: the appellants must pay 50% of the service tax determined in the adjudication order within six weeks of receipt of the order. This direction is tailored to enable part recovery while preserving the appellants' right to challenge the adjudication on merits thereafter. [Paras 7, 8]

Appellants directed to pay 50% of the service tax determined in the adjudication order within six weeks.

Liberty to file appeal on compliance with payment condition - right to contest adjudication and penalty before appellate authority - Whether the appellants are permitted to file an appeal and contest the adjudication and penalty after complying with the payment direction. - HELD THAT: - The Court granted the appellants liberty to file an appeal before the Commissioner of Central Excise (Appeals), Kolkata, provided the interim payment is effected. The appellate time-limit for filing is regulated from the date of payment: appellants have thirty days from the date on which payment is effected to file the appeal. The Court expressly preserved the appellants' entitlement to canvass all grounds challenging the correctness of the adjudication order and to contest the levy and quantum of penalty before the appellate authority, thereby leaving substantive legal issues open for adjudication at the appeal stage. [Paras 9, 11]

On making the directed payment, appellants may file an appeal within thirty days and may contest the adjudication and the penalty on all grounds before the appellate authority.

Relief where appellate order passed ex parte for want of adjournment - right to contest adjudication and penalty before appellate authority - Whether the Commissioner (Appeals) should permit the appellants to canvass grounds relating to penalty and its quantum because the earlier appellate order was passed ex parte after refusing adjournment. - HELD THAT: - Noting that the Commissioner (Appeals) had rejected the appellants' adjournment requests and proceeded ex parte when the department's appeal was allowed, the Court directed that the Commissioner (Appeals) shall permit the appellants to canvass grounds regarding both the levy of penalty and the quantum of penalty. The direction restores the appellants' opportunity to be heard on issues that were previously determined without their participation and ensures that the appeal filed after compliance with the payment condition will be heard on merits. [Paras 3, 10]

Commissioner (Appeals) to permit appellants to canvass grounds on levy and quantum of penalty in the appeal.

Final Conclusion: The appeal is disposed by directing the appellants to pay 50% of the service tax determined in the adjudication order within six weeks; upon such payment they are granted thirty days' liberty to file an appeal before the Commissioner (Appeals), Kolkata, and to contest the adjudication and the enhanced penalty (with the Commissioner (Appeals) permitting them to raise grounds that were not heard earlier). The order is confined to the facts of the case and is not to be treated as a precedent; no order as to costs.

Commercial training or coaching service - service tax leviability of educational institutions - extended period of limitation in tax demands - bona fide belief as defence to extended limitation - retrospective explanatory amendment clarifying taxable institutions

Commercial training or coaching service - service tax leviability of educational institutions - Whether the appellant's activities during the relevant period amounted to a taxable Commercial Training or Coaching Service. - HELD THAT: - The Tribunal examined the nature of the appellant's activities and the contemporaneous legal position. Having regard to the Larger Bench decision in Sri Chaitanya Educational Committee which held that an institute providing training/coaching that issues no legally-recognised certificates is a 'commercial training or coaching centre', the Tribunal held that the appellant's services fall within the taxable category. The Tribunal therefore concluded on the merits that the appellant was liable to pay service tax as a Commercial Training or Coaching Centre during the relevant period. [Paras 5]

On merits the appellant's activities are taxable as Commercial Training or Coaching Service and the appellant is liable for service tax.

Extended period of limitation in tax demands - bona fide belief as defence to extended limitation - retrospective explanatory amendment clarifying taxable institutions - Whether the demand could be sustained by invoking the extended period of limitation or was barred by limitation. - HELD THAT: - The Tribunal noted that during the relevant period there was conflicting authority on whether charitable/non profit educational institutions were liable to service tax, and that a retrospective Explanation was later inserted clarifying that trusts or societies fall within the taxable class. Having regard to earlier decisions favourable to the appellant, the later Larger Bench ruling, and the existence of a bona fide belief by the appellant that its activities were not chargeable, the Tribunal held that there was no suppression with intent to evade tax and the extended period could not be invoked. Applying precedents the Tribunal concluded that the entire demand was time barred. [Paras 5]

The demand is barred by limitation and the extended period cannot be invoked; the demand is set aside on limitation grounds.

Bona fide belief as defence to extended limitation - penalty for failure to pay service tax - Consequences for interest and penalty where the substantive demand is time barred on account of bona fide belief. - HELD THAT: - Because the Tribunal held the substantive tax demand to be barred by limitation owing to the appellant's bona fide belief and the then existing conflicting decisions, the adjudication on interest and penalty could not survive. The Tribunal followed authorities recognizing that where a bona fide legal controversy exists and there is no deliberate evasion, extended limitation and concomitant penalties are not invokable. [Paras 5, 6]

Consequential relief granted: interest and penalties connected with the time barred demand are set aside as the substantive demand is disposed of on limitation grounds.

Final Conclusion: Although on merits the appellant's activities were held to be taxable as Commercial Training or Coaching Service, the Tribunal set aside the entire demand (and related interest/penalty) as barred by limitation in view of bona fide belief and conflicting earlier rulings, and disposed of the appeal with consequential relief as per law.

Admissibility of CENVAT Credit on banking and financial services - Renting of Immovable Property service - input service - definition under the Cenvat Credit Rules, 2004 - interest on delayed payment of service tax - rate of interest under Notification No. 13/2016 ST - penalty equivalent to CENVAT Credit

Admissibility of CENVAT Credit on banking and financial services - Renting of Immovable Property service - input service - definition under the Cenvat Credit Rules, 2004 - penalty equivalent to CENVAT Credit - CENVAT Credit on banking and financial services used in providing Renting of Immovable Property service is admissible and associated penalty and interest are set aside. - HELD THAT: - The Tribunal examined whether banking and financial services qualify as input service within the definition under the Cenvat Credit Rules, 2004 when used in relation to Renting of Immovable Property service. Relying on its precedents, including decisions affirming that various input services used for maintenance and provision of Renting of Immovable Property service are eligible for CENVAT credit, the Tribunal held that credit availed on banking and financial services for providing the output service is admissible. Consequent imposition of penalty and interest attributable to the irregular availment of that credit were set aside in view of this admissibility. [Paras 7]

CENVAT Credit availed on banking and financial services for Renting of Immovable Property service is admissible; corresponding penalty and interest imposed on that credit are set aside.

Interest on delayed payment of service tax - rate of interest under Notification No. 13/2016 ST - Interest at the rate of 24% is applicable for belated payment of service tax where tax collected from service recipients was not deposited on due dates. - HELD THAT: - The department's allegation that the appellant had collected service tax along with rent but failed to deposit it on time was not controverted by production of invoices by the appellant. In the absence of evidence to the contrary, the Tribunal found the case falls within the category attracting the higher rate prescribed at Sl. No. 1 of Notification No. 13/2016 ST. Accordingly, differential interest calculated at the department's applicable rate is sustainable. The appellant's contention for a lower rate could not be accepted due to failure to establish that tax was not collected earlier. [Paras 8]

Interest at 24% is confirmed as payable on the belated payment of service tax; appellant liable to pay the differential interest after adjustment of amounts, if any, already paid.

Final Conclusion: The appeal is partly allowed: CENVAT credit on banking and financial services used for Renting of Immovable Property service is admitted and the related penalty and interest set aside; the demand of differential interest is otherwise confirmed at 24% and is payable after adjustment, and the appeal is disposed accordingly.

Cenvat credit - restriction on utilization of Cenvat credit up to 20% cap - utilization of accumulated Cenvat credit after 01.04.2008 - interest for excess utilization prior to 01.04.2008 - eligibility of credit on input services (activities relating to business) - debit note as document for availing Cenvat credit - technical deficiencies in invoices not a ground to deny credit - extended period of limitation and suppression

Restriction on utilization of Cenvat credit up to 20% cap - utilization of accumulated Cenvat credit after 01.04.2008 - interest for excess utilization prior to 01.04.2008 - Whether demand for service tax and penalty can be sustained for utilization of Cenvat credit in excess of 20% cap under Rule 6(3)(c) of CCR, 2004 for the period prior to 01.04.2008. - HELD THAT: - The Tribunal examined the effect of omission of the 20% utilization restriction w.e.f. 01.04.2008 and the Board's Circular No.137/12/2008-CX.4 which clarified that accumulated credit could be utilized from 01.04.2008 and that, in absence of explicit lapsing provision, the substantive right to credit cannot be denied. Following precedents, the Tribunal held that recovery of the excess credit itself could not be sustained; only interest is leviable for the intervening period from date of excess utilization till 01.04.2008. Penalty for such utilization is not imposable where the legal position changed and utilization prior to 01.04.2008 does not attract forfeiture of credit. [Paras 8, 10]

Demand of Rs.24,10,286/- and penalty set aside; appellant liable to pay interest on the amount from date of utilisation till 01.04.2008.

Eligibility of credit on input services (activities relating to business) - Whether Cenvat credit on various input services (motor vehicle insurance, group/employee insurance, tour and travel, event management/entertainment) is allowable for the period April 2007-March 2008. - HELD THAT: - For the relevant period the definition of 'input service' was wide and included activities relating to business. The invoices were in the name of the appellant and costs were borne by the company; relying on precedents holding such services as integrally connected to business output, the Tribunal concluded that these input services qualified for credit. Accordingly the adjudicated denial of credit on these heads was incorrect. [Paras 11]

Demand of Rs.7,36,922/- along with interest and penalty set aside.

Debit note as document for availing Cenvat credit - technical deficiencies in invoices not a ground to deny credit - Whether Cenvat credit availed on the basis of debit note (and where debit note/invoice lacked service provider registration number) is permissible. - HELD THAT: - The show cause allegation was that a debit note is not a valid document under Rule 9 of CCR, 2004 and that the debit note lacked the service provider's registration number. The Tribunal noted authority holding that when necessary particulars are present, credit cannot be denied merely because the document is a debit note. Further, omission of registration number or other technical infirmities are curable and do not defeat the substantive right to credit where tax payment and receipt of service are not disputed; the adjudicating authority ought to have verified tax payment rather than deny credit summarily. No specific charge of document falsification was made in the SCN and the department did not pursue verification despite earlier remand. [Paras 12, 13, 14]

Demand of Rs.10,67,514/- along with interest and penalty set aside.

Extended period of limitation and suppression - Whether penalty and extended-period invocation are justified in respect of the admitted and paid Cenvat credit amount which was disclosed in returns and paid prior to issuance of the SCN. - HELD THAT: - The amount in question was admitted by the appellant and paid before issuance of the SCN, and the availment had been disclosed in ST-3 returns. The SCN did not articulate any specific act of wilful suppression or evidence showing intent to evade tax; the only allegation was that the irregularity came to light by audit. In these circumstances, invoking extended period/penalty for suppression was not justified. [Paras 15]

Demand of Rs.8,69,567/- along with interest upheld; penalty on this amount set aside.

Final Conclusion: The appeal is partly allowed: demands and penalties confirmed on account of excess utilization over the 20% cap, in so far as recovery of the credit, are set aside and only interest is directed to be paid for the period up to 01.04.2008; demands and penalties in respect of ineligible input services and credit availed on debit notes are set aside; the admitted and paid tax is upheld but penalty relating to that amount is set aside.

Penalty under Rule 26 of the Central Excise Rules, 2002 - liability of a chartered accountant for issuance of certificate - causal link between professional certificate and wrongful claim of exemption - reliance on Chartered Accountant's certificate for claiming benefit under Notification 20/2007-CE

Penalty under Rule 26 of the Central Excise Rules, 2002 - liability of a chartered accountant for issuance of certificate - causal link between professional certificate and wrongful claim of exemption - Whether the penalty of Rs.50,000 imposed under Rule 26 on the appellant (a chartered accountant) was sustainable where there was no evidence that the assessee relied on the appellant's certificate to claim exemption under Notification 20/2007-CE. - HELD THAT: - The adjudicating authority imposed penalty on the appellant alleging that the assessee claimed exemption under Notification 20/2007-CE on the basis of a certificate issued by the appellant. The appellant produced a certificate dated 31.03.2005 certifying value of plant and machinery but did not specify that it was issued for claiming the exemption. The impugned order, however, refers to a different Chartered Accountant certificate dated 30.06.2007 which was not issued by the appellant. There is therefore no material on record establishing that the assessee relied upon the appellant's certificate in making the contested claim or that the appellant abetted any wrongful claim. In absence of the requisite causal link or reliance, the foundational basis for imposing penalty under Rule 26 is lacking. [Paras 7, 8]

Penalty imposed under Rule 26 set aside as unsustainable for want of evidence that the appellant's certificate was relied upon in claiming the exemption.

Final Conclusion: The appeal is allowed and the penalty of Rs.50,000 imposed under Rule 26 of the Central Excise Rules, 2002 on the appellant is set aside.

CENVAT credit admissibility on office equipment and printer cartridges - Exclusion of equipment or appliance used in office from 'capital goods' under Rule 2(a)(A) - Burden of proof on manufacturer under Rule 9(5) for admissibility of CENVAT credit - CENVAT credit admissible only for inputs received in the factory of manufacture under Rule 3 - CENVAT credit for packing materials delivered at depot/warehouse when used in relation to manufacture - Judicial precedent prevails over Board circulars

CENVAT credit admissibility on office equipment and printer cartridges - Exclusion of equipment or appliance used in office from 'capital goods' under Rule 2(a)(A) - Burden of proof on manufacturer under Rule 9(5) for admissibility of CENVAT credit - Judicial precedent prevails over Board circulars - CENVAT credit claimed on printers and printer cartridges used in the appellant's office is not admissible. - HELD THAT: - The Tribunal upheld the disallowance of CENVAT credit on printers and cartridges used in the office. The exclusion in the definition of 'capital goods' (Rule 2(a)(A)) specifically omits equipment or appliances used in an office, and the printers/cartridges fall within that excluded category. The appellant's reliance on a Board clarification that goods used in the factory are generally allowable was held to be inapposite where the statutory definition expressly excludes office equipment, and judicial decisions interpreting the rule were given precedence over the circular. Further, the onus to establish admissibility rests on the manufacturer under Rule 9(5); the appellant did not establish sufficient nexus or usage in manufacturing premises to counter the exclusion. Applying these principles, the Tribunal affirmed that credit on the printers and cartridges is not allowable and sustained demand, interest and penalty to the extent of the disallowed credit. [Paras 4]

Credit on printers and printer cartridges used in the office is not admissible; demand, interest and penalty in respect of this disallowance are upheld.

CENVAT credit admissibility on office equipment and printer cartridges - CENVAT credit admissible only for inputs received in the factory of manufacture under Rule 3 - CENVAT credit for packing materials delivered at depot/warehouse when used in relation to manufacture - CENVAT credit claimed on corrugated packing boxes delivered at the appellant's depot/warehouse is admissible where they were used in relation to manufacture and clearance. - HELD THAT: - The Tribunal held that Rule 3 requires credit to relate to inputs received in the factory or used in relation to manufacture and clearance of finished goods. The facts showed the corrugated boxes were delivered to the appellant's warehouse/depot from which the finished goods were repacked and cleared; these facts were not disputed. Relying on established authority that packing material used at depots for packing goods for clearance may be eligible where it is used in relation to manufacture and clearance, the Tribunal found no justification to deny credit for these packing materials and allowed the claimed credit. Accordingly, the adjudicating authority's denial as to these inputs was set aside. [Paras 4]

Credit on corrugated packing material delivered at the depot/warehouse and used in relation to manufacture and clearance is admissible; the disallowance in respect of these packing materials is reversed.

Final Conclusion: Appeal partially allowed: CENVAT credit on the corrugated packing material delivered at the depot/warehouse and used in relation to manufacture and clearance is admitted; CENVAT credit on printers and printer cartridges used in the office is disallowed. Demand of interest and penalty is sustained to the extent of the disallowed credit.

Admissibility of statements recorded during investigation and requirement of examination-in-chief and cross-examination under Section 9D - reliance on statements without affording opportunity of cross-examination - Cenvat credit denial on the ground of non-receipt of inputs - treatment of transporter Goods Receipts, RG 23C/Daily Stock Account and bank records as evidence of receipt - imposition of penalty under Rule 13 and Rule 26 in absence of proved intention to evade duty

Admissibility of statements recorded during investigation and requirement of examination-in-chief and cross-examination under Section 9D - reliance on statements without affording opportunity of cross-examination - Reliance by adjudicating authorities on statements recorded during investigation without affording the assessee opportunity for examination in chief of the makers and for cross examination is impermissible and vitiates the order. - HELD THAT: - The Tribunal found that the adjudication was founded primarily on statements of third parties (manufacturers and dealers) recorded during investigation, but the assessee's request for cross examination was not permitted. Applying the principles in the cited Punjab & Haryana High Court authorities, the Tribunal held that if the Revenue intends to rely on statements recorded under Section 14, it must have the makers examined in chief before the adjudicating authority, provide the assessee a copy of that examination, and permit cross examination. Statements recorded behind the back of the assessee which are not dealt with by examination in chief and cross examination cannot be relied upon in adjudication. The impugned order's reliance on such untested statements rendered the decision legally unsustainable. [Paras 14, 15, 16]

Findings based solely on untested statements were held inadmissible; the impugned order was set aside on this ground.

Cenvat credit denial on the ground of non-receipt of inputs - treatment of transporter Goods Receipts, RG 23C/Daily Stock Account and bank records as evidence of receipt - The authorities failed to consider or record findings on documentary evidence (transporter Goods Receipts, RG 23C/Daily Stock Account and bank statements) produced by the assessee to establish receipt of inputs; in the absence of independent evidence disproving receipt, the demand could not be sustained. - HELD THAT: - The Tribunal noted that the appellant produced GRs issued by the transporter, entries in Daily Stock Account and RG 23C Part I, and bank statements showing payments, and that monthly statutory returns reflected clearance of finished goods and availing of credit. The Commissioner (Appeals) did not examine these documents nor adduce independent evidence to prove non receipt. Precedents where reliance only on supplier statements was held insufficient, and where documentary proof of invoiced transactions and payments through banking channels warranted relief, were applied. Because the lower authorities did not evaluate these materials or record contrary independent findings, the demand could not be upheld. [Paras 4, 8, 16, 17]

Documentary evidence of receipt was not considered by the authorities; absence of independent evidence of non receipt led to setting aside the demand.

Imposition of penalty under Rule 13 and Rule 26 in absence of proved intention to evade duty - Penalty confirmed by the authorities could not be sustained where the foundational demand itself was unsupported because the adjudication ignored procedural safeguards and documentary evidence; penalty cannot be imposed in the absence of intention to evade duty. - HELD THAT: - Given that the demand for reversal of Cenvat credit was quashed on grounds that statements relied upon were inadmissible and that documentary evidence of receipt was not considered, the Tribunal found that the penalties imposed on the appellants lacked a lawful foundation. The Tribunal observed that statutory returns and lack of any proof of fraudulent intention weigh against imposition of penalty, and that penalties premised on an unsustainable demand cannot stand. [Paras 12, 16, 17]

Penalties imposed under Rule 13 and Rule 26 were held unsustainable and set aside along with the demand.

Final Conclusion: Both appeals were allowed; the impugned order of the Commissioner (Appeals) confirming the demand and penalties was set aside for failure to afford the assessee procedural safeguards regarding reliance on investigational statements and for failure to consider the documentary evidence of receipt and statutory returns.

Inclusion of facility charges and escalation charges in assessable value - application of Board Circulars to valuation of goods - precedential effect of earlier Tribunal decision - penalty under Rule 25 of the Central Excise Rules, 2002

Inclusion of facility charges and escalation charges in assessable value - application of Board Circulars to valuation of goods - precedential effect of earlier Tribunal decision - Facility charges and escalation charges recovered from customers during November 2006 to October 2007 are includable in the assessable value of gases manufactured and supplied. - HELD THAT: - The Tribunal considered whether fixed facility charges and escalation charges collected by the appellant for storage/plant facilities at customer sites form part of the assessable value of gases supplied. The appellant failed to place before the authorities or the Tribunal the separate agreements with customers (other than Tata Steel Ltd.) despite repeated opportunities. The Tribunal held the issue to be covered by its earlier decision in BOC India Ltd., which applied the Board Circulars (including the circular dated 10.11.2014) and concluded that such facility charges are includable in the value of the gases. In view of that precedent and the Board clarifications, the Tribunal affirmed inclusion of the facility and escalation charges in the assessable value for the period under adjudication and upheld the duty confirmed along with interest.

Duty confirmed on facility and escalation charges upheld; such charges are includable in assessable value for November 2006 to October 2007.

Penalty under Rule 25 of the Central Excise Rules, 2002 - Whether the penalty imposed under Rule 25 of the Central Excise Rules, 2002 should be sustained. - HELD THAT: - While upholding the duty demand, the Tribunal examined the imposition of penalty under Rule 25 and, considering the facts and circumstances including the appellant's conduct and available records, found no sufficient reason to sustain the penalty. The Tribunal therefore exercised its discretion to set aside the penalty despite confirming the duty and interest.

Penalty of Rs.5,00,000 under Rule 25 of the Central Excise Rules, 2002 set aside; duty and interest upheld.

Final Conclusion: The appeal is disposed by upholding the duty (with interest) on facility and escalation charges for November 2006 to October 2007 as includable in the assessable value, following the Tribunal's earlier decision and Board Circulars; the penalty imposed under Rule 25 is set aside.

Finality of adjudication - Scope of appellate remand - limited to parties before the appellate forum - De novo adjudication on remand - Principles of natural justice

Finality of adjudication - Scope of appellate remand - limited to parties before the appellate forum - Whether the CESTAT order remanding the matter operated to set aside the original adjudication in respect of appellants who had not filed an appeal before the Tribunal. - HELD THAT: - The Tribunal found that the present appellants had not filed any appeal against the Order in Original dated 21.01.2013; consequently that order attained finality as regards them. The CESTAT's order dated 04.04.2013 expressly set aside and remanded the impugned order only in respect of the three noticees who were the appellants before the CESTAT and directed de novo adjudication in their cases. The CESTAT's reasons and operative directions were confined to those parties; they did not purport to affect persons who were not parties to the appeals. The Commissioner, in the de novo adjudication of the other three appellants before him, recorded that the earlier Order in Original had attained finality in respect of the present two appellants and that the remand order was not applicable to them. That conclusion accords with the scope of the Tribunal's order and with the law that an appellate remand operates as to the parties before the appellate forum and does not, by itself, reopen finalized adjudications of non appealing parties. [Paras 4, 5]

The CESTAT's remand did not affect the Order in Original insofar as it related to appellants who had not appealed; the Commissioner correctly held that the original order was final as to those appellants.

Final Conclusion: Revenue's appeals are dismissed; the impugned order holding that the Order in Original dated 21.01.2013 attained finality in respect of the two appellants who did not file appeals before the CESTAT is upheld.

Summary order. Special Leave Petition dismissed on ground of delay (1651 days); question of law left open; pending applications disposed of.

Quashing of disciplinary order - parity of treatment between co-delinquents - grant of increments, seniority and promotion as consequential relief - elimination of revenue effect as basis for dropping disciplinary charges - Article 14 and limits of equality in service jurisprudence

Parity of treatment between co-delinquents - elimination of revenue effect as basis for dropping disciplinary charges - quashing of disciplinary order - Petitioner entitled to the same reliefs as the co-delinquent whose charges were dropped after the revenue effect was eliminated; disciplinary order set aside and comparable benefits to be granted - HELD THAT: - The Court found that the head of the inspection team, though initially charged, was subsequently held "NOT PROVED" and the charges against him were dropped because the alleged revenue effect stood eliminated by appellate orders. The petitioner was a similarly placed member of the same inspection team and no mala fide or ulterior motive was alleged against him; the disciplinary findings against the petitioner recorded only negligence. In these circumstances the Court held that the benevolence extended to the co-delinquent should likewise be extended to the petitioner and that perpetuating a disparity in treatment where the underlying revenue effect has been eliminated would be inappropriate. The Court therefore quashed the impugned G.O.(D).No.78 dated 28.05.2020 and directed respondents to accord the petitioner the same increments, seniority and promotion on par with his junior, with consequential benefits. [Paras 10, 11, 12]

G.O.(D).No.78 dated 28.05.2020 set aside; respondents directed to accord increments, seniority and promotion to the petitioner on par with his junior with consequential benefits.

Article 14 and limits of equality in service jurisprudence - parity of treatment between co-delinquents - Court declined the respondents' submission that Article 14 precludes granting the petitioner the same benefit, distinguishing cases of inadvertent illegality from cases where charges are dropped because the revenue effect was eliminated - HELD THAT: - Respondents relied on the proposition that Article 14 cannot be invoked to perpetuate illegality or mistake and that relief granted to one person inadvertently does not create a legal right for others. The Court explained that in the present case the co-delinquent was consciously discharged because the revenue effect was eliminated by subsequent appellate orders, not because of an inadvertent mistake in departmental action. Given that the petitioner was similarly placed and no malafide was alleged, the Court held that the doctrine invoked by respondents did not preclude extending the same treatment to the petitioner. [Paras 8, 9, 10]

Respondents' reliance on Article 14 to deny parity rejected; petitioner entitled to the same benefit as the co-delinquent whose charges were dropped due to elimination of revenue effect.

Final Conclusion: Writ petition allowed; impugned Government Order G.O.(D).No.78 dated 28.05.2020 is set aside and respondents directed to grant the petitioner increments, seniority and promotion on par with his junior, with consequential benefits.

Adjustment or refund of tax in certain cases - set-off of tax paid on purchases used in manufacture - rebate of tax paid on raw materials - apportionment of input tax where manufactured goods include tax-free output - Application of Section 15A of the Haryana General Sales Tax Act, 1973 and Rule 24A of the Haryana General Sales Tax Rules, 1975

Set-off of tax paid on purchases used in manufacture - rebate of tax paid on raw materials - apportionment of input tax where manufactured goods include tax-free output - Dealer entitled to rebate on the entire amount of tax paid on purchase of cotton seed at first stage when the cotton seed was wholly used in manufacture despite some manufactured items being tax-free. - HELD THAT: - The Court held that where the entire purchased raw material (cotton seed) was used in the manufacture of goods, the rebate under the provisions embodied in Section 15A of the Act and rule 24A of the Rules cannot be restricted by a notional apportionment simply because one of the manufactured products is tax-free. Reliance was placed on the Division Bench decision in M/s. Sharda Cotton Ginning & Pressing Factory , which construed the rule in light of the Supreme Court's reasoning in the Bharat Petroleum matter to the effect that, in composite or inseparable use of inputs, the rules do not require that purchased goods must have been used only for the manufacture of taxable goods for sale and therefore the full set-off/rebate is allowable. The High Court observed that the Tribunal and revising authority erred in applying proportional reduction where the raw material was indisputably wholly consumed in the manufacturing process, and accordingly answered the question in favour of the assessee. [Paras 6]

Rebate of tax paid on the purchase of cotton seed allowed in full where the entire cotton seed was used in manufacture, notwithstanding that one of the manufactured products was tax-free.

Adjustment or refund of tax in certain cases - set-off of tax paid on purchases used in manufacture - Dealer entitled to refund of tax paid in excess at the first stage over and above the tax payable on finished goods sold by him. - HELD THAT: - Having concluded that the full rebate of tax paid on the purchased cotton seed is permissible under Section 15A and rule 24A where the raw material is wholly used in manufacture, the Court answered the ancillary question that the dealer is entitled to refund of the excess tax paid at the first stage over and above the tax payable on the finished goods. The Court invoked the same line of authority and factual conclusion to hold that the excess paid must be refunded rather than being proportionately disallowed. [Paras 6]

Refund of excess tax paid at the first stage is allowable to the dealer.

Final Conclusion: Reference answered in favour of the dealer: full rebate of tax paid on cotton seed used wholly in manufacture is permissible and refund of the excess tax paid at the first stage is allowable; General Sales Tax Reference is allowed.